Growing Faster

Around the World

2008 H. J. Heinz Company Annual Report

Global Reports LLC

Financial Highlights

Number One in Total Shareholder Return*

May 4, 2006 through April 30, 2008
Dividend Increase

27.6% 26.7% Annual Dividend/Share

24.6%
21.0%
11.4% CAGR
14.0% $1.66
12.4% $1.52
9.9% 9.3% $1.40
$1.20
Sara Lee Hershey
Heinz Wrigley General Kellogg ConAgra McCormick Campbell Kraft
Mills Soup
* Represents the change in the average of each TSR Peer Group (as identified in Heinz’s 2007 proxy
statement) company’s stock price for the 60 trading days prior to the beginning and end of the two-year
performance period (May 4, 2006 through April 30, 2008) plus dividends paid over the two-year -18.9%
performance period.
-25.3% FY06 FY07 FY08 FY09E

H. J. Heinz Company and Subsidiaries

2008 2007
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (52 WEEKS) (52 WEEKS)
Sales $10,070,778 $ 9,001,630
Operating income 1,568,967 1,446,715
Income from continuing operations 844,925 791,602
Net income (1) 844,925 785,746
Per common share amounts:
Income from continuing operations - diluted $ 2.63 $ 2.38
Net income - diluted 2.63 2.36
Cash dividends 1.52 1.40
Cash from operations $ 1,188,303 $ 1,062,288
Capital expenditures 301,588 244,562
Proceeds from disposals of property, plant, and equipment 8,531 60,661
Depreciation and amortization 288,897 266,197
Property, plant and equipment, net 2,104,713 1,998,153
Cash and cash equivalents $ 617,687 $ 652,896
Cash conversion cycle (days) 49 49
Total debt 5,183,654 4,881,884
Shareholders’ equity 1,887,820 1,841,683
Average common shares outstanding - diluted 321,717 332,468
Return on average invested capital (“ROIC”) 16.8% 15.8%
Debt/invested capital 73.3% 72.6%
Dividend/share $ 1.52 $ 1.40
Share repurchases $ 580,707 $ 760,686

(1) Net income in Fiscal Year 2007 includes a loss from discontinued operations of $5.9 million.
See Management’s Discussion and Analysis for details.
 HEINZ’S FISCAL 2008
SALES WERE
THE HIGHEST
William R. Johnson
Chairman, President and
Chief Executive Officer IN OUR HISTORY.

DEAR FELLOW SHAREHOLDER: clear competitive advantages to enable faster growth in

Heinz delivered a record year of growth in Fiscal 2008, a rapidly changing landscape.
surpassing the top end of our earnings per share outlook
We now have a focused collection of fifteen strong and
while achieving record sales of $10.1 billion. Organic sales
growing brands that each drive at least $100 million in sales
growth (volume plus price) of 6.9 percent was our best in at
and account for approximately 70 percent of our annual
least 15 years. Our financial performance was all the more
revenue. The “jewel in the crown” is the nearly four billion
significant given the unprecedented increases in
dollar Heinz® brand, which commands extraordinary reach
commodity and energy costs.
across all of our categories and most of the world.
The Company’s momentum was broad based, with sustained
These brands have benefited from both our steadfast
success in North American Consumer Products, robust growth
emphasis on using market research to better understand our
in the Pacific, good performance in Europe, and a 25 percent
consumers, and a multi-million dollar investment in our
increase in Emerg-
Global Innovation
ing Market sales. Fiscal 2008: A Record Year and Quality Center
Importantly, we Sales by Segment
in Pittsburgh.
Sales: $10.1B +12% (MM)
delivered these $3,532

OI: $1.6B +8.5%

$3,012 During the past
top-tier results $1,600 $1,559 five years, we also
while reinvesting EPS: $2.63 +10.5% $368
expanded our
in our brands, Europe N.A. Consumer Asia/ U.S. Rest of
OFCF(1): $895MM +2% Products Pacific Foodservice World presence in fast-
people, facilities, B/(W) vs. Prior Year
(1) Cash from operations less capital Organic Growth 7.8% 7.0% 9.3% 0.6% 19.9%
growing Emerging
business systems, expenditures net of proceeds from disposal Total Segment 14.8% 9.9% 21.3% 0.2% 18.7% Markets, including
of Property, Plant, and Equipment.
and processes.
joint ventures in
Heinz’s growth is determined by how well our brand innovation China and Russia in 2004 and 2005, respectively, which
and marketing investment connects with consumers. On this are both now wholly owned and growing faster than the
score, we were very successful, introducing more than 200 Company average.
new products across the Heinz world in Fiscal 2008, sup-
While improving our business mix, we also strengthened our
ported by a double-digit increase in marketing investment.
managerial talent with 75 percent of our top one hundred
Consumers enthusiastically embraced our initiatives
leaders new to their jobs within the past five years and 30
resulting in our strong top-line performance.
percent new to the Company. Through changes to our
WE HAVE SUCCESSFULLY REPOSITIONED incentive compensation plans, our people are now more
THE COMPANY FOR FASTER GROWTH closely aligned with the metrics necessary for creating
Over the past five-plus years, we have focused Heinz around shareholder value.
the brands, categories, and geographies where we have

1
 Performance Against Superior Value and Growth Plan

Fiscal 2007 and 2008 Operating Targets Met ✓ Exceeded ✓✓

Generate Cash to Deliver
Grow the Portfolio Reduce Cost to Drive Margins
Superior Value

Organic Sales(1)(2) +6% ✓✓ Trade Spending -170BP(3) ✓✓ Op. Free Cash Flow(4) $1,774MM ✓✓
Emerging Markets Sales(1) +20% ✓✓ COGS Productivity $425MM ✓✓ CCC -7 Days ✓✓
Consumer Marketing +19% ✓✓ Plant Exits 20 ✓ Net Share Repurchases $1,003MM ✓
R&D +18% ✓✓ SG&A Productivity $120MM ✓✓ Dividend Per Share +12.5% ✓✓
(1) Adjusted for approximate impact of one percent for the extra week in FY06.
(2) Volume plus net price increases.
(3) Basis Points.
(4) Cash from operations less capital expenditures net of proceeds from disposal of PP&E.
Note: All percentage changes represent two-year Compound Annual Growth Rates (CAGRs). All financial information within this section reflects continuing operations, excluding special items.

Finally, we invested in the tools our people need to work more

effectively and efficiently, including the phased expansion of
Sixty percent of Like the late 1970s and
early 1980s, we are
our SAP enterprise resource planning software that will Heinz’s portfolio dealing with the
continue through Fiscal 2009.
comprises Health & pressures of significant
cost inflation, along with
HEINZ OVER-DELIVERED THE FY07-08
SUPERIOR VALUE AND GROWTH PLAN
Wellness products, weak economies and

Fiscal 2008 marked the conclusion of our two-year Superior a segment that declining consumer
sentiment. However,
Value and Growth Plan, which we announced in June 2006.
is growing at several significant
I am pleased to report that we met or exceeded virtually
every target for growth and productivity in our ambitious plan.
nearly twice the countervailing forces
exist today, including
We introduced hundreds of new products while increasing our industry rate. rapid growth in
investment in R&D and marketing by 39 percent and 42 per- Emerging Markets and
cent respectively over the two years. We fueled these invest- the accelerating consumer interest in higher-margin Health
ments with nearly $550 million in productivity savings made and Wellness foods.
possible by our tighter brand and category focus.
More consumers are opting for healthier lifestyles and are
The capstone of this plan was achieving the No. 1 position looking to food to help them achieve their goal. Our portfolio
in Total Shareholder Return versus our peer group for the is well suited to the opportunity, given our infant/nutrition and
two-year period. (See chart on inside front cover.) weight management capabilities, in addition to our leading
positions in tomato-based foods, beans, soups, and other
During this time, Heinz generated nearly $1.8 billion in operat-
inherently healthy products.
ing free cash flow, most of which we returned to shareholders
through the repurchase of more than $1 billion of our shares In the crucial area of infant/nutrition, we possess two leading
and a 27 percent increase in our dividend. In fact, since Fiscal brands — Heinz® and Plasmon® — and we are building
2003, we have returned in excess of $6.5 billion to our own- increased global R&D capabilities in this category with an
ers. Our approximately 60 percent dividend payout ratio, expanded R&D Center of Excellence in Milan, Italy.
meanwhile, remains among the highest in the Consumer
We are meeting consumer demand for great tasting and
Packaged Goods industry.
convenient nutritional meals with our Weight Watchers® Smart
HEINZ IS AT THE LEADING EDGE OF CONSUMER Ones® and Weight Watchers® from Heinz® branded products in
TRENDS TO DRIVE FUTURE GROWTH North America, Europe, Australia, and New Zealand. These
This is a time of significant challenge — and even greater two brands generate nearly $800 million in sales and are
opportunity — for the food industry. among the Company’s fastest growing equities.

2 H. J. HEINZ ANNUAL REPORT 2008

 Focused Portfolio Rapid Sales Growth Top-15 Brands Growth

Sales KC&S (B) Meals & Snacks (B) Infant/Nutrition (B) Sales $6.9B
8.5% $4.1 9.0% $4.5 13.3% $1.1
CAGR(1) CAGR(1) CAGR(1) $5.6B
Non-Core=30% $3.5 $3.9
$0.9
Core=70%

Pre-Del Monte
Spin-Off

Non-Core=4%
Core=96% FY06 FY08

FY08 12% CAGR (1)

FY06 FY08 FY06 FY08 FY06 FY08 (1) Adjusted for approximate
impact of one percent for
(1) Adjusted for approximate impact of one percent for the extra week in FYO6. the extra week in FY06.

Ninety-six percent of Heinz’s sales are now within its core categories of Ketchup and Sauces, Meals and Snacks, and
Infant/Nutrition. A tighter category focus has paid off as Heinz has reinvested against its leading brands to drive faster growth.

We see additional opportunities in other trends, including • Sales growth of 6%+;

meeting the needs of an aging population around the world • Increases in consumer marketing of 8-12%;
with foods designed for specific dietary needs. • Operating income growth of 6-7%;
• Earnings per share growth of 8-11%;
We have also broadened our search for appropriate
• Operating free cash flow of around $850 million annually;
acquisitions to further strengthen our core businesses,
• FY09 dividend of $1.66 per share (+9.2%).
extend our position in Health and Wellness, and expand
our presence in Emerging Markets. In my 11th year as CEO of this great company, I have never
been more optimistic about our future. Heinz has the
OUR GROWTH IS ACCELERATING IN EMERGING MARKETS
right people in the right places driving growth in the right
Heinz is extending its first-mover
categories. We have put the consumer at the forefront of all
Emerging advantage in Emerging Markets
we do and have exciting innovation pipelines in place across
with well-established, profitable,
Markets are and growing domestic brands,
most of our businesses. Importantly, we are guided by an
energetic and engaged Board of Directors, which is committed
expected to as well as an expanding Heinz®-
to creating superior shareholder value.
branded ketchup and Infant/
account for Nutrition business. As we approach our 140th birthday, we continue to do
approximately Our Emerging Markets represent
“the common thing, uncommonly well,” as Henry Heinz aptly
phrased our simple philosophy for success. I believe Mr. Heinz
20 percent of 13 percent of total Heinz sales
would see a lot of what he created still evident in the
and about 25 percent of our sales
Heinz’s sales growth. We expect these markets
entrepreneurial spirit pervading our businesses and our
operational model of global leadership and local execution.
by 2013. to grow net sales at high-teen
rates for the foreseeable future. As always, I thank you for your investment and assure you
We will support this growth with continued investments in that the nearly 33,000 people of Heinz will work to earn
R&D, marketing, new capacity, and management talent in your support every day.
these markets.

FISCAL 2009-2010 HIGH PERFORMANCE PLAN

While we are encouraged by our success, we still see abundant
growth opportunities. Our capable leadership team, combined
with a performance-driven and winning culture, have given us
the confidence to establish a new two-year plan, which raises William R. Johnson
our outlook in several key areas, including expected annualized: Chairman, President and Chief Executive Officer

3
 Heinz’s acquisition search is biased toward businesses that have a strong Health and Wellness platform. The acquisition
of Renée’s Gourmet, Canada’s leading maker of chilled dressings and toppings, is an excellent example of this
approach. Renée’s portfolio includes a line of Wellness dressings with reduced fat and fewer calories.

F O C U S O N C O N S U M E R N E E D S
Heinz classifies its Health and Wellness initiatives into four categories
based on how consumers view healthy food options:

Lifestyle Children’s Nutrition Weight Management Health Management

Promotes general Health & Infants, toddlers, and Enables/promotes weight Science-influenced
Wellness, lifestyle preferences children reduction, maintenance foods & beverages

4 H. J. HEINZ ANNUAL REPORT 2008

 Weight Management
Fiscal 2008 Health and Wellness Sales Growth is a Heinz core compe-
tency that is on-trend
25% and demonstrating
rapid growth. Heinz is
20% capitalizing on this
17%
strength by expanding
our trusted brands to
11%
new categories and
meal occasions.

Lifestyle Children’s Weight Health

Nutrition Management Management

Heinz’s Health and Wellness-related products com-

bined are growing faster than the Company average.

Lifestyle-oriented options are what most major food

Extending the companies are pursuing, with an emphasis on making
products incrementally healthier. Heinz is making good

Heinz Heritage progress here. Our U.S. Foodservice business, for example,
is developing reduced fat, salt, and sugar varieties of many

of Health and of its most popular soups and sauces, as well as

portion-controlled desserts.

Wellness It is in the other three categories, however, where the

Company aims to differentiate itself.

Our Children’s Nutrition capabilities are being enhanced

Fiscal 2008 was a monumental year of progress for Heinz
significantly by a new R&D Center of Excellence in Milan,
toward our commitment to improve the Health and Italy — home of our Plasmon® brand.
Wellness attributes of our global portfolio. The year was
highlighted by the removal of more than 13 million pounds In Weight Management, meanwhile, we license the global
rights to the Weight Watchers® brand in our core categories
of trans fat from the North American diet with the switch to
and enjoy a strong partnership with the classroom program.
healthier oils in our Ore-Ida® brand.
We are broadening the Weight Watchers® Smart Ones®
HEINZ IS MOVING TO A CONSUMER-CENTRIC
HEALTH AND WELLNESS MODEL product line into the breakfast segment, through the intro-

Our Health and Wellness strategy has been guided by an duction of Morning Express™, a line of on-the-go calorie-

internal model focused on food ingredients and our strong controlled breakfast sandwiches. The menu is also expanding

foundation of nutrient-rich potatoes, tomatoes, and beans. for Weight Watchers® from Heinz® in Europe, Australia, and

Through the work of the Heinz Health and Wellness Task New Zealand, with entries into new categories like soups,

Force established last year, the Company has evolved to a salad dressings, and desserts.

consumer-directed model built around four basic platforms: Our Health Management capabilities are focused today
Lifestyle, Children’s Nutrition, Weight Management, and in our Italian business under the Aproten® and Biaglut®
Health Management. brands, which address needs for gluten-free and low-

Through this approach, each of our major business units is protein products.

responding to Health and Wellness consumer needs within We expect to have many new things to report next year
their respective markets to add value for consumers. in our quest to deliver great tasting foods to consumers
that are also good for them.

5
 Rapid Economic Growth Increasing Heinz Impact

GDP Growth (%) Key Emerging Markets GDP Growth (%) % of Company % of Company
11.8% Sales Sales Growth
10.5% 20%
10.2% 9.9% 9.3%
7.3%
6.3% 15%
13%
3.7%
~1 /4 ~1 /3
Average Average China Russia Indonesia India Poland L.America
Developed* Emerging 12.4% 14.6% 15.1% 12.8% 6.7% 11.7%
Packaged food per capita growth
FY08 FY10* FY13*
*U.S., Canada, UK, France, Italy, Germany, Spain, Australia, New Zealand, Japan *Target FY06-08 FY08-10E
Source: World Bank; IMF data from Euromonitor; Euromonitor

Economies in Heinz’s Emerging Markets are growing at Accelerating growth in Emerging Markets is resulting in a
nearly triple the rate of developed markets, with corre- rapid increase in their share of Heinz’s total sales and
sponding increases in the growth rate of packaged food. sales growth.

oversaw the opening of our infant cereal factory in

Accelerating Guangzhou in 1986. We remain the trusted leader in the
Chinese infant cereal category.

Growth in Heinz has initiated a new program in China to expand our

fast-growing Long Fong® brand. The Company provides
Emerging Markets grocers in second- and third-tier cities with freezers in
exchange for exclusively merchandising Long Fong’s
dumplings, dim sum, rice balls, and steam bread. Aided by
Upon receiving his first order for Heinz products in the this program, we have doubled Long Fong sales in less than
UK in 1886, Henry Heinz declared, “The World Is four years, and expect to
Our Field.” Heinz has been a pioneer among U.S. continue driving double-
food companies in exploring global opportunities digit sales increases for the
ever since. forseeable future.

Emerging Markets have become one In India, meanwhile, a fleet

of the largest growth engines for of bicycle salesmen,
today’s Heinz. supported by mobile health
clinics and door-to-door promotion,
Heinz possesses significant
has significantly
advantages in many of these markets
increased brand
due to our well-established domestic
penetration for our
brands, in addition to a growing
Glucon-D® energy
Heinz® brand in ketchup, sauces,
beverage brand.
and infant/nutrition. We also enjoy
scalable infrastructure, unique WE ARE GROWING
In Fiscal 2008, Heinz expanded its freezer
distribution capabilities, and strong distribution program to introduce the WITH OUR GLOBAL
local management. Long Fong brand to many new cities. CUSTOMERS
In Russia, the world’s second-largest
THE INFRASTRUCTURE WE HAVE
ketchup market, we recently extended
ACQUIRED AND BUILT HAS ALLOWED
our relationship with McDonald’s.
US TO EXPAND OUR PRESENCE
Building on the awareness created
Heinz was one of the first companies from the western
by this partnership, the Heinz® brand
world to operate in China. Our late Chairman Henry
is now the leader in Moscow and
“Jack” Heinz II, grandson of the Founder, personally
St. Petersburg.

6 H. J. HEINZ ANNUAL REPORT 2008

The Complan® brand has been growing at a double-digit rate since an ad campaign in support of the product’s growth benefit
was launched in Fiscal 2005.

We are leveraging the infrastructure we acquired in 2005,

Accelerating Sales Growth
combined with new advertising, to build distribution and
trial deeper in the Russian interior. Sales (MM)
FY06 +27% (1) $923
WE ARE INVESTING AGGRESSIVELY IN FY07 +14% (1) $1,038
INNOVATION AND MARKETING FY08 +25% $1,295

In India, our Complan® nutritional beverage brand had been (1) Adjusted for approximate impact of two percent for the extra week in FY06 and one less week in FY07.

growing modestly for several years until we began an ad Heinz has grown sales 40 percent in its Emerging Markets
campaign in Fiscal 2005 emphasizing Complan’s milk over the past two years. The introduction of Heinz business
processes, meanwhile, has led to double-digit operating
protein and other nutrients and their effect on the growth margins not far below the Company average.
of children. This has resulted in double-digit growth in each
For example, we have recently launched a range of Long
year since the campaign began.
Fong®-branded sauces in China, and in Indonesia, we are
THE BEST IS YET TO COME supplementing strong growth in our core ABC®-branded soy
While we are growing rapidly in these sauce and beverage businesses with new cooking pastes.
markets, we are only beginning to tap their We will also consider entering select new markets, given
full potential. We intend to continue investing our proven ability to iden-
for growth by expanding our strong brand tify, execute, and grow joint
equities into new categories. ventures and acquisitions
in the developing world.

7
 Heinz eliminated more than 13 million pounds of
trans fat from its Ore-Ida® product line in Fiscal
2008 and continues to grow the brand with
exciting new innovations that expand beyond
fries, including new Steam n’ Mash™ potatoes.

8 H. J. HEINZ ANNUAL REPORT 2008

 Heinz is investing incrementally
Ramped-Up Marketing Investment Strong Top-Line Growth behind its robust new product
pipeline, which is driving strong top-
line growth, including record sales
$10.1
of $10.1 billion in Fiscal 2008.
Marketing (MM) $383 Sales (B) (Record Sales)

$7.6
$269

+42% +$2.5 Billion

FY06* FY08 FY03* FY08

* Results from continuing operations * Results from continuing operations

Investing for OUR INNOVATION IS AIMED AT THE SWEET SPOT

WHERE TASTE, HEALTH, AND CONVENIENCE CONVERGE
In addition to our focus on Health and Wellness, we continue
Growth Through to upgrade taste and convenience in our leading brands.

Innovation and For example, we recently launched a line of Ore-Ida® Steam

n’ Mash™ potatoes in four varieties. Consumers simply
“steam” the potatoes in the microwave for 10 minutes, add
Marketing milk and butter, then mash to their liking. We do the dirty
work of scrubbing, peeling, and chopping.

Heinz is driving strong top-line sales growth through a

proven formula of consumer-validated product innovation
Heinz plans to launch at least 200 new
supported by creative and targeted marketing. products in each of the next two years,
The Company has strengthened its market research capabil- supported by a continued double-digit
ities and has increased R&D investment at a double-digit
rate in each of the past four years, in addition to deploying
increase in R&D investment.
significant capital to a new Global Innovation and Quality Also new in the U.S. is T.G.I. Friday’s™ Skillet Meals. These
Center in Pittsburgh. are tasty meals for two inspired by the restaurant. They
As a result, Heinz has built a robust 18–24 month innova- involve a simple, three-step stove-top preparation which, like
tion pipeline in its core brands. Steam n’ Mash™ potatoes, saves consumers time while giving
them the satisfaction of being part of the cooking experience.
Heinz plans to launch at least 200 new products in each of
the next two years, supported by a continued double-digit HEINZ IS SHARING ITS BEST IDEAS ACROSS THE
increase in R&D investment. Our goal is to derive 15% of
COMPANY LIKE NEVER BEFORE
Some of the Company’s best growth is derived from its
our Fiscal 2010 sales from products launched within the
ability to transfer innovations in one Heinz market success-
prior 36 months.
fully to others. Soup varieties first launched in
We also expect to increase marketing by 8-12% in each Australia are driving strong growth in the UK, and
of the next two years targeting an effective mix of media, a line of Heinz® condiment sauces that
including TV, radio, print, outdoor, in-store, and online. have enjoyed success in France are now
rolling out across Europe.

9
 Heinz Europe has launched a campaign heralding Heinz’s
tomato heritage under the slogan “Grown, Not Made.™”
The campaign includes a new clear bottle and label featuring
a red, ripe tomato on the vine. Although it is hard to
improve on perfection, the Heinz Europe team also
leveraged the Company’s tomato expertise to improve the
European ketchup recipe for an even thicker, richer flavor.

Success That’s Importantly, as Heinz grows faster around the world, it is

sharing its tomato technology with farmers in developing
nations. This will ensure Heinz a consistent tomato supply

Grown, Not Made that meets the Company’s rigorous quality standards, while
improving the livelihood of farmers in these nations and
introducing sustainable farming methods.
H. J. Heinz played a pivotal role in introducing the tomato
Heinz also continues to fund studies
into the daily lives of Americans when he debuted his
into the health benefits of processed
recipe for tomato ketchup in 1876. Today, Heinz ketchup
tomatoes, which contain concentrated
is found in homes and on restaurant tables from
levels of Lycopene, a
Minneapolis to Moscow to Mumbai.
powerful antioxidant.
With products ranging from Classico® pasta sauces, to
Heinz® Cream of Tomato Soup (the UK’s biggest soup
brand), to supplying custom-made tomato sauces for
restaurants and pizzerias, Heinz continues to market
foods featuring all-natural tomato goodness.

The tomatoes in Heinz’s foods are grown from the

Company’s own hybrid seeds. Heinz has been
breeding hybrid tomatoes since 1936, becoming
a global authority on tomatoes grown for processing.
The Company’s ability to breed for optimum size, color,
flavor, sweetness, thickness, and disease resistance is
a unique competitive advantage.

Heinz uses more than 5

billion pounds of tomatoes
every year in its products.

10 H. J. HEINZ ANNUAL REPORT 2008

11
As the original Pure Food Global 10-Year Sustainability Goals*

Company, Heinz is a Greenhouse Gas (GHG) Emissions ▼ 20%

Energy Use in Manufacturing
g Usage ▼ 20%
trusted leader in nutrition Renewable Energy Renewable Energy Sources ▲ 15%
Packaging
g Total Packaging ▼ 15%
and wellness, dedicated Sustainable Agriculture Carbon Footprint ▼ 15%
▼ 15%
to the sustainable health Water Usage
Field Yield ▲ 5%

of people, the planet, and Water Use in Manufacturing

Transportation
g Water Consumption
Fossil Fuel Consumption
▼ 20%
▼ 10%

our Company. Solid Waste Waste from Heinz Operations ▼ 20%

*Base year for 10-year goals is 2005

Building a For example, with the launch of the new clear plastic
top-down ketchup bottle in Europe, we have reduced total
package weight by about nine percent, or roughly 340 tons
Sustainable Future of plastic per year.

In Fremont, Ohio, Heinz is on track to reduce solid waste

by 10 percent, or 800,000 pounds of recyclable material.
The H. J. Heinz Company in May 2008 announced a series
Meanwhile, in Dundalk, Ireland, the Heinz facility is already
of environmental sustainability goals, highlighted by an
recycling 95 percent of the plastic and 99 percent of the
overarching objective to reduce greenhouse gas emissions
cardboard, wood, and steel it uses.
by 20 percent by the year 2015.
On the energy conservation front, the process heat recovery
To achieve these goals we are executing numerous global
project at our facility in Pocatello, Idaho, is generating 2.3
initiatives to reduce non-value-added packaging, increase
million kWh in annual electric power reduction.
the use of recycled materials, lower energy consumption,
conserve water, and increase our use of renewable energy These initiatives are important to the communities in
sources at some of our largest plants. which we operate and reflect our heritage as a socially
responsible company. They are also critical to building
improved partnerships with our customers, many of whom
are pioneering the sustainability movement.

We have received widespread recognition for our work

to date and look forward to strong progress toward
our goals in Fiscal 2009.

To learn more about our commitment to

sustainability and our other Corporate Social
Responsibility initiatives, visit www.Heinz.com/csr.

Cogeneration in California
A one mega-watt natural gas-fired generator was
recently installed in a Heinz plant in California.
The energy-efficient generator not only produces
electrical power, but the thermal exhaust is used
to heat water for factory processes.

12 H. J. HEINZ ANNUAL REPORT 2008

 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
¥ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2008
or
n 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 of Incorporation) (I.R.S. Employer Identification No.)
One PPG Place 15222
Pittsburgh, Pennsylvania (Zip Code)
(Address of principal executive offices)
412-456-5700
(Registrant’s telephone number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class Name of each exchange on which registered

Common Stock, par value $.25 per share The New York Stock Exchange
Third Cumulative Preferred Stock,
$1.70 First Series, par value $10 per share The New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes ¥ No n
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of
the Act. Yes n No ¥
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 ¥ No n
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¥
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 n Non-accelerated filer n Smaller reporting company n
(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 n No ¥
As of October 31, 2007 the aggregate market value of the Registrant’s voting stock held by non-affiliates of the
Registrant was approximately $14.2 billion.
The number of shares of the Registrant’s Common Stock, par value $.25 per share, outstanding as of May 31,
2008, was 312,559,006 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement for the Annual Meeting of Shareholders to be held on August 13,
2008, which will be filed with the Securities and Exchange Commission within 120 days after the end of the
Registrant’s fiscal year ended April 30, 2008, are incorporated into Part III, Items 10, 11, 12, 13, and 14.

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 PART I

Item 1. Business.
H. J. Heinz Company was incorporated in Pennsylvania on July 27, 1900. In 1905, it succeeded
to the business of a partnership operating under the same name which had developed from a food
business founded in 1869 in Sharpsburg, Pennsylvania by Henry J. Heinz. H. J. Heinz Company and
its subsidiaries (collectively, the “Company”) manufacture and market an extensive line of food
products throughout the world. The Company’s principal products include ketchup, condiments and
sauces, frozen food, soups, beans and pasta meals, infant nutrition and other processed food products.
The Company’s products are manufactured and packaged to provide safe, wholesome foods for
consumers, as well as foodservice and institutional customers. Many products are prepared from
recipes developed in the Company’s research laboratories and experimental kitchens. Ingredients
are carefully selected, inspected and passed on to modern factory kitchens where they are processed,
after which the intermediate product is filled automatically into containers of glass, metal, plastic,
paper or fiberboard, which are then sealed. Products are processed by sterilization, blending,
fermentation, pasteurization, homogenization, chilling, freezing, pickling, drying, freeze drying,
baking or extruding, then labeled and cased for market. Quality assurance procedures are designed
for each product and process and applied to ensure quality and compliance with applicable laws.
The Company manufactures and contracts for the manufacture of its products from a wide
variety of raw foods. Pre-season contracts are made with farmers for a portion of raw materials such
as tomatoes, cucumbers, potatoes, onions and some other fruits and vegetables. Dairy products, meat,
sugar and other sweeteners including high fructose corn syrup, spices, flour and certain other fruits
and vegetables are purchased from approved suppliers.
The following table lists the number of the Company’s principal food processing factories and
major trademarks by region:
Factories
Owned Leased Major Owned and Licensed Trademarks

North America 22 4 Heinz, Classico, Quality Chef Foods, Jack Daniel’s*, Catelli,
Wyler’s, Heinz Bell ’Orto, Bella Rossa, Chef Francisco,
Dianne’s, Ore-Ida, Tater Tots, Bagel Bites, Weight Watchers*
Smart Ones, Boston Market*, Poppers, T.G.I. Friday’s*,
Delimex, Truesoups, Alden Merrell, Escalon, PPI, Todd’s,
Appetizers And, Inc., Nancy’s, Lea & Perrins, Renee’s Gourmet,
HP, Diana, Bravo
Europe 21 — Heinz, Orlando, Karvan Cevitam, Brinta, Roosvicee, Venz,
Weight Watchers*, Farley’s, Farex, Sonnen Bassermann,
Plasmon, Nipiol, Dieterba, Bi-Aglut, Aproten, Pudliszki, Ross,
Honig, De Ruijter, Aunt Bessie*, Mum’s Own, Moya Semya,
Picador, Derevenskoye, Mechta Hoziajki, Lea & Perrins, HP,
Amoy*, Daddies, Squeezme!, Wyko
Asia/Pacific 17 2 Heinz, Tom Piper, Wattie’s, ABC, Chef, Craig’s, Bruno, Winna,
Hellaby, Hamper, Farley’s, Greenseas, Gourmet, Nurture,
LongFong, Ore-Ida, SinSin, Lea & Perrins, HP, Star-Kist,
Classico, Weight Watchers*, Pataks*, Cottee’s*, Rose’s*,
Complan, Glucon D, Nycil
Rest of World 5 3 Heinz, Wellington’s, Today, Mama’s, John West, Farley’s,
Dieterba, HP, Lea & Perrins, Classico, Banquete
65 9 * Used under license

The Company also owns or leases office space, warehouses, distribution centers and research and
other facilities throughout the world. The Company’s food processing factories and principal prop-
erties are in good condition and are satisfactory for the purposes for which they are being utilized.

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 The Company has developed or participated in the development of certain of its equipment,
manufacturing processes and packaging, and maintains patents and has applied for patents for some
of those developments. The Company regards these patents and patent applications as important but
does not consider any one or group of them to be materially important to its business as a whole.
Although crops constituting some of the Company’s raw food ingredients are harvested on a
seasonal basis, most of the Company’s products are produced throughout the year. Seasonal factors
inherent in the business have always influenced the quarterly sales, operating income and cash flows
of the Company. Consequently, comparisons between quarters have always been more meaningful
when made between the same quarters of prior years.
The products of the Company are sold under highly competitive conditions, with many large and
small competitors. The Company regards its principal competition to be other manufacturers of
processed foods, including branded retail products, foodservice products and private label products,
that compete with the Company for consumer preference, distribution, shelf space and merchan-
dising support. Product quality and consumer value are important areas of competition.
The Company’s products are sold through its own sales organizations and through independent
brokers, agents and distributors to chain, wholesale, cooperative and independent grocery accounts,
convenience stores, bakeries, pharmacies, mass merchants, club stores, foodservice distributors and
institutions, including hotels, restaurants, hospitals, health-care facilities, and certain government
agencies. For Fiscal 2008, one customer, Wal-Mart Stores Inc., represented 10.4% of the Company’s
sales. We closely monitor the credit risk associated with our customers and to date have not
experienced material losses.
Compliance with the provisions of national, state and local environmental laws and regulations
has not had a material effect upon the capital expenditures, earnings or competitive position of the
Company. The Company’s estimated capital expenditures for environmental control facilities for the
remainder of Fiscal Year 2009 and the succeeding fiscal year are not material and are not expected to
materially affect either the earnings, cash flows or competitive position of the Company.
The Company’s factories are subject to inspections by various governmental agencies, including
the United States Department of Agriculture, and the Occupational Health and Safety Adminis-
tration, and its products must comply with the applicable laws, including food and drug laws, such as
the Federal Food and Cosmetic Act of 1938, as amended, and the Federal Fair Packaging or Labeling
Act of 1966, as amended, of the jurisdictions in which they are manufactured and marketed.
The Company employed, on a full-time basis as of April 30, 2008, approximately 32,500 people
around the world.
Segment information is set forth in this report on pages 69 through 72 in Note 15, “Segment
Information” in Item 8—“Financial Statements and Supplementary Data.”
Income from international operations is subject to fluctuation in currency values, export and
import restrictions, foreign ownership restrictions, economic controls and other factors. From time to
time, exchange restrictions imposed by various countries have restricted the transfer of funds
between countries and between the Company and its subsidiaries. To date, such exchange restric-
tions have not had a material adverse effect on the Company’s operations.
The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the
Exchange Act are available free of charge on the Company’s website at www.heinz.com, as soon as
reasonably practicable after filed or furnished to the Securities and Exchange Commission (“SEC”).
Our reports filed with the SEC are also made available to read and copy at the SEC’s Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information about the Public
Reference Room by contacting the SEC at 1-800-SEC-0330. Reports filed with the SEC are also made
available on its website at www.sec.gov.

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 Executive Officers of the Registrant
The following is a list of the names and ages of all of the executive officers of H. J. Heinz Company
indicating all positions and offices held by each such person and each such person’s principal occu-
pations or employment during the past five years. All the executive officers have been elected to serve
until the next annual election of officers, until their successors are elected, or until their earlier
resignation or removal. The annual election of officers is scheduled to occur on August 13, 2008.
Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name August 13, 2008) Employment During Past Five Years

William R. Johnson . . . . . . . . . 59 Chairman, President, and Chief Executive Officer

since September 2000.
Theodore N. Bobby . . . . . . . . . 57 Executive Vice President and General Counsel
since January 2007; Senior Vice President and
General Counsel from April 2005 to January
2007; Acting General Counsel from January
2005 to April 2005; Vice President—Legal
Affairs from September 1999 to January 2005.
Edward J. McMenamin . . . . . . 51 Senior Vice President—Finance and Corporate
Controller since August 2004; Vice President
Finance from June 2001 to August 2004.
Michael D. Milone . . . . . . . . . . 51 Senior Vice President-Heinz Pacific, Rest of World
and Enterprise Risk Management since May 2006;
Senior Vice President—President Rest of World
and Asia from May 2005 to May 2006; Senior
Vice President—President Rest of World from
December 2003 to May 2005; Chief Executive
Officer Star-Kist Foods, Inc. from June 2002 to
December 2003.
David C. Moran . . . . . . . . . . . . 50 Executive Vice President & Chief Executive
Officer and President of Heinz North America
since May 2007; Executive Vice President &
Chief Executive Officer and President of Heinz
North America Consumer Products from
November 2005 to May 2007; Senior Vice
President—President Heinz North America
Consumer Products from May 2005 to November
2005; President North America Consumer
Products from January 2003 to May 2005.
C. Scott O’Hara . . . . . . . . . . . . 47 Executive Vice President—President and Chief
Executive Officer Heinz Europe since May 2006;
Executive Vice President—Asia Pacific/Rest of
World from January 2006 to May 2006; Senior
Vice President Europe—The Gillette Company
from October 2004 to January 2006; General
Manager U.K. and NL—The Gillette Company
from June 2001 to October 2004.
D. Edward I. Smyth. . . . . . . . . 58 Senior Vice President—Chief Administrative
Officer and Corporate and Government Affairs
since December 2002

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 Positions and Offices Held with the Company and
Age (as of Principal Occupations or
Name August 13, 2008) Employment During Past Five Years

Christopher J. Warmoth . . . . . 49 Senior Vice President—Heinz Asia since May

2006; Deputy President Heinz Europe from
December 2003 to April 2006; Director Business
Development and Marketing, Central and Eastern
Europe, Eurasia and Middle East Group, The
Coca-Cola Company from December 2001 to
April 2003.
Arthur B. Winkleblack . . . . . . 51 Executive Vice President and Chief Financial
Officer since January 2002.

Item 1A. Risk Factors

In addition to the factors discussed elsewhere in this Report, the following risks and uncer-
tainties could materially and adversely affect the Company’s business, financial condition, and
results of operations. Additional risks and uncertainties that are not presently known to the
Company or are currently deemed by the Company to be immaterial also may impair the Company’s
business operations and financial condition.

Competitive product and pricing pressures in the food industry could adversely affect
the Company’s ability to gain or maintain market share.
The Company operates in the highly competitive food industry across its product lines competing
with other companies that have varying abilities to withstand changing market conditions. Any
significant change in the Company’s relationship with a major customer, including changes in
product prices, sales volume, or contractual terms may impact financial results. Such changes
may result because the Company’s competitors may have substantial financial, marketing, and other
resources that may change the competitive environment. Such competition could cause the Company
to reduce prices and/or increase capital, marketing, and other expenditures, or could result in the loss
of category share. Such changes could have a material adverse impact on the Company’s net income.
As the retail grocery trade continues to consolidate, the larger retail customers of the Company could
seek to use their positions to improve their profitability through lower pricing and increased
promotional programs. If the Company is unable to use its scale, marketing expertise, product
innovation, and category leadership positions to respond to these changes, its profitability and
volume growth could be impacted in a materially adverse way.

The Company’s performance may be adversely affected by economic and political

conditions in the U.S. and in various other nations where it does business.
The Company’s performance has been in the past and may continue in the future to be impacted
by economic and political conditions in the United States and in other nations. Such conditions and
factors include changes in applicable laws and regulations, including changes in food and drug laws,
accounting standards, taxation requirements and environmental laws. Other factors impacting our
operations include export and import restrictions, currency exchange rates, recessionary conditions,
foreign ownership restrictions, nationalization, the performance of businesses in hyperinflationary
environments, and terrorist acts and political unrest in the U.S., Venezuela and other international
locations where the Company does business. Such changes in either domestic or foreign jurisdictions
could materially and adversely affect our financial results.

Increases in the cost and restrictions on the availability of raw materials could
adversely affect our financial results.
The Company sources raw materials including agricultural commodities such as tomatoes,
cucumbers, potatoes, onions, other fruits and vegetables, dairy products, meat, sugar and other
sweeteners, including high fructose corn syrup, spices, and flour, as well as packaging materials such

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 as glass, plastic, metal, paper, fiberboard, and other materials in order to manufacture products. The
availability or cost of such commodities may fluctuate widely due to government policy and regu-
lation, crop failures or shortages due to plant disease or insect and other pest infestation, weather
conditions, increased demand for biofuels, or other unforeseen circumstances. To the extent that any
of the foregoing factors increase the prices of such commodities and the Company is unable to
increase its prices or adequately hedge against such changes in a manner that offsets such changes,
the results of its operations could be materially and adversely affected. Similarly, if supplier
arrangements and relationships result in increased and unforeseen expenses, the Company’s finan-
cial results could be materially and adversely impacted.

Disruption of our supply chain could adversely affect our business.

Damage or disruption to our manufacturing or distribution capabilities due to weather, natural
disaster, fire, terrorism, pandemic, strikes, the financial and/or operational instability of key sup-
pliers, distributors, warehousing and transportation providers, or brokers, or other reasons could
impair our ability to manufacture or sell our products. To the extent the Company is unable to, or
cannot financially mitigate the likelihood or potential impact of such events, or to effectively manage
such events if they occur, particularly when a product is sourced from a single location, there could be
a materially adverse affect on our business and results of operations, and additional resources could
be required to restore our supply chain.

Higher energy costs and other factors affecting the cost of producing, transporting,
and distributing the Company’s products could adversely affect our financial results.
Rising fuel and energy costs may have a significant impact on the cost of operations, including
the manufacture, transportation, and distribution of products. Fuel costs may fluctuate due to a
number of factors outside the control of the Company, including government policy and regulation
and weather conditions. Additionally, the Company may be unable to maintain favorable arrange-
ments with respect to the costs of procuring raw materials, packaging, services, and transporting
products, which could result in increased expenses and negatively affect operations. If the Company
is unable to hedge against such increases or raise the prices of its products to offset the changes, its
results of operations could be materially and adversely affected.

The results of the Company could be adversely impacted as a result of increased

pension, labor, and people-related expenses.
Inflationary pressures and any shortages in the labor market could increase labor costs, which
could have a material adverse effect on the Company’s consolidated operating results or financial
condition. The Company’s labor costs include the cost of providing employee benefits in the U.S. and
foreign jurisdictions, including pension, health and welfare, and severance benefits. Any declines in
market returns could adversely impact the funding of pension plans, the assets of which are invested
in a diversified portfolio of equity and fixed income securities and other investments. Additionally,
the annual costs of benefits vary with increased costs of health care and the outcome of collectively-
bargained wage and benefit agreements.

The impact of various food safety issues, environmental, legal, tax, and other regulations
and related developments could adversely affect the Company’s sales and profitability.
The Company is subject to numerous food safety and other laws and regulations regarding the
manufacturing, marketing, and distribution of food products. These regulations govern matters such
as ingredients, advertising, taxation, relations with distributors and retailers, health and safety
matters, and environmental concerns. The ineffectiveness of the Company’s planning and policies
with respect to these matters, and the need to comply with new or revised laws or regulations with
regard to licensing requirements, trade and pricing practices, environmental permitting, or other
food or safety matters, or new interpretations or enforcement of existing laws and regulations, may
have a material adverse effect on the Company’s sales and profitability. Avian flu or other pandemics
could disrupt production of the Company’s products, reduce demand for certain of the Company’s

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 products, or disrupt the marketplace in the foodservice or retail environment with consequent
material adverse effect on the Company’s results of operations.

The need for and effect of product recalls could have an adverse impact on the
Company’s business.
If any of the Company’s products become misbranded or adulterated, the Company may need to
conduct a product recall. The scope of such a recall could result in significant costs incurred as a result
of the recall, potential destruction of inventory, and lost sales. Should consumption of any product
cause injury, the Company may be liable for monetary damages as a result of a judgment against it. A
significant product recall or product liability case could cause a loss of consumer confidence in the
Company’s food products and could have a material adverse effect on the value of its brands and
results of operations.

The failure of new product or packaging introductions to gain trade and consumer
acceptance and changes in consumer preferences could adversely affect our sales.
The success of the Company is dependent upon anticipating and reacting to changes in consumer
preferences, including health and wellness. There are inherent marketplace risks associated with
new product or packaging introductions, including uncertainties about trade and consumer accep-
tance. Moreover, success is dependent upon the Company’s ability to identify and respond to
consumer trends through innovation. The Company may be required to increase expenditures for
new product development. The Company may not be successful in developing new products or
improving existing products, or its new products may not achieve consumer acceptance, each of
which could materially and negatively impact sales.

The failure to successfully integrate acquisitions and joint ventures into our existing
operations or the failure to gain applicable regulatory approval for such transactions
could adversely affect our financial results.
The Company’s ability to efficiently integrate acquisitions and joint ventures into its existing
operations also affects the financial success of such transactions. The Company may seek to expand
its business through acquisitions and joint ventures, and may divest underperforming or non-core
businesses. The Company’s success depends, in part, upon its ability to identify such acquisition, joint
venture, and divestiture opportunities and to negotiate favorable contractual terms. Activities in
such areas are regulated by numerous antitrust and competition laws in the U. S., the European
Union, and other jurisdictions, and the Company may be required to obtain the approval of acqui-
sition and joint venture transactions by competition authorities, as well as satisfy other legal
requirements. The failure to obtain such approvals could materially and adversely affect our results.

The Company’s operations face significant foreign currency exchange rate exposure,
which could negatively impact its operating results.
The Company holds assets and incurs liabilities, earns revenue, and pays expenses in a variety of
currencies other than the U.S. dollar, primarily the British Pound, Euro, Australian dollar, Canadian
dollar, and New Zealand dollar. The Company’s consolidated financial statements are presented in
U.S. dollars, and therefore the Company must translate its assets, liabilities, revenue, and expenses
into U.S. dollars for external reporting purposes. Increases or decreases in the value of the U.S. dollar
may materially and negatively affect the value of these items in the Company’s consolidated financial
statements, even if their value has not changed in their original currency.

The Company could incur more debt, which could have an adverse impact on our
business.
The Company may incur additional indebtedness in the future to fund acquisitions, repurchase
shares, or fund other activities for general business purposes, which could result in a downward
change in credit rating. The Company’s ability to make payments on and refinance its indebtedness
and fund planned capital expenditures depends upon its ability to generate cash in the future. The

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 cost of incurring additional debt could increase in the event of possible downgrades in the Company’s
credit rating. Additionally, the Company’s ability to pay cash dividends will depend upon its ability to
generate cash and profits, which, to a certain extent, is subject to economic, financial, competitive,
and other factors beyond the Company’s control.

The failure to implement our growth plans could adversely affect the Company’s
ability to increase net income.
The success of the Company could be impacted by its inability to continue to execute on its publicly-
announced growth plans regarding product innovation, implementing cost-cutting measures, improv-
ing supply chain efficiency, enhancing processes and systems, including information technology
systems, on a global basis, and growing market share and volume. The failure to fully implement
the plans could materially and adversely affect the Company’s ability to increase net income.

CAUTIONARY STATEMENT RELEVANT TO FORWARD-LOOKING INFORMATION

Statements about future growth, profitability, costs, expectations, plans, or objectives included
in this report, including the management’s discussion and analysis, 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:
• sales, earnings, and volume growth,
• general economic, political, and industry conditions, including those that could impact con-
sumer spending,
• competitive conditions, which affect, among other things, customer preferences and the
pricing of products, production, and energy costs,
• increases in the cost and restrictions on the availability of raw materials including agricul-
tural 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 relationships,
• currency valuations and interest rate fluctuations,
• changes in credit ratings, leverage, and economic conditions, and the impact of these factors on
our cost of borrowing and access to capital markets,
• the ability to execute our strategy, which includes our continued evaluation of potential
acquisition opportunities, including strategic acquisitions, joint ventures, divestitures and
other initiatives, including our ability to identify, finance and complete these initiatives, and
our ability to realize anticipated benefits from them,
• the ability to successfully complete cost reduction programs and increase productivity,
• the ability to effectively integrate acquired businesses, new product and packaging
innovations,
• product mix,
• the effectiveness of advertising, marketing, and promotional programs,
• supply chain efficiency,
• cash flow initiatives,
• risks inherent in litigation, including tax litigation,

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 • the ability to further penetrate and grow in international markets, economic or political
instability in those markets, particularly in Venezuela, and the performance of business in
hyperinflationary environments,
• 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,
• the ability to implement new information systems and potential disruptions due to failures in
technology systems,
• with regard to dividends, dividends must be declared by the Board of Directors and will be
subject to certain legal requirements being met at the time of declaration, as well as antic-
ipated cash needs, and
• other factors as described in “Risk Factors” above.
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 1B. Unresolved Staff Comments

None.

Item 2. Properties.
See table in Item 1.

Item 3. Legal Proceedings.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

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 PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
Information relating to the Company’s common stock is set forth in this report on page 33 under
the caption “Stock Market Information” in Item 7—“Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” and on pages 72 through 73 in Note 16, “Quarterly
Results” in Item 8—“Financial Statements and Supplementary Data.”
In the fourth quarter of Fiscal 2008, the Company repurchased the following number of shares of
its common stock:
Maximum
Total Total Number of Number of Shares
Number of Average Shares Purchased as that May Yet Be
Shares Price Paid Part of Publicly Purchased Under
Period Purchased per Share Announced Programs the Programs

January 31, 2008 —

February 27, 2008 . . . . . . . . . . . . . — $ — — —
February 28, 2008 —
March 26, 2008 . . . . . . . . . . . . . . . 4,150,000 44.48 — —
March 27, 2008 —
April 30, 2008 . . . . . . . . . . . . . . . . 580,000 47.14 — —
Total . . . . . . . . . . . . . . . . . . . . . . . . . 4,730,000 $44.81 — —

The shares repurchased were acquired under the share repurchase program authorized by the
Board of Directors on May 31, 2006 for a maximum of 25 million shares. All repurchases were made in
open market transactions. As of April 30, 2008, the maximum number of shares that may yet be
purchased under the 2006 program is 10,366,192.

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 Item 6. Selected Financial Data.

The following table presents selected consolidated financial data for the Company and its
subsidiaries for each of the five fiscal years 2004 through 2008. All amounts are in thousands except
per share data.
Fiscal Year Ended
April 30, May 2, May 3, April 27, April 28,
2008 2007 2006 2005 2004
(52 Weeks) (52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks)

Sales(1) . . . . . . . . . . . . . . $10,070,778 $ 9,001,630 $8,643,438 $ 8,103,456 $7,625,831

Interest expense(1) . . . . . 364,856 333,270 316,296 232,088 211,382
Income from continuing
operations(1) . . . . . . . . 844,925 791,602 442,761 688,004 715,451
Income from continuing
operations per
share—diluted(1) . . . . . 2.63 2.38 1.29 1.95 2.02
Income from continuing
operations per
share—basic(1) . . . . . . . 2.67 2.41 1.31 1.97 2.03
Short-term debt and
current portion of long-
term debt(2) . . . . . . . . . 452,708 468,243 54,969 573,269 436,450
Long-term debt, exclusive
of current portion(2) . . . 4,730,946 4,413,641 4,357,013 4,121,984 4,537,980
Total assets(3) . . . . . . . . . 10,565,043 10,033,026 9,737,767 10,577,718 9,877,189
Cash dividends per
common share . . . . . . . 1.52 1.40 1.20 1.14 1.08
(1) Amounts exclude the operating results related to the Company’s European seafood business and
Tegel» poultry businesses in New Zealand which were divested in Fiscal 2006 and have been
presented as discontinued operations.
(2) Long-term debt, exclusive of current portion, includes $198.3 million, $71.0 million, ($1.4) million,
$186.1 million, and $125.3 million of hedge accounting adjustments associated with interest rate
swaps at April 30, 2008, May 2, 2007, May 3, 2006, April 27, 2005, and April 28, 2004, respectively.
Heinz Finance Company’s $325 million of mandatorily redeemable preferred shares are classified
as long-term debt as a result of the adoption of Statement of Financial Accounting Standards
(“SFAS”) No. 150.
(3) Fiscals 2008 and 2007 reflect the adoption of SFAS No. 158, “Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans- an amendment of FASB Statements No. 87, 88,
106 and 132(R).” See Note 2, “Recently Issued Accounting Standards” in Item 8- “Financial
Statements and Supplementary Data.”

As a result of the Company’s strategic transformation, the Fiscal 2006 results from continuing
operations include expenses of $124.7 million pretax ($80.3 million after tax) for targeted workforce
reductions consistent with the Company’s goals to streamline its businesses and expenses of
$22.0 million pretax ($16.3 million after tax) for strategic review costs related to the potential
divestiture of several businesses. Also, $206.5 million pretax ($153.9 million after tax) was recorded
for net losses on non-core businesses and product lines which were sold and asset impairment
charges on non-core businesses and product lines which were sold in Fiscal 2007. Also during 2006,
the Company reversed valuation allowances of $27.3 million primarily related to The Hain Celestial
Group, Inc. (“Hain”). In addition, results include $24.4 million of tax expense relating to the impact of
the American Jobs Creation Act. For more details regarding these items, see pages 47 to 48 in Note 4,
“Fiscal 2006 Transformation Costs” in Item 8—“Financial Statements and Supplementary Data.”

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 Fiscal 2005 results from continuing operations include a $64.5 million non-cash impairment
charge for the Company’s equity investment in Hain and a $9.3 million non-cash charge to recognize
the impairment of a cost-basis investment in a grocery industry sponsored e-commerce business
venture. There was no tax benefit recorded with these impairment charges in Fiscal 2005. Fiscal 2005
also includes a $27.0 million pre-tax ($18.0 million after-tax) non-cash asset impairment charge
related to the anticipated disposition of the HAK vegetable product line in Northern Europe which
occurred in Fiscal 2006.
Fiscal 2004 results from continuing operations include a gain of $26.3 million ($13.3 million
after-tax) related to the disposal of a bakery business in Northern Europe, costs of $16.6 million
pretax ($10.6 million after-tax), primarily due to employee termination and severance costs related to
on-going efforts to reduce overhead costs, and $4.0 million pretax ($2.8 million after-tax) due to the
write down of pizza crust assets in the United Kingdom.

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 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Executive Overview- Fiscal 2008
The H.J. Heinz Company has been a pioneer in the food industry for 139 years and possesses one
of the world’s best and most recognizable brands—Heinz». In the first half of this decade, the
Company was reshaped around three core categories, Ketchup, Condiments and Sauces, Meals and
Snacks and Infant/Nutrition. Beginning with the spin-off of non-core U.S. businesses in December
2002 and ending in Fiscal 2006 with the sales of our non-core European Seafood and New Zealand
Poultry businesses, we divested over $3 billion of non-core sales from businesses where we lacked
scale and competitive advantage. During this same time period, we acquired almost $1.5 billion of
new revenue in core categories and faster-growing emerging markets. Consequently, our core
categories now generate almost 96% of our sales and each is showing strong growth. Additionally,
our top 15 brands, each of which exceeds $100 million in annual sales, drive approximately 70% of our
sales. The Heinz» brand generates almost $4 billion of annual sales and has extraordinary reach
across all of our categories and most of our markets. Our focus on three core categories, our top
15 brands and emerging markets has enhanced our growth trajectory and enabled us to achieve
improved productivity.

Performance under the Fiscal 2007-2008 Superior Value and Growth Plan
Unless specifically noted, all amounts in this section represent figures over the two-year time
frame of the Plan (Fiscal 2007-2008). Also, all growth rates represent compounded annual growth
rates (“CAGR”) over this same two-year period, using Fiscal 2006 continuing operations, excluding
special items as the base (see table in “Fiscal 2006 Transformation Costs” which reconciles Fiscal 2006
reported amounts to amounts excluding special items).
On June 1, 2006, the Company presented its Superior Value and Growth Plan for fiscal years
2007 and 2008. Under this Plan, the Company set forth three key operational imperatives: grow the
core portfolio, reduce costs to drive margins and generate cash to deliver superior value. Under each
of these imperatives, the Company established financial and operational targets aimed at increasing
shareholder value. The Company has met or exceeded virtually all of the targets established in the
two year Plan and believes that it is well positioned for continued growth in Fiscals 2009 and 2010.
For the two years ending with Fiscal 2008:
• Net sales grew at a CAGR of 8%, to over $10 billion for the first time in the Company’s history,
driven primarily by strong volume and net pricing as well as favorable foreign exchange.
• Operating income grew at a CAGR of 8%, as strong top-line growth and productivity more than
offset higher commodity costs and incremental marketing investments, which grew at a
CAGR of 19%.
• Operating free cash flow in Fiscal 2008 (cash flow from operations of $1,188 million less capital
expenditures of $302 million plus proceeds from disposals of PP&E of $9 million) grew to
$895 million and was nearly $1.8 billion over the two-year Plan period.
• EPS grew to $2.63, an average annual increase of 12%.
The following is a detailed analysis of the Company’s overall performance against the three
imperatives under our Superior Value and Growth Plan.

Grow the Core Portfolio

This imperative focused on a strategy to grow our largest brands in our three core categories.
This strategy established targets for average annual increased marketing spending of 17% and
double digit increases in research and development investment (“R&D”). This strategy also focused
on expansion in various emerging markets, where growth potential was viewed as high. During

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 Fiscal 2008 and over the entire two-year Plan period, we delivered excellent results relative to this
imperative as evidenced by the following:
• Our top 15 brands, which generate nearly 70% of total sales, grew at a CAGR of 12%, driven by
strong volume and net price increases as well as favorable impacts from foreign exchange.
• Over the two-year Plan period, we launched a number of new products, which accounted for
approximately 11% of sales and was supported by a 19% average annual increase in
marketing.
• R&D increased at a CAGR of 18% as we increased capabilities in the areas of innovation and
consumer insight.
• Innovation in our emerging markets (Russia, Poland, the Czech Republic, Indonesia, China,
India, South Africa, the Middle East and Latin America) drove strong growth, with an average
annual sales increase of 19%, which accounted for 26% of the Company’s total sales growth
over the two-year period. These markets accounted for approximately 13% of total Company
sales in Fiscal 2008.

Reduce Costs to Drive Margins

The Company’s investment in growth behind the core portfolio has been fueled by the second
pillar of our two-year Plan, Reducing Costs to Drive Margins. Key targets set under this imperative
included productivity improvements on deals and allowances (“D&A”), cost of goods sold and selling,
general and administrative expenses (“SG&A”). The following summarizes our results relative to this
imperative:
• D&A as a percentage of gross sales was reduced by 170 basis points, 30 basis point ahead of our
original target.
• Total gross profit dollars exceeded target expectations by $200 million, or almost 6%, although
gross margin was 200 basis points below target due to higher than expected commodity
inflation. As a result of new product introductions, volume growth, pricing, productivity and
foreign exchange, the Company has successfully offset commodity costs and achieved strong
gross profit growth.
• The Company divested or closed 20 plants around the globe, 4 of which were during Fiscal
2008.
• SG&A, excluding marketing, was 17.2% as a percentage of sales in Fiscal 2008, 30 basis points
better than target. As a result of productivity gains in SG&A and despite a 19% average
annual increase in consumer marketing, we delivered consistent operating income growth at a
CAGR of 8%.

Generate Cash to Deliver Superior Value

The Company’s growth, cost savings and working capital productivity drove operating free cash
flow of almost $1.8 billion, which averaged 9% of revenue and 109% of net income over the two years.
This was $123 million, or 7% ahead of the target. A key driver in achieving our strong cash flow
results was the significant reduction in our Cash Conversion Cycle (“CCC”) of 7 days, which is a 12%
reduction when comparing Fiscal 2006 to 2008.
Much of this increased cash flow has been returned directly to shareholders, as evidenced by the
following:
• Increase in the Company’s dividend by 32 cents, or a CAGR of 12.5%, to $1.52. This increase
was to maintain our target payout ratio of approximately 60%.

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 • Decrease in average shares outstanding by 6% when comparing Fiscal 2006 to 2008, resulting
from net share repurchases of $1 billion.
• Combining dividends and share repurchases over the last two years, the Company has
returned more than $2 billion to shareholders.

High-Performance Growth Plan for Fiscal 2009-2010

The following are the major targets the Company has set under its new High-Performance
Growth Plan for Fiscals 2009-2010:
• For Fiscal 2009 and Fiscal 2010, the Company expects combined sales volume and net price
growth of 6%+ annually and EPS growth of 8% to 11% per year.
• Emerging market revenues are targeted to grow in the high teens over the next two years.
• The Plan calls for 6% to 7% annual growth in operating income, while increasing the
investment in marketing by $60 million to $100 million over the two-year period. Pricing
and productivity gains are expected to help offset the 8 to 9% inflation expected in commodities
to maintain the current gross profit and operating income margins realized in Fiscal 2008.
• Annualized dividend raised to $1.66 per share, an increase of 9.2%, for Fiscal 2009 and the
Company anticipates a dividend payout ratio of around 60% for Fiscal 2010.
• The Company expects operating free cash flow of approximately $1.7 billion over the two-year
period, driven by a 2 to 3 day reduction per year in CCC.

Results of Continuing Operations

The Company’s revenues are generated via the sale of products in the following categories:
Fiscal Year Ended
April 30, May 2, May 3,
2008 2007 2006
(52 Weeks) (52 Weeks) (53 Weeks)
(Dollars in thousands)
Ketchup and sauces . .. .. .. . .. .. .. .. .. .. .. $ 4,081,864 $3,682,102 $3,530,346
Meals and snacks . . . .. .. .. . .. .. .. .. .. .. .. 4,521,697 4,026,168 3,876,743
Infant/Nutrition . . . . .. .. .. . .. .. .. .. .. .. .. 1,089,544 929,075 863,943
Other . . . . . . . . . . . . .. .. .. . .. .. .. .. .. .. .. 377,673 364,285 372,406
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,070,778 $9,001,630 $8,643,438

Fiscal Year Ended April 30, 2008 compared to Fiscal Year Ended May 2, 2007
Sales for Fiscal 2008 increased $1.07 billion, or 11.9%, to $10.07 billion, reflecting growth in all
five business segments. Volume increased 3.6%, as continued solid growth in the North American
Consumer Products segment, Australia, New Zealand and the emerging markets were combined
with strong performance of beans, soup and pasta meals in the U.K. and Heinz» ketchup across
Europe. The emerging markets produced a 9.1% volume increase and accounted for over 24% of the
Company’s total sales growth for the year. These volume increases were partially offset by declines in
U.S. Foodservice. Net pricing increased sales by 3.3%, mainly in the North American Consumer
Products, European and U.S. Foodservice segments and our businesses in Latin America and
Indonesia. Divestitures, net of acquisitions, decreased sales by 0.2%. Foreign exchange translation
rates increased sales by 5.1%.
Sales of the Company’s top 15 brands grew 13.4% from prior year, led by strong increases in
Heinz», Smart Ones», Classico», Boston Market», Pudliszki», Weight Watchers» and ABC». These

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 increases are a result of the Company’s strategy of focused innovation and marketing support behind
these top brands.

Gross profit increased $288 million, or 8.5%, to $3.68 billion, benefiting from favorable volume,
pricing and foreign exchange translation rates. The gross profit margin decreased to 36.5% from
37.7%, as pricing and productivity improvements were more than offset by increased commodity
costs. The most significant commodity cost increases were for dairy, oils and grains.

SG&A increased $166 million, or 8.5%, to $2.11 billion. As a percentage of sales, SG&A decreased
to 21.0% from 21.6%. The increase in SG&A is due to a 14.9% increase in marketing expense, a 16.9%
increase in R&D and higher selling and distribution costs (“S&D”) resulting from increased volume,
higher fuel costs and foreign exchange translation rates. Additional investments were also made in
the current year for global task force initiatives, streamlining and system capability improvements.
These increases were partially offset by the benefits of effective cost control and prior year workforce
reductions and costs related to the proxy contest.

Total marketing support (recorded as a reduction of revenue or as a component of SG&A)

increased $177 million, or 8.1%, to $2.36 billion on a gross sales increase of 11.0%. Marketing support
recorded as a reduction of revenue, typically D&A, increased $127 million, or 6.9%, to $1.98 billion,
but decreased as a percentage of gross sales to 16.4% from 17.1%, in line with the Company’s strategy
to reduce spending on less efficient promotions and realignment of some list prices. Marketing
support recorded as a component of SG&A increased $50 million, or 14.9%, to $383 million, as we
increased consumer marketing across the Company’s businesses supporting innovation and our top
brands.

Operating income increased $122 million, or 8.5%, to $1.57 billion, reflecting the strong sales
growth, productivity improvements and favorable impacts from foreign exchange, partially offset by
increased commodity costs.

Net interest expense increased $32 million, to $323 million, largely as a result of higher debt in
Fiscal 2008 related to share repurchase activity. Other expenses, net, decreased $3 million to
$28 million, primarily due to an insignificant gain recognized on the sale of our business in
Zimbabwe.

The current year effective tax rate was 30.6% compared to 29.6% for the prior year. The current
year’s tax rate was higher than the prior year’s primarily due to benefits recognized in Fiscal 2007 for
reversal of a foreign tax reserve, tax planning completed in a foreign jurisdiction, and R&D tax
credits. Those prior year benefits were partially offset by lower repatriation costs and increased
benefits from tax audit settlements occurring during Fiscal 2008, along with changes in valuation
allowances for foreign losses.

Income from continuing operations was $845 million compared to $792 million in the prior year,
an increase of 6.7%, due to the increase in operating income, which was partially offset by higher net
interest expense and a higher effective tax rate. Diluted earnings per share from continuing
operations were $2.63 in the current year compared to $2.38 in the prior year, up 10.5%, which
also benefited from a 3.2% reduction in fully diluted shares outstanding.

FISCAL YEAR 2008 OPERATING RESULTS BY BUSINESS SEGMENT

During the first quarter of Fiscal 2008, the Company changed its segment reporting to reclassify
its business in India from the Rest of World segment to the Asia/Pacific segment, reflecting orga-
nizational changes. Prior periods have been conformed to the current presentation. (See Note 15,
“Segments” in Item 8—“Financial Statements and Supplementary Data” for further discussion of the
Company’s reportable segments).

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 North American Consumer Products
Sales of the North American Consumer Products segment increased $272 million, or 9.9%, to
$3.01 billion. Volume increased 3.5%, due primarily to Smart Ones» frozen entrees and desserts,
Boston Market» frozen entrees and Classico» pasta sauces. The Smart Ones» volume improvement
was driven by successful new product introductions like Anytime SelectionsTM, Fruit InspirationsTM
and various dessert items, as well as the impact of the launch of Smart Ones» products into Canada.
The Boston Market» improvements were mainly driven by new products and increased consumption,
and the success of Classico» was primarily due to new products as well as increased promotions in
Canada. These volume improvements were partially offset by a decline in Ore-Ida» frozen potatoes
reflecting the timing of price increases taken during both the fourth quarter of last year and the third
quarter of this year. The Ore-Ida» frozen potatoes price increases, along with other commodity cost
related price increases, resulted in overall price gains of 3.5%. The prior year acquisition of Renee’s
Gourmet Foods in Canada increased sales 0.7% and favorable Canadian exchange translation rates
increased sales 2.2%.
Gross profit increased $85 million, or 7.5%, to $1.22 billion, due primarily to the sales increase
along with favorable foreign exchange translation rates. The gross profit margin decreased to 40.5%
from 41.4%, as increased pricing, favorable mix and productivity improvements only partially offset
increased commodity costs. Operating income increased $53 million, or 8.4%, to $678 million, due to
the strong increase in sales, partially offset by higher commodity costs and increased S&D due to
higher volume and fuel costs.

Europe
Heinz Europe sales increased $456 million, or 14.8%, to $3.53 billion, driven by new product
innovation and more focus on the key brands in the portfolio. Volume increased 4.5%, principally due
to strong performance of Heinz» ketchup across Europe, soup, beans and pasta meals in the U.K.,
Pudliszki» branded products in Poland, and Heinz» sauces and condiments in Russia. Volume also
benefited from new product introductions across continental Europe, such as Weight Watchers» Big
Soups in Germany, Austria and Switzerland. Net pricing increased sales 3.3%, resulting chiefly from
commodity-related price increases on Heinz» ketchup and soup, the majority of the products in our
Russian market and Italian infant nutrition products. Pricing was also favorable due to promotional
timing on Heinz» beans. Divestitures, net of acquisitions, reduced sales 1.4% and favorable foreign
exchange translation rates increased sales by 8.5%.
Gross profit increased $135 million, or 10.9%, to $1.37 billion, and the gross profit margin
decreased to 38.8% from 40.2%. The 10.9% increase reflects improved pricing and volume and the
favorable impact of foreign exchange translation rates, while the decline in gross profit margin is
largely due to increased commodity costs and higher manufacturing costs in our U.K., European frozen
and Netherlands businesses. Operating income increased $71 million, or 12.4%, to $637 million, due to
higher sales and reductions in general and administrative expenses (“G&A”), partially offset by higher
commodity costs and increased marketing spending in support of our strong brands across Europe.

Asia/Pacific
Heinz Asia/Pacific sales increased $281 million, or 21.3%, to $1.60 billion. Volume increased
6.5%, reflecting significant improvements across the majority of the businesses within this segment,
particularly Australia, India and China, related primarily to new product introductions supported by
a 34.7% increase in marketing. Pricing increased 2.8%, due to increases on soy sauce and beverages
in Indonesia, LongFong» frozen products in China and nutritional products in India. Acquisitions,
net of divestitures, increased sales 1.6%, and favorable foreign exchange translation rates increased
sales by 10.4%.
Gross profit increased $101 million, or 23.9%, to $526 million, and the gross profit margin
increased to 32.9% from 32.2%. These increases were due to increased volume, pricing, favorable mix

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 and foreign exchange translation rates, which more than offset increased commodity costs. Oper-
ating income increased by $45 million, or 29.8%, to $195 million, primarily reflecting the increase in
sales and gross margin, partially offset by increased marketing spending and increased S&D due to
higher volume.

U.S. Foodservice
Sales of the U.S. Foodservice segment increased $3 million, or 0.2%, to $1.56 billion. Pricing
increased sales 1.7%, largely due to commodity-related price increases and reduced promotional
spending on Heinz» ketchup, frozen soup and tomato products, partially offset by declines in frozen
desserts. Volume decreased by 1.1%, as higher volume from frozen desserts sold to casual dining
customers was more than offset by declines in the portion control business, tomato products and
frozen appetizers. The volume reflected softness in the U.S. restaurant business as well as increased
competition on our non-branded products. Divestitures reduced sales 0.4%.
Gross profit decreased $47 million, or 10.0%, to $419 million, and the gross profit margin
decreased to 26.8% from 29.9%, as commodity costs continue to disproportionately impact the
foodservice business, despite gains on commodity derivative contracts. The declines also reflect
costs incurred in the current year in anticipation of a plant closure in the first quarter of Fiscal 2009,
partially offset by increased pricing and productivity. Operating income decreased $47 million, or
21.5%, to $170 million, all of which is due to the decline in gross profit. The Company is simplifying its
U.S. Foodservice business, while increasing the level of innovation in its foodservice brands, and
expects more profitable growth in this segment as macroeconomic conditions improve.

Rest of World
Sales for Rest of World increased $58 million, or 18.7%, to $368 million. Volume increased 6.3%
due primarily to increased demand for the Company’s products in Latin America as well as strong
performance across our Middle East business. Higher pricing increased sales by 13.6%, largely due to
price increases and reduced promotions in Latin America as well as commodity-related price
increases in South Africa. Divestitures reduced growth 1.7% and favorable foreign exchange trans-
lation rates increased sales 0.6%.
Gross profit increased $22 million, or 19.9%, to $133 million, due mainly to increased pricing,
higher volume and improved business mix, partially offset by increased commodity costs. Operating
income increased $6 million, or 15.1%, to $45 million.

Fiscal Year Ended May 2, 2007 compared to Fiscal Year Ended May 3, 2006
Sales for Fiscal 2007 increased $358 million, or 4.1%, to $9.00 billion. Sales were favorably
impacted by a volume increase of 0.7%, despite one less selling week in Fiscal 2007 compared with
Fiscal 2006. Volume growth was led by North American Consumer Products, Australia, New Zealand
and Germany, and the emerging markets of India, China and Poland. These increases were partially
offset by declines in the U.K. and Russian businesses. Pricing increased sales by 2.1%, mainly due to
our businesses in North America, the U.K, Indonesia and Latin America. Divestitures, net of
acquisitions, decreased sales by 1.6%. Foreign exchange translation rates increased sales by 2.9%.
Gross profit increased $300 million, or 9.7%, to $3.39 billion, and the gross profit margin
increased to 37.7% from 35.8%. These improvements reflect higher volume, increased pricing,
productivity improvements and favorable foreign exchange translation rates, partially offset by
commodity cost increases. Also contributing to the favorable comparison are the $92 million of Fiscal
2006 strategic transformation costs discussed below.
SG&A decreased $33 million, or 1.7%, to $1.95 billion and decreased as a percentage of sales to
21.6% from 22.9%. These decreases are primarily due to the favorable impact of the Fiscal 2006
targeted workforce reductions, particularly in Europe and Asia, and the $145 million of Fiscal 2006

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 strategic transformation costs discussed below. These declines were partially offset by increased
marketing and R&D expenses, costs related to the proxy contest affecting the Company’s 2006
election of directors, and higher incentive compensation costs, including the expensing of stock
options (SFAS No. 123R). S&D was higher as a result of the volume increase; however, as a
percentage of sales, S&D declined.
Total marketing support (recorded as a reduction of revenue or as a component of SG&A)
increased $4 million, or 0.2%, to $2.18 billion on a gross sales increase of 2.8%. Marketing support
recorded as a reduction of revenue, typically D&A, decreased $60 million, or 3.1%, to $1.85 billion.
This decrease is largely due to spending reductions on less efficient promotions and a realignment of
list prices, partially offset by the impact of foreign exchange translation rates. Marketing support
recorded as a component of SG&A increased $64 million, or 23.8%, to $334 million, consistent with
the Company’s continued strategy to invest behind its key brands.
Operating income increased $333 million, or 29.9%, to $1.45 billion, which was favorably
impacted by increased volume, the higher gross profit margin and the $236 million of Fiscal 2006
strategic transformation costs discussed below.
Net interest expense increased $8 million, to $291 million, due primarily to higher average
interest rates and higher average debt in Fiscal 2007. Fiscal 2006 income from continuing operations
was unfavorably impacted by the $111 million write down of the Company’s net investment in
Zimbabwe. Other expenses, net, increased $5 million, to $31 million, largely due to increased
currency losses and minority interest expense, the later of which is a result of improved business
performance in our joint ventures, partially offset by the $7 million loss on the sale of the Company’s
equity investment in The Hain Celestial Group, Inc. (“Hain”) in Fiscal 2006.
The Fiscal 2007 effective tax rate was 29.6% compared to 36.2% in Fiscal 2006. During the first
quarter of Fiscal 2007, a foreign subsidiary of the Company revalued certain of its assets, under local
law, increasing the local tax basis by approximately $245 million. This revaluation reduced Fiscal
2007 tax expense by approximately $35 million. During the third quarter of Fiscal 2007, final
conditions necessary to reverse a foreign tax reserve related to a prior year transaction were
achieved. As a result, the Company realized a non-cash tax benefit of $64 million. At the same
time, the Company modified its plans for repatriation of foreign earnings, ultimately incurring an
additional charge of $90 million. Full year Fiscal 2007 repatriation costs were $108 million, exceeding
Fiscal 2006’s repatriation costs by approximately $78 million. In addition, Fiscal 2007 tax expense
benefited from the reductions in foreign statutory tax rates and initiatives associated with R&D tax
credits. The Fiscal 2006 tax expense benefited from the reversal of a tax provision of $23 million
related to a foreign affiliate along with an additional benefit of $16 million resulting from tax
planning initiatives related to foreign tax credits, which was partially offset by the non-deductibility
of certain asset write-offs.
Income from continuing operations was $792 million compared to $443 million in Fiscal 2006, an
increase of 78.8%, primarily due to the increase in operating income and a lower effective tax rate,
partially offset by higher net interest expense. Diluted earnings per share from continuing opera-
tions was $2.38 in Fiscal 2007 compared to $1.29 in Fiscal 2006, an increase of 84.5%, which also
benefited from a 2.8% reduction in fully diluted shares outstanding.

FISCAL YEAR 2007 OPERATING RESULTS BY BUSINESS SEGMENT

North American Consumer Products

Sales of the North American Consumer Products segment increased $185 million, or 7.3%, to
$2.74 billion. Volume increased 2.6%, largely resulting from strong growth in Smart Ones» and
Boston Market» frozen entrees and desserts, Classico» pasta sauces and Ore-Ida» frozen potatoes.
The increases reflect new distribution, increased consumption driven by new product launches and

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 increased marketing support. These increases were partially offset by the expected volume decline in
Heinz» ketchup, reflecting a reduction in promotion expense as part of the strategy to increase
consumption of more profitable larger sizes. Pricing increased 2.1% largely due to Heinz» ketchup,
Ore-Ida» frozen potatoes, Smart Ones» frozen entrees and Bagel Bites» and TGI Friday’s» frozen
snacks, all resulting primarily from reduced inefficient promotions. Acquisitions increased sales
1.9%, primarily from the Fiscal 2006 acquisitions of Nancy’s Specialty Foods and HP Foods as well as
the Fiscal 2007 acquisition of Renée’s Gourmet Foods. Favorable Canadian exchange translation
rates increased sales 0.7%.
Gross profit increased $86 million, or 8.2%, to $1.14 billion, and the gross profit margin increased
to 41.4% from 41.1%. These improvements were due primarily to increased volume, higher pricing
and the favorable impact of acquisitions, partially offset by increased commodity costs. Operating
income increased $42 million, or 7.3%, to $626 million, mainly due to the improvement in gross profit
and $7 million of Fiscal 2006 transformation costs discussed below. This increase was partially offset
by a $32 million or 40.4% increase in consumer marketing, primarily for Heinz» ketchup, Smart
Ones» frozen entrees, Ore-Ida» frozen potatoes and frozen snacks, and increased R&D costs. In
addition, operating income benefited from reduced S&D as a percentage of sales due to reduced
transportation costs resulting from distribution efficiencies.

Europe
Heinz Europe’s sales increased $89 million, or 3.0%, to $3.08 billion. Pricing increased 1.7%,
driven primarily by value-added innovation and reduced promotions on Heinz» soup and pasta meals
in the U.K and in the Italian infant nutrition business. Volume declined 2.4% as improvements in
Heinz» ketchup, Heinz» beans, Weight Watchers» branded products and Pudliszki» ketchup and
ready meals in Poland were more than offset by market softness in non-Heinz» branded products in
Russia and the non-branded European frozen business and declines in U.K. ready-to-serve soups and
pasta convenience meals. Volume was also unfavorably impacted by one less week in the 2007 fiscal
year compared to the 2006 fiscal year. The acquisition of HP Foods and Petrosoyuz in Fiscal 2006
increased sales 1.9%, while divestitures reduced sales 5.6%. Favorable foreign exchange translation
rates increased sales by 7.3%.
Gross profit increased $112 million, or 10.0%, to $1.24 billion, and the gross profit margin
increased to 40.2% from 37.6%. These improvements are due to higher pricing, favorable impact of
foreign exchange translation rates and $36 million of Fiscal 2006 transformation costs discussed
below. These improvements were partially offset by reduced volume and increased commodity and
manufacturing costs. Operating income increased $152 million, or 36.7%, to $566 million, due to the
increase in gross profit, the $112 million of Fiscal 2006 transformation costs discussed below, and
reduced G&A, partially offset by increased marketing expense. The decrease in G&A is driven by the
workforce reductions, including the elimination of European headquarters.

Asia/Pacific
Sales in Asia/Pacific increased $98 million, or 8.0%, to $1.32 billion. Volume increased sales 4.6%,
reflecting strong volume in Australia, New Zealand and China, largely due to increased marketing
and new product introductions, as well as market and share growth in nutritional drinks in India.
Higher pricing increased sales 2.3%, mainly due to commodity-related price increases taken on
Indonesian sauces and drinks. Divestitures reduced sales 0.3%, and foreign exchange translation
rates increased sales by 1.5%.
Gross profit increased $50 million, or 13.4%, to $425 million, and the gross profit margin
increased to 32.2% from 30.7%. These improvements were due to volume increases and higher
pricing, partially offset by increased commodity costs, most notably in Indonesia. Fiscal 2006 also
included a $19 million asset impairment charge on an Indonesian noodle business. Operating income
increased $49 million, to $150 million, largely reflecting the increase in gross profit and reduced

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 G&A, partially offset by increased marketing. The reduction in G&A is a result of effective cost
control in our Chinese businesses, targeted workforce reductions, including the elimination of Asian
headquarters in Fiscal 2006, and $10 million of reorganization costs in Fiscal 2006 related to the
workforce reductions discussed below.

U.S. Foodservice
Sales of the U.S. Foodservice segment decreased $14 million, or 0.9%, to $1.56 billion, primarily
due to the impact of divestitures. Divestitures, net of acquisitions, reduced sales 2.1%. Pricing
increased 1.7%, largely due to Heinz» ketchup and tomato products, single serve condiments and
frozen desserts. Volume decreased 0.4%, as higher volume in Heinz» ketchup was offset by declines
resulting primarily from one less week in Fiscal 2007 and a decision to exit certain low margin
accounts.
Gross profit increased $29 million, or 6.6%, to $465 million, and the gross profit margin increased
to 29.9% from 27.8%, due to $8 million of Fiscal 2006 reorganization costs discussed below and a
$22 million impairment charge in Fiscal 2006 related to the sale of the Portion Pac Bulk product line.
In addition, increased pricing was offset by higher commodity costs. Operating income increased
$39 million, or 21.9%, to $216 million, largely due to the increase in gross profit and reduced S&D
expense as a percentage of sales resulting from productivity initiatives.

Rest of World
Sales for Rest of World decreased $0.9 million, or 0.3%, to $310 million. Volume increased 5.0%
due primarily to ketchup and baby food in Latin America and our business in South Africa. Higher
pricing increased sales by 8.9%, largely due to reduced promotions on ketchup and price increases
taken on baby food in Latin America. Divestitures reduced sales 11.8% and foreign exchange
translation rates reduced sales 2.3%.
Gross profit increased $17 million, or 18.4%, to $111 million, as increased volume and higher
pricing were partially offset by higher commodity costs and the impact of divestitures. Fiscal 2006
also included $8 million of asset impairment charges discussed below. Operating income increased
$38 million, to $39 million, due primarily to the increase in gross profit and the $30 million of Fiscal
2006 transformation costs primarily related to divestitures.
As a result of general economic uncertainty, coupled with restrictions on the repatriation of
earnings, as of the end of November 2002 the Company deconsolidated its Zimbabwean operations
and classified its remaining net investment of approximately $111 million as a cost investment. In
the fourth quarter of Fiscal 2006, the Company wrote off its net investment in Zimbabwe. The
decision to write off the Zimbabwe investment related to management’s determination that this
investment was not a core business. Management’s determination was based on an evaluation of
political and economic conditions existing in Zimbabwe and the ability for the Company to recover its
cost in this investment. This evaluation considered the continued economic turmoil, further insta-
bility in the local currency and the uncertainty regarding the ability to source raw material in the
future.

Discontinued Operations
During fiscal years 2003 through 2006, the Company focused on exiting non-strategic business
operations. Certain of these businesses which were sold were accounted for as discontinued
operations.
In the fourth quarter of Fiscal 2006, the Company completed the sale of the European Seafood
business, which included the brands of John West», Petit Navire», Marie Elisabeth» and Mareblu».
The Company received net proceeds of $469 million for this disposal and recognized a $200 million
pretax ($123 million after tax) gain which has been recorded in discontinued operations. Also in the

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 fourth quarter of Fiscal 2006, the Company completed the sale of the Tegel» Poultry business in New
Zealand and received net proceeds of $150 million, and recognized a $10 million non-taxable gain,
which is also recorded in discontinued operations.

In accordance with accounting principles generally accepted in the United States of America, the
operating results related to these businesses have been included in discontinued operations in the
Company’s consolidated statements of income. The Company recorded a loss of $3 million ($6 million
after-tax) from these businesses for the year ended May 2, 2007, primarily resulting from purchase
price adjustments pursuant to the transaction agreements. These discontinued operations generated
sales of $688 million (partial year) and net income of $169 million (net of $90 million in tax expense)
for the year ended May 3, 2006.

In addition, net income from discontinued operations includes amounts related to the favorable
settlement of tax liabilities associated with the businesses spun-off to Del Monte in Fiscal 2003. Such
amounts totaled $34 million for the year ended May 3, 2006.

Fiscal 2006 Transformation Costs

In executing its strategic transformation during Fiscal 2006, the Company incurred the follow-
ing associated costs. These costs were directly linked to the Company’s transformation strategy.

Reorganization Costs

In Fiscal 2006, the Company recorded pretax integration and reorganization charges for tar-
geted workforce reductions consistent with the Company’s goals to streamline its businesses totaling
$125 million ($80 million after tax). Approximately 1,000 positions were eliminated as a result of this
program, primarily in the G&A area. Additionally, pretax costs of $22 million ($16 million after tax)
were incurred in Fiscal 2006, primarily as a result of the strategic reviews related to the portfolio
realignment.

The total impact of these initiatives on continuing operations in Fiscal 2006 was $147 million
pre-tax ($97 million after-tax), of which $17 million was recorded as costs of products sold and
$129 million in SG&A. In addition, $11 million was recorded in discontinued operations, net of tax.
The amount included in accrued expenses related to these initiatives totaled $52 million at May 3,
2006, all of which was paid during Fiscal 2007.

Other Divestitures/Impairment Charges

The following (losses)/gains or non-cash asset impairment charges were recorded in continuing
operations during Fiscal 2006:
Business or Product Line Segment Pre-Tax After-Tax
(In millions)
Loss on sale of Seafood business in Israel. . . . . . . . . . . . . . . Rest of World $ (16) $ (16)
Impairment charge on Portion Pac Bulk product line . . . . . U.S. Foodservice (22) (13)
Impairment charge on U.K. Frozen and Chilled product
lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Europe (15) (15)
Impairment charge on European production assets . . . . . . . Europe (19) (19)
Impairment charge on Noodle product line in Indonesia . . . Asia/Pacific (16) (9)
Impairment charge on investment in Zimbabwe business . . Rest of World (111) (106)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Various (2) 1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(200) $(177)

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 Of the above pre-tax amounts, $74 million was recorded in cost of products sold, $16 million in
SG&A, $111 million in asset impairment charges for cost and equity investments, and $(1) million in
other expense.

Also during the third quarter of Fiscal 2006, the Company sold its equity investment in Hain and
recognized a $7 million ($5 million after-tax) loss which is recorded within other expense, net. Net
proceeds from the sale of this investment were $116 million. During the third quarter of Fiscal 2005,
the Company recognized a $65 million impairment charge on its equity investment in Hain. The
charge reduced Heinz’s carrying value in Hain to fair market value as of January 26, 2005, with no
resulting impact on cash flows. Due to the uncertainty of realizability and executing possible tax
planning strategies, the Company recorded a valuation allowance of $27 million against the potential
tax benefits primarily related to the Hain impairment. This valuation allowance was subsequently
released in Fiscal 2006 based upon tax planning strategies that are expected to generate sufficient
capital gains that will occur during the capital loss carryforward period. See further discussion in
Note 7, “Income Taxes” in Item 8—“Financial Statements and Supplementary Data.”

There were no material gains/(losses) on divested businesses or asset impairment charges in

Fiscals 2008 or 2007.

Other Non-recurring—American Jobs Creation Act

The American Jobs Creation Act (“AJCA”) provided a deduction of 85% of qualified foreign
dividends in excess of a “Base Period” dividend amount. During Fiscal 2006, the Company finalized
plans to repatriate dividends that qualified under the AJCA. The total impact of the AJCA on tax
expense for Fiscal 2006 was $17 million, of which $24 million of expense was recorded in continuing
operations and $7 million was a benefit in discontinued operations.

The Company reports its financial results in accordance with accounting principles generally
accepted in the United States of America (“GAAP”). However, management believes that certain non-
GAAP performance measures and ratios, used in managing the business, may provide users of this
financial information with additional meaningful comparisons between current results and results
in prior periods. Non-GAAP financial measures should be viewed in addition to, and not as an
alternative for, the Company’s reported results prepared in accordance with GAAP. The following
table provides a reconciliation of the Company’s reported results from continuing operations to the
results excluding special items for the fiscal year ended May 3, 2006:

Fiscal Year Ended May 3, 2006

Income from Earnings
Net Gross Operating Continuing Per Share
Sales Profit Income Operations —Diluted
(Amounts in millions, except per share amounts)
Reported results from continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . $8,643 $3,093 $1,114 $443 $1.29
Separation, downsizing and integration . . — 17 147 97 0.28
Net loss on disposals & impairments . . . . — 74 90 48 0.14
Asset impairment charges for cost and
equity investments . . . . . . . . . . . . . . . . — — — 106 0.31
American Jobs Creation Act . . . . . . . . . . . — — — 24 0.07
Results from continuing operations
excluding special items . . . . . . . . . . . . . . . $8,643 $3,185 $1,350 $718 $2.10

(Note: Totals may not add due to rounding.)

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 Liquidity and Financial Position

For Fiscal 2008, cash provided by operating activities was $1.19 billion, an increase of $126 million
from the prior year. The increase in Fiscal 2008 versus Fiscal 2007 is primarily due to favorable
movements in accounts payable and income taxes, and cash paid in the prior year for reorganization
costs related to workforce reductions in Fiscal 2006. These improvements were partially offset by
higher inventories and receivables. The higher inventory levels were required to support customer
service demands created by the Company’s strong growth. The Company’s cash conversion cycle of
49 days in Fiscal 2008 was consistent with that of Fiscal 2007, as a two day improvement in payables
was offset by a two day increase in inventories. Days in inventory increased this year due to the volume
growth and related capacity constraints in a number of areas.

During the first quarter of Fiscal 2007, a foreign subsidiary of the Company revalued certain of
its assets, under local law, increasing the local tax basis by approximately $245 million. As a result of
this revaluation, the Company incurred a foreign income tax liability of approximately $30 million
related to this revaluation which was paid during the third quarter of Fiscal 2007. Additionally, cash
flow from operations is expected to be improved by approximately $90 million over the five to twenty
year tax amortization period.

Cash used for investing activities totaled $554 million compared to $326 million last year.
Capital expenditures totaled $302 million (3.0% of sales) compared to $245 million (2.7% of sales) last
year, which reflect capacity-related spending in support of future growth and an ongoing investment
in improved systems. Proceeds from disposals of property, plant and equipment were $9 million
compared to $61 million in the prior year, representing the disposal of four plants in the current year
versus 16 plants during Fiscal 2007. In Fiscal 2008, cash paid for acquisitions, net of divestitures,
required $88 million, primarily related to the acquisition of the license to the Cottee’s» and Rose’s»
premium branded jams, jellies and toppings business in Australia and New Zealand, the Wyko» sauce
business in the Netherlands and the buy-out of the minority ownership on the Company’s Long Fong
business in China, partially offset by the divestiture of a tomato paste business in Portugal. In Fiscal
2007, acquisitions, net of divestitures, used $93 million primarily related to the Company’s purchase
of Renée’s Gourmet Foods and the purchase of the minority ownership in our Heinz Petrosoyuz
business in Russia. Divestitures in the prior year included the sale of a non-core U.S. Foodservice
product line, a frozen and chilled product line in the U.K. and a pet food business in Argentina. In
addition, transaction costs related to the European Seafood and Tegel» Poultry divestitures were also
paid during Fiscal 2007. During Fiscal 2008, the Company terminated the cross currency swaps that
were previously designated as net investment hedges of foreign operations. The notional amount of
these contracts totaled $1.6 billion, and the Company paid $93 million of cash to the counterparties,
which is presented in investing activities in the consolidated statements of cash flows. In addition,
the Company paid $74 million in the current year and $41 million in the prior year to the counter-
parties as a result of cross currency swap contract maturities and such payments are presented
within other investing items, net.

The early termination of the net investment hedges described above and interest rate swaps
described below were completed in conjunction with the reorganizations of the Company’s foreign
operations and interest rate swap portfolio.

Cash used by financing activities totaled $758 million compared to $621 million last year.
Proceeds from commercial paper and short-term debt were $484 million this year compared to
$384 million in the prior year. Payments on long-term debt were $368 million in the current year
compared to $52 million in the prior year, representing the maturity and payment of the $300 million
6% U.S. Dollar Notes in the current year as well as the repurchase in Fiscal 2008 of a portion of the 6%
U.S. Dollar Notes due March 15, 2012. Cash used for the purchases of treasury stock, net of proceeds
from option exercises, was $502 million this year compared to $501 million in the prior year, in line
with the Company’s plans for repurchasing $1 billion in net shares cumulatively in Fiscals 2007 and
2008. Dividend payments totaled $485 million, compared to $461 million in the prior year, reflecting

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 an 8.6% increase in the annualized dividend on common stock. During Fiscal 2008, the Company
terminated certain interest rate swaps that were previously designated as fair value hedges of fixed
rate debt obligations. The notional amount of these interest rate contracts totaled $612 million, and
the Company received a total of $104 million of cash from the termination of these contracts, which
has been presented in the consolidated statements of cash flows within financing activities. The
$104 million gain is being amortized to reduce interest expense over the remaining term of the
corresponding debt obligations (average of 22 years).
In Fiscal 2006, the Company divested its European Seafood business and Tegel» Poultry
business in New Zealand, and such divestitures were accounted for as discontinued operations.
The cash flows from these discontinued operations have been combined with the operating, investing
and financing cash flows from continuing operations (i.e., no separate classification of cash flows from
discontinued operations) for all periods presented. The absence of the cash flows from these discon-
tinued operations will not have a material impact on the Company’s future liquidity and capital
resources.
In Fiscal 2003, the Company spun-off businesses to Del Monte and treated the operating results
related to these businesses as discontinued operations. In Fiscals 2007 and 2006, the Company
generated cash flows from the favorable settlement of tax liabilities related to these spun-off
businesses. These cash flows, which represent solely cash flows from operations, have been classified
separately on the Company’s Consolidated Statements of Cash Flows for Fiscals 2007 and 2006 as
“Cash provided by operating activities of discontinued operations spun-off to Del Monte.” There was
no impact on cash flows from investing or financing activities from these spun-off businesses in these
fiscal years.
On May 29, 2008, the Company announced that its Board of Directors approved a 9.2% increase
in the dividend on common stock from 38 cents to 41.5 cents quarterly to an annual indicative rate of
$1.66 per share for Fiscal 2009, effective with the July 2008 dividend payment. Fiscal 2009 dividends
are expected to be approximately $525 million.
At April 30, 2008, the Company had total debt of $5.18 billion (including $199 million relating to
the SFAS No. 133 hedge accounting adjustments) and cash and cash equivalents of $618 million.
Total debt balances since prior year end increased primarily due to share repurchases.
Return on average shareholders’ equity (“ROE”) is calculated by taking net income divided by
average shareholders’ equity. Average shareholders’ equity is a five-point quarterly average. ROE
was 44.0% in Fiscal 2008, 37.4% in Fiscal 2007 and 29.1% in Fiscal 2006. Fiscal 2008 and 2007 ROE
was favorably impacted by higher net income and decreased average equity reflecting the adoption of
SFAS No. 158 and share repurchases. Fiscal 2006 ROE was unfavorably impacted by 6.5% due to the
previously discussed strategic transformation costs.
Return on invested capital (“ROIC”) is calculated by taking net income, plus net interest expense
net of tax, divided by average invested capital. Average invested capital is a five-point quarterly
average of debt plus total equity less cash and cash equivalents, short-term investments and the
SFAS No. 133 hedge accounting adjustments. ROIC was 16.8% in Fiscal 2008, 15.8% in Fiscal 2007
and 13.1% in Fiscal 2006. Fiscal 2008 and 2007 ROIC was favorably impacted by higher net income
and lower average equity reflecting effective management of the asset base and the adoption of
SFAS No. 158. Fiscal 2006 ROIC was unfavorably impacted by higher average debt and by
5.5 percentage points related to the previously discussed strategic transformation costs.
The Company and H.J. Heinz Finance Company maintain a $2 billion credit agreement that
expires in August 2009. The credit agreement supports the Company’s commercial paper borrowings.
As a result, these borrowings are classified as long-term debt based upon the Company’s intent and
ability to refinance these borrowings on a long-term basis. The Company maintains in excess of
$1 billion of other credit facilities used primarily by the Company’s foreign subsidiaries. These
resources, the Company’s existing cash balance, strong operating cash flow, and access to the capital

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 markets, if required, should enable the Company to meet its cash requirements for operations,
including capital expansion programs, debt maturities, acquisitions, share repurchases and
dividends to shareholders.
As of April 30, 2008, the Company’s long-term debt ratings at Moody’s, Standard & Poor’s and
Fitch Rating were Baa2, BBB and BBB, respectively.

Contractual Obligations and Other Commitments

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. In the aggregate, such commitments are not at prices in excess of current
markets. 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 is 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 April 30, 2008.
Less than More than
1 year 1-3 years 3-5 years 5 years Total
(Amounts in thousands)
Long Term Debt(1) . . . . . . $ 530,731 $1,778,224 $1,641,220 $3,233,352 $ 7,183,527
Capital Lease
Obligations . . . . . . . . . . 10,161 19,475 48,179 32,574 110,389
Operating Leases . . . . . . . 68,752 106,689 87,514 190,984 453,939
Purchase Obligations . . . . 1,254,104 745,641 184,074 25,907 2,209,726
Other Long Term
Liabilities Recorded on
the Balance Sheet . . . . . 101,928 236,512 231,383 167,033 736,856
Total . . . . . . . . . . . . . . . $1,965,676 $2,886,541 $2,192,370 $3,649,850 $10,694,437
(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 specific incentive compensation arrange-
ments and pension and postretirement benefit commitments. The following long-term liabilities
included on the consolidated balance sheet are excluded from the table above: income taxes, minority
interest and insurance accruals. The Company is unable to estimate the timing of the payments for
these items.
The Company adopted Financial Accounting Standards Board Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes” (“FIN 48”) as of the beginning of fiscal year 2008.
At April 30, 2008, 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 $189 million. However, the net obligation to taxing authorities
under FIN 48 was approximately $103 million. The difference relates primarily to outstanding
refund claims. 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 net obligations
within the next year. The Company is unable to make a reasonably reliable estimate of when cash
settlements with taxing authorities may occur.

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 Off-Balance Sheet Arrangements and Other Commitments

The Company does not have guarantees or other off-balance sheet financing arrangements that
we believe are reasonably likely to have a current or future effect on our financial condition, changes
in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or
capital resources. In addition, the Company does not have any related party transactions that
materially affect the results of operations, cash flow or financial condition.

As of April 30, 2008, the Company was party to an operating lease for buildings and equipment in
which the Company has guaranteed a supplemental payment obligation of approximately $64 million
at the termination of the lease. The Company believes, based on current facts and circumstances, that
any payment pursuant to this guarantee is remote. In May 2008, the construction of a new frozen food
factory in South Carolina commenced. It is expected that the factory will be operational in approx-
imately 18 to 24 months and that it will be financed by an operating lease.

Market Risk Factors

The Company is exposed to market risks from adverse changes in foreign exchange rates,
interest rates, commodity prices and production costs. As a policy, the Company does not engage in
speculative or leveraged transactions, nor does the Company hold or issue financial instruments for
trading purposes.

Foreign Exchange Rate Sensitivity: The Company’s cash flow and earnings are subject to
fluctuations due to exchange rate variation. Foreign currency risk exists by nature of the Company’s
global operations. The Company manufactures and sells its products in a number of locations around
the world, and hence foreign currency risk is diversified.

The Company may attempt to limit its exposure to changing foreign exchange rates through both
operational and financial market actions. These actions may include entering into forward contracts,
option contracts, or cross currency swaps to hedge existing exposures, firm commitments and
forecasted transactions.

The instruments are used to reduce risk by essentially creating offsetting currency exposures.
The following table presents information related to foreign currency contracts held by the Company:
Aggregate Notional Amount Net Unrealized Gains/(Losses)
April 30, 2008 May 2, 2007 April 30, 2008 May 2, 2007
(Dollars in millions)
Purpose of Hedge:
Intercompany cash flows . . . . . $1,110 $1,010 $25 $ (4)
Forecasted purchases of raw
materials and finished
goods and foreign currency
denominated obligations . . . 541 360 6 (3)
Forecasted sales and foreign
currency denominated
assets . . . . . . . . . . . . . . . . . . 57 136 — 8
Net investments in foreign
operations. . . . . . . . . . . . . . . — 1,964 — (73)
$1,708 $3,470 $31 $(72)

As of April 30, 2008, the Company’s foreign currency contracts mature within two years.
Contracts that meet qualifying criteria are accounted for as either foreign currency cash flow hedges
or net investment hedges of foreign operations. Any gains and losses related to contracts that do not
qualify for hedge accounting are recorded in current period earnings in other income and expense.

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 Substantially all of the Company’s foreign business units’ financial instruments are denomi-
nated in their respective functional currencies. Accordingly, exposure to exchange risk on foreign
currency financial instruments is not material. (See Note 13, “Derivative Financial Instruments and
Hedging Activities” in Item 8—“Financial Statements and Supplementary Data.”)

Interest Rate Sensitivity: The Company is exposed to changes in interest rates primarily as a
result of its borrowing and investing activities used to maintain liquidity and fund business oper-
ations. The nature and amount of the Company’s long-term and short-term debt can be expected to
vary as a result of future business requirements, market conditions and other factors. The Company’s
debt obligations totaled $5.18 billion (including $199 million relating to the SFAS No. 133 hedge
accounting adjustments) and $4.88 billion (including $71 million relating to the SFAS No. 133 hedge
accounting adjustments) at April 30, 2008 and May 2, 2007, respectively. The Company’s debt
obligations are summarized in Note 8, “Debt” in Item 8—“Financial Statements and Supplementary
Data.”

In order to manage interest rate exposure, the Company utilizes interest rate swaps to convert
fixed-rate debt to floating. These derivatives are primarily accounted for as fair value hedges.
Accordingly, 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. Based on the amount of fixed-rate debt converted to floating as of April 30, 2008, a variance
of 1⁄8% in the related interest rate would cause annual interest expense related to this debt to change
by approximately $2 million. The following table presents additional information related to interest
rate contracts designated as fair value hedges by the Company:
April 30, 2008 May 2, 2007
(Dollars in millions)
Pay floating swaps—notional amount . .. .. .. .. .. .. . .. .. .. $1,642 $2,588
Net unrealized gains . . . . . . . . . . . . . . .. .. .. .. .. .. . .. .. .. $ 95 $ 71
Weighted average maturity (years) . . . .. .. .. .. .. .. . .. .. .. 4 9
Weighted average receive rate . . . . . . . .. .. .. .. .. .. . .. .. .. 6.36% 6.37%
Weighted average pay rate . . . . . . . . . . .. .. .. .. .. .. . .. .. .. 6.15% 6.35%

The Company had interest rate contracts with a total notional amount of $177 million and
$108 million at April 30, 2008 and May 2, 2007, respectively, that did not meet the criteria for hedge
accounting but effectively mitigated interest rate exposures. These derivatives are accounted for on a
full mark-to-market basis through current earnings and they mature within one year from the
current fiscal year-end. Net unrealized gains related to these interest rate contracts were insignif-
icant as of April 30, 2008, and net unrealized losses totaled $2 million at May 2, 2007.

Effect of Hypothetical 10% Fluctuation in Market Prices: As of April 30, 2008, the
potential gain or loss in the fair value of the Company’s outstanding foreign currency contracts
and interest rate contracts assuming a hypothetical 10% fluctuation in currency and swap rates
would be approximately:
Fair Value Effect
(Dollars in
millions)
Foreign currency contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $177
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21

However, it should be noted that any change in the fair value of the contracts, real or hypo-
thetical, would be significantly offset by an inverse change in the value of the underlying hedged
items. In relation to currency contracts, this hypothetical calculation assumes that each exchange
rate would change in the same direction relative to the U.S. dollar.

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 Recently Issued Accounting Standards

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation
No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109
(“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in financial
statements. This Interpretation includes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, and disclosures. See Note 7, “Income Taxes” in Item 8—“Financial
Statements and Supplementary Data” for additional information.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which defines
fair value, establishes a framework for measuring fair value under generally accepted accounting
principles, and expands disclosures about fair value measurements. This statement applies when-
ever other accounting pronouncements require or permit assets or liabilities to be measured at fair
value, but does not expand the use of fair value to new accounting transactions. SFAS No. 157 is
effective for financial assets and liabilities in fiscal years beginning after November 15, 2007, and for
non-financial assets and liabilities in fiscal years beginning after November 15, 2008. The Company
will adopt SFAS No. 157 for its financial assets and liabilities on May 1, 2008, the first day of Fiscal
2009. The Company’s financial instruments consist primarily of cash and cash equivalents, receiv-
ables, accounts payable, short-term and long-term debt, swaps, forward contracts, and option
contracts. The recorded values of the Company’s financial instruments approximate fair value.
The Company is currently evaluating the impact of adopting SFAS No. 157 on its consolidated
financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statement Nos. 87, 88, 106 and
132(R).” SFAS No. 158 required that the Company recognize the funded status of each of its defined
pension and postretirement benefit plans as a net asset or liability in the consolidated balance sheet
and to recognize changes in that funded status in the year in which changes occur through com-
prehensive income. Effective May 2, 2007, the Company adopted these provisions of SFAS No. 158.
SFAS No. 158 also requires that employers measure plan assets and obligations as of the date of their
year-end financial statements beginning with the Company’s fiscal year ending April 29, 2009. The
Company does not expect the impact of the change in measurement date to have a material impact on
the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” and
SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—An Amendment
of ARB No. 51.” These new standards will significantly change the accounting for and reporting of
business combination transactions and noncontrolling (minority) interests in consolidated financial
statements. SFAS Nos. 141(R) and 160 are required to be adopted simultaneously and are effective
for fiscal years beginning after December 15, 2008, with early adoption prohibited. Thus, the
Company will be required to adopt these standards on April 30, 2009, the first day of Fiscal
2010. The Company is currently evaluating the impact of adopting SFAS Nos. 141(R) and 160 on
its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and
Hedging Activities—an amendment of FASB Statement No. 133”. This new standard requires
enhanced disclosures about how and why an entity uses derivative instruments, how derivative
instruments and related hedged items are accounted for under SFAS No. 133 and its related
interpretations, and how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This statement is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008. The Company is
currently evaluating the impact of adopting SFAS No. 161 in the fourth quarter of Fiscal 2009.

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 Discussion of Significant Accounting Estimates

In the ordinary course of business, the Company has made a number of estimates and assump-
tions relating to the reporting of results of operations and financial condition in the preparation of its
financial statements in conformity with accounting principles generally accepted in the United States
of America. Actual results could differ significantly from those estimates under different assump-
tions and conditions. The Company believes that the following discussion addresses 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.

Marketing Costs—Trade promotions are an important component of the sales and marketing of
the Company’s products and are critical to the support of the business. Trade promotion costs include
amounts paid to retailers to offer temporary price reductions for the sale of the Company’s products to
consumers, amounts paid to obtain favorable display positions in retailers’ stores, and amounts paid
to customers for shelf space in retail stores. Accruals for trade promotions are initially recorded at the
time of sale of product to the customer based on an estimate of the expected levels of performance of
the trade promotion, which is dependent upon factors such as historical trends with similar
promotions, expectations regarding customer participation, and sales and payment trends with
similar previously offered programs. Our original estimated costs of trade promotions may change in
the future as a result of changes in customer participation, particularly for new programs and for
programs related to the introduction of new products. We perform monthly and quarterly evaluations
of our outstanding trade promotions, making adjustments where appropriate to reflect changes in
estimates. Settlement of these liabilities typically occurs in subsequent periods primarily through an
authorization process for deductions taken by a customer from amounts otherwise due to the
Company. As a result, the ultimate cost of a trade promotion program is dependent on the relative
success of the events and the actions and level of deductions taken by the Company’s customers for
amounts they consider due to them. Final determination of the permissible deductions may take
extended periods of time and could have a significant impact on the Company’s results of operations
depending on how actual results of the programs compare to original estimates.

We offer coupons to consumers in the normal course of our business. Expenses associated with
this activity, which we refer to as coupon redemption costs, are accrued in the period in which the
coupons are offered. The initial estimates made for each coupon offering are based upon historical
redemption experience rates for similar products or coupon amounts. We perform monthly and
quarterly evaluations of outstanding coupon accruals that compare actual redemption rates to the
original estimates. We review the assumptions used in the valuation of the estimates and determine
an appropriate accrual amount. Adjustments to our initial accrual may be required if actual
redemption rates vary from estimated redemption rates.

Investments and Long-lived Assets, including Property, Plant and Equipment—Investments and
long-lived assets are recorded at their respective cost basis on the date of acquisition. Buildings,
equipment and leasehold improvements are depreciated on a straight-line basis over the estimated
useful life of such assets. The Company reviews investments and long-lived assets, including
intangibles with finite useful lives, and property, plant and equipment, whenever circumstances
change such that the indicated recorded value of an asset may not be recoverable or has suffered an
other-than-temporary impairment. Factors that may affect recoverability include changes in
planned use of equipment or software, the closing of facilities and changes in the underlying financial
strength of investments. The estimate of current value requires significant management judgment
and requires assumptions that can include: future volume trends, revenue and expense growth rates
and foreign exchange rates developed in connection with the Company’s internal projections and
annual operating plans, and in addition, external factors such as changes in macroeconomic trends
which are developed in connection with the Company’s long-term strategic planning. As each is

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 management’s best estimate on then available information, resulting estimates may differ from
actual cash flows.

Goodwill and Indefinite-Lived Intangibles—Carrying values of goodwill and intangible assets

with indefinite lives are reviewed for impairment at least annually, or when circumstances indicate
that a possible impairment may exist. Indicators such as unexpected adverse economic factors,
unanticipated technological change or competitive activities, loss of key personnel, and acts by
governments and courts, may signal that an asset has become impaired. All goodwill is assigned to
reporting units, which are one level below our operating segments. Goodwill is assigned to the
reporting unit that benefits from the synergies arising from each business combination. We perform
our impairment tests of goodwill at the reporting unit level. The Company’s measure of impairment
for both goodwill and intangible assets with indefinite lives is based on a discounted cash flow model
that requires significant judgment and requires assumptions about future volume trends, revenue
and expense growth rates and foreign exchange rates developed in connection with the Company’s
internal projections and annual operating plans, and in addition, external factors such as changes in
macroeconomic trends and cost of capital developed in connection with the Company’s long-term
strategic planning. Inherent in estimating future performance, in particular assumptions regarding
external factors such as capital markets, are uncertainties beyond the Company’s control.

Retirement Benefits—The Company sponsors pension and other retirement plans in various
forms covering substantially all employees who meet eligibility requirements. Several actuarial and
other factors that attempt to anticipate future events are used in calculating the expense and
obligations related to the plans. These factors include assumptions about the discount rate, expected
return on plan assets, turnover rates and rate of future compensation increases as determined by the
Company, within certain guidelines. In addition, the Company uses best estimate assumptions,
provided by actuarial consultants, for withdrawal and mortality rates to estimate benefit expense.
The financial and actuarial assumptions used by the Company may differ materially from actual
results due to changing market and economic conditions, higher or lower withdrawal rates or longer
or shorter life spans of participants. These differences may result in a significant impact to the
amount of pension expense recorded by the Company.

The Company recognized pension expense related to defined benefit programs of $7 million,
$32 million and $77 million for fiscal years 2008, 2007 and 2006, respectively, which reflected
expected return on plan assets of $227 million, $199 million and $169 million, respectively. The
Company contributed $60 million to its pension plans in Fiscal 2008 compared to $63 million in Fiscal
2007 and $65 million in Fiscal 2006. The Company expects to contribute approximately $80 million to
its pension plans in Fiscal 2009.

One of the significant assumptions for pension plan accounting is the expected rate of return on
pension plan assets. Over time, the expected rate of return on assets should approximate actual long-
term returns. In developing the expected rate of return, the Company considers average real historic
returns on asset classes, the investment mix of plan assets, investment manager performance and
projected future returns of asset classes developed by respected consultants. When calculating the
expected return on plan assets, the Company primarily uses a market-related-value of assets that
spreads asset gains and losses (difference between actual return and expected return) uniformly over
3 years. The weighted average expected rate of return on plan assets used to calculate annual
expense was 8.2% for the years ended April 30, 2008, May 2, 2007 and May 3, 2006. For purposes of
calculating Fiscal 2009 expense, the weighted average rate of return will remain at approximately
8.2%.

Another significant assumption used to value benefit plans is the discount rate. The discount
rate assumptions used to value pension and postretirement benefit obligations reflect the rates
available on high quality fixed income investments available (in each country where the Company
operates a benefit plan) as of the measurement date. The Company uses bond yields of appropriate
duration for each country by matching to the duration of plan liabilities. The weighted average

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 discount rate used to measure the projected benefit obligation for the year ending April 30, 2008
increased to 6.1% from 5.5% as of May 2, 2007.
Deferred gains and losses result from actual experience different from expected financial and
actuarial assumptions. The pension plans currently have a deferred loss amount of $803 million at
April 30, 2008. During 2008, the deferred loss amount was negatively impacted by actual asset
returns being less than expected. Deferred gains and losses are amortized through the actuarial
calculation into annual expense over the estimated average remaining service period of plan par-
ticipants, which is currently 11 years.
The Company also provides certain postretirement health care benefits. The postretirement
health care benefit expense and obligation are determined using the Company’s assumptions
regarding health care cost trend rates. The health care trend rates are developed based on historical
cost data, the near-term outlook on health care trends and the likely long-term trends. The domestic
postretirement health care benefit obligation at April 30, 2008 was determined using an average
initial health care trend rate of 9.3% which gradually decreases to an average ultimate rate of 5% in
5 years. The foreign postretirement health care benefit obligation at April 30, 2008 was determined
using an average initial health care trend rate of 6.7% which gradually decreases to an average
ultimate rate of 4% in 7 years. A one percentage point increase in the assumed health care cost trend
rate would increase the service and interest cost components of annual expense by $2 million and
increase the benefit obligation by $18 million. A one percentage point decrease in the assumed health
care cost trend rates would decrease the service and interest cost by $1 million and decrease the
benefit obligation by $16 million.

Sensitivity of Assumptions
If we assumed a 100 basis point change in the following assumptions, our Fiscal 2008 projected
benefit obligation and expense would increase (decrease) by the following amounts (in millions):
100 Basis Point
Increase Decrease

Pension benefits
Discount rate used in determining projected benefit obligation . . . . . $(341) $392
Discount rate used in determining net pension expense . . . . . . . . . . $ (26) $ 29
Long-term rate of return on assets used in determining net pension
expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (29) $ 29
Other benefits
Discount rate used in determining projected benefit obligation . . . . . $ (22) $ 22
Discount rate used in determining net benefit expense . . . . . . . . . . . $ (3) $ 3
Income Taxes—The Company computes its annual tax rate based on the statutory tax rates and
tax planning opportunities available to it in the various jurisdictions in which it earns income.
Significant judgment is required in determining the Company’s annual tax rate and in evaluating
uncertainty in its tax positions. The Company recognizes a benefit for tax positions that it believes
will more likely than not be sustained upon examination. The amount of benefit recognized is the
largest amount of benefit that the Company believes has more than a 50% probability of being
realized upon settlement. The Company regularly monitors its tax positions and adjusts the amount
of recognized tax benefit based on its evaluation of information that has become available since the
end of its last financial reporting period. The annual tax rate includes the impact of these changes in
recognized tax benefits. When adjusting the amount of recognized tax benefits the Company does not
consider information that has become available after the balance sheet date, but does disclose the
effects of new information whenever those effects would be material to the Company’s financial
statements. The difference between the amount of benefit taken or expected to be taken in a tax
return and the amount of benefit recognized for financial reporting represents unrecognized tax

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 benefits. These unrecognized tax benefits are presented in the balance sheet principally within
accrued income taxes.
The Company records valuation allowances to reduce deferred tax assets to the amount that is
more likely than not to be realized. When assessing the need for valuation allowances, the Company
considers future taxable income and ongoing prudent and feasible tax planning strategies. Should a
change in circumstances lead to a change in judgment about the realizability of deferred tax assets in
future years, the Company would adjust related valuation allowances in the period that the change in
circumstances occurs, along with a corresponding increase or charge to income.
Changes in recognized tax benefits and changes in valuation allowances could be material to the
Company’s results of operations for any period, but is not expected to be material to the Company’s
financial position.

Inflation and Input Costs

In general, the effects of inflation on costs may be experienced by the Company in future periods.
During Fiscal 2008, the Company has experienced inflationary increases in commodity input costs
and expects this trend to continue through Fiscal 2009. The most significant commodity cost
increases in Fiscal 2008 were for dairy, edible oils and processed grains. Strong sales growth, price
increases, continued productivity improvements and the Company’s geographic diversity are helping
to offset these cost increases.
The Company operates in certain countries around the world, such as Venezuela, that have
experienced hyperinflation. In hyperinflationary foreign countries, the Company attempts to mit-
igate the effects of inflation by increasing prices in line with inflation, where possible, and efficiently
managing its working capital levels.

Stock Market Information

H. J. Heinz Company common stock is traded principally on The New York Stock Exchange
under the symbol HNZ. The number of shareholders of record of the Company’s common stock as of
May 31, 2008 approximated 37,000. The closing price of the common stock on The New York Stock
Exchange composite listing on April 30, 2008 was $47.03.
Stock price information for common stock by quarter follows:
Stock Price Range
High Low

2008
First . . . .. .. .. .. .. .. .. . .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . $48.50 $42.84
Second . .. .. .. .. .. .. .. . .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . 47.18 41.82
Third . . .. .. .. .. .. .. .. . .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . 48.75 41.37
Fourth . .. .. .. .. .. .. .. . .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . 48.25 41.60
2007
First . . . .. .. .. .. .. .. .. . .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . $44.15 $39.62
Second . .. .. .. .. .. .. .. . .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . 42.65 40.33
Third . . .. .. .. .. .. .. .. . .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . 47.16 41.78
Fourth . .. .. .. .. .. .. .. . .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . 48.73 44.28

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

This information is set forth in this report in Item 7—“Management’s Discussion and Analysis of
Financial Condition and Results of Operations” on pages 27 through 28.

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 Item 8. Financial Statements and Supplementary Data.

TABLE OF CONTENTS

Report of Management on Internal Control over Financial Reporting . .. .. .. .. .. .. .. . .. .. 35

Report of Independent Registered Public Accounting Firm . . . . . . . . . .. .. .. .. .. .. .. . .. .. 36
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . .. .. 37
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . .. .. 38
Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . .. .. 40
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . .. .. 41
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . .. .. 42

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 Report of Management on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over
financial reporting for the Company. Internal control over financial reporting refers to the process
designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and
effected by our Board of Directors, management and other personnel, to provide reasonable assur-
ance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles, and includes those
policies and procedures that:
(1) Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the Company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permit prep-
aration of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the Company; and
(3) Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Management has used the framework set forth in the report entitled “Internal Control—Integrated
Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission to
evaluate the effectiveness of the Company’s internal control over financial reporting. Management has
concluded that the Company’s internal control over financial reporting was effective as of the end of the
most recent fiscal year. PricewaterhouseCoopers LLP, an independent registered public accounting firm,
audited the effectiveness of the Company’s internal control over financial reporting as of April 30, 2008,
as stated in their report which appears herein.

/s/ William R. Johnson

Chairman, President and
Chief Executive Officer

/s/ Arthur B. Winkleblack

Executive Vice President and
Chief Financial Officer

June 19, 2008

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 Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

H. J. Heinz Company:
In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1)
present fairly, in all material respects, the financial position of H. J. Heinz Company and its subsid-
iaries at April 30, 2008 and May 2, 2007, and the results of their operations and their cash flows for each
of the three years in the period ended April 30, 2008 in conformity with accounting principles generally
accepted in the United States of America. In addition, in our opinion, the financial statement schedule
listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the infor-
mation set forth therein when read in conjunction with the related consolidated financial statements.
Also in our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of April 30, 2008, based on criteria established in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Company’s management is responsible for these financial statements and financial
statement schedule, for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the Report of
Management on Internal Control over Financial Reporting appearing under Item 8. Our responsibility
is to express opinions on these financial statements, on the financial statement schedule, and on the
Company’s internal control over financial reporting based on our integrated audits. We conducted our
audits in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audits to obtain reasonable assurance
about whether the financial statements are free of material misstatement and whether effective
internal control over financial reporting was maintained in all material respects. Our audits of the
financial statements included examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our
audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circum-
stances. We believe that our audits provide a reasonable basis for our opinions.
As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in
which it accounts for share-based compensation effective May 4, 2006 and as discussed in Note 2 to
the consolidated financial statements, the Company changed the manner in which it accounts for
defined benefit pension and other postretirement plans effective May 2, 2007.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

/s/ PRICEWATERHOUSECOOPERS LLP

Pittsburgh, Pennsylvania
June 19, 2008

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 H. J. Heinz Company and Subsidiaries
Consolidated Statements of Income

Fiscal Year Ended

April 30, 2008 May 2, 2007 May 3, 2006
(52 Weeks) (52 Weeks) (53 Weeks)
(In thousands, except per share amounts)
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,070,778 $9,001,630 $8,643,438
Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,390,086 5,608,730 5,550,364
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,680,692 3,392,900 3,093,074
Selling, general and administrative expenses . . . . . . . . . 2,111,725 1,946,185 1,979,462
Operating income. . . . . . . . . . . . . . . . . . . . . . . ........ 1,568,967 1,446,715 1,113,612
Interest income . . . . . . . . . . . . . . . . . . . . . . . . ........ 41,519 41,869 33,190
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . ........ 364,856 333,270 316,296
Asset impairment charges for cost and equity
investments . . . . . . . . . . . . . . . . . . . . . . . . . ........ — — 110,994
Other expense, net . . . . . . . . . . . . . . . . . . . . . . ........ 27,836 30,915 26,051
Income from continuing operations before income
taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,217,794 1,124,399 693,461
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . 372,869 332,797 250,700
Income from continuing operations . . . . . . . . . . . . . . . . . 844,925 791,602 442,761
(Loss)/income from discontinued operations, net of
tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (5,856) 202,842
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 844,925 $ 785,746 $ 645,603
Income/(Loss) Per Common Share:
Diluted
Continuing operations. . . . . . . . . . . . . . . . . . . . . . . . $ 2.63 $ 2.38 $ 1.29
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . — (0.02) 0.59
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.63 $ 2.36 $ 1.89
Average common shares outstanding—Diluted . . . . 321,717 332,468 342,121
Basic
Continuing operations. . . . . . . . . . . . . . . . . . . . . . . . $ 2.67 $ 2.41 $ 1.31
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . — (0.02) 0.60
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2.67 $ 2.39 $ 1.90
Average common shares outstanding—Basic . . . . . . 317,019 328,625 339,102
Cash dividends per share . . . . . . . . . . . . . . . . . . . . . . . . $ 1.52 $ 1.40 $ 1.20

See Notes to Consolidated Financial Statements

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 H. J. Heinz Company and Subsidiaries
Consolidated Balance Sheets

April 30, May 2,

2008 2007
(Dollars in thousands)
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 617,687 $ 652,896
Receivables (net of allowances: 2008—$15,687 and 2007—$14,706) .... 1,161,481 996,852
Inventories:
Finished goods and work-in-process . . . . . . . . . . . . . . . . . . . . . . .... 1,100,735 943,449
Packaging material and ingredients . . . . . . . . . . . . . . . . . . . . . . .... 277,481 254,508
Total inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,378,216 1,197,957
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,492 132,561
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,690 38,736
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,325,566 3,019,002
Property, plant and equipment:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,007 51,950
Buildings and leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . 842,198 788,053
Equipment, furniture and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,502,071 3,214,860
4,400,276 4,054,863
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,295,563 2,056,710
Total property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . 2,104,713 1,998,153
Other non-current assets:
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,997,462 2,834,639
Trademarks, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 957,111 892,749
Other intangibles, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456,948 412,484
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723,243 875,999
Total other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,134,764 5,015,871
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,565,043 $10,033,026

See Notes to Consolidated Financial Statements

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 H. J. Heinz Company and Subsidiaries
Consolidated Balance Sheets

April 30, May 2,

2008 2007
(Dollars in thousands)
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. . $ 124,290 $ 165,054
Portion of long-term debt due within one year. . . . . . . . .. .. .. .. . 328,418 303,189
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. . 1,247,479 1,181,078
Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. . 92,553 85,818
Accrued marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. . 298,342 262,217
Other accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. . 487,656 414,130
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. . 91,322 93,620
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,670,060 2,505,106
Long-term debt and other liabilities:
Long-term debt . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. . .. .. .. .. . 4,730,946 4,413,641
Deferred income taxes . . . . . . . . . . . . . .. .. .. .. .. .. . .. .. .. .. . 409,186 463,666
Non-pension post-retirement benefits . .. .. .. .. .. .. . .. .. .. .. . 257,051 253,117
Minority interest. . . . . . . . . . . . . . . . . . .. .. .. .. .. .. . .. .. .. .. . 65,727 98,309
Other liabilities. . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. . .. .. .. .. . 544,253 457,504
Total long-term debt and other liabilities . . . . . . . . . . . . . . . . . . . 6,007,163 5,686,237
Shareholders’ equity:
Capital stock:
Third cumulative preferred, $1.70 first series, $10 par value* . . 72 77
Common stock, 431,096,486 shares issued, $0.25 par value. . . . . 107,774 107,774
107,846 107,851
Additional capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617,811 580,606
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,129,008 5,778,617
6,854,665 6,467,074
Less:
Treasury shares, at cost (119,628,499 shares at April 30, 2008 and
109,317,154 shares at May 2, 2007) . . . . . . . . . . . . . . . . . . . . . . . 4,905,755 4,406,126
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . 61,090 219,265
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,887,820 1,841,683
Total liabilities and shareholders’ equity. . . . . . . . . . . . . . . . . . $10,565,043 $10,033,026

* The preferred stock outstanding is convertible at a rate of one share of preferred stock into 15 shares of common stock. The
Company can redeem the stock at $28.50 per share. As of April 30, 2008, there were authorized, but unissued,
2,200,000 shares of third cumulative preferred stock for which the series had not been designated.

See Notes to Consolidated Financial Statements

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 H. J. Heinz Company and Subsidiaries
Consolidated Statements of Shareholders’ Equity
April 30, 2008 May 2, 2007 May 3, 2006
Shares Dollars Shares Dollars Shares Dollars
(Amounts in thousands, expect per share amounts)
PREFERRED STOCK
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 $ 77 8 $ 82 9 $ 83
Conversion of preferred into common stock . . . . . . . . . . . . . . . . . . . . . . . . (1) (5) — (5) (1) (1)
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 72 8 77 8 82
Authorized shares- April 30, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
COMMON STOCK
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431,096 107,774 431,096 107,774 431,096 107,774
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431,096 107,774 431,096 107,774 431,096 107,774
Authorized shares- April 30, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
ADDITIONAL CAPITAL
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580,606 502,235 430,073
Conversion of preferred into common stock . . . . . . . . . . . . . . . . . . . . . . . . (219) (191) (32)
Stock options exercised, net of shares tendered for payment . . . . . . . . . . . . . . 20,920† 79,735† 46,861†
Stock option expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,919 11,987 —
Restricted stock unit activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,961 16,000 21,958
Transfer of unearned compensation balance per SFAS No. 123R . . . . . . . . . . . — (32,773) —
Initial adoption of FIN 48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,719) — —
Other, net* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,343 3,613 3,375
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617,811 580,606 502,235
RETAINED EARNINGS
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,778,617 5,454,108 5,210,748
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 844,925 785,746 645,603
Cash dividends:
Preferred (per share $1.70 per share in 2008, 2007, and 2006) . . . . . . . . . . . (12) (13) (14)
Common (per share $1.52, $1.40, and $1.20 in 2008, 2007, and 2006,
respectively). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (485,234) (461,224) (408,137)
Initial adoption of FIN 48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,288) — —
Other, net* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 5,908
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,129,008 5,778,617 5,454,108
TREASURY STOCK
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (109,317) (4,406,126) (100,339) (3,852,220) (83,419) (3,140,586)
Shares reacquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,054) (580,707) (16,651) (760,686) (21,925) (823,370)
Conversion of preferred into common stock . . . . . . . . . . . . . . . . . . . . . . . . 8 224 7 195 1 33
Stock options exercised, net of shares tendered for payment . . . . . . . . . . . . . . 2,116 62,486 7,265 195,117 4,575 101,945
Restricted stock unit activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289 8,591 96 2,438 58 1,303
Other, net* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330 9,777 305 9,030 371 8,455
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (119,628) (4,905,755) (109,317) (4,406,126) (100,339) (3,852,220)
UNEARNED COMPENSATION
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (32,773) (31,141)
Restricted stock unit activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (2,195)
Transfer of balance to additional capital per SFAS No. 123R . . . . . . . . . . . . . — 32,773 —
Other, net* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 563
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (32,773)
OTHER COMPREHENSIVE (LOSS)/INCOME
Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (219,265) (130,383) 25,622
Net pension and post-retirement benefit losses (net of $75,407 tax benefit in
2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (155,989) — —
Reclassification of net pension and post-retirement benefit losses to net income
(net of $14,159 tax benefit in 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,787 — —
Minimum pension liability (net of $4,167 tax expense and $3,306 tax benefit in
2007 and 2006, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 8,041 (8,583)
Unrealized translation adjustments (net of $25,823 tax expense, $29,635 tax
benefit, and $11,912 tax benefit in 2008, 2007 and 2006, respectively) . . . . . . 281,090 293,673 (147,746)
Net change in fair value of cash flow hedges (net of $7,527 tax expense and
$4,423 tax benefit in 2008 and 2007, respectively) . . . . . . . . . . . . . . . . . . . 16,273 (3,401) 8,236
Net hedging (gains)/losses reclassified into earnings (net of $7,287 tax expense,
$6,163 tax benefit, and $5,915 tax expense in 2008, 2007, and 2006,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,986) 11,239 (7,912)
Net other comprehensive income/(loss) adjustments . . . . . . . . . . . . . . . . . . . 158,175 309,552 (156,005)
Initial adoption of SFAS No. 158, net of $182,530 tax benefit . . . . . . . . . . . . . — (398,434) —
Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (61,090)†† (219,265) (130,383)
TOTAL SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,887,820 $ 1,841,683 $ 2,048,823
COMPREHENSIVE INCOME
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 844,925 $ 785,746 $ 645,603
Net other comprehensive income/(loss) adjustments . . . . . . . . . . . . . . . . . . . 158,175 309,552 (156,005)
TOTAL COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,003,100 $ 1,095,298 $ 489,598

* Includes activity of the Global Stock Purchase Plan. Retained Earnings in Fiscal 2006 reflects the final settlement
associated with businesses spun-off to Del Monte in Fiscal 2003.
† Includes income tax benefit resulting from exercised stock options.
†† Comprised of unrealized translation adjustment of $529,228, pension and post-retirement benefits net prior service cost of
$(11,833) and net losses of $(586,986), and deferred net gains on derivative financial instruments of $8,501.

See Notes to Consolidated Financial Statements

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 H. J. Heinz Company and Subsidiaries
Consolidated Statements of Cash Flows

Fiscal Year Ended

April 30, May 2, May 3,
2008 2007 2006
(52 Weeks) (52 Weeks) (53 Weeks)
(Dollars in thousands)
Operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 844,925 $ 785,746 $ 645,603
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,826 233,374 227,454
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,071 32,823 36,384
Deferred tax provision/(benefit) . . . . . . . . . . . . . . . . . 18,543 52,244 (57,693)
(Gains)/losses on disposals and impairment
charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,706) (1,391) 48,023
Other items, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,343 11,066 39,066
Changes in current assets and liabilities, excluding
effects of acquisitions and divestitures:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55,832) 10,987 115,583
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (133,600) (82,534) (47,401)
Prepaid expenses and other current assets . . . . . . 5,748 14,208 13,555
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 89,160 56,524 56,545
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 28,259 (4,489) 57,353
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95,566 (46,270) (59,511)
Cash provided by operating activities . . . . . . . . 1,188,303 1,062,288 1,074,961
Investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . (301,588) (244,562) (230,577)
Proceeds from disposals of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,531 60,661 19,373
Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . (151,604) (88,996) (1,100,436)
Net proceeds/(payments) related to divestitures. . . . . . 63,481 (4,144) 856,729
Termination of net investment hedges . . . . . . . . . . . . . (93,153) — —
Other items, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,894) (49,203) 3,094
Cash used for investing activities. . . . . . . . . . . . (554,227) (326,244) (451,817)
Financing activities:
Payments on long-term debt . . . . . . . . . . . . . . . . . . . . . (368,214) (52,069) (727,772)
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . — — 230,790
Net proceeds from commercial paper and short-term
debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483,730 384,055 298,525
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (485,246) (461,237) (408,151)
Purchases of treasury stock . . . . . . . . . . . . . . . . . . . . . (580,707) (760,686) (823,370)
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . 78,596 259,816 142,046
Termination of interest rate swaps . . . . . . . . . . . . . . . . 103,522 — —
Other items, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,224 9,212 18,507
Cash used for financing activities . . . . . . . . . . . (758,095) (620,909) (1,269,425)
Cash provided by operating activities of discontinued
operations spun-off to Del Monte . . . . . . . . . . . . . . . . . — 33,511 13,312
Effect of exchange rate changes on cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,810 58,823 (5,353)
Net (decrease)/increase in cash and cash equivalents . . . (35,209) 207,469 (638,322)
Cash and cash equivalents at beginning of year . . . . . . . 652,896 445,427 1,083,749
Cash and cash equivalents at end of year . . . . . . . . . . . . $ 617,687 $ 652,896 $ 445,427

See Notes to Consolidated Financial Statements

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 H. J. Heinz Company and Subsidiaries
Notes to Consolidated Financial Statements

1. Significant Accounting Policies

Fiscal Year:
H. J. Heinz Company (the “Company”) operates on a 52-week or 53-week fiscal year ending the
Wednesday nearest April 30. However, certain foreign subsidiaries have earlier closing dates to
facilitate timely reporting. Fiscal years for the financial statements included herein ended April 30,
2008, May 2, 2007, and May 3, 2006.

Principles of Consolidation:
The consolidated financial statements include the accounts of the Company and entities in which
the Company maintains a controlling financial interest. Control is generally determined based on the
majority ownership of an entity’s voting interests. In certain situations, control is based on partic-
ipation in the majority of an entity’s economic risks and rewards. Investments in certain companies
over which the Company exerts significant influence, but does not control the financial and operating
decisions, are accounted for as equity method investments. All intercompany accounts and trans-
actions are eliminated.
As a result of general economic uncertainty, coupled with restrictions on the repatriation of
earnings, as of the end of November 2002 the Company deconsolidated its Zimbabwean operations
and classified its remaining net investment of approximately $111 million as a cost investment. In
the fourth quarter of Fiscal 2006, the Company wrote off its net investment in Zimbabwe. The
decision to write off the Zimbabwe investment related to management’s determination that this
investment was not a core business. Management’s determination was based on an evaluation of
political and economic conditions existing in Zimbabwe and the ability for the Company to recover its
cost in this investment. This evaluation considered the continued economic turmoil, further insta-
bility in the local currency and the uncertainty regarding the ability to source raw material in the
future. In Fiscal 2008, the Company sold this business resulting in an insignificant gain.

Use of Estimates:
The preparation of financial statements, in conformity with accounting principles generally
accepted in the United States of America, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.

Translation of Foreign Currencies:

For all significant foreign operations, the functional currency is the local currency. Assets and
liabilities of these operations are translated at the exchange rate in effect at each year-end. Income
statement accounts are translated at the average rate of exchange prevailing during the year.
Translation adjustments arising from the use of differing exchange rates from period to period are
included as a component of other comprehensive income/(loss) within shareholders’ equity. Gains and
losses from foreign currency transactions are included in net income for the period.

Cash Equivalents:
Cash equivalents are defined as highly liquid investments with original maturities of 90 days or
less.

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 H. J. Heinz Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)

Inventories:
Inventories are stated at the lower of cost or market. Cost is determined principally under the
average cost method.

Property, Plant and Equipment:

Land, buildings and equipment are recorded at cost. For financial reporting purposes, depre-
ciation is provided on the straight-line method over the estimated useful lives of the assets, which
generally have the following ranges: buildings—40 years or less, machinery and equipment—
15 years or less, computer software—3 to 7 years, and leasehold improvements—over the life of
the lease, not to exceed 15 years. Accelerated depreciation methods are generally used for income tax
purposes. Expenditures for new facilities and improvements that substantially extend the capacity
or useful life of an asset are capitalized. Ordinary repairs and maintenance are expensed as incurred.
When property is retired or otherwise disposed, the cost and related depreciation are removed from
the accounts and any related gains or losses are included in income. Property, plant and equipment
are reviewed for possible impairment when appropriate. The Company’s impairment review is based
on an undiscounted cash flow analysis at the lowest level for which identifiable cash flows exist.
Impairment occurs when the carrying value of the asset exceeds the future undiscounted cash flows.
When an impairment is indicated, the asset is written down to its fair value.

Intangibles:
Intangible assets with finite useful lives are amortized on a straight-line basis over the estimated
periods benefited, and are reviewed when appropriate for possible impairment, similar to property,
plant and equipment. Goodwill and intangible assets with indefinite useful lives are not amortized.
The carrying values of goodwill and other intangible assets with indefinite useful lives are tested at
least annually for impairment.

Revenue Recognition:
The Company recognizes revenue when title, ownership and risk of loss pass to the customer.
This occurs upon delivery of the product to the customer. Customers generally do not have the right to
return products unless damaged or defective. Revenue is recorded, net of sales incentives, and
includes shipping and handling charges billed to customers. Shipping and handling costs are
primarily classified as part of selling, general and administrative expenses.

Marketing Costs:
The Company promotes its products with advertising, consumer incentives and trade promo-
tions. Such programs include, but are not limited to, discounts, coupons, rebates, in-store display
incentives and volume-based incentives. Advertising costs are expensed as incurred. Consumer
incentive and trade promotion activities are recorded as a reduction of revenue or as a component of
cost of products sold based on amounts estimated as being due to customers and consumers at the end
of a period, based principally on historical utilization and redemption rates. For interim reporting
purposes, advertising, consumer incentive and product placement expenses are charged to opera-
tions as a percentage of volume, based on estimated volume and related expense for the full year.

Income Taxes:
Deferred income taxes result primarily from temporary differences between financial and tax
reporting. If it is more likely than not that some portion or all of a deferred tax asset will not be

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 H. J. Heinz Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)

realized, a valuation allowance is recognized. When assessing the need for valuation allowances, the
Company considers future taxable income and ongoing prudent and feasible tax planning strategies.
Should a change in circumstances lead to a change in judgment about the realizability of deferred tax
assets in future years, the Company would adjust related valuation allowances in the period that the
change in circumstances occurs, along with a corresponding increase or charge to income.
The Company has not provided for possible U.S. taxes on the undistributed earnings of foreign
subsidiaries that are considered to be reinvested indefinitely. Calculation of the unrecognized
deferred tax liability for temporary differences related to these earnings is not practicable.

Stock-Based Employee Compensation Plans:

Prior to May 4, 2006, the Company accounted for its stock-based compensation plans under the
measurement and recognition provisions of Accounting Principles Board Opinion No. (“APB”) 25,
Accounting for Stock Issued to Employees, and related Interpretations, as permitted by Statement of
Financial Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation
(“SFAS 123”). Under the intrinsic-value method prescribed by APB 25, compensation cost for stock
options was measured at the grant date as the excess, if any, of the quoted market price of the
Company’s stock over the exercise price of the options. Generally employee stock options were
granted at or above the grant date market price, therefore, no compensation cost was recognized for
stock option grants in prior periods; however, stock-based compensation was included as a pro-forma
disclosure in the Notes to Consolidated Financial Statements. Compensation cost for restricted stock
units was determined as the fair value of the Company’s stock at the grant date and was amortized
over the vesting period and recognized as a component of general and administrative expenses.
Effective May 4, 2006, the Company adopted SFAS No. 123R, Share-Based Payment
(“SFAS 123R”), which requires all stock-based payments to employees, including grants of employee
stock options, to be recognized in the Consolidated Statements of Income based on their fair values.
Determining the fair value of share-based awards at the grant date requires judgment in estimating
the expected term that the stock options will be outstanding prior to exercise as well as the volatility
and dividends over the expected term. Judgment is also required in estimating the amount of stock-
based awards expected to be forfeited prior to vesting. If actual forfeitures differ significantly from
these estimates, stock-based compensation expense could be materially impacted.

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 H. J. Heinz Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)

Had compensation cost for the Company’s stock option plans been determined in Fiscal 2006
based on the fair-value based method for all awards, the pro forma income and earnings per share
from continuing operations would have been as follows:

Fiscal Year Ended

May 3,
2006
(53 Weeks)
(In thousands,
except per share amounts)
Income from continuing operations:
As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $442,761
Fair value-based expense, net of tax . . . . . . . . . . . . . . . . . . . . . . . 12,333
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $430,428
Income per common share from continuing operations:
Diluted
As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... $ 1.29
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... $ 1.26
Basic
As reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... $ 1.31
Pro forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... $ 1.27

Financial Instruments:

The Company’s financial instruments consist primarily of cash and cash equivalents, receiv-
ables, accounts payable, short-term and long-term debt, swaps, forward contracts, and option
contracts. The carrying values for the Company’s financial instruments approximate fair value.
As a policy, the Company does not engage in speculative or leveraged transactions, nor does the
Company hold or issue financial instruments for trading purposes.

The Company uses derivative financial instruments for the purpose of hedging currency, debt
and interest rate exposures, which exist as part of ongoing business operations. The Company carries
derivative instruments on the balance sheet at fair value, determined by reference to quoted market
data. Derivatives with scheduled maturities of less than one year are included in receivables or
accounts payable, based on the instrument’s fair value. Derivatives with scheduled maturities
beyond one year are classified between current and long-term based on the timing of anticipated
future cash flows. The current portion of these instruments is included in receivables or accounts
payable and the long-term portion is presented as a component of other non-current assets or other
liabilities, based on the instrument’s fair value. The accounting for changes in the fair value of a
derivative instrument depends on whether it has been designated and qualifies as part of a hedging
relationship and, if so, the reason for holding it. Cash flows related to derivative instruments
designated as cash flow hedges are generally classified in the consolidated statements of cash flows
within operating activities as a component of other items, net. Cash flows related to the settlement of
derivative instruments designated as net investment hedges of foreign operations are classified in
the consolidated statements of cash flows within investing activities. Cash flows related to the
termination of derivative instruments designated as fair value hedges of fixed rate debt obligations
are classified in the consolidated statements of cash flows within financing activities.

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Notes to Consolidated Financial Statements — (Continued)

2. Recently Issued Accounting Standards

In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation
No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109
(“FIN 48”), which clarifies the accounting for uncertainty in income taxes recognized in financial
statements. This Interpretation includes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, and disclosures. See Note 7 for additional information.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”, which defines
fair value, establishes a framework for measuring fair value under generally accepted accounting
principles, and expands disclosures about fair value measurements. This statement applies when-
ever other accounting pronouncements require or permit assets or liabilities to be measured at fair
value, but does not expand the use of fair value to new accounting transactions. SFAS No. 157 is
effective for financial assets and liabilities in fiscal years beginning after November 15, 2007, and for
non-financial assets and liabilities in fiscal years beginning after November 15, 2008. The Company
will adopt SFAS No. 157 for its financial assets and liabilities on May 1, 2008, the first day of Fiscal
2009. The Company’s financial instruments consist primarily of cash and cash equivalents, receiv-
ables, accounts payable, short-term and long-term debt, swaps, forward contracts, and option
contracts. The recorded values of the Company’s financial instruments approximate fair value.
The Company is currently evaluating the impact of adopting SFAS No. 157 on its consolidated
financial statements.

In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statement Nos. 87, 88, 106 and
132(R).” SFAS No. 158 required that the Company recognize the funded status of each of its defined
pension and postretirement benefit plans as a net asset or liability in the consolidated balance sheet
and to recognize changes in that funded status in the year in which changes occur through com-
prehensive income. Effective May 2, 2007, the Company adopted these provisions of SFAS No. 158.
SFAS No. 158 also requires that employers measure plan assets and obligations as of the date of their
year-end financial statements beginning with the Company’s fiscal year ending April 29, 2009. The
Company does not expect the impact of the change in measurement date to have a material impact on
the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” and
SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—An Amendment
of ARB No. 51.” These new standards will significantly change the accounting for and reporting of
business combination transactions and noncontrolling (minority) interests in consolidated financial
statements. SFAS Nos. 141(R) and 160 are required to be adopted simultaneously and are effective
for fiscal years beginning after December 15, 2008, with early adoption prohibited. Thus, the
Company will be required to adopt these standards on April 30, 2009, the first day of Fiscal
2010. The Company is currently evaluating the impact of adopting SFAS Nos. 141(R) and 160 on
its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and
Hedging Activities—an amendment of FASB Statement No. 133”. This new standard requires
enhanced disclosures about how and why an entity uses derivative instruments, how derivative
instruments and related hedged items are accounted for under SFAS No. 133 and its related
interpretations, and how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This statement is effective for financial statements

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Notes to Consolidated Financial Statements — (Continued)

issued for fiscal years and interim periods beginning after November 15, 2008. The Company is
currently evaluating the impact of adopting SFAS No. 161 in the fourth quarter of Fiscal 2009.

3. Discontinued Operations

During fiscal years 2003 through 2006, the Company focused on exiting non-strategic business
operations. Certain of these businesses which were sold were accounted for as discontinued
operations.

In the fourth quarter of Fiscal 2006, the Company completed the sale of the European seafood
business, which included the brands of John West», Petit Navire», Marie Elisabeth» and Mareblu».
The Company received net proceeds of $469.3 million for this disposal and recognized a $199.8 million
pretax ($122.9 million after tax) gain which has been recorded in discontinued operations. Also in the
fourth quarter of Fiscal 2006, the Company completed the sale of the Tegel» poultry business in New
Zealand and received net proceeds of $150.4 million, and recognized a $10.4 million non-taxable gain,
which is also recorded in discontinued operations.

In accordance with accounting principles generally accepted in the United States of America, the
operating results related to these businesses have been included in discontinued operations in the
Company’s consolidated statements of income. The Company recorded a loss of $3.3 million ($5.9 million
after-tax) from these businesses for the year ended May 2, 2007, primarily resulting from purchase price
adjustments pursuant to the transaction agreements. These discontinued operations generated sales of
$688.0 million (partial year) and net income of $169.1 million (net of $90.2 million in tax expense) for the
year ended May 3, 2006.

In addition, net income from discontinued operations includes amounts related to the favorable
settlement of tax liabilities associated with the businesses spun-off to Del Monte in Fiscal 2003. Such
amounts totaled $33.7 million for the year ended May 3, 2006.

4. Fiscal 2006 Transformation Costs

In executing its strategic transformation during Fiscal 2006, the Company incurred the follow-
ing associated costs. These costs were directly linked to the Company’s transformation strategy.

Reorganization Costs:

In Fiscal 2006, the Company recorded pretax integration and reorganization charges for tar-
geted workforce reductions consistent with the Company’s goals to streamline its businesses totaling
$124.7 million ($80.3 million after tax). Additionally, pretax costs of $22.0 million ($16.3 million after
tax) were incurred in Fiscal 2006, primarily as a result of the strategic reviews related to the portfolio
realignment.

The total impact of these initiatives on continuing operations in Fiscal 2006 was $146.7 million
pre-tax ($96.6 million after-tax), of which $17.4 million was recorded as costs of products sold and
$129.3 million in selling, general and administrative expenses (“SG&A”). In addition, $10.5 million
was recorded in discontinued operations, net of tax. The amount included in accrued expenses related
to these initiatives totaled $51.6 million at May 3, 2006, all of which was paid during Fiscal 2007.

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Notes to Consolidated Financial Statements — (Continued)

Other Divestitures/Impairment Charges:

The following (losses)/gains or non-cash asset impairment charges were recorded in continuing
operations during Fiscal 2006:
Business or Product Line Segment Pre-Tax After-Tax
(In millions)
Loss on sale of Seafood business in Israel . . . . . . . . . . . . .. Rest of World $ (15.9) $ (15.9)
Impairment charge on Portion Pac Bulk product line. . . .. U.S. Foodservice (21.5) (13.3)
Impairment charge on U.K. Frozen and Chilled product
lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Europe (15.2) (15.2)
Impairment charge on European production assets . . . . .. Europe (18.7) (18.7)
Impairment charge on Noodle product line in Indonesia .. Asia/Pacific (15.8) (8.5)
Impairment charge on investment in Zimbabwe
business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Rest of World (111.0) (105.6)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. Various (1.5) 0.5
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(199.6) $(176.7)

Of the above pre-tax amounts, $74.1 million was recorded in cost of products sold, $15.5 million in
SG&A, $111.0 million in asset impairment charges for cost and equity investments, and $(1.0) million
in other expense.
Also during the third quarter of Fiscal 2006, the Company sold its equity investment in The Hain
Celestial Group, Inc. (“Hain”) and recognized a $6.9 million ($4.5 million after-tax) loss which is
recorded within other expense, net. Net proceeds from the sale of this investment were $116.1 million.
During the third quarter of Fiscal 2005, the Company recognized a $64.5 million impairment charge
on its equity investment in Hain. The charge reduced Heinz’s carrying value in Hain to fair market
value as of January 26, 2005, with no resulting impact on cash flows. Due to the uncertainty of
realizability and executing possible tax planning strategies, the Company recorded a valuation
allowance of $27.3 million against the potential tax benefits primarily related to the Hain impair-
ment. This valuation allowance was subsequently released in Fiscal 2006 based upon tax planning
strategies that are expected to generate sufficient capital gains that will occur during the capital loss
carryforward period. See further discussion in Note 7.
There were no material gains/(losses) on divested businesses or asset impairment charges in
Fiscal 2007 or 2008.

Other Non-recurring—American Jobs Creation Act:

The American Jobs Creation Act (“AJCA”) provided a deduction of 85% of qualified foreign
dividends in excess of a “Base Period” dividend amount. During Fiscal 2006, the Company finalized
plans to repatriate dividends that qualified under the AJCA. The total impact of the AJCA on tax
expense for Fiscal 2006 was $17.3 million, of which $24.4 million of expense was recorded in
continuing operations and $7.1 million was a benefit in discontinued operations.

5. Acquisitions
During the first quarter of Fiscal 2008, the Company acquired the license to the Cottee’s» and
Rose’s» premium branded jams, jellies and toppings business in Australia and New Zealand for
approximately $58 million. During the second quarter of Fiscal 2008, the Company acquired the
remaining interest in its Shanghai LongFong Foods business for approximately $18 million in cash

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Notes to Consolidated Financial Statements — (Continued)

and $15 million of deferred consideration. During the fourth quarter of Fiscal 2008, the Company
acquired the Wyko» sauce business in the Netherlands for approximately $66 million. The Company
also made payments during Fiscal 2008 related to acquisitions completed in prior fiscal years, none of
which were significant.
During Fiscal 2007, the Company acquired Renée’s Gourmet Foods, a Canadian manufacturer of
premium chilled salad dressings, sauces, dips, marinades and mayonnaise, for approximately
$68 million. In addition, during Fiscal 2007, the Company acquired the remaining interest in its
Petrosoyuz joint venture for approximately $15 million. The Company also made payments during
Fiscal 2007 related to acquisitions completed in prior fiscal years, none of which were significant.
The Company acquired the following businesses during Fiscal 2006 for a total purchase price of
$1.1 billion:
• In August 2005, the Company acquired HP Foods Limited, HP Foods Holdings Limited, and
HP Foods International Limited (collectively referred to as “HPF”) for a purchase price of
approximately $877 million. HPF is a manufacturer and marketer of sauces which are
primarily sold in the United Kingdom, the United States, and Canada. The Company acquired
HPF’s brands including HP» and Lea & Perrins» and a perpetual license to market Amoy»
brand Asian sauces and products in Europe. During the fourth quarter of Fiscal 2006, the
Company divested the Ethnic Foods division of HPF for net proceeds totaling approximately
$43 million. In March 2006, the British Competition Commission formally cleared this
acquisition, concluding that the acquisition may not be expected to result in a substantial
lessening of competition within the markets for tomato ketchup, brown sauce, barbeque sauce,
canned baked beans and canned pasta in the United Kingdom.
• On April 28, 2005, the Company acquired a controlling interest in Petrosoyuz, a leading
Russian maker of ketchup, condiments and sauces. Petrosoyuz’s business includes brands
such as Pikador», Derevenskoye», Mechta Hoziajki» and Moya Sem’ya».
• In July 2005, the Company acquired Nancy’s Specialty Foods, Inc., which produces premium
appetizers, quiche entrees and desserts in the United States and Canada.
• In March 2006, the Company acquired Kabobs, Inc., which produces premium hors d’oeuvres
in the United States.
In addition, the Company made payments during Fiscal 2006 related to acquisitions completed
in prior fiscal years, none of which were significant.
All of the above-mentioned acquisitions have been accounted for as purchases and, accordingly,
the respective purchase prices have been allocated to the respective assets and liabilities based upon
their estimated fair values as of the acquisition date. Operating results of the businesses acquired
have been included in the consolidated statements of income from the respective acquisition dates
forward. Pro forma results of the Company, assuming all of the acquisitions had occurred at the
beginning of each period presented, would not be materially different from the results reported.
There are no significant contingent payments, options or commitments associated with any of the
acquisitions, except as disclosed above.

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Notes to Consolidated Financial Statements — (Continued)

6. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the fiscal year ended April 30, 2008, by reportable
segment, are as follows:
North
American Rest
Consumer Asia/ U.S. of
Products Europe Pacific Foodservice World Total
(Thousands of dollars)
Balance at May 2, 2007 . .. $1,081,673 $1,259,514 $214,964 $262,823 $15,665 $2,834,639
Acquisitions . . . . . . . . . . .. — 15,259 47,603 — — 62,862
Purchase accounting
adjustments . . . . . . . . .. 2,820 (2,155) — — — 665
Disposals . . . . . . . . . . . . .. — (1,239) — — — (1,239)
Translation adjustments .. 11,795 69,549 19,852 — (661) 100,535
Balance at April 30,
2008 . . . . . . . . . . . . . . . . $1,096,288 $1,340,928 $282,419 $262,823 $15,004 $2,997,462

The annual impairment tests are performed as of the last day of the third quarter of each fiscal
year unless events suggest an impairment may have occurred in the interim.
The Company finalized the purchase price allocation for the Cottee’s» and Rose’s» acquisition
during the fourth quarter of Fiscal 2008. The Company also recorded a preliminary purchase price
allocation related to the Wyko» acquisition, which is expected to be finalized upon completion of
valuation procedures.
Trademarks and other intangible assets at April 30, 2008 and May 2, 2007, subject to amor-
tization expense, are as follows:
April 30, 2008 May 2, 2007
Gross Accum Amort Net Gross Accum Amort Net
(Thousands of dollars)
Trademarks . . . . . ... $200,966 $ (69,104) $131,862 $196,703 $ (63,110) $133,593
Licenses . . . . . . . . ... 208,186 (141,070) 67,116 208,186 (135,349) 72,837
Recipes/processes . ... 71,495 (19,306) 52,189 64,315 (15,779) 48,536
Customer related
assets . . . . . . . . ... 183,204 (31,418) 151,786 152,668 (19,183) 133,485
Other . . . . . . . . . . ... 73,848 (59,639) 14,209 70,386 (56,344) 14,042
$737,699 $(320,537) $417,162 $692,258 $(289,765) $402,493

Amortization expense for trademarks and other intangible assets subject to amortization was
$27.7 million, $25.7 million and $27.6 million for the fiscal years ended April 30, 2008, May 2, 2007
and May 3, 2006, respectively. The finalization of the purchase price allocation for the HP Foods
acquisition resulted in a $5.3 million adjustment to amortization expense during the second quarter
of Fiscal 2007. Based upon the amortizable intangible assets recorded on the balance sheet as of
April 30, 2008, amortization expense for each of the next five fiscal years is estimated to be
approximately $28 million.
Intangible assets not subject to amortization at April 30, 2008 totaled $996.9 million and
consisted of $825.2 million of trademarks, $135.3 million of recipes/processes, and $36.4 million of
licenses. Intangibles assets not subject to amortization at May 2, 2007 totaled $902.7 million and

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Notes to Consolidated Financial Statements — (Continued)

consisted of $759.2 million of trademarks, $126.6 million of recipes/processes, and $16.9 million of
licenses.

7. Income Taxes

The following table summarizes the provision/(benefit) for U.S. federal, state and foreign taxes
on income from continuing operations.
2008 2007 2006
(Dollars in thousands)
Current:
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,638 $ 89,020 $ 71,533
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,323 9,878 14,944
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258,365 181,655 225,498
354,326 280,553 311,975
Deferred:
U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,975 104,113 (54,957)
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,381 5,444 3,015
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,187 (57,313) (9,333)
18,543 52,244 (61,275)
Provision for income taxes . . . . . . . . . . . . . . . . . . . . $372,869 $332,797 $250,700

Tax benefits related to stock options and other equity instruments recorded directly to additional
capital totaled $6.2 million in Fiscal 2008, $15.5 million in Fiscal 2007 and $6.7 million in Fiscal 2006.

The components of income from continuing operations before income taxes consist of the
following:
2008 2007 2006
(Dollars in thousands)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 268,450 $ 293,580 $ 87,409
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 949,344 830,819 606,052
From continuing operations . . . . . . . . . . . . . . . . . . $1,217,794 $1,124,399 $693,461

The differences between the U.S. federal statutory tax rate and the Company’s consolidated
effective tax rate on continuing operations are as follows:
2008 2007 2006

U.S. federal statutory tax rate. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 35.0% 35.0% 35.0%

Tax on income of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . .. . . (4.5) (5.4) (3.6)
State income taxes (net of federal benefit) . . . . . . . . . . . . . . . . . .. . . 0.7 1.0 1.8
Earnings repatriation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 3.3 9.6 4.3
Reduction of tax reserves for statute of limitations expiration . .. . . (0.1) (5.9) —
Effects of revaluation of tax basis of foreign assets . . . . . . . . . . .. . . (2.4) (4.6) (2.3)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . (1.4) (0.1) 1.0
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.6% 29.6% 36.2%

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Notes to Consolidated Financial Statements — (Continued)

The increase in the effective tax rate in Fiscal 2008 is primarily the result of benefits recognized
in Fiscal 2007 for reversal of a foreign tax reserve, tax planning completed in a foreign jurisdiction,
and R&D tax credits. Those prior year benefits were partially offset by lower repatriation costs and
increased benefits from tax audit settlements occurring during Fiscal 2008, along with changes in
valuation allowances for foreign losses. The decrease in the effective tax rate in Fiscal 2007 was
primarily the result of an increase in benefits associated with tax planning, a reduction in foreign tax
reserves, a prior year write-off of investment in affiliates for which no tax benefit could be recognized,
a decrease in costs associated with tax audit settlements and decreases to foreign statutory tax rates,
partially offset by increased costs of repatriation and changes in valuation allowances. The Fiscal
2006 effective tax rate was unfavorably impacted by increased costs of repatriation including the
effects of the AJCA, a reduction in tax benefits associated with tax planning, increased costs
associated with audit settlements and the write-off of investment in affiliates for which no tax
benefit could be recognized, partially offset by the reversal of valuation allowances, the benefit of
increased profits in lower tax rate jurisdictions and a reduction in tax reserves.

The following table and note summarize deferred tax (assets) and deferred tax liabilities as of
April 30, 2008 and May 2, 2007.
2008 2007
(Dollars in thousands)
Depreciation/amortization . .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. $ 689,112 $ 634,192
Benefit plans . . . . . . . . . . . .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. 33,719 43,632
Deferred income . . . . . . . . . .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. 30,145 —
Other . . . . . . . . . . . . . . . . . .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. 56,160 39,377
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 809,136 717,201
Operating loss carryforwards .. .. .. . .. .. .. .. .. .. .. . .. .. .. (40,852) (41,210)
Benefit plans . . . . . . . . . . . . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. (248,808) (198,011)
Depreciation/amortization . . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. (69,909) (53,722)
Tax credit carryforwards . . . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. (12,998) (851)
Deferred income . . . . . . . . . . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. (39,942) —
Other . . . . . . . . . . . . . . . . . . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. (96,618) (72,593)
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (509,127) (366,387)
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,008 44,935
Net deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 352,017 $ 395,749

The Company also has foreign deferred tax assets and valuation allowances of $143.0 million,
each related to statutory increases in the capital tax bases of certain internally generated intangible
assets for which the probability of realization is remote.

The Company records valuation allowances to reduce deferred tax assets to the amount that is
more likely than not to be realized. When assessing the need for valuation allowances, the Company
considers future taxable income and ongoing prudent and feasible tax planning strategies. Should a
change in circumstances lead to a change in judgment about the realizability of deferred tax assets in
future years, the Company would adjust related valuation allowances in the period that the change in
circumstances occurs, along with a corresponding increase or charge to income.

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Notes to Consolidated Financial Statements — (Continued)

The resolution of tax reserves and changes in valuation allowances could be material to the
Company’s results of operations for any period, but is not expected to be material to the Company’s
financial position.
The net change in the Fiscal 2008 valuation allowance shown above is an increase of $7.0 million.
The increase was primarily due to the recording of additional valuation allowance for state deferred
tax assets that are not expected to be utilized prior to their expiration date. The net change in the
Fiscal 2007 valuation allowance was an increase of $14.0 million. The increase was primarily due to
the recording of additional valuation allowance for state and foreign loss carryforwards that were not
expected to be utilized prior to their expiration date. The net change in the Fiscal 2006 valuation
allowance was a decrease of $39.3 million. The decrease was primarily due to the reversal of valuation
allowances of $27.3 million in continuing operations related to the non-cash asset impairment
charges recorded in Fiscal 2005 on cost and equity investments.
At the end of Fiscal 2008, foreign operating loss carryforwards totaled $125.2 million. Of that
amount, $70.9 million expire between 2009 and 2018; the other $54.3 million do not expire. Deferred
tax assets of $10.3 million have been recorded for state operating loss carryforwards. These losses
expire between 2009 and 2028.
The Company adopted FIN 48 on May 3, 2007. As a result of adoption, the Company recognized a
$9.3 million decrease to retained earnings and a $1.7 million decrease to additional capital from the
cumulative effect of adoption.
Changes in the total amount of gross unrecognized tax benefits are as follows:
(Dollars in
millions)

Balance at May 3, 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . $183.7

Increases for tax positions of prior years. . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . 10.6
Decreases for tax positions of prior years . . . . . . . . . . . . . . . .. .. .. .. .. .. .. . (31.0)
Increases based on tax positions related to the current year .. .. .. .. .. .. .. . 9.9
Decreases due to settlements with taxing authorities . . . . . .. .. .. .. .. .. .. . (41.0)
Decreases due to lapse of statute of limitations . . . . . . . . . . .. .. .. .. .. .. .. . (3.1)
Balance at April 30, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $129.1

The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate
was $55.7 million and $71.2 million, on April 30, 2008 and May 3, 2007, respectively.
The Company classifies interest and penalties on tax uncertainties as a component of the
provision for income taxes. For Fiscal 2008, the approximate amount of interest and penalties
included in the provision for income taxes was $10.7 million and $0.6 million, respectively. The total
amount of interest and penalties accrued as of May 3, 2007 was $55.9 million and $2.2 million,
respectively. The corresponding amounts of accrued interest and penalties at April 30, 2008 were
$57.2 million and $2.8 million, respectively.
It is reasonably possible that the amount of unrecognized tax benefits will decrease by as much
as $24 million in the next 12 months primarily due to the progression of federal, state, and foreign
audits in process. In addition, it is also reasonably possible that during the next 12 months the
Company may reach a conclusion regarding its appeal, filed October 15, 2007, of a U.S. Court of
Federal Claims decision regarding a refund claim resulting from a Fiscal 1995 transaction. Upon
conclusion of the appeal, the amount of unrecognized tax benefits will decrease by approximately
$43 million the benefit of which, if any, would be reflected through additional capital.

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Notes to Consolidated Financial Statements — (Continued)

The provision for income taxes consists of provisions for federal, state and foreign income taxes.
The Company operates in an international environment with significant operations in various
locations 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 Canada, Italy, the United Kingdom and the United States. The Company has
substantially concluded all U.S. federal income tax matters for years through Fiscal 2005, with
the exception of the Company’s appeal of a U.S. Court of Federal Claims decision regarding a refund
claim. In the Company’s major non-U.S. jurisdictions, the Company has substantially concluded all
income tax matters for years through Fiscal 2002.
Undistributed earnings of foreign subsidiaries considered to be indefinitely reinvested
amounted to $3.3 billion at April 30, 2008.
During the first quarter of Fiscal 2007, a foreign subsidiary of the Company revalued certain of
its assets, under local law, increasing the local tax basis by approximately $245 million. As a result of
this revaluation, the Company incurred a foreign tax liability of approximately $30 million related to
this revaluation which was paid during the third quarter of Fiscal 2007. This revaluation is expected
to benefit cash flow from operations by approximately $90 million over the five to twenty year tax
amortization period.

8. Debt
Short-term debt consisted of bank debt and other borrowings of $124.3 million and $165.1 million
as of April 30, 2008 and May 2, 2007, respectively. The weighted average interest rate was 6.9% and
5.4% for Fiscal 2008 and Fiscal 2007, respectively.
The Company maintains a $2 billion credit agreement that expires in August 2009. The credit
agreement supports the Company’s commercial paper borrowings. As a result, the commercial paper
borrowings are classified as long-term debt based upon the Company’s intent and ability to refinance
these borrowings on a long-term basis. In addition, the Company has $1.1 billion of foreign lines of
credit available at April 30, 2008.

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Long-term debt was comprised of the following as of April 30, 2008 and May 2, 2007:
2008 2007
(Dollars in thousands)
Commercial Paper (variable rate) . . . . . . . . . . . . . . . . . . . . .. . $1,223,367 $ 673,604
6.00% U.S. Dollar Notes due March 2008 . . . . . . . . . . . . . . .. . — 299,824
6.226% Heinz Finance Preferred Stock due July 2008 . . . . .. . 325,000 325,000
6.625% U.S. Dollar Notes due July 2011 . . . . . . . . . . . . . . . .. . 749,668 749,563
6.00% U.S. Dollar Notes due March 2012 . . . . . . . . . . . . . . .. . 598,301 632,201
U.S. Dollar Remarketable Securities due December 2020 . . .. . 800,000 800,000
6.375% U.S. Dollar Debentures due July 2028 . . . . . . . . . . .. . 230,101 229,842
6.25% British Pound Notes due February 2030 . . . . . . . . . . .. . 246,386 247,089
6.75% U.S. Dollar Notes due March 2032 . . . . . . . . . . . . . . .. . 449,855 449,779
Canadian Dollar Credit Agreement due October 2010 . . . . .. . 144,669 157,842
Other U.S. Dollar due May 2008—November 2034
(3.00—7.97)% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 56,136 59,216
Other Non-U.S. Dollar due May 2008—March 2022
(7.00—11.00)% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 37,360 21,675
4,860,843 4,645,635
SFAS No. 133 Hedge Accounting Adjustments (See Note 13) . . 198,521 71,195
Less portion due within one year . . . . . . . . . . . . . . . . . . . . . . . . (328,418) (303,189)
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,730,946 $4,413,641
Weighted-average interest rate on long-term debt, including
the impact of applicable interest rate swaps . . . . . . . . . . . . . 5.90% 6.14%

During the fourth quarter of Fiscal 2008, the Company paid off $300 million of notes which
matured on March 15, 2008. During Fiscal 2008 the Company also repurchased $34.5 million of its
6.0% notes due 2012 and effectively terminated the corresponding interest rate swaps.
During Fiscal 2007, the Company repurchased $3.2 million of its 6.375% notes due 2028 and
$23.3 million of its 6.75% notes due 2032 and terminated the corresponding interest rate swaps.
The fair value of the debt obligations approximated the recorded value as of April 30, 2008 and
May 2, 2007. Annual maturities of long-term debt during the next five fiscal years are $328.4 million
in 2009, $1,226.5 million in 2010, $160.8 million in 2011, $1,389.7 million in 2012 and $1.3 million in
2013.
As of April 30, 2008, the Company had $800 million of remarketable securities due December
2020. On December 1, 2005, the Company remarketed the $800 million remarketable securities at a
coupon of 6.428% and amended the terms of the securities so that the securities will be remarketed
every third year rather than annually. The next remarketing is scheduled for December 1, 2008. If
the securities are not remarketed, then the Company is required to repurchase all of the securities at
100% of the principal amount plus accrued interest. The Company intends to remarket the securities
in 2008; therefore, the debt is classified as long-term at April 30, 2008.
H.J. Heinz Finance Company’s 3,250 mandatorily redeemable preferred shares are classified as
long-term debt as a result of the adoption of SFAS No. 150. Each share of preferred stock is entitled to
annual cash dividends at a rate of 6.226% or $6,226 per share. On July 15, 2008, each share will be
redeemed for $100,000 in cash for a total redemption price of $325 million.

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9. Supplemental Cash Flows Information

2008 2007 2006
(Dollars in thousands)
Cash Paid During the Year For:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $360,698 $268,781 $ 292,285
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $261,283 $283,431 $ 326,370
Details of Acquisitions:
Fair value of assets . . . . . . . . . . . . . . . . . . . . . . . . . . $165,093 $108,438 $1,296,379
Liabilities* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,489 19,442 192,486
Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151,604 88,996 1,103,893
Less cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 3,457
Net cash paid for acquisitions . . . . . . . . . . . . . . . . . . $151,604 $ 88,996 $1,100,436

* Includes obligations to sellers of $11.5 million, $2.0 million and $5.7 million in 2008, 2007 and 2006,
respectively.
A capital lease obligation of $51.0 million was incurred when the Company entered into a lease
for equipment during the first quarter of Fiscal 2007. This equipment was previously under an
operating lease. This non-cash transaction has been excluded from the consolidated statement of
cash flows for the year ended May 2, 2007.

10. Employees’ Stock Incentive Plans and Management Incentive Plans

As of April 30, 2008, the Company had outstanding stock option awards, restricted stock units
and restricted stock awards issued pursuant to various shareholder-approved plans and a
shareholder-authorized employee stock purchase plan. The compensation cost related to these plans
recognized in general and administrative expenses, and the related tax benefit was $31.7 million and
$11.1 million for the fiscal year ended April 30, 2008, respectively and $32.0 million and $11.1 million
for the fiscal year ended May 2, 2007, respectively.
The Company has two plans from which it can issue equity based awards, the Fiscal Year 2003
Stock Incentive Plan (the “2003 Plan”), which was approved by shareholders on September 12, 2002,
and the 2000 Stock Option Plan (the “2000 Plan”), which was approved by shareholders on
September 12, 2000. The Company’s primary means for issuing equity-based awards is the 2003
Plan. Pursuant to the 2003 Plan, the Management Development & Compensation Committee is
authorized to grant a maximum of 9.4 million shares for issuance as restricted stock units or
restricted stock. Any available shares may be issued as stock options. The maximum number of
shares that may be granted under this plan is 18.9 million shares. Shares issued under these plans
are sourced from available treasury shares.
On May 4, 2006, the Company adopted SFAS 123R and began recognizing the cost of all employee
stock options on a straight-line basis over their respective requisite service periods (generally equal
to an award’s vesting period), net of estimated forfeitures, using the modified-prospective transition
method. Under this transition method, Fiscal 2008 and 2007 results include stock-based compen-
sation expense related to stock options granted on or prior to, but not vested as of, May 3, 2006, based
on the grant date fair value originally estimated and disclosed in a pro-forma manner in prior period
financial statements in accordance with the original provisions of SFAS 123. All stock-based pay-
ments granted subsequent to May 3, 2006, will be expensed based on the grant date fair value

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estimated in accordance with the provisions of SFAS 123R. All stock-based compensation expense is
recognized as a component of general and administrative expenses. Results for prior periods have not
been restated.

SFAS 123R also requires the attribution of compensation expense based on the concept of
“requisite service period.” For awards with vesting provisions tied to retirement status (i.e., non-
substantive vesting provisions,) compensation cost is recognized from the date of grant to the earlier
of the vesting date or the date of retirement-eligibility. The use of the non-substantive vesting
approach does not affect the overall amount of compensation expense recognized, but could accel-
erate the recognition of expense. The Company will continue to follow its previous vesting approach
for the remaining portion of those outstanding awards that were unvested and granted prior to
May 4, 2006, and accordingly, will recognize expense from the grant date to the earlier of the actual
date of retirement or the vesting date. Had the Company previously applied the accelerated method
of expense recognition, the impact would have been immaterial to the fiscal year ended May 3, 2006.

Stock Options:

Stock options generally vest over a period of one to four years after the date of grant. Awards
granted prior to Fiscal 2004 generally had a vesting period of three years. Prior to Fiscal 2006, awards
generally had a maximum term of ten years. Beginning in Fiscal 2006, awards have a maximum term
of seven years.

In accordance with their respective plans, stock option awards are forfeited if a holder volun-
tarily terminates employment prior to the vesting date. The Company estimates forfeitures based on
an analysis of historical trends updated as discrete new information becomes available and will be re-
evaluated on an annual basis. Compensation cost in any period is at least equal to the grant-date fair
value of the vested portion of an award on that date.

The Company previously presented all benefits of tax deductions resulting from the exercise of
stock-based compensation as operating cash flows in the consolidated statements of cash flows. Upon
adoption of SFAS 123R, the benefit of tax deductions in excess of the compensation cost recognized for
those options (excess tax benefits) are classified as financing cash flows. For the fiscal year ended,
April 30, 2008, $2.7 million of cash tax benefits was reported as an operating cash inflow and
$1.7 million of excess tax benefits as a financing cash inflow. For the fiscal year ended, May 2, 2007,
$10.4 million of cash tax benefits was reported as an operating cash inflow and $4.6 million of excess
tax benefits as a financing cash inflow.

As of April 30, 2008, 29,994 shares remained available for issuance under the 2000 Plan. During
the fiscal year ended April 30, 2008, 29,866 shares were forfeited and returned to the plan. During the
fiscal year ended April 30, 2008, 12,839 shares were issued from the 2000 Plan.

A summary of the Company’s 2003 Plan at April 30, 2008 is as follows:

2003 Plan
(Amounts in
thousands)
Number of shares authorized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. . .. 18,869
Number of stock option shares granted . . . . . . . . . . . . . . . . . . . . . . .. .. .. . .. (3,347)
Number of stock option shares forfeited and returned to the plan . .. .. .. . .. 178
Number of restricted stock units and restricted stock issued . . . . . .. .. .. . .. (3,421)
Shares available for grant as stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,279

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During Fiscal 2008, the Company granted 1,352,155 option awards to employees sourced from
the 2000 and 2003 Plans. The weighted average fair value per share of the options granted during the
fiscal years ended April 30, 2008, May 2, 2007 and May 3, 2006 as computed using the Black-Scholes
pricing model was $6.25, $6.69, and $6.66, respectively. The weighted average assumptions used to
estimate these fair values are as follows:
Fiscal Year Ended
April 30, May 2, May 3,
2008 2007 2006

Dividend yield. . . . . . . .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. 3.3% 3.3% 3.2%

Expected volatility . . . .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. 15.8% 17.9% 22.0%
Expected term (years). .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. 5.0 5.0 5.0
Risk-free interest rate .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. 4.3% 4.7% 4.0%
The dividend yield assumption is based on the current fiscal year dividend payouts. The
Company estimates expected volatility and expected option life assumption consistent with
SFAS 123R. The expected volatility of the Company’s common stock at the date of grant is estimated
based on a historic daily volatility rate over a period equal to the average life of an option. The
weighted average expected life of options is based on consideration of historical exercise patterns
adjusted for changes in the contractual term and exercise periods of current awards. The risk-free
interest rate is based on the U.S. Treasury (constant maturity) rate in effect at the date of grant for
periods corresponding with the expected term of the options.
A summary of the Company’s stock option activity and related information is as follows:
Weighted
Average
Number of Exercise Price Aggregate
Options (per share) Intrinsic Value
(Amounts in thousands, except per share data)
Options outstanding at April 27, 2005 . . . . .. .. .. . 35,464 $38.27 $1,357,071
Options granted . . . . . . . . . . . . . . . . . . . . . .. .. .. . 1,165 37.01 43,126
Options exercised . . . . . . . . . . . . . . . . . . . . .. .. .. . (4,575) 30.66 (140,266)
Options forfeited and returned to the plan .. .. .. . (539) 38.06 (20,505)
Options outstanding at May 3, 2006 . . . . . .. .. .. . 31,515 39.33 1,239,426
Options granted . . . . . . . . . . . . . . . . . . . . . .. .. .. . 895 41.92 37,515
Options exercised . . . . . . . . . . . . . . . . . . . . .. .. .. . (7,266) 35.77 (259,860)
Options forfeited and returned to the plan .. .. .. . (347) 44.60 (15,481)
Options outstanding at May 2, 2007 . . . . . .. .. .. . 24,797 40.39 1,001,600
Options granted . . . . . . . . . . . . . . . . . . . . . .. .. .. . 1,352 45.54 61,579
Options exercised . . . . . . . . . . . . . . . . . . . . .. .. .. . (2,116) 37.31 (78,960)
Options forfeited and returned to the plan .. .. .. . (1,899) 51.32 (97,461)
Options outstanding at April 30, 2008 . . . . . . . . . . . 22,134 $40.06 $ 886,758
Options vested and exercisable at May 3, 2006 . . . . 25,545 $39.29 $1,003,646
Options vested and exercisable at May 2, 2007 . . . . 21,309 $40.88 $ 871,095
Options vested and exercisable at April 30, 2008 . . 19,249 $39.77 $ 765,552

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The following summarizes information about shares under option in the respective exercise price
ranges at April 30, 2008:
Options Outstanding Options Exercisable
Weighted- Weighted- Weighted-
Average Average Average
Remaining Remaining Remaining Weighted-
Range of Exercise Number Life Exercise Price Number Life Average
Price Per Share Outstanding (Years) Per Share Exercisable (Years) Exercise Price
(Options in thousands)
$29.18-$35.38 . . . . . . 7,357 3.8 $33.32 7,326 3.8 $33.31
$35.39-$44.77 . . . . . . 9,506 3.1 40.46 7,965 2.8 40.71
$44.78-$54.00 . . . . . . 5,271 1.7 48.76 3,958 0.2 49.83
22,134 3.0 $40.06 19,249 2.6 $39.77

The Company received proceeds of $78.6 million, $259.8 million, and $142.0 million from the
exercise of stock options during the fiscal years ended April 30, 2008, May 2, 2007 and May 3, 2006,
respectively. The tax benefit recognized as a result of stock option exercises was $4.4 million,
$15.2 million and $6.7 million for the fiscal years ended April 30, 2008, May 2, 2007 and May 3,
2006, respectively.
A summary of the status of the Company’s unvested stock options is as follows:
Weighted
Average
Grant Date
Number of Fair Value
Options (per share)
(Amounts in thousands,
except per share data)
Unvested options at May 2, 2007 . . . . . . . . . .. .. .. .. .. .. . .. .. . 3,488 $6.98
Options granted . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. . .. .. . 1,352 6.25
Options vested . . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. .. .. . .. .. . (1,886) 6.88
Options forfeited and returned to the plan . .. .. .. .. .. .. . .. .. . (69) 6.98
Unvested options at April 30, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . 2,885 $7.07

Unrecognized compensation cost related to unvested option awards under the 2000 and 2003
Plans totaled $8.5 million and $8.8 million as of April 30, 2008 and May 2, 2007, respectively. This cost
is expected to be recognized over a weighted average period of 2.3 years.

Restricted Stock Units and Restricted Shares:

The 2003 Plan authorizes up to 9.4 million shares for issuance as restricted stock units (“RSUs”)
or restricted stock with vesting periods from the first to the fifth anniversary of the grant date as set
forth in the award agreements. Upon vesting, the RSUs are converted into shares of the Company’s
stock on a one-for-one basis and issued to employees, subject to any deferral elections made by a
recipient or required by the plan. Restricted stock is reserved in the recipients’ name at the grant date
and issued upon vesting. The Company is entitled to an income tax deduction in an amount equal to
the taxable income reported by the holder upon vesting of the award. RSUs generally vest over a
period of one to four years after the date of grant.
Total compensation expense relating to RSUs and restricted stock was $21.1 million, $18.7 mil-
lion and $21.5 million for the fiscal years ended April 30, 2008, May 2, 2007 and May 3, 2006,
respectively. Unrecognized compensation cost in connection with these grants totaled $35.7 million,

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$28.4 million and $32.8 million at April 30, 2008, May 2, 2007 and May 3, 2006, respectively. The cost
is expected to be recognized over a weighted-average period of 2.3 years. The unearned compensation
balance of $32.8 million as of May 4, 2006 related to RSUs and restricted stock awards were
reclassified into additional capital upon adoption of SFAS 123R.
A summary of the Company’s RSU and restricted stock awards at April 30, 2008 is as follows:
2003 Plan
(Amounts in thousands)
Number of shares authorized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,440
Number of shares reserved for issuance . . . . . . . . . . . . . . . . . . . . . . . (4,072)
Number of shares forfeited and returned to the plan . . . . . . . . . . . . 651
Shares available for grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,019

A summary of the activity of unvested RSU and restricted stock awards and related information
is as follows:
Weighted
Average
Grant Date
Fair Value
Number of Units (Per Share)
(Amounts in thousands,
except per share data)
Unvested units and stock at May 2, 2007 . . . . . . . .. .. .. .. . 2,025 $36.57
Units and stock granted . . . . . . . . . . . . . . . . . . . . . .. .. .. .. . 715 46.00
Units and stock vested . . . . . . . . . . . . . . . . . . . . . . .. .. .. .. . (579) 35.94
Units and stock forfeited and returned to the plan .. .. .. .. . (74) 38.92
Unvested units and stock at April 30, 2008 . . . . . . . . . . . . . . . 2,087 $39.88

Grants of restricted stock and RSUs were 364,112 and 708,180 for the fiscal years ended May 2,
2007 and May 3, 2006, respectively. Restricted stock and RSUs that vested during the fiscal years
ended May 2, 2007 and May 3, 2006 were 130,803 and 70,775, respectively. Restricted stock and RSUs
that were forfeited and returned to the plan were 21,476 and 60,054 for the fiscal years ended May 2,
2007 and May 3, 2006, respectively.
Upon share option exercise or vesting of restricted stock and RSUs, the Company uses available
treasury shares and maintains a repurchase program that anticipates exercises and vesting of
awards so that shares are available for issuance. The Company records forfeitures of restricted stock
as treasury share repurchases. The Company repurchased approximately 13.1 million shares during
Fiscal 2008.

Global Stock Purchase Plan:

The Company has a shareholder-approved employee global stock purchase plan (the “GSPP”)
that permits substantially all employees to purchase shares of the Company’s common stock at a
discounted price through payroll deductions at the end of two six-month offering periods. Currently,
the offering periods are February 16 to August 15 and August 16 to February 15. Commencing with
the February 2006 offering period, the purchase price of the option is equal to 85% of the fair market
value of the Company’s common stock on the last day of the offering period. The number of shares
available for issuance under the GSPP is a total of five million shares. During the two offering periods
from February 16, 2007 to February 15, 2008, employees purchased 302,284 shares under the plan.

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During the two offering periods from February 16, 2006 to February 15, 2007, employees purchased
268,224 shares under the plan.

Annual Incentive Bonus:

The Company’s management incentive plans cover officers and other key employees. Partici-
pants may elect to be paid on a current or deferred basis. The aggregate amount of all awards may not
exceed certain limits in any year. Compensation under the management incentive plans was
approximately $45 million, $41 million and $37 million in Fiscal years 2008, 2007 and 2006
respectively.

Long-Term Performance Program:

In Fiscal 2008, the Company granted performance awards as permitted in the 2003 Plan, subject
to the achievement of certain performance goals. These performance awards are tied to the
Company’s relative Total Shareholder Return (“TSR”) Ranking within the defined Long-term Per-
formance Program (“LTPP”) peer group and the 2-year average after-tax Return on Invested Capital
(“ROIC”) metrics. The Relative TSR metric is based on the two-year cumulative return to share-
holders from the change in stock price and dividends between the starting and ending dates. The
starting value was based on the average of each LTPP peer group Company stock price for the 60
trading days prior to and including May 2, 2007. The ending value will be based on the average stock
price for the 60 trading days prior to and including the close of the Fiscal 2009 year end, plus
dividends paid over the 2 year performance period. The Fiscal 2008-2009 LTPP will be fully funded if
2-year cumulative EPS equals or exceeds the predetermined level. The Company also granted
performance awards in Fiscal 2007 under the 2007-2008 LTPP. The compensation cost related to
LTPP awards recognized in general and administrative expenses (“G&A”) was $23.8 million, and the
related tax benefit was $8.1 million for the fiscal year ended April 30, 2008. The compensation cost
related to these plans, recognized in G&A was $14.2 million, and the related tax benefit was
$5.5 million for the fiscal year ended May 2, 2007.

11. Retirement Plans

The Company maintains retirement plans for the majority of its employees. Current defined
benefit plans are provided primarily for domestic union and foreign employees. Defined contribution
plans are provided for the majority of its domestic non-union hourly and salaried employees as well as
certain employees in foreign locations. The Company uses an April 30 measurement date for its
domestic plans and a March 31 measurement date for foreign plans.

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The following table sets forth the funded status of the Company’s principal defined benefit plans
at April 30, 2008 and May 2, 2007.
2008 2007
(Dollars in thousands)
Change in Benefit Obligation:
Benefit obligation at the beginning of the year . . . . . . . . . . . . . . . . . . . $2,794,722 $2,601,229
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,832 42,886
Interest cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,073 135,984
Participants’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,090 10,347
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,907 4,046
Actuarial (gain)/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (89,838) 21,301
Divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (459)
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (10,664)
Special termination benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 3,188
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (149,048) (143,298)
Exchange/other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,437 130,162
Benefit obligation at the end of the year . . . . . . . . . . . . . . . . . . . . . . $2,843,175 $2,794,722
Change in Plan Assets:
Fair value of plan assets at the beginning of the year . . . . . . . . . . . . . . $2,888,780 $2,621,220
Actual (loss)/return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . (79,759) 207,470
Divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (172)
Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (10,664)
Employer contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,799 62,505
Participants’ contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,090 10,347
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (149,048) (143,298)
Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,261 141,372
Fair value of plan assets at the end of the year . . . . . . . . . . . . . . . . . 2,793,123 2,888,780
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (50,052) $ 94,058
Amount recognized in the consolidated balance sheet consists of:
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . ........... . . . . . . . . . $ 191,079 $ 284,619
Current liabilities . . . . . . . . . . . . . . . . . . . . . . ........... ......... (19,826) (8,545)
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . ........... ......... (221,305) (182,016)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (50,052) $ 94,058
Amounts recognized in accumulated other comprehensive loss consist of:
Net actuarial loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 802,738 $ 633,461
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,572 11,746
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 828,310 $ 645,207
Amounts in accumulated other comprehensive loss expected to be
recognized as components of net periodic pension costs in the following
fiscal year are as follows:
Net actuarial loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 36,512 $ 42,921
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,567 (1,093)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,079 $ 41,828

The accumulated benefit obligation for all defined benefit pension plans was $2,600.2 million at
April 30, 2008 and $2,561.1 million at May 2, 2007. The projected benefit obligation, accumulated
benefit obligation and fair value of plan assets for plans with accumulated benefit obligations in
excess of plan assets were $656.7 million, $173.0 million and $430.5 million respectively, as of
April 30, 2008 and $607.4 million, $551.2 million and $437.8 million, respectively, as of May 2, 2007.
The change in other comprehensive loss related to pension benefit losses arising during the period is
$236.0 million at April 30, 2008. The change in other comprehensive loss related to the

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reclassification of pension benefit losses to net income is $42.1 million at April 30, 2008. The change
in minimum liability included in other comprehensive loss was a decrease of $12.2 million at May 2,
2007.
The weighted-average rates used for the years ended April 30, 2008 and May 2, 2007 in
determining the projected benefit obligations for defined benefit plans were as follows:
2008 2007

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1% 5.5%

Compensation increase rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2% 5.0%
Total pension cost of the Company’s principal pension plans consisted of the following:
2008 2007 2006
(Dollars in thousands)
Components of defined benefit net periodic benefit
cost:
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,832 $ 42,886 $ 42,081
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,073 135,984 124,064
Expected return on assets . . . . . . . . . . . . . . . . . . . (227,373) (198,470) (168,990)
Amortization of:
Net initial asset . . . . . . . . . . . . . . . . . . . . . . . . . — — (21)
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . (1,403) (3,465) 2,207
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . 44,121 52,302 58,869
Loss due to curtailment, settlement and special
termination benefits . . . . . . . . . . . . . . . . . . . . . . — 2,335 18,846
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . 7,250 31,572 77,056
Defined contribution plans . . . . . . . . . . . . . . . . . . . . 34,027 34,940 28,139
Total pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,277 66,512 105,195
Less pension cost associated with discontinued
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 375
Pension cost associated with continuing
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 41,277 $ 66,512 $ 104,820

The weighted-average rates used for the fiscal years ended April 30, 2008, May 2, 2007 and
May 3, 2006 in determining the defined benefit plans’ net pension costs were as follows:
2008 2007 2006

Expected rate of return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2% 8.2% 8.2%

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5% 5.3% 5.5%
Compensation increase rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0% 4.0% 4.0%
The Company’s expected rate of return is determined based on a methodology that considers
investment real returns for certain asset classes over historic periods of various durations, in
conjunction with the long-term outlook for inflation (i.e. “building block” approach). This method-
ology is applied to the actual asset allocation, which is in line with the investment policy guidelines
for each plan. The Company also considers long-term rates of return for each asset class based on
projections from consultants and investment advisers regarding the expectations of future invest-
ment performance of capital markets.

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Plan Assets:
The Company’s defined benefit pension plans’ weighted average asset allocation at April 30,
2008 and May 2, 2007 and weighted average target allocation were as follows:
Plan Assets at Target
Asset Category 2008 2007 Allocation

Equity securities . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. 65% 68% 65%

Debt securities . . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. 32% 29% 33%
Real estate . . . . . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. 1% 1% 1%
Other . . . . . . . . . .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. 2% 2% 1%
100% 100% 100%

The underlying basis of the investment strategy of the Company’s defined benefit plans is to
ensure that pension funds are available to meet the plans’ benefit obligations when they are due. The
Company’s investment objectives include: prudently investing plan assets in a high-quality, diver-
sified manner in order to maintain the security of the funds; achieving an optimal return on plan
assets within specified risk tolerances; and investing according to local regulations and requirements
specific to each country in which a defined benefit plan operates. The investment strategy expects
equity investments to yield a higher return over the long term than fixed income securities, while
fixed income securities are expected to provide certain matching characteristics to the plans’ benefit
payment cash flow requirements. Company common stock held as part of the equity securities
amounted to less than one percent of plan assets at April 30, 2008 and May 2, 2007.

Cash Flows:
The Company contributed approximately $60 million to the defined benefit plans in Fiscal 2008.
The Company funds its U.S. defined benefit plans in accordance with IRS regulations, while foreign
defined benefit plans are funded in accordance with local laws and regulations in each respective
country. Discretionary contributions to the pension funds may also be made by the Company from
time to time. Defined benefit plan contributions for the next fiscal year are expected to be approx-
imately $80 million, however actual contributions may be affected by pension asset and liability
valuations during the year.
Benefit payments expected in future years are as follows (dollars in thousands):
2009 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $168,750
2010 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $166,008
2011 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $168,318
2012 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $172,486
2013 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $171,284
Years 2014-2018 . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $879,329

12. Postretirement Benefits Other Than Pensions and Other Post Employment
Benefits
The Company and certain of its subsidiaries provide health care and life insurance benefits for
retired employees and their eligible dependents. Certain of the Company’s U.S. and Canadian
employees may become eligible for such benefits. The Company currently does not fund these benefit
arrangements until claims occur and may modify plan provisions or terminate plans at its discretion.

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The Company uses an April 30 measurement date for its domestic plans and a March 31 measure-
ment date for the Canadian plan.
The following table sets forth the combined status of the Company’s postretirement benefit plans
at April 30, 2008 and May 2, 2007.
2008 2007
(Dollars in thousands)
Change in benefit obligation:
Benefit obligation at the beginning of the year . . .. .. . .. .. .. $ 273,161 $ 273,434
Service cost . . . . . . . . . . . . . . . . . . . . . . . . ...... .. .. . .. .. .. 6,451 6,253
Interest cost . . . . . . . . . . . . . . . . . . . . . . . ...... .. .. . .. .. .. 15,626 15,893
Participants’ contributions . . . . . . . . . . . . ...... .. .. . .. .. .. 973 913
Amendments. . . . . . . . . . . . . . . . . . . . . . . ...... .. .. . .. .. .. 1,001 —
Actuarial gain. . . . . . . . . . . . . . . . . . . . . . ...... .. .. . .. .. .. (5,523) (2,262)
Benefits paid . . . . . . . . . . . . . . . . . . . . . . ...... .. .. . .. .. .. (20,386) (21,180)
Exchange/other . . . . . . . . . . . . . . . . . . . . . ...... .. .. . .. .. .. 5,295 110
Benefit obligation at the end of the year . . . . . . . . . . . . . . . . . . 276,598 273,161
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(276,598) $(273,161)
Amount recognized in the consolidated balance sheet consists of:
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (19,547) $ (20,090)
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (257,051) (253,071)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(276,598) $(273,161)
Amounts recognized in accumulated other comprehensive loss
consist of:
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,329 $ 59,702
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,242) (14,019)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,087 $ 45,683
Amounts in accumulated other comprehensive loss expected to
be recognized as components of net periodic pension costs in
the following fiscal year are as follows:
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,693 $ 4,549
Negative prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,783) (4,766)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (90) $ (217)

The change in other comprehensive loss related to postretirement benefit gains arising during
the period is $4.6 million at April 30, 2008. The change in other comprehensive loss related to the
reclassification of post-retirement benefit gains to net income is $0.2 million at April 30, 2008.
The weighted-average discount rate used in the calculation of the accumulated post-retirement
benefit obligation at April 30, 2008 and May 2, 2007 was 5.9%.

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Net postretirement costs consisted of the following:

2008 2007 2006
(Dollars in thousands)
Components of defined benefit net periodic benefit cost:
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,451 $ 6,253 $ 6,242
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,626 15,893 15,631
Amortization of:
Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,770) (6,098) (2,830)
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,579 5,465 6,925
Loss due to curtailment and special termination
benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,846
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,886 $21,513 $27,814

The weighted-average discount rate used in the calculation of the net postretirement benefit cost
was 5.9% in 2008, 6.1% in 2007 and 5.5% in 2006.

The domestic weighted-average assumed annual composite rate of increase in the per capita cost
of company-provided health care benefits begins at 9.3% for 2009, gradually decreases to 5% by 2014
and remains at that level thereafter. The foreign weighted-average assumed annual composite rate of
increase in the per capita cost of company-provided health care benefits begins at 6.7% for 2009,
gradually decreases to 4% by 2016 and remains at that level thereafter. Assumed health care cost
trend rates have a significant effect on the amounts reported for postretirement medical benefits. A
one-percentage-point change in assumed health care cost trend rates would have the following
effects:
1% Increase 1% Decrease
(Dollars in thousands)
Effect on total service and interest cost components . . . . . . . . . . $ 1,581 $ 1,406
Effect on postretirement benefit obligation . . . . . . . . . . . . . . . . . . $18,016 $16,284

Cash Flows:

The Company paid $20.4 million for benefits in the postretirement medical plans in Fiscal 2008.
The Company funds its postretirement medical plans in order to make payment on claims as they
occur during the fiscal year. Payments for the next fiscal year are expected to be approximately
$21.3 million.

Benefit payments expected in future years are as follows (dollars in thousands):

2009 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $ 21,296
2010 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $ 22,624
2011 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $ 23,766
2012 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $ 24,733
2013 . . . . . . . . . . . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $ 25,038
Years 2014-2018 . .. .. .. .. .. . .. .. .. .. .. .. .. . .. .. .. .. .. .. . .. .. .. .. . $132,239

Estimated future medical subsidy receipts are approximately $1.4 million annually from 2009
through 2013 and $8.4 million for the period from 2014 through 2018.

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13. 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 April 30, 2008, the Company had outstanding currency exchange and interest rate derivative
contracts with notional amounts of $1.71 billion and $1.82 billion, respectively. At May 2, 2007, the
Company had outstanding currency exchange and interest rate derivative contracts with notional
amounts of $3.47 billion and $2.70 billion, respectively. The fair value of derivative financial
instruments was a net asset of $126.0 million at April 30, 2008, and a net liability of $2.0 million
at May 2, 2007.

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. Deriv-
atives 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 desig-
nated 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.
The Company had outstanding cross currency swaps with a total notional amount of $1.96 billion
as of May 2, 2007, which were designated as net investment hedges of foreign operations. During
Fiscal 2008, the Company made cash payments to the counterparties totaling $74.5 million as a
result of contract maturities and $93.2 million as a result of early termination of contracts. As of
April 30, 2008 there are no outstanding cross currency swaps. The Company assessed hedge
effectiveness for these contracts based on changes in fair value attributable to changes in spot
prices. Net losses of $95.8 million ($72.0 million after-tax) and $72.9 million ($43.9 million after-tax)
which represented effective hedges of net investments, were reported as a component of accumulated
other comprehensive loss within unrealized translation adjustment for Fiscal 2008 and Fiscal 2007,
respectively. Gains of $3.6 million and $15.9 million, which represented the changes in fair value
excluded from the assessment of hedge effectiveness, were included in current period earnings as a
component of interest expense for Fiscal 2008 and Fiscal 2007, respectively.
The early termination of the net investment hedges described above and interest rate swaps
described below were completed in conjunction with the reorganizations of the Company’s foreign
operations and interest rate swap portfolio.

Interest Rate Hedging:

The Company uses interest rate swaps to manage debt and interest rate exposures. 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 deriv-
atives, 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. During Fiscal 2008, the Company terminated
certain interest rate swaps that were previously designated as fair value hedges of fixed rate debt
obligations. The notional amount of these interest rate contracts totaled $612.0 million and the
Company received a total of $103.5 million of cash from the termination of these contracts. The
$103.5 million gain is being amortized to reduce interest expense over the remaining term of the

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corresponding debt obligations (average of 22 years). SFAS No. 133 hedge accounting adjustments
related to hedged debt obligations totaled $198.5 million and $71.2 million as of April 30, 2008 and
May 2, 2007, respectively.

Hedge Ineffectiveness:
Hedge ineffectiveness related to cash flow hedges, which is reported in current period earnings
as other income and expense, was not significant for the years ended April 30, 2008, May 2, 2007 and
May 3, 2006. The Company excludes the time value component of option contracts from the
assessment of hedge effectiveness.

Deferred Hedging Gains and Losses:

As of April 30, 2008, the Company is hedging forecasted transactions for periods not exceeding
two years. During the next 12 months, the Company expects $8.7 million of net deferred gains
reported in accumulated other comprehensive loss to be reclassified to earnings, assuming market
rates remain constant through contract maturities. Amounts reclassified to earnings because the
hedge transaction was no longer expected to occur were not significant for the years ended April 30,
2008, May 2, 2007 and May 3, 2006.

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. Although these derivatives do not qualify
as hedges, they have the economic impact of largely mitigating foreign currency or interest rate
exposures. These derivative financial instruments are accounted for on a full mark-to-market basis
through current earnings even though they were not acquired for trading purposes.

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. During Fiscal 2008, one customer represented 10.4% of the
Company’s sales. The Company closely monitors the credit risk associated with its customers and to
date has not experienced material losses.

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14. Income Per Common Share

The following are reconciliations of income to income applicable to common stock and the
number of common shares outstanding used to calculate basic EPS to those shares used to calculate
diluted EPS.
Fiscal Year Ended
April 30, May 2, May 3,
2008 2007 2006
(52 Weeks) (52 Weeks) (53 Weeks)
(Amounts in thousands)
Income from continuing operations . . . . . . . . . . . . . . . $844,925 $791,602 $442,761
Preferred dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 14
Income from continuing operations applicable to
common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $844,913 $791,589 $442,747
Average common shares outstanding—basic . . . . . . . . 317,019 328,625 339,102
Effect of dilutive securities:
Convertible preferred stock. . . . . . . . . . . . . . . . . . . . 109 123 125
Stock options, restricted stock and the global stock
purchase plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,589 3,720 2,894
Average common shares outstanding—diluted . . . . . . 321,717 332,468 342,121

Diluted earnings per share is based upon the average shares of common stock and dilutive
common stock equivalents outstanding during the periods presented. Common stock equivalents
arising from dilutive stock options, restricted common stock units, and the global stock purchase plan
are computed using the treasury stock method.

Options to purchase an aggregate of 6.1 million, 9.1 million and 18.2 million shares of common
stock as of April 30, 2008, May 2, 2007 and May 3, 2006, respectively, were not included in the
computation of diluted earnings per share because inclusion of these options would be anti-dilutive.
These options expire at various points in time through 2014. The Company elected to apply the long-
form method for determining the pool of windfall tax benefits in connection with the adoption of
SFAS 123R.

15. Segment Information

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. During the first quarter of Fiscal 2008, the Company changed its segment reporting to
reclassify its business in India from the Rest of World segment to the Asia/Pacific segment, reflecting
organizational changes. Prior periods have been conformed to the current presentation. Net external
sales for this business were $117.3 million and $104.2 million for Fiscal 2007 and 2006, respectively.
Operating income for this business was $14.4 million and $16.2 million for Fiscal 2007 and 2006,
respectively. Operating income excluding special items for this business was $14.4 million and
$14.1 million for Fiscal 2007 and 2006, respectively. Depreciation and amortization expense for this
business was $1.7 million for Fiscal 2007 and 2006. Capital expenditures for this business were
$1.5 million and $2.3 million for Fiscal 2007 and 2006, respectively. Identifiable assets for this
business were $84.1 million and $69.9 million for Fiscal 2007 and 2006, respectively.

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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, including Eastern
Europe and Russia, and sells products in all of the Company’s categories.
• Asia/Pacific—This segment includes the Company’s operations in New Zealand, Australia,
India, Japan, China, South Korea, Indonesia, 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, desserts
and appetizers.
• 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, operating income excluding special items, and the use of capital resources.
Intersegment revenues and items below the operating income line of the consolidated statements of
income are not presented by segment, since they are excluded from 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:
Fiscal Year Ended
April 30, May 2, May 3, April 30, May 2, May 3,
2008 2007 2006 2008 2007 2006
(52 Weeks) (52 Weeks) (53 Weeks) (52 Weeks) (52 Weeks) (53 Weeks)
(Dollars in thousands)
Net External Sales Operating Income (Loss)

North American
Consumer Products . . . $ 3,011,513 $2,739,527 $2,554,118 $ 678,388 $ 625,675 $ 583,367
Europe . . . . . . . . . . . . . . . 3,532,326 3,076,770 2,987,737 636,866 566,362 414,178
Asia/Pacific . . . . . . . . . . . . 1,599,860 1,319,231 1,221,054 194,900 150,177 101,447
U.S. Foodservice . . . . . . . . 1,559,370 1,556,339 1,569,833 169,581 216,115 177,292
Rest of World . . . . . . . . . . 367,709 309,763 310,696 45,437 39,484 1,618
Non-Operating(a) . . . . . . . — — — (156,205) (151,098) (164,290)
Consolidated Totals . . . . . $10,070,778 $9,001,630 $8,643,438 $1,568,967 $1,446,715 $1,113,612

Operating Income (Loss) Excluding(b)

Special Items

North American
Consumer Products . . . $ 678,388 $ 625,675 $ 589,958
Europe . . . . . . . . . . . . . . . 636,866 566,362 526,372
Asia/Pacific . . . . . . . . . . . . 194,900 150,177 126,563
U.S. Foodservice . . . . . . . . 169,581 216,115 212,053
Rest of World . . . . . . . . . . 45,437 39,484 31,609
Non-Operating(a) . . . . . . . (156,205) (151,098) (136,564)
Consolidated Totals . . . . . $ 1,568,967 $1,446,715 $1,349,991

Depreciation and Amortization Expenses Capital Expenditures(c)

Total North America . . $ 122,200 $ 112,031 $ 103,492 $121,937 $ 97,954 $ 82,726

Europe . . . . . . . . . . . . . 115,578 108,479 98,106 119,425 99,939 102,275
Asia/Pacific . . . . . . . . . . 35,410 29,390 28,708 36,404 36,903 36,479
Rest of World . . . . . . . . 5,690 5,010 5,349 10,064 7,586 6,139
Non-Operating(a) . . . . . 10,019 11,287 11,778 13,758 2,180 2,958
Consolidated Totals . . . $ 288,897 $ 266,197 $ 247,433 $301,588 $244,562 $230,577

Identifiable Assets

Total North America . . $ 3,795,272 $ 3,752,033 $3,530,639

Europe . . . . . . . . . . . . . 4,731,760 4,166,174 4,285,233
Asia/Pacific . . . . . . . . . . 1,433,467 1,213,867 1,208,504
Rest of World . . . . . . . . 235,625 189,543 208,175
Non-Operating(d) . . . . . 368,919 711,409 505,216
Consolidated Totals . . . $10,565,043 $10,033,026 $9,737,767

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 H. J. Heinz Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)

(a) Includes corporate overhead, intercompany eliminations and charges not directly attributable to
operating segments.
(b) Fiscal year ended May 3, 2006: Excludes costs associated with targeted workforce reductions,
costs incurred in connection with strategic reviews of several non-core businesses and net losses/
impairment charge on divestures as follows: North American Consumer Products, $6.6 million;
Europe, $112.2 million; Asia/Pacific, $25.1 million; U.S. Foodservice, $34.8 million; Rest of World,
$30.0 million; and Non-Operating $27.7 million.
(c) Excludes property, plant and equipment obtained through acquisitions.
(d) Includes identifiable assets not directly attributable to operating segments.
The Company’s revenues are generated via the sale of products in the following categories:
Fiscal Year Ended
April 30, May 2, May 3,
2008 2007 2006
(52 Weeks) (52 Weeks) (53 Weeks)
(Dollars in thousands)
Ketchup and sauces . .. .. .. . .. .. .. .. .. .. . .. .. .. .. $ 4,081,864 $3,682,102 $3,530,346
Meals and snacks . . . .. .. .. . .. .. .. .. .. .. . .. .. .. .. 4,521,697 4,026,168 3,876,743
Infant/Nutrition . . . . .. .. .. . .. .. .. .. .. .. . .. .. .. .. 1,089,544 929,075 863,943
Other . . . . . . . . . . . . .. .. .. . .. .. .. .. .. .. . .. .. .. .. 377,673 364,285 372,406
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,070,778 $9,001,630 $8,643,438

The Company has significant sales and long-lived assets in the following geographic areas. Sales
are based on the location in which the sale originated. Long-lived assets include property, plant and
equipment, goodwill, trademarks and other intangibles, net of related depreciation and amortization.
Fiscal Year Ended
Net External Sales Long-Lived Assets
April 30, May 2, May 3,
2008 2007 2006 April 30, May 2, May 3,
(52 Weeks) (52 Weeks) (53 Weeks) 2008 2007 2006
(Dollars in thousands)
United States . . . .. $ 3,971,296 $3,809,786 $3,693,262 $2,393,732 $2,377,900 $2,359,630
United Kingdom .. 1,844,014 1,643,268 1,636,089 1,582,088 1,588,218 1,442,562
Other . . . . . . . . . .. 4,255,468 3,548,576 3,314,087 2,540,414 2,171,907 1,967,353
Total . . . . . . . . . . .. $10,070,778 $9,001,630 $8,643,438 $6,516,234 $6,138,025 $5,769,545

16. Quarterly Results

2008
First Second Third Fourth Total
(13 Weeks) (13 Weeks) (13 Weeks) (13 Weeks) (52 Weeks)
(Unaudited)
(Dollars in thousands, except per share amounts)
Sales . . . . . . . . . . . . ...... $2,248,285 $2,523,379 $2,610,863 $2,688,251 $10,070,778
Gross profit . . . . . . . ...... 838,400 931,802 935,416 975,074 3,680,692
Net income . . . . . . . ...... 205,294 227,037 218,532 194,062 844,925
Per Share Amounts:
Net income—diluted ...... $ 0.63 $ 0.71 $ 0.68 $ 0.61 $ 2.63
Net income—basic . . ...... 0.64 0.72 0.69 0.62 2.67
Cash dividends . . . . ...... 0.38 0.38 0.38 0.38 1.52

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 H. J. Heinz Company and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)

2007
First Second Third Fourth Total
(13 Weeks) (13 Weeks) (13 Weeks) (13 Weeks) (52 Weeks)
(Unaudited)
(Dollars in thousands, except per share amounts)
Sales . . . . . . . . . . . . . . . . ... $2,059,920 $2,232,225 $2,295,192 $2,414,293 $9,001,630
Gross profit . . . . . . . . . . . ... 772,417 846,598 852,116 921,769 3,392,900
Income from continuing
operations . . . . . . . . . . ... 194,101 197,431 219,038 181,032 791,602
Net income . . . . . . . . . . . ... 194,101 191,575 219,038 181,032 785,746
Per Share Amounts:
Income from continuing
operations—diluted . . . ... $ 0.58 $ 0.59 $ 0.66 $ 0.55 $ 2.38
Income from continuing
operations—basic . . . . . ... 0.59 0.60 0.67 0.56 2.41
Cash dividends . . . . . . . . ... 0.35 0.35 0.35 0.35 1.40

17. Commitments and Contingencies

Legal Matters:

Certain suits and claims have been filed against the Company and have not been finally
adjudicated. In the opinion of management, based upon the information that it presently possesses,
the final conclusion and determination of these suits and claims will not have a material adverse
effect on the Company’s consolidated financial position, results of operations or liquidity.

Lease Commitments:

Operating lease rentals for warehouse, production and office facilities and equipment amounted
to approximately $107.2 million, in 2008, $104.3 million in 2007 and $97.6 million in 2006. Future
lease payments for non-cancellable operating leases as of April 30, 2008 totaled $454.0 million
(2009-$68.8 million, 2010-$58.3 million, 2011-$48.4 million, 2012-$44.7 million, 2013-$42.8 million
and thereafter-$191.0 million).

As of April 30, 2008, the Company was party to an operating lease for buildings and equipment in
which the Company has guaranteed a supplemental payment obligation of approximately $64 million
at the termination of the lease. The Company believes, based on current facts and circumstances, that
any payment pursuant to this guarantee is remote. No significant credit guarantees existed between
the Company and third parties as of April 30, 2008.

In May 2008, the construction of a new frozen food factory in South Carolina commenced. It is
expected that the factory will be operational in approximately 18 to 24 months and that it will be
financed by an operating lease.

18. Advertising Costs

Advertising expenses (including production and communication costs) for fiscal years 2008, 2007
and 2006 were $339.3 million, $315.2 million and $296.9 million, respectively. For fiscal years 2008,
2007 and 2006, $118.9 million, $123.6 million and $148.9 million, respectively, were recorded as a
reduction of revenue and $220.4 million, $191.5 million and $148.0 million, respectively, were
recorded as a component of SG&A.

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 Item 9. Changes in and Disagreements with Accountants on Accounting and Finan-
cial Disclosure.
There is nothing to be reported under this item.

Item 9A. 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. See also “Report of Management on Internal
Control over Financial Reporting.”
(b) Management’s Report on Internal Control Over Financial Reporting.
Our management’s report on Internal Control Over Financial Reporting is set forth in Item 8 and
incorporated herein by reference.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, audited the
effectiveness of the Company’s internal control over financial reporting as of April 30, 2008, as stated
in their report as set forth in Item 8.
(c) Changes in Internal Control over Financial Reporting
During the fourth quarter of Fiscal 2008, the Company continued its implementation of SAP
software across its U.K., Ireland, and Poland operations. As appropriate, the Company is modifying
the design and documentation of internal control processes and procedures relating to the new
systems to supplement and complement existing internal controls 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.

Item 9B. Other Information.

There is nothing to be reported under this item.

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 PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Information relating to the Directors of the Company is set forth under the captions “Election of
Directors” and “Additional Information—Section 16 Beneficial Ownership Reporting Compliance” in
the Company’s definitive Proxy Statement in connection with its Annual Meeting of Shareholders to
be held August 13, 2008. Information regarding the audit committee members and the audit
committee financial expert is set forth under the captions “Report of the Audit Committee” and
“Relationship with Independent Registered Public Accounting Firm” in the Company’s definitive
Proxy Statement in connection with its Annual Meeting of Shareholders to be held on August 13,
2008. Information relating to the executive officers of the Company is set forth under the caption
“Executive Officers of the Registrant” in Part I of this report, and such information is incorporated
herein by reference. The Company’s Global Code of Conduct, which is applicable to all employees,
including the principal executive officer, the principal financial officer, and the principal accounting
officer, as well as the charters for the Company’s Audit, Management Development & Compensation,
Corporate Governance, and Corporate Social Responsibility Committees, as well as periodic and
current reports filed with the SEC are available on the Company’s website, www.heinz.com, and are
available in print to any shareholder upon request. Such specified information is incorporated herein
by reference.

Item 11. Executive Compensation.

Information relating to executive compensation is set forth under the captions “Compensation
Discussion and Analysis,” “Director Compensation Table,” and “Report of the Management Devel-
opment and Compensation Committee on Executive Compensation” in the Company’s definitive
Proxy Statement in connection with its Annual Meeting of Shareholders to be held on August 13,
2008. Such information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
Information relating to the ownership of equity securities of the Company by certain beneficial
owners and management is set forth under the captions “Security Ownership of Certain Principal
Shareholders” and “Security Ownership of Management” in the Company’s definitive Proxy Statement
in connection with its Annual Meeting of Shareholders to be held August 13, 2008. Such information is
incorporated herein by reference.
The number of shares to be issued upon exercise and the number of shares remaining available
for future issuance under the Company’s equity compensation plans at April 30, 2008 were as follows:

Equity Compensation Plan Information

(a) (b) (c)
Number of securities
remaining available
for future issuance
Number of securities to Weighted-average under equity
be issued upon exercise exercise price of compensation Plans
of outstanding options, outstanding options, (excluding securities
warrants and rights warrants and rights reflected in column (a))

Equity Compensation plans

approved by stockholders . . . . . . . 24,610,332 $39.96 12,307,925
Equity Compensation plans not
approved by stockholders(1)(2) . . . 60,093 N/A(3) N/A(1)(4)
Total . . . . . . . . . . . . . . . . . . . . . . . . . 24,670,425 $39.96 12,307,925

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 (1) The H. J. Heinz Company Restricted Stock Recognition Plan for Salaried Employees (the
“Restricted Stock Plan”) was designed to provide recognition and reward in the form of awards
of restricted stock to employees who have a history of outstanding accomplishment and who,
because of their experience and skills, are expected to continue to contribute significantly to the
success of the Company. Eligible employees were those full-time salaried employees not partic-
ipating in the shareholder-approved H. J. Heinz Company Incentive Compensation Plan in effect
as of May 1, 2002, and who have not been awarded an option to purchase Company Common
Stock. The Company has ceased issuing shares from this Restricted Stock Plan, and it is the
Company’s intention to terminate the Restricted Stock Plan once all restrictions on previously
issued shares are lifted. All awards of this type are now made under the Fiscal Year 2003 Stock
Incentive Plan.
(2) The Executive Deferred Compensation Plan, as amended and restated on December 27, 2001 and
the Deferred Compensation Plan for Non-Employee Directors as amended and restated on
January 1, 2004, permit full-time salaried personnel based in the U.S. who have been identified
as key employees and non-employee directors, to defer all or part of his or her cash compensation
into either a cash account that accrues interest, or into a Heinz stock account. The election to
defer is irrevocable. The Management Development & Compensation Committee of the Board of
Directors administers the Plan. All amounts are payable at the times and in the amounts elected
by the executives at the time of the deferral. The deferral period shall be at least one year and
shall be no greater than the date of retirement or other termination, whichever is earlier.
Amounts deferred into cash accounts are payable in cash, and all amounts deferred into the
Heinz stock account are payable in Heinz Common Stock. Compensation deferred into the Heinz
stock account appreciates or depreciates according to the fair market value of Heinz Common
Stock.
(3) The grants made under the Restricted Stock Plan, the Executive Deferred Compensation Plan
and the Deferred Compensation Plan for Non-Employee Directors are restricted or reserved
shares of Common Stock, and therefore there is no exercise price.
(4) The maximum number of shares of Common Stock that the Chief Executive Officer was autho-
rized to grant under the Restricted Stock Plan was established annually by the Executive
Committee of the Board of Directors; provided, however, that such number of shares did not
exceed in any plan year 1% of all then outstanding shares of Common Stock.

Item 13. Certain Relationships and Related Transactions, and Director

Independence.

Information relating to the Company’s policy on related person transactions and certain rela-
tionships with a beneficial shareholder is set forth under the caption “Related Person Transaction
Policy” in the Company’s definitive Proxy Statement in connection with its Annual Meeting of
Shareholders to be held on August 13, 2008. Such information is incorporated herein by reference.

Information relating to director independence is set forth under the caption “Director Indepen-
dence Standards” in the Company’s definitive Proxy Statement in connection with its Annual
Meeting of Shareholders to be held on August 13, 2008. Such information is incorporated herein
by reference.

Item 14. Principal Accountant Fees and Services.

Information relating to the principal auditor’s fees and services is set forth under the caption
“Relationship With Independent Registered Public Accounting Firm” in the Company’s definitive
Proxy Statement in connection with its Annual Meeting of Shareholders to be held on August 13,
2008. Such information is incorporated herein by reference.

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 PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)(1) The following financial statements and reports are filed as part of this report under
Item 8—“Financial Statements and Supplementary Data”:
Consolidated Balance Sheets as of April 30, 2008 and May 2, 2007
Consolidated Statements of Income for the fiscal years ended April 30, 2008,
May 2, 2007 and May 3, 2006
Consolidated Statements of Shareholders’ Equity for the fiscal years ended
April 30, 2008, May 2, 2007 and May 3, 2006
Consolidated Statements of Cash Flows for the fiscal years ended April 30, 2008,
May 2, 2007 and May 3, 2006
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm of
PricewaterhouseCoopers LLP dated June 19, 2008, on the Company’s consolidated
financial statements and financial statement schedule filed as a part hereof for the
fiscal years ended April 30, 2008, May 2, 2007 and May 3, 2006
(2) The following report and schedule is filed herewith as a part hereof:
Schedule II (Valuation and Qualifying Accounts and Reserves) for the three fiscal
years ended April 30, 2008, May 2, 2007 and May 3, 2006
All other schedules are omitted because they are not applicable or the required
information is included herein or is shown in the consolidated financial statements
or notes thereto filed as part of this report incorporated herein by reference.
(3) 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(i) Second Amended and Restated Articles of Incorporation of H.J. Heinz Company
dated August 15, 2007, amending and restating the amended and restated Articles
of Amendment in their entirety.
3(ii) The Company’s By-Laws, as amended effective August 15, 2007, are incorporated
herein by reference to Exhibit 3(ii) of the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended August 1, 2007.
4. Except as set forth below, there are no instruments with respect to long-term debt
of the Company that involve indebtedness or securities authorized thereunder in
amounts that exceed 10 percent of the total assets of the Company on a
consolidated basis. The Company agrees to file a copy of any instrument or
agreement defining the rights of holders of long-term debt of the Company upon
request of the Securities and Exchange Commission.
(a) The Indenture among the Company, H. J. Heinz Finance Company, and
Bank One, National Association dated as of July 6, 2001 relating to the
H. J. Heinz Finance Company’s $750,000,000 6.625% Guaranteed Notes due
2011, $700,000,000 6.00% Guaranteed Notes due 2012 and $550,000,000
6.75% Guaranteed Notes due 2032 is incorporated herein by reference to
Exhibit 4 of the Company’s Annual Report on Form 10-K for the fiscal year
ended May 1, 2002.
(b) The Certificate of Designations, Preferences and Rights of Voting
Cumulative Preferred Stock, Series A of H. J. Heinz Finance Company is
incorporated herein by reference to Exhibit 4 of the Company’s Quarterly
Report on Form 10-Q for the three months ended August 1, 2001.

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 (c) Amended and Restated Five-Year Credit Agreement dated as of
September 6, 2001 and amended and restated as of August 4, 2004 among
H.J. Heinz Company, H.J. Heinz Finance Company, the Banks listed on the
signature pages thereto and JP Morgan Chase Bank, as Administrative
Agent, is incorporated herein by reference to Exhibit 4 to the Company’s
quarterly report on Form 10-Q for the period ended January 25, 2006.
10(a) Management contracts and compensatory plans:
(i) 1986 Deferred Compensation Program for H. J. Heinz Company
and affiliated companies, as amended and restated in its entirety
effective December 6, 1995, is incorporated herein by reference to
Exhibit 10(c)(i) to the Company’s Annual Report on Form 10-K for
the fiscal year ended May 1, 1995.
(ii) H. J. Heinz Company 1990 Stock Option Plan is incorporated
herein by reference to Appendix A to the Company’s Proxy
Statement dated August 3, 1990.
(iii) H. J. Heinz Company 1994 Stock Option Plan is incorporated
herein by reference to Appendix A to the Company’s Proxy
Statement dated August 5, 1994.
(iv) H. J. Heinz Company Supplemental Executive Retirement Plan, as
amended, is incorporated herein by reference to Exhibit 10(c)(ix) to
the Company’s Annual Report on Form 10-K for the fiscal year
ended April 28, 1993.
(v) H. J. Heinz Company Executive Deferred Compensation Plan (as
amended and restated on December 27, 2001) is incorporated by
reference to Exhibit 10(a)(vii) of the Company’s Annual Report on
Form 10-K for the fiscal year ended May 1, 2002.
(vi) H. J. Heinz Company Incentive Compensation Plan is incorporated
herein by reference to Appendix B to the Company’s Proxy
Statement dated August 5, 1994.
(vii) H. J. Heinz Company Stock Compensation Plan for Non-Employee
Directors is incorporated herein by reference to Appendix A to the
Company’s Proxy Statement dated August 3, 1995.
(viii) H. J. Heinz Company 1996 Stock Option Plan is incorporated
herein by reference to Appendix A to the Company’s Proxy
Statement dated August 2, 1996.
(ix) H. J. Heinz Company Deferred Compensation Plan for Directors is
incorporated herein by reference to Exhibit 10(a)(xiii) to the
Company’s Annual Report on Form 10-K for the fiscal year ended
April 29, 1998.
(x) H. J. Heinz Company 2000 Stock Option Plan is incorporated
herein by reference to Appendix A to the Company’s Proxy
Statement dated August 4, 2000.
(xi) H. J. Heinz Company Executive Estate Life Insurance Program is
incorporated herein by reference to Exhibit 10(a)(xv) to the
Company’s Annual Report on Form 10-K for the fiscal year ended
May 1, 2002.
(xii) H. J. Heinz Company Restricted Stock Recognition Plan for
Salaried Employees is incorporated herein by reference to
Exhibit 10(a)(xvi) to the Company’s Annual Report on Form 10-K
for the fiscal year ended May 1, 2002.
(xiii) H. J. Heinz Company Senior Executive Incentive Compensation
Plan is incorporated by reference to the Company’s Proxy
Statement dated August 2, 2002.

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 (xiv) Deferred Compensation Plan for Non-Employee Directors of
H. J. Heinz Company (as amended and restated effective
January 1, 2004), is incorporated herein by reference to Exhibit 10
to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended January 28, 2004.
(xv) Form of Stock Option Award and Agreement for U.S. Employees is
incorporated herein by reference to Exhibit 10(a) to the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended
January 26, 2005.
(xvi) Form of Stock Option Award and Agreement for U.S. Employees
Based in the U.K. on International Assignment is incorporated
herein by reference to Exhibit 10(a) to the Company’s Quarterly
Report on Form 10-Q for the quarterly period ended January 26,
2005.
(xvii) Form of Restricted Stock Unit Award and Agreement for
U.S. Employees is incorporated herein by reference to Exhibit 10(a)
to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended January 26, 2005.
(xviii) Form of Restricted Stock Unit Award and Agreement for
Non-U.S. Based Employees is incorporated herein by reference to
Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended January 26, 2005.
(xix) Form of Five-Year Restricted Stock Unit Retention Award and
Agreement for U.S. Employees is incorporated herein by reference
to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q
for the quarterly period ended January 26, 2005.
(xx) Form of Five-Year Restricted Stock Unit Retention Award and
Agreement for Non-U.S. Based Employees is incorporated herein by
reference to Exhibit 10(a) to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended January 26, 2005.
(xxi) Form of Three-Year Restricted Stock Unit Retention Award and
Agreement for U.S. Employees is incorporated herein by reference
to Exhibit 10(a) to the Company’s Quarterly Report on Form 10-Q
for the quarterly period ended January 26, 2005.
(xxii) Form of Three-Year Restricted Stock Unit Retention Award and
Agreement for Non-U.S. Based Employees is incorporated herein by
reference to Exhibit 10(a) to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended January 26, 2005.
(xxiii) Named Executive Officer and Director Compensation
(xxiv) Form of Fiscal Year 2006 Restricted Stock Unit Award and
Agreement for U.S. Employees is incorporated herein by reference
to the Company’s Annual Report on Form 10-K for the fiscal year
ended April 27, 2005.
(xxv) Form of Fiscal Year 2006 Restricted Stock Unit Award and
Agreement for non-U.S. Based Employees is incorporated herein by
reference to the Company’s Annual Report on Form 10-K for the
fiscal year ended April 27, 2005.
(xxvi) Amendment Number One to the H.J. Heinz Company 2000 Stock
Option Plan is incorporated herein by reference to the Company’s
Annual Report on Form 10-K for the fiscal year ended April 27,
2005.

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 (xxvii) Amendment Number One to the H.J. Heinz Company 1996 Stock
Option Plan is incorporated herein by reference to the Company’s
Annual Report on Form 10-K for the fiscal year ended April 27,
2005.
(xxviii) Form of Fiscal Year 2006 Severance Protection Agreement is
incorporated herein by reference to the Company’s Annual Report
on Form 10-K for the fiscal year ended April 27, 2005.
(xxix) Form of Long-Term Performance Program Award Agreement is
hereby incorporated by reference to Exhibit 99 of the Company’s
Form 8-K filed on June 12, 2006.
(xxx) Form of Fiscal Year 2007 Restricted Stock Unit Award and
Agreement is incorporated herein by reference to the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended
November 1, 2006.
(xxxi) Form of Fiscal Year 2008 Stock Option Award and Agreement
(U.S. Employees) is hereby incorporated by reference to the
Company’s Quarterly Report on Form 10-Q for the quarterly period
ended August 1, 2007.
(xxxii) Form of Stock Option Award and Agreement is hereby incorporated
by reference to the Company’s Quarterly Report on Form 10-Q for
the quarterly period ended August 1, 2007.
(xxxiii) Form of Restricted Stock Unit Award and Agreement is hereby
incorporated by reference to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended August 1, 2007.
(xxxiv) Form of Revised Fiscal Year 2008 Restricted Stock Unit Award and
Agreement is hereby incorporated by reference to the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended
August 1, 2007.
(xxxv) Form of Restricted Stock Unit Award and Agreement
(U.S. Employees Retention) is hereby incorporated by reference to
the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended August 1, 2007.
(xxxvi) Second Amended and Restated Fiscal Year 2003 Stock Incentive
Plan is hereby incorporated herein by reference to the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended
August 1, 2007.
(xxxvii) Second Amended and Restated Global Stock Purchase Plan is
hereby incorporated herein by reference to the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended
August 1, 2007.
(xxxviii) Time Sharing Agreement dated as of September 14, 2007, between
H.J. Heinz Company and William R. Johnson incorporated herein
by reference to Exhibit 10.1 of the Company’s Form 8-K dated
September 14, 2007.
(xxxix) Retirement and Consulting Agreement and a Non-Competition and
Non-Solicitation Agreement dated January 30, 2008 between
H. J. Heinz Company and Jeffrey P. Berger are hereby incorporated
by reference to Exhibit 10.1 of the Company’s Form 8-K dated
February 1, 2008.
12. Computation of Ratios of Earnings to Fixed Charges.
21. Subsidiaries of the Registrant.
23. Consent of PricewaterhouseCoopers LLP.
24. Powers-of-attorney of the Company’s directors.

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 31(a) Rule 13a-14(a)/15d-14(a) Certification by William R. Johnson.
31(b) Rule 13a-14(a)/15d-14(a) Certification by Arthur B. Winkleblack.
32(a) Certification by the Chief Executive Officer Relating to the Annual Report
Containing Financial Statements.
32(b) Certification by the Chief Financial Officer Relating to the Annual Report
Containing Financial Statements.
Copies of the exhibits listed above will be furnished upon request to holders or beneficial holders of
any class of the Company’s stock, subject to payment in advance of the cost of reproducing the
exhibits requested.

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 SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on June 19, 2008.

H. J. HEINZ COMPANY
(Registrant)

By: . . . . . . . ./s/
. . .A . . . . . B.
. RTHUR ..W. . INKLEBLACK
...................
Arthur B. Winkleblack
Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant and in the capacities indicated, on
June 19, 2008.

Signature Capacity

. . . . . . . ./s/. . .W . . . . R.
. .ILLIAM . . .J.OHNSON
.............. Chairman, President and
William R. Johnson Chief Executive Officer
(Principal Executive Officer)
. . . . . . /s/
...A . . . . .B.. .W. INKLEBLACK
. .RTHUR ................ Executive Vice President and
Arthur B. Winkleblack (Principal Financial Officer)

. . . . . . /s/ . . . . . J.
. . . .E. DWARD . .M
. .CM
. .ENAMIN
............. Senior Vice President-Finance and
Edward J. McMenamin Corporate Controller
(Principal Accounting Officer)
”
“
William R. Johnson Director “
“
Charles E. Bunch Director “
“
“
“
Leonard S. Coleman, Jr. Director “
“
John G. Drosdick Director “
“
“
“
Edith E. Holiday Director “
“
“
“
Candace Kendle Director • By: . . . . . /s/
...A . . . . .B.. .W. INKLEBLACK
. .RTHUR .............
“
“
Dean R. O’Hare Director “
“ Arthur B. Winkleblack
Nelson Peltz Director “
“ Attorney-in-Fact
“
“
Dennis H. Reilley Director “
“
Lynn C. Swann Director “
“
“
“
Thomas J. Usher Director “
“
Michael F. Weinstein Director “
–

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 [THIS PAGE INTENTIONALLY LEFT BLANK]

Global Reports LLC

 Exhibit 31(a)

I, William R. Johnson, certify that:

1. I have reviewed this annual report on Form 10-K of H. J. Heinz Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons fulfilling the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.

Date: June 19, 2008

By: /s/ WILLIAM R. JOHNSON

Name: William R. Johnson
Title: Chairman, President and
Chief Executive Officer

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 Exhibit 31(b)

I, Arthur B. Winkleblack, certify that:

1. I have reviewed this annual report on Form 10-K of H. J. Heinz Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;

3. Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for
the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent
evaluation of such internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons fulfilling the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.

Date: June 19, 2008

By: /s/ ARTHUR B. WINKLEBLACK

Name: Arthur B. Winkleblack
Title: Executive Vice President and
Chief Financial Officer

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 Exhibit 32(a)

Certification by the Chief Executive Officer Relating to

the Annual Report Containing Financial Statements
I, William R. Johnson, Chairman, President and Chief Executive Officer, of H. J. Heinz Company,
a Pennsylvania corporation (the “Company”), hereby certify that, to my knowledge:
1. The Company’s annual report on Form 10-K for the fiscal year ended April 30, 2008 (the
“Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and
2. The information contained in the Form 10-K fairly presents, in all material respects, the
financial condition and results of operations of the Company.

Date: June 19, 2008

By: /s/ WILLIAM R. JOHNSON

Name: William R. Johnson
Title: Chairman, President and
Chief Executive Officer

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 Exhibit 32(b)

Certification by the Chief Financial Officer Relating to

the Annual Report Containing Financial Statements
I, Arthur B. Winkleblack, Executive Vice President and Chief Financial Officer of H. J. Heinz
Company, a Pennsylvania corporation (the “Company”), hereby certify that, to my knowledge:
1. The Company’s annual report on Form 10-K for the fiscal year ended April 30, 2008 (the
“Form 10-K”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended; and
2. The information contained in the Form 10-K fairly presents, in all material respects, the
financial condition and results of operations of the Company.

Date: June 19, 2008

By: /s/ ARTHUR B. WINKLEBLACK

Name: Arthur B. Winkleblack
Title: Executive Vice President and
Chief Financial Officer

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 DIRECTORS AND OFFICERS*
H. J. Heinz Company
Directors C. Scott O’Hara
Dennis H. Reilley
William R. Johnson Executive Vice President —
Chairman Covidien
Chairman, President and President and Chief Executive
Former Chairman and
Chief Executive Officer Officer
Chief Executive Officer, Praxair
Director since 1993. (1) Heinz Europe
Danbury, Connecticut.
Charles E. Bunch Director since 2005. (2,3,4) Arthur B. Winkleblack
Chairman and Executive Vice President and Chief
Lynn C. Swann
Chief Executive Officer, Financial Officer
President, Swann, Inc.
PPG Industries, Inc.
Managing Director, Diamond Edge Theodore N. Bobby
Pittsburgh, Pennsylvania.
Capital Partners, LLC in Executive Vice President and
Director since 2003. (1,2,4)
New York. General Counsel
Leonard S. Coleman, Jr. Pittsburgh, Pennsylvania.
Director since 2003. (3,5) Edward J. McMenamin
Former President of the National
Senior Vice President —
League of Professional Baseball
Thomas J. Usher Finance and Corporate Controller
Clubs;
Chairman of Marathon Oil Com-
Middletown, NJ. Michael D. Milone
pany and Retired Chairman of
Director since 1998. (1,3,5) Senior Vice President
United States Steel Corporation,
Pittsburgh, Pennsylvania. Heinz Pacific, Rest of World,
John G. Drosdick
Director since 2000. (1,2,3,5) and Enterprise Risk Management
Chairman, President and
Chief Executive Officer, D. Edward I. Smyth
Michael F. Weinstein
Sunoco, Inc. Senior Vice President —
Chairman and Co-founder, INOV8
Philadelphia, Pennsylvania. Corporate and Government
Beverage Co., L.L.C.
Director since 2005. (4,5) Affairs and Chief
Rye, New York
Director since 2006 (2,4) Administrative Officer
Edith E. Holiday
Attorney and Director, Mitchell A. Ring
Various Corporations. Committees of the Board
Senior Vice President —
Director since 1994. (2,5) (1) Executive Committee Business Development
Candace Kendle (2) Management Development and
Christopher J. Warmoth
Chairman and Chief Executive Compensation Committee
Senior Vice President —
Officer, (3) Corporate Governance
Heinz Asia
Kendle International Inc., Committee
Cincinnati, Ohio. (4) Audit Committee Rene D. Biedzinski
Director since 1998. (3,4) (5) Corporate Social Responsibility Corporate Secretary
Committee
Dean R. O’Hare Leonard A. Cullo, Jr.
Former Chairman and Chief Officers Vice President — Treasurer
Executive Officer, William R. Johnson
The Chubb Corporation, Chairman, President and
Warren, New Jersey. Chief Executive Officer
Director since 2000. (1,2,4,5)
David C. Moran
Nelson Peltz Executive Vice President and
Chief Executive Officer and President and Chief Executive
founding partner of Trian Officer of
Fund Management, L.P. Heinz North America
New York, NY
Director since 2006. (3,5)

* As of June 2008

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 PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the Company’s
Common Stock over the five preceding fiscal years with the cumulative total shareholder return
on the Standard & Poor’s Package Foods Group Index and the return on the Standard & Poor’s 500
Index, assuming an investment of $100 in each at their closing prices on April 30, 2003 and
reinvestment of dividends.
Standard & Poor’s Package Foods Index includes: Campbell Soup Company, ConAgra Foods,
Inc., Dean Foods Company, General Mills Inc., The Hershey Company, H.J. Heinz Company, Kellogg
Company, Kraft Foods Inc., McCormick & Company, Inc., Sara Lee Corporation, Tyson Foods, Inc.,
and William Wrigley Jr. Company.

200
H.J. HEINZ COMPANY
S&P PACKAGED FOODS
150 S&P 500
DOLLARS

100

50

0
2003 2004 2005 2006 2007 2008

2003 2004 2005 2006 2007 2008

H.J. HEINZ COMPANY 100.00 131.40 131.15 154.09 177.07 184.65
S&P PACKAGED FOODS 100.00 128.60 136.84 133.44 159.87 156.93
S&P 500 100.00 124.55 130.61 150.49 175.38 165.66

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 FIVE-YEAR SUMMARY OF OPERATIONS AND OTHER RELATED DATA
H. J. Heinz Company and Subsidiaries
(Dollars in thousands, except per
share amounts) 2008 2007 2006(a) 2005 2004
SUMMARY OF OPERATIONS:
Sales . . . . . . . . . . . . . . . . . . . . . . . $ 10,070,778 $ 9,001,630 $ 8,643,438 $ 8,103,456 $ 7,625,831
Cost of products sold . . . . . . . . . . . $ 6,390,086 $ 5,608,730 $ 5,550,364 $ 5,069,926 $ 4,733,314
Interest expense . . . . . . . . . . . . . . . $ 364,856 $ 333,270 $ 316,296 $ 232,088 $ 211,382
Provision for income taxes . . . . . . . $ 372,869 $ 332,797 $ 250,700 $ 299,511 $ 352,117
Income from continuing
operations. . . . . . . . . . . . . . . . . . $ 844,925 $ 791,602 $ 442,761 $ 688,004 $ 715,451
Income from continuing operations
per share — diluted. . . . . . . . . . . $ 2.63 $ 2.38 $ 1.29 $ 1.95 $ 2.02
Income from continuing operations
per share — basic . . . . . . . . . . . . $ 2.67 $ 2.41 $ 1.31 $ 1.97 $ 2.03

OTHER RELATED DATA:

Dividends paid:
Common . . . . . . . . . . . . . . . . . .. $ 485,234 $ 461,224 $ 408,137 $ 398,854 $ 379,910
per share . . . . . . . . . . . . . . . .. $ 1.52 $ 1.40 $ 1.20 $ 1.14 $ 1.08
Preferred . . . . . . . . . . . . . . . . .. $ 12 $ 13 $ 14 $ 15 $ 16
Average common shares
outstanding — diluted . . . . . . . .. 321,717,238 332,468,171 342,120,989 353,450,066 354,371,667
Average common shares
outstanding — basic . . . . . . . . . . 317,019,072 328,624,527 339,102,332 350,041,842 351,809,512
Number of employees . . . . . . . . . . . 32,500 33,000 36,000 41,000 37,500
Capital expenditures . . . . . . . . . . . $ 301,588 $ 244,562 $ 230,577 $ 240,671 $ 231,961
Depreciation and amortization . . . . $ 288,897 $ 266,197 $ 247,433 $ 235,571 $ 217,677
Total assets . . . . . . . . . . . . . . . . . . $ 10,565,043 $ 10,033,026 $ 9,737,767 $ 10,577,718 $ 9,877,189
Total debt . . . . . . . . . . . . . . . . . . . $ 5,183,654 $ 4,881,884 $ 4,411,982 $ 4,695,253 $ 4,974,430
Shareholders’ equity . . . . . . . . . . . . $ 1,887,820 $ 1,841,683 $ 2,048,823 $ 2,602,573 $ 1,894,189
Return on average invested
capital . . . . . . . . . . . . . . . . . . .. 16.8% 15.8% 13.1% 15.4% 17.0%
Return on average shareholders’
equity . . . . . . . . . . . . . . . . . . . .. 44.0% 37.4% 29.1% 34.4% 51.6%
Book value per common share . . . .. $ 6.06 $ 5.72 $ 6.19 $ 7.48 $ 5.38
Price range of common stock:
High. . . . . . . . . . . . . . . . . . . . .. $ 48.75 $ 48.73 $ 42.79 $ 40.61 $ 38.95
Low . . . . . . . . . . . . . . . . . . . . .. $ 41.37 $ 39.62 $ 33.42 $ 34.53 $ 29.71

(a) Fiscal year consisted of 53 weeks.

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 There were no special items in Fiscal 2008 or Fiscal 2007.
The 2006 results include $124.7 million pre-tax ($80.3 million after tax) for targeted workforce reductions consistent with
the Company’s goals to streamline its businesses and $22.0 million pre-tax ($16.3 million after tax) for strategic review costs
related to the potential divestiture of several businesses. Also, $206.5 million pre-tax ($153.9 million after tax) was recorded for
net losses on non-core businesses and product lines which were sold and asset impairment charges on non-core businesses and
product lines anticipated to be sold in Fiscal 2007. Also during 2006, the Company reversed valuation allowances of
$27.3 million primarily related to the Hain Celestial Group, Inc. (“Hain”). In addition, results include $24.4 million of tax
expense relating to the impact of the American Jobs Creation Act.
The 2005 results include a $64.5 million non-cash impairment charge for the Company’s equity investment in Hain and a
$9.3 million non-cash charge to recognize the impairment of a cost-basis investment in a grocery industry sponsored
e-commerce business venture. There was no tax benefit recorded with these impairment charges in Fiscal 2005. Fiscal
2005 also includes a $27.0 million pre-tax ($18.0 million after-tax) non-cash asset impairment charge related to the anticipated
disposition of the HAK vegetable product line in Northern Europe which occurred in Fiscal 2006.
The 2004 results include, on a pretax basis, the gain on the sale of the bakery business in Northern Europe of $26.3 million,
reorganization costs of $16.6 million and the write down of pizza crust assets in the United Kingdom of $4.0 million.

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 CORPORATE DATA

Heinz: H. J. Heinz Company is one of the world’s leading BNY Mellon Shareowner Services, 480 Washington Bou-
marketers of branded foods to retail and foodservice levard, Jersey City, NJ 07310. (800) 253-3399 (within
channels. Heinz has number-one or number-two branded U.S.A.) or (201) 680-6578 or www.bnymellon.com/share-
businesses in more than 50 world markets. owner/isd.

Among the Company’s famous brands are Heinz, Ore- Auditors: PricewaterhouseCoopers LLP, 600 Grant
Ida, Smart Ones, Classico, Wyler’s, Delimex, Bagel Bites, Street, Pittsburgh, Pennsylvania 15219
Lea & Perrins, HP, Wattie’s, Farley’s, Plasmon, BioDie-
Stock Listings:
terba, Greenseas, Orlando, ABC, Honig, De Ruijter, and
New York Stock Exchange, Inc.
Pudliszki. Heinz also uses the famous brands Weight
Ticker Symbols: Common-HNZ; Third Cumulative
Watchers, Boston Market, T.G.I. Friday’s, Jack Daniel’s,
Preferred-HNZ PR
Amoy, Cottee’s and Rose’s under license.
The Annual Written Affirmation and the Annual CEO
Heinz provides employment for approximately Affirmation were submitted
32,500 people full time, plus thousands of others on a on August 21,2007.
part-time basis and during seasonal peaks.
TDD Services BNY Mellon Shareowner Services can be
Annual Meeting The annual meeting of the Company’s accessed through telecommunications devices for the
shareholders will be held at 9:00 a.m. on August 13, 2008, hearing impaired by dialing (800) 231-5469 (within
in Pittsburgh at The Westin Convention Center Hotel. U.S.A.) and by dialing 201-680-6610 (outside of U.S.A.).
The meeting will be Webcast live at www.heinz.com.

Copies of This Publication and Others Mentioned in

This Report are available without charge from the Cor-
porate Affairs Department at the Heinz World Headquar- H. J. Heinz Company
ters address or by calling (412) 456-6000. P.O. Box 57
Pittsburgh, Pennsylvania 15230-0057
Form 10-K The Company submits an annual report to the (412) 456-5700
Securities and Exchange Commission on Form 10-K. Cop- www.heinz.com
ies of this Form 10-K and exhibits are available without
charge from the Corporate Affairs Department.
Weight Watchers on foods and beverages is the registered trademark of WW
Investor Information Securities analysts and investors Foods, LLC. Weight Watchers for services and POINTS are the registered
trademarks of Weight Watchers International, Inc. Boston Market is a regis-
seeking additional information about the Company
tered trademark of Boston Market Corporation. T.G.I. Friday’s is a trademark of
should contact Margaret Nollen, Vice President-Investor TGI Friday’s of Minnesota, Inc. Jack Daniel’s is the registered trademark of
Relations, at (412) 456-1048. Jack Daniel’s Properties, Inc. Amoy is a trademark of Danone Asia Pte Limited.
Cottee’s and Rose’s are registered trademarks of Cadbury Enterprises Pte Ltd.
Media Information Journalists seeking additional infor-
K This entire report is printed on recycled paper.
mation about the Company should contact Michael Mullen,
Director of Corporate Affairs, at (412) 456-5751.

Equal Employment Opportunity H. J. Heinz Com-

pany hires, trains, promotes, compensates and makes
all other employment decisions without regard to race,
color, sex, age, religion, national origin, disability or other
protected conditions or characteristics. It has affirmative
action programs in place at all domestic locations to
ensure equal opportunity for every employee.

The H. J. Heinz Company Equal Opportunity Review is

available from the Corporate Affairs Department.

Environmental Policy H. J. Heinz Company is committed

to protecting the environment. Each affiliate has estab-
lished programs to review its environmental impact, to
safeguard the environment and to train employees.

The H. J. Heinz Company Environmental, Health &

Safety Report is available from the Corporate Affairs
Department and is accessible on www.heinz.com.

Corporate Data Transfer Agent, Registrar and Disburs-

ing Agent (for inquiries and changes in shareholder
accounts or to arrange for the direct deposit of dividends):

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 Executive Management

Office of the Chairman

William R. Johnson
Chairman, President & Chief Executive Officer
Theodore N. Bobby
Executive Vice President & General Counsel
Michael D. Milone
Senior Vice President, Heinz Pacific, Rest of World & Enterprise Risk Management
David C. Moran
Executive Vice President, President & Chief Executive Officer, Heinz North America
C. Scott O’Hara
Executive Vice President, President & Chief Executive Officer, Heinz Europe
D. Edward I. Smyth
Chief Administrative Officer & Senior Vice President, Corporate & Government Affairs
Christopher J. Warmoth
Senior Vice President, Heinz Asia
Arthur B. Winkleblack
Executive Vice President & Chief Financial Officer

Presidents’ Council
Karen L. Alber
Vice President & Chief Information Officer
Stephen S. Clark
Chief People Officer
Stefano Clini
President, Heinz Italy
Nigel P. Comer
Managing Director, Heinz Watties New Zealand
Beth A. Eckenrode
Vice President & Chief Strategy Officer
Brendan M. Foley
President, U.S. Foodservice
Peter T. Luik
President & Chief Executive Officer, Heinz Canada
Jennifer K. McGurrin
Director, Office of the Chairman
Edward J. McMenamin
Senior Vice President, Finance & Corporate Controller
Daniel G. Milich
Vice President, Global Business Development
Margaret R. Nollen
Vice President, Investor Relations
Robert P. Ostryniec
Global Supply Chain Officer
Diane B. Owen
Vice President, Corporate Audit
Fernando Pocaterra
Area Director, Latin America & Caribbean
Mitchell A. Ring
Senior Vice President, Business Development
Roel van Neerbos
President, Heinz Continental Europe
Peter Widdows
Managing Director, Heinz Australia
David C. Woodward
President, Heinz UK & Ireland

Global Reports LLC

H. J. Heinz Company
P. O. Box 57
Pittsburgh, PA 15230-0057
412-456-5700
www.heinz.com