Heinz Reports Second Quarter Fiscal 2006 EPS From Continuing Operations of $0.62, Up 10.7% (Excluding Special Items), And Operating Free Cash Flow of $175 Million

-- EPS on a GAAP basis was $0.60 versus $0.56 last year, up 7.1%. EPS from continuing operations was $0.50 versus $0.56 in the prior year.

-- Special items of $0.12 for the quarter reflect previously announced reorganization charges and costs related to potential sale of business units.

-- Sales increased 6.3%, reflecting continued strong performance in North American Consumer Products and Asia Pacific.

-- Operating Free Cash Flow of $175 million up 17.4% versus prior year.

-- Operating income up 5.2% (excluding special items).

-- Q2 EPS benefited from a lower tax rate, with the full-year rate now expected to be 30% to 31%.

H.J. Heinz Company (NYSE:HNZ) today reported net income of $203.8 million, or $0.60 per diluted share, for its second quarterended October 26, 2005. This represents a 7.1% increase in EPS versusthe second quarter of Fiscal 2005 on a Generally Accepted AccountingPrinciples and total company basis. Net income from discontinuedoperations for the second quarter of Fiscal 2006 was $32.0 million($0.09 of EPS), reflecting the resolution of tax liabilities relatedto the businesses spun-off to Del Monte in Fiscal 2003. The secondquarter net income from continuing operations, excluding specialitems, was $212.0 million, or $0.62 per diluted share, a 10.7%increase over earnings of $0.56 in the prior year. On a GAAP basis,income from continuing operations was $171.8 million, compared to$197.3 million in the prior year.

Special items in the second quarter of Fiscal 2006 totaled $50.9 million pretax ($40.2 million after tax) and related topreviously announced reorganization charges for targeted workforcereductions at various worldwide locations, as well as costs incurredin connection with strategic reviews related to the potentialdivestiture of several non-core businesses. The special items includea charge recognized by the Company related to the sale of Star-KistFood D'Or in Israel, which had been anticipated during the quarter andoccurred subsequently. The Company is still projecting to incur netexpenses totaling approximately $100 million in Fiscal 2006 forreorganization activities, portfolio reviews and costs to integrateacquisitions.

Commenting on the Company's performance, Heinz's Chairman,President and CEO William R. Johnson said: "We are generally pleasedwith results for the quarter. Volume, operating income and operatingfree cash flow, all showed solid progress. We achieved these resultsdespite significant cost headwinds and during a period of extensiveefforts to reshape the portfolio and streamline our core businesses.We are making good progress on our potential divestitures and willcarefully assess offers to ensure good value for our shareholders."

(Comments on the second quarter and six months that follow referto results excluding special items. See attached tables for furtherdetails, including reconciliation of non-GAAP financial measures.Management believes that the adjusted GAAP measures provide additionalclarity in understanding the trends of the business as they providemanagement with a view of the business excluding special items.)

SECOND QUARTER SUMMARY

Overall, Heinz's second quarter sales increased 6.3%, reflectingimprovements in all sales measures. Volume increased 0.6%, drivenprimarily by the North American Consumer Products segment, as well asthe Australian and Indonesian businesses. These volume increases werepartially offset by declines in the European frozen food andconvenience meals businesses, the Tegel(R) poultry business in NewZealand and the U.S. Foodservice segment. Pricing and foreign exchangeincreased sales slightly, both by 0.2%.

Acquisitions, net of divestitures, increased sales by 5.4%, andconsisted primarily of the following:

-- HP Foods Limited, HP Foods Holdings Limited, and HP Foods International Limited, collectively referred to as "HPF", a manufacturer and marketer of sauces that are primarily sold in the United Kingdom, the United States and Canada;

-- Nancy's Specialty Foods, Inc., a producer of premium appetizers, quiche entrees and desserts in the United States and Canada;

-- A majority interest in Petrosoyuz, a leading Russian maker of ketchup, condiments and sauces; and,

-- Appetizers And, Inc. ("AAI"), a manufacturer and marketer of high-quality, frozen hors d'oeuvres sold primarily in the U.S. foodservice industry.

Adjusted gross profit increased 5.6%, due primarily to theincreased volume and favorable impact of acquisitions. Adjusted grossprofit margins were off slightly, as a modest increase in net priceand strong productivity initiatives largely offset increases incommodity and fuel costs. Adjusted operating income grew 5.2% despitethe significant cost headwinds buffeting the industry. The increase inadjusted operating income and a lower effective tax rate offsetincreased net interest expense, resulting in the 10.7% increase inEPS.

The effective tax rate for the quarter was 24.8% versus 32.0% inthe prior year. This decline is primarily due to the reversal of a taxprovision of $23.4 million related to a foreign affiliate as a resultof a favorable court decision involving an unrelated party. As aresult of this favorable outcome and other tax initiatives, theCompany has revised its projected tax rate for the year from a rangeof 31% - 33% to 30% - 31%.

Heinz's working capital management improved over the prior yearand the Cash Conversion Cycle improved by one day. The Companygenerated $175 million of Operating Free Cash Flow in the secondquarter of Fiscal 2006, a 17.4% improvement over last year.

SECOND QUARTER SEGMENT HIGHLIGHTS

NORTH AMERICAN CONSUMER PRODUCTS

Sales of the North American Consumer Products segment increased10.4%. Volume increased 4.2%, as a result of strong growth in SmartOnes(R) frozen entrees and desserts, TGI Friday's(R) and Delimex(R)brands of frozen snacks and Classico(R) pasta sauces. Frozen potatoesvolume also improved. Pricing increased 0.7% largely due to reducedtrade promotion expense, primarily in the frozen food category. TheHPF and Nancy's acquisitions increased sales 4.1% and exchangetranslation rates increased sales 1.4%.

Adjusted operating income increased 9.3%, driven primarily by thefavorable impact of volume growth and acquisitions, partially offsetby increased commodity costs and Selling and Distribution expenses("S&D").

HEINZ U.S. FOODSERVICE

Sales of the U.S. Foodservice segment increased 1.5%. Theacquisition of AAI in the fourth quarter of Fiscal 2005 increasedsales 4.6%. Lower volume in the base business decreased sales 2.5%,largely due to the timing of trade promotions on ketchup and reducedtraffic at some key customers.

Adjusted operating income decreased 9.4% primarily due to thevolume decline, higher commodity costs and increased S&D expense,partially offset by the favorable impact of the AAI acquisition.

EUROPE

Heinz Europe's sales increased 5.4%. The HPF and Petrosoyuzacquisitions increased sales 9.7%. Volume decreased 2.0% but wouldhave been flat without the impact of the non-core frozen, seafood andHAK(R) businesses targeted for divestiture. Lower pricing decreasedsales 0.5%, driven primarily by increased promotional spending onHeinz(R) soup in the U.K., partially offset by improvements in theItalian infant nutrition business and price increases on Heinz(R)beans. Divestitures reduced sales 1.0%, and unfavorable exchangetranslation rates decreased sales by 0.8%.

Adjusted operating income increased 8.6%, driven mainly by thefavorable impact of the HPF acquisition, the settlement of a supplierclaim in the U.K. related to the Sudan 1 recall, improved performancein European seafood and reduced European headquarter costs. Theseincreases were partially offset by lower volume and highermanufacturing costs in Northern Europe and Italy.

ASIA PACIFIC

Sales in Asia/Pacific increased 7.1%. Volume increased sales 3.9%,reflecting strong results in Australia and Indonesia, largely due tonew product introductions and increased promotions. These increaseswere partially offset by a decline in the Tegel(R) poultry business inNew Zealand. Favorable exchange translation rates increased sales by1.6%. Pricing also increased sales slightly, up 0.4%. Acquisitions,net of divestitures, increased sales 1.2%, largely due to theacquisition of Shanghai LongFong Foods, a maker of popular frozenChinese snacks and desserts.

Adjusted operating income was virtually flat, due primarily tocommodity and manufacturing cost increases in Indonesia and China, andlower sales in the Tegel(R) poultry business, partially offset byvolume improvements and the LongFong acquisition.

REST OF WORLD

Strong top line growth was generated in Heinz's ROW segment. HeinzIndia showed both double-digit sales and profit growth for thequarter. Other markets posting strong growth were South Africa, Egyptand Mexico, where the new single-serve foodservice acquisition isdoing quite well.

YEAR-TO-DATE HIGHLIGHTS

Heinz reported income from continuing operations, excludingspecial items, of $393.7 million in the six months ended October 26,2005, up 0.4% compared to income from continuing operations of $392.1 million for the year-earlier period. Diluted earnings per sharefrom continuing operations, excluding special items, was $1.14, a 2.7%increase over $1.11 in the prior year.

Sales increased 5.9% for the first half of Fiscal 2006, driven byvolume increases of 1.4% and acquisitions, net of divestitures, of3.4%. The favorable volume was due primarily to the North AmericanConsumer Products segment, as well as the Australian, EasternEuropean, Indonesian, Indian and Italian infant nutrition businesses.These volume increases were partially offset by declines in Europeanfrozen food, convenience meals and seafood, U.S. Foodservice segmentand Tegel(R) poultry. Gross profit increased 4.0%, despite a 60 basispoint decline in adjusted gross profit margin, primarily from thefavorable impact of acquisitions, higher volume and favorable exchangetranslation rates. Adjusted operating income declined 1.0%, largelydue to the lower gross profit margin, higher fuel and transportationcosts and increased G&A expense.

On a GAAP basis, net income for the six months was $361.1 millioncompared to $393.8 million in the prior year, and EPS was $1.04compared to $1.11 in the prior year. The current year includes chargesfor special items of $84.8 million pretax ($64.6 million after tax)and income of $32.0 million related to discontinued operations.

MEETING WITH SECURITIES ANALYSTS - INTERNET BROADCASTS

Heinz will host a conference call with security analysts today at8:30 a.m. (Eastern Time). The call will be webcast live onwww.heinz.com and will be archived for playback beginning at 2 p.m.The call is available live via conference call at 1-800-955-1760(listen only). It will be hosted by William R. Johnson, Chairman,President & CEO; Art Winkleblack, Executive Vice President and ChiefFinancial Officer; and Jack Runkel, Vice President - InvestorRelations.

SAFE HARBOR PROVISIONS FOR FORWARD-LOOKING STATEMENTS:

This press release contains forward-looking statements within themeaning of the "safe harbor" provisions of the Private SecuritiesLitigation Reform Act of 1995. These forward-looking statementsreflect management's view of future events and financial performance.These statements are subject to risks, uncertainties, assumptions andother important factors, many of which may be beyond Heinz's controland could cause actual results to differ materially from thoseexpressed or implied in these forward-looking statements.Uncertainties contained in such statements include, but are notlimited to, sales, earnings, and volume growth, general economic,political, and industry conditions, competitive conditions, whichaffect, among other things, customer preferences and the pricing ofproducts, production, energy and raw material costs, the ability toidentify and anticipate and respond through innovation to consumertrends, the need for product recalls, the ability to maintainfavorable supplier relationships, achieving cost savings and grossmargins objectives, currency valuations and interest ratefluctuations, change in credit ratings, the ability to identify andcomplete and the timing, pricing and success of acquisitions, jointventures, divestitures and other strategic initiatives, approval ofacquisitions and divestitures by competition authorities, includingpotential divestitures of certain HPF product lines in the U.K., thesuccess of Heinz's growth and innovation strategy and the ability tolimit disruptions to the business resulting from the emphasis on threecore categories and potential divestitures, the ability to effectivelyintegrate acquired businesses, new product and packaging innovations,product mix, the effectiveness of advertising, marketing, andpromotional programs, supply chain efficiency and cash flowinitiatives, risks inherent in litigation, including tax litigation,and international operations, particularly the performance of businessin hyperinflationary environments, changes in estimates in criticalaccounting judgments and other laws and regulations, including taxlaws, the success of tax planning strategies, the possibility ofincreased pension expense and contributions and other people-relatedcosts, the possibility of an impairment in Heinz's investments, andother factors described in "Cautionary Statement Relevant toForward-Looking Information" in the Company's Form 10-K for the fiscalyear ended April 27, 2005. The Company undertakes no obligation topublicly update or revise any forward-looking statements, whether as aresult of new information, future events or otherwise, except asrequired by the securities laws.

ABOUT HEINZ: H.J. Heinz Company, offering "Good Food, EveryDay(TM)," is one of the world's leading marketers and producers ofbranded foods in ketchup, condiments, sauces, meals, soups, seafood,snacks, and infant foods. Heinz satisfies hungry consumers in everyoutlet, from supermarkets to restaurants to convenience stores andkiosks. Heinz is a global family of leading brands, including Heinz(R)Ketchup, sauces, soups, beans, pasta and infant foods (representingnearly one-third of total sales or close to $3 billion), HP(R) and Lea& Perrins(R), Ore-Ida(R) french fries and roasted potatoes, BostonMarket(R) and Smart Ones(R) meals, and Plasmon(R) baby food. Heinz's50 companies have number-one or number-two brands in 200 countries,showcased by Heinz(R) Ketchup, The World's Favorite Ketchup(TM).Information on Heinz is available at www.heinz.com/news.
H. J. Heinz Company and Subsidiaries
Consolidated Statements of Income
(In Thousands, Except per Share Amounts)

Second Quarter Ended Six Months Ended
----------------------- -----------------------
October 26, October 27, October 26, October 27,
2005 2004 2005 2004
FY2006 FY2005 FY2006 FY2005
----------- ----------- ----------- -----------

Sales $2,338,848 $2,199,560 $4,449,001 $4,202,586
Cost of products sold 1,496,477 1,399,546 2,852,879 2,663,819
----------- ----------- ----------- -----------
Gross profit 842,371 800,014 1,596,122 1,538,767
Selling, general and
administrative
expenses 531,835 456,566 1,004,384 855,665
----------- ----------- ----------- -----------
Operating income 310,536 343,448 591,738 683,102
Interest income 5,896 5,983 14,085 12,644
Interest expense 76,571 56,600 143,043 109,946
Other expense, net (9,088) (2,777) (13,628) (9,160)
----------- ----------- ----------- -----------
Income from continuing
operations before
income taxes 230,773 290,054 449,152 576,640
Provision for income
taxes 58,991 92,775 120,096 184,525
----------- ----------- ----------- -----------
Income from continuing
operations 171,782 197,279 329,056 392,115

Income from
discontinued
operations, net of
tax 32,039 1,686 32,039 1,686
----------- ----------- ----------- -----------
Net income $203,821 $198,965 $361,095 $393,801
=========== =========== =========== ===========

Income per common
share - Diluted
Continuing
operations $0.50 $0.56 $0.95 $1.11
Discontinued
operations 0.09 - 0.09 -
----------- ----------- ----------- -----------
Net Income $0.60 $0.56 $1.04 $1.11
=========== =========== =========== ===========

Average common shares
outstanding - diluted 342,533 353,275 345,963 354,145
=========== =========== =========== ===========

Income per common
share - Basic
Continuing
operations $0.51 $0.56 $0.96 $1.12
Discontinued
operations 0.09 - 0.09 -
----------- ----------- ----------- -----------
Net Income $0.60 $0.57 $1.05 $1.12
=========== =========== =========== ===========

Average common shares
outstanding - basic 339,475 349,655 342,856 350,569
=========== =========== =========== ===========

Cash dividends per
share $0.30 $0.285 $0.60 $0.57
=========== =========== =========== ===========
Note: Fiscal 2006 includes special items.
(Totals may not add due to rounding)



H. J. Heinz Company and Subsidiaries
Segment Data

Second Quarter Ended Six Months Ended
----------------------- -----------------------
October 26, October 27, October 26, October 27,
2005 2004 2005 2004
FY2006 FY2005 FY2006 FY2005
----------- ----------- ----------- -----------
Net external sales:
North American
Consumer Products $625,039 $565,927 $1,169,999 $1,054,759
U.S. Foodservice 385,345 379,832 738,556 723,700
Europe 858,692 814,771 1,646,856 1,603,496
Asia/Pacific 369,110 344,787 692,640 639,059
Other Operating
Entities 100,662 94,243 200,950 181,572
----------- ----------- ----------- -----------
Consolidated Totals $2,338,848 $2,199,560 $4,449,001 $4,202,586
=========== =========== =========== ===========

Intersegment revenues:
North American
Consumer Products $13,128 $12,965 $25,431 $25,691
U.S. Foodservice 5,307 5,339 10,205 9,581
Europe 3,239 4,494 6,474 9,166
Asia/Pacific 449 1,013 1,223 1,610
Other Operating
Entities 301 368 564 758
Non-Operating (22,424) (24,179) (43,897) (46,806)
----------- ----------- ----------- -----------
Consolidated Totals $- $- $- $-
=========== =========== =========== ===========

Operating income
(loss):
North American
Consumer Products $147,018 $134,977 $270,949 $246,069
U.S. Foodservice 47,202 57,964 97,664 112,304
Europe 112,727 125,480 229,017 279,571
Asia/Pacific 39,633 42,858 59,986 75,121
Other Operating
Entities (5,002) 8,162 1,365 22,488
Non-Operating (31,042) (25,993) (67,243) (52,451)
----------- ----------- ----------- -----------
Consolidated Totals $310,536 $343,448 $591,738 $683,102
=========== =========== =========== ===========

Operating income
(loss) excluding
special items:
North American
Consumer Products $147,571 $134,977 $273,338 $246,069
U.S. Foodservice 52,535 57,964 104,345 112,304
Europe 136,288 125,480 266,019 279,571
Asia/Pacific 42,750 42,858 70,021 75,121
Other Operating
Entities 10,419 8,162 18,751 22,488
Non-Operating (28,111) (25,993) (55,986) (52,451)
----------- ----------- ----------- -----------
Consolidated Totals $361,452 $343,448 $676,488 $683,102
=========== =========== =========== ===========

The company's revenues are generated via the sale of products in the
following categories:

Ketchup, Condiments
and Sauces $870,080 $800,435 $1,673,009 $1,563,035
Frozen Foods 602,455 543,050 1,106,337 1,004,590
Convenience Meals 477,358 480,431 931,634 931,300
Infant Feeding 207,318 202,437 401,696 381,388
Other 181,637 173,207 336,325 322,273
----------- ----------- ----------- -----------
Total $2,338,848 $2,199,560 $4,449,001 $4,202,586
=========== =========== =========== ===========


H.J. Heinz Company and Subsidiaries
Special Items - Second Quarter Ended October 26, 2005

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 second
quarter ended October 26, 2005:

Second Quarter Ended October 26, 2005
------------------------------------------

(amounts in millions) Net Gross Operating Per
Sales Profit Income Income Share
--------- ------- --------- ------- ------
Reported results from
continuing operations $2,338.8 $842.4 $310.5 $171.8 $0.50
Reorganization costs - 4.0 31.5 22.2 0.06
Strategic review costs - 1.5 6.8 4.4 0.01
Net loss on disposals - (3.3) 12.7 13.6 0.04
--------- ------- --------- ------- ------
Results from continuing
operations excluding
special items $2,338.8 $844.5 $361.5 $212.0 $0.62
========= ======= ========= ======= ======
(Note: Totals may not add due to rounding.)


H.J. Heinz Company and Subsidiaries
Special Items - Six Months Ended October 26, 2005

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 six months
ended October 26, 2005:

Six Months Ended October 26, 2005
--------------------------------------------

(amounts in millions) Net Gross Operating Per
Sales Profit Income Income Share
--------- --------- --------- ------- ------
Reported results from
continuing operations $4,449.0 $1,596.1 $591.7 $329.1 $0.95
Reorganization costs - 6.0 56.5 39.1 0.11
Strategic review costs - 1.5 15.6 12.0 0.03
Net loss on disposals - (3.3) 12.7 13.6 0.04
--------- --------- --------- ------- ------
Results from continuing
operations excluding
special items $4,449.0 $1,600.3 $676.5 $393.7 $1.14
========= ========= ========= ======= ======
(Note: Totals may not add due to rounding.)



H.J. Heinz Company and Subsidiaries
Non-GAAP Performance Ratios

The Company reports its financial results in accordance with
accounting principles generally accepted in the United States of
America ("GAAP"). However, management believes that certain non-GAAP
performance measures and ratios, used in managing the business, may
provide users of this financial information with additional
meaningful comparisons between current results and results in prior
periods. Non-GAAP financial measures should be viewed in addition to,
and not as an alternative for, the Company's reported results
prepared in accordance with GAAP. The following table provides the
calculation of the non-GAAP performance ratio discussed in the
Company's press release dated November 22, 2005:

Operating Free Cash Flow Calculation

(amounts in thousands) Second Quarter Ended Six Months Ended
----------------------- -----------------------
October 26, October 27, October 26, October 27,
2005 2004 2005 2004
FY 2006 FY 2005 FY 2006 FY 2005
----------- ----------- ----------- -----------
Cash provided by
operating activities $227,567 $193,382 $393,483 $379,562
Capital expenditures (52,447) (44,180) (99,609) (82,620)
----------- ----------- ----------- -----------
Operating Free Cash
Flow $175,120 $149,202 $293,874 $296,942
=========== =========== =========== ===========