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eduction of cost of products sold in the consolidated statement of income for the year ended April 28,
2010. In the future, the deferred amounts will be recognized as the related costs are incurred and if
estimated costs differ from amounts actually incurred there could be adjustments that will be
reflected in earnings.
Results of Continuing Operations
The Company’s revenues are generated via the sale of products in the following categories:
April 28,
2010
(52 Weeks)
Fiscal Year Ended
April 29,
2009
(52 Weeks)
April 30,
2008
(52 Weeks)
(Dollars in thousands)
Ketchup and sauces . . . . . . . . . . . . . . . . . . . . . $ 4,446,911 $ 4,251,583 $4,081,864
Meals and snacks . . . . . . . . . . . . . . . . . . . . . . . 4,289,977 4,225,127 4,336,475
Infant/Nutrition . . . . . . . . . . . . . . . . . . . . . . . . 1,157,982 1,105,313 1,089,544
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,113 429,308 377,673
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,494,983 $10,011,331 $9,885,556
Fiscal Year Ended April 28, 2010 compared to Fiscal Year Ended April 29, 2009
Sales for Fiscal 2010 increased $484 million, or 4.8%, to $10.49 billion. Net pricing increased
sales by 3.4%, largely due to the carryover impact of broad-based price increases taken in Fiscal 2009
to help offset increased commodity costs. Volume decreased 1.3%, as favorable volume in emerging
markets was more than offset by declines in the U.S. and Australian businesses. Volume was
impacted by aggressive competitor promotional activity and softness in some of the Company’s
product categories, as well as reduced foot traffic in U.S. restaurants this year. Emerging markets
continued to be an important growth driver, with combined volume and pricing gains of 15.3%. In
addition, the Company’s top 15 brands performed well, with combined volume and pricing gains of
3.4%, led by the Heinz», Complan» and ABC» brands. Acquisitions, net of divestitures, increased
sales by 2.2%. Foreign exchange translation rates increased sales by 0.5% compared to the prior year.
Gross profit increased $225 million, or 6.3%, to $3.79 billion, and the gross profit margin
increased to 36.2% from 35.7%. The improvement in gross margin reflects higher net pricing and
productivity improvements, partially offset by higher commodity costs including transaction currency
costs. Acquisitions had a favorable impact on gross profit dollars but reduced overall gross
profit margin. In addition, gross profit was unfavorably impacted by lower volume and $24 million of
charges for a corporation-wide initiative to improve productivity, partially offset by a $15 million gain
related to property sold in the Netherlands as discussed previously.
Selling, general and administrative expenses (“SG&A”) increased $168 million, or 8.1%, to
$2.24 billion, and increased as a percentage of sales to 21.3% from 20.6%. The increase reflects the
impact from additional marketing investments, acquisitions, inflation in Latin America, and higher
pension and incentive compensation expenses. In addition, SG&A was impacted by $14 million
related to targeted workforce reductions in the current year and a gain in the prior year on the sale of
a small portion control business in the U.S. These increases were partially offset by improvements in
selling and distribution expenses (“S&D”), reflecting productivity improvements and lower fuel costs.
Operating income increased $57 million, or 3.8%, to $1.56 billion, reflecting the items above.
Net interest expense decreased $25 million, to $251 million, reflecting a $44 million decrease in
interest expense and a $19 million decrease in interest income. The decreases in interest income and
interest expense are primarily due to lower average interest rates.
Other expenses, net, increased $111 million primarily due to a $105 million decrease in currency
gains, and $9 million of charges recognized in connection with the August 2009 dealer remarketable
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