Bestfood PreAcquisition Info

Unilever PLC
Unilever NV
3 November 2000


BESTFOODS PRE-ACQUISITION FINANCIAL INFORMATION  
 
The acquisition of Bestfoods was completed by Unilever on 4 October 2000 and,
as a wholly owned subsuidiary of the Unilever Group, Bestfoods results will
be consolidated from that date.
 
In accordance with SEC reporting requirements the Bestfoods second quarter
earnings statement issued on the 12th July 2000 and the 10/QA filed on the
10th August 2000 are the last required filings of Bestfoods. However, in
order to assist in understanding the development of the Bestfoods business
since 30th June, and up to 30th September, 2000, unaudited third quarter
financial data for the Bestfoods operations has been prepared.
 
The financial data has been prepared on a consistent basis with previous
quarters and has been prepared in accordance with US GAAP. US GAAP differs
from UK and Dutch GAAP and if the financial data presented were to be
prepared in accordance with UK and Dutch GAAP there would be differences in
the amounts reported.
 
The financial data presented herein for the third quarter should be
considered indicative only and excludes merger related integration costs of
$21.4m and includes financial data in respect of the Bestfoods Baking Company
in the US and the Lesieur business in France which Unilever has announced its
intention to sell.
 

Review of Third Quarter Income Data

Diluted earnings per share before merger related expenses reached 71 cents
per share for the third quarter, 10.9% above the 64 cents in the prior year.
This increase in earnings arose despite the adverse impact amounting to 7
cents per share for the third quarter from exchange rates and higher
financing costs. The Euro, Pound Sterling and Brazilian Real all weakened
versus the dollar. Financing costs for the quarter increased because higher
levels of debt were needed as a result of the Arisco acquisition in February.
 
Overall net sales increased by 6% compared to prior year. This included 4.1%
internal volume growth. Operating income in the quarter increased by 14.2%
compared to prior year. Operating income also includes $8m net gain arising
from the sale of a potato ingredients business in Germany.
 

North America

Net sales increased 13.5% for the third quarter, reflecting 5.2% internal
growth in volumes plus 8.1% volume growth from acquisitions. Pricing and
currencies (Canada and the Dominican Republic) had a small positive impact.

 
Volume growth for retail products was 5.0% for the quarter. Gains were seen
in vegetable oils, pourable dressings, peanut butter, bouillon and soups.
Mayonnaise declined 4%, reflecting an overall
decline in the category during the quarter and slight loss of market share
due to competitive activities. For the year to date, mayonnaise volumes are
up by 2% compared to prior year.
 
Foodservice volumes grew 60% for the quarter, reflecting solid growth in
existing products (+11.3%) and higher volumes from the Case Swayne
acquisition, which took place in early October 1999. Strong volume growth was
seen in mayonnaise, pourable dressings, bouillons and vegetable oils. The
line of chilled pourable dressings launched earlier in the year continues to
show very encouraging results.
 
Operating income for the North American division increased 21.8% over prior
year for the quarter, coming mostly from higher volumes (including the Case
Swayne acquisition) and improved margins. Marketing expenditure was
essentially flat year over year. The operating income to net sales margin
improved from 16.6% in 1999's third quarter to 17.9% this year.

Europe

Net sales decreased 6.1% for the quarter, but excluding the negative currency
impact, sales revenues grew 3.5% over prior year. Unit volume growth was
3.4%, of which 2.6% came from internal growth and 0.8% came from
acquisitions. Particularly strong volume performances were seen in Benelux,
Nordic, and South Africa.
 
Operating income grew 10.4% in the third quarter compared to prior year. The
increase excluding currency impact would have been 21.9%. The strong
performance was due primarily to margin improvement, as the operating income
to net sales margin increased from 16.4% to 19.2%. Some of the margin
improvement came from reduced marketing. There was also a net gain of $8
million, or 5% of the operating income for the quarter, arising from the sale
of a potato ingredients business in Germany. Excluding this one time gain,
operating income for Europe grew 4.4% in reported dollars.

Latin America

Latin America continued to show signs of improvement compared to last year
when difficulties were encountered particularly in Brazil. Overall sales for
the quarter grew 33.7%, which included 40.1% volume growth (5.4% excluding
the Arisco and Molinos acquisitions) offset by currency declines (-4.5%) and
some price declines (-1.9%). Excluding the acquisitions, sales were
essentially flat, as gains in Mexico were mostly offset by the effect of
price declines in Argentina and Brazil.
 
Operating income for the quarter grew 24.8%, which resulted mostly from
volume gains, 10.4% internal and 17.1% from acquisitions, offset by exchange
declines (-4.8%). Margin levels declined slightly year over year for the
quarter. Argentina and Mexico performed well with Brazil reflecting the
benefit of the Arisco acquisition.

Asia

Net sales for the third quarter grew by 5.3%, but this came from an increase
in volumes of 14.1% (9.9% excluding acquisitions) offset by some price
declines (-5.6%) and a negative currency impact (-3.2%). Volumes were strong
in Hong Kong, Philippines, Thailand and China, although the last was off a
small base. Price promotions in Hong Kong, Philippines and Thailand drove the
volumes but also caused erosion in prices at the net sales level. Currency
declines took place in Thailand and the Philippines.
 
Knorr retail bouillon volume was up 8% in the area compared to prior year and
soup volumes were up 18%. Additional soup varieties were successfully
launched in China. Dressings and foodservice also showed strong double digit
increases in volume.

Operating income grew 21.6% for the quarter, resulting from volume gains and
margin improvements. Operating income to net sales margins were 17.3%
compared to 14.9% in prior year, despite the price declines mentioned above.
Cost containment and product mix were favourable.

Baking Business

Net sales for Baking increased 4.6% over last year's third quarter, 3.5% from
volume growth (all internal) and 1.1% from price improvements. Volume growth
was strong in all bread brands, led by the continuing unit growth in Arnold
and very strong Thomas' bagel sales. Of note is the growth in Entenmann's
base cake sales, +1.6%. Thomas' fresh waffles were introduced in the
Northeast with very positive consumer response.
 
Operating income grew 19.4% for the quarter, mostly coming from the volume
improvement. Favourable price/mix was offset by higher operating costs for
the direct store delivery system. There was improvement in the operating
margin, which grew from 8.1% in 1999 to 9.3% this year. This quarter marks
the 12th consecutive quarter with double digit earnings growth, comparable
quarter over quarter.
-o0o-
 


 Bestfoods and Subsidiaries                                                   
 Consolidated Income Data (unaudited)                                         
 (All figures are in millions except per share amounts)                       
                        
                                                    
                             Three months ended            Nine months ended  
                                   Sep-30                       Sep-30        
     
                                          %                            %      
                         2000    1999    Incr/Decr   2000   1999   Incr/Decr  
  
  Net Sales        $    2,188   2,064        6.0    6,615  6,414       3.1 
  Operating income        381     334       14.2    1,055    952      10.9 
  Net income              205     184       11.5      558    504      10.8 
  
  Average common shares                                                       
  outstanding: Diluted  286.2   287.8               285.1  288.6              
  
  Earnings (excluding                                                         
  merger related                                                              
  expenses) per common                                                        
  share:Diluted          0.71    0.64                1.95   1.74              
  
  Analysis of change in EPS 2000 versus 1999                                  
                     
                             Diluted              Diluted                     
     ($ per share)           Three months         Nine months                 
                             ended September      ended September             
                                    $                    $                    
              
  Higher volumes                      0.10                 0.25               
  Margin improvement                  0.05                 0.14               
  Currency impact                    -0.04                -0.15               
  Financing cost                     -0.03                -0.05               
  Shares outstanding                    --                 0.02               
  Tax rate                           -0.02                   --               
  Minority interest                   0.01                   --               
                
  Total change in EPS                 0.07                 0.21               
  EPS 1999                            0.64                 1.74               
  EPS 2000                            0.71                 1.95               
               
                                                                              
  This is unaudited consolidated income data prepared by management. The      
  operating income amounts exclude integration costs of $21.4 million in the  
  third quarter of 2000 and $66.4 million in the nine month period.           
                                          
 
  Bestfoods and Subsidiaries                                                  
  Consolidated Income Data (unaudited)                                        
                        
  Divisional results                                                          
  ($ millions)                                                                
                              Three months ended        
                                  Sep-30                     Due to: ($)      
                                          %                                  
                       2000    1999     Incr/Decr      Volume     Price     FX
  Net Sales               $       $                                 
  North America          511     450       13.5          60          0       1
  Europe                 778     828       -6.1          28          1     -79
  Latin America          354     265       33.7         106         -5     -12
  Asia                   101      96        5.3          14         -5      -4
  Baking                 444     425        4.6          15          4      --
  Total Operations     2,188   2,064        6.0         223         -5     -94
                                                  
  Operating Income        $         $                Volume     Margin     FX 
                                                                      
  North America           91       75      21.8        11         5      -- 
  Europe                 150      136      10.4         5        25     -16 
  Latin America           94       75      24.8        21         1      -3 
  Asia                    17       14      21.6         2         2      -1 
  Baking                  41       35      19.4         6        --      -- 
  Corporate  Expenses    -12       -1        -         --       -11      -- 
                                                                    
 Total Operating Income  381      334      14.2        45        22     -20 
                                                                     
                                                                        
                              Nine months ended                               
                                   Sep-30                Due to:($)
                                           %                                  
                        2000     1999  Incr/Decr      Volume     Price     FX 
  Net Sales                $        $                                       
  North America         1,468   1,334       10.1       147       -15      2 
  Europe                2,572   2,726       -5.6        93        12   -259 
  Latin America           938     798       17.4       196        10    -66 
  Asia                    311     281       10.6        52       -17     -5 
  Baking                1,326   1,275        4.0        42         9      - 
  Total Operations      6,615   6,414        3.1       530        -1   -328 
                                                                  
  Operating Income          $       $                 Volume    Margin     FX 
 
  North America           245     219       11.7        33        -7       0 
  Europe                  482    452         6.8        16        64     -50 
  Latin America           217    185        17.4        37        11     -16 
  Asia                     48     39        24.3         4         6      -1 
  Baking                  102     82        24.6        18         2       - 
  Corporate Expenses      -39    -25        56.7         -       -14       - 
                                                                      
Total Operating Income  1,055    952        10.9       108        62     -67 
                                                                    
                                                                        
  This is unaudited consolidated income data prepared by management. The      
  operating income amounts exclude integration costs of $21.4 million in the  
  third quarter of 2000 and $66.4 million in the nine month period.