<PAGE>   1
                       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

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<S>                                               <C>
    FOR THE FISCAL YEAR ENDED                     COMMISSION FILE NUMBER
          JULY 30, 2000                                   1-13933
</TABLE>




                       [VLASIC FOODS INTERNATIONAL LOGO]




<TABLE>
<S>                                            <C>
         NEW JERSEY                                      52-2067518
   STATE OF INCORPORATION                      I.R.S. EMPLOYER IDENTIFIED NO.
</TABLE>


                                  VLASIC PLAZA
                              SIX EXECUTIVE CAMPUS
                       CHERRY HILL, NEW JERSEY 08002-4112
                           PRINCIPAL EXECUTIVE OFFICES


                         TELEPHONE NUMBER: 856-969-7100

            --------------------------------------------------------


             SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF ACT:

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<S>                                  <C>
    TITLE OF EACH CLASS              NAME OF EACH EXCHANGE ON WHICH REGISTERED
 COMMON STOCK, NO PAR VALUE                   NEW YORK STOCK EXCHANGE
</TABLE>

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF ACT: NONE

            --------------------------------------------------------

        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 /X/ NO

        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 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. [ ]

        AS OF OCTOBER 6, 2000, THE AGGREGATE MARKET VALUE OF COMMON STOCK HELD
BY NON-AFFILIATES OF THE REGISTRANT WAS $49,520,912. THERE WERE 45,418,203
SHARES OF COMMON STOCK OUTSTANDING AS OF OCTOBER 6, 2000.

        PORTIONS OF THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT DATED
OCTOBER 20, 2000, FOR THE ANNUAL MEETING OF SHAREOWNERS TO BE HELD ON DECEMBER
5, 2000, ARE INCORPORATED BY REFERENCE INTO PART III.


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TABLE OF CONTENTS

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<TABLE>
<CAPTION>
<S>          <C>                                                                                              <C>
Part I.                                                                                                       Page No.

Item 1.      Business ....................................................................................       3

Item 2.      Properties ..................................................................................       8

Item 3.      Legal Proceedings ...........................................................................       9

Item 4.      Submission of Matters to a Vote of Security Holders .........................................       9

Part II.

Item 5.      Market for the Registrant's Common Stock and Related Shareowner Matters .....................      10

Item 6.      Selected Financial Data .....................................................................      10

Item 7.      Management's Discussion and Analysis of Results of Operations and Financial Condition .......      11

Item 7A.     Quantitative and Qualitative Disclosures About Market Risk ..................................      24

Item 8.      Financial Statements ........................................................................      25

Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ........      50

Part III.

Item 10.     Directors and Executive Officers of the Registrant ..........................................      51

Item 11.     Executive Compensation ......................................................................      51

Item 12.     Security Ownership of Certain Beneficial Owners and Management ..............................      51

Item 13.     Certain Relationships and Related Transactions ..............................................      51

Part IV.

Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K ............................      52

             Signatures ..................................................................................      55

             Report of Management ........................................................................      56

             Report of Independent Accountants ...........................................................      56
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FISCAL 2000 ANNUAL REPORT                      [VLASIC FOODS INTERNATIONAL LOGO]

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                                     PART I

ITEM 1.   BUSINESS
                                COMPANY OVERVIEW

        Vlasic Foods International Inc. was created through a tax-free spin-off
of various food businesses from Campbell Soup Company on March 30, 1998. The
businesses making up Vlasic had product portfolios that were not core to
Campbell's strategy. In January 1999 and July 1999 we sold two of these
businesses, the Kattus German distribution business and the Swift-Armour
Argentine beef business. In January 2000, we sold our fresh mushroom business,
Vlasic Farms, Inc. which has been accounted for as a discontinued operation.

        We are a leading producer, marketer and distributor of high quality,
branded convenience food products in primarily three operating segments: Frozen
Food Operations, Grocery Products Operations and United Kingdom Operations.

        -       Frozen Food Operations. The frozen foods segment manufactures
                frozen dinners and other frozen foods and accounted for
                approximately 53%, 43% and 41% of our net sales in fiscal 2000,
                1999 and 1998. The frozen foods segment derives the largest
                portion of its earnings from manufacturing frozen dinners,
                breakfasts and pot pies in the United States and marketing such
                products in the United States and Canada under the Swanson brand
                name.

        -       Grocery Products Operations. The grocery products segment
                manufactures pickles and peppers and markets a diverse portfolio
                of pickle products, peppers and barbecue sauce; mostly with
                leading national or regional market positions. The grocery
                products segment accounted for approximately 32%, 26% and 23% of
                our net sales in fiscal 2000, 1999 and 1998, primarily from
                sales of pickles, relishes and other products marketed under the
                Vlasic brand name in the United States.

        -       United Kingdom Operations. Our United Kingdom segment
                manufactures and distributes frozen foods such as sausages, pies
                and savory-filled pastries as well as canned and jarred beans,
                pickles, fruits and vegetables. The United Kingdom segment
                accounted for approximately 15%, 13% and 14% of our net sales in
                fiscal 2000, 1999 and 1998, predominately from products
                manufactured and marketed under the Freshbake, SonA and Rowats
                brand names.


                              GOING CONCERN MATTERS

        The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As discussed in Note 26, we
have significant borrowings which require, among other things, compliance with
certain financial ratios, specifically a debt/EBITDA ratio and a fixed charge
coverage ratio, on a quarterly basis. As a result of operating losses incurred
during the second, third, and fourth quarters in fiscal 2000, we were not in
compliance with the financial ratio covenants under our senior credit facility;
however, we requested and received a waiver through February 28, 2001 in
consideration for the payment of a fee and an increase in interest rates. There
are three key provisions of the waiver: (1) an escrow deposit to pay the January
2, 2001 interest payment on the senior subordinated notes ("January Interest
Payment") must be established by December 28, 2000 and cannot be funded with
funds generated from operations or proceeds of asset sales, as is more fully
described below; (2) certain events, including the payment in full of our
indebtedness outstanding under the senior credit facility, must take place by
the expiration of the waiver, or if there is a Standstill Period (as defined and
discussed below), the Standstill Period, or else we will be required to pay an
additional fee in the amount of $1.5 million to the senior credit facility bank
syndicate; and (3) we must comply with certain monthly tests of minimum sales
and net worth and maximum capital expenditures.

        If the January Interest Payment is not paid within 30 days of the due
date, there would be an event of default which upon a vote of the holders of at
least 25% of the senior subordinated notes could cause them to be accelerated.

        The terms of the waiver require the Company to deposit an amount in
escrow on or before December 28, 2000 for payment of the January Interest
Payment ("Escrow"). The waiver as presently in force precludes the Escrow from
being funded with funds generated from operations or proceeds of asset sales.
Failure to timely fund the Escrow would cause the waiver to expire on December
28, 2000. In such event, the waiver provides for a "Standstill Period" following
expiration of the waiver during which Events of Default would continue to be
waived. However, the principal of the bank loans could be accelerated and a
"payment blockage notice" could be delivered on the Company preventing it from
making the January Interest Payment. The Standstill Period would expire on the
later of (a) January 30, 2001 or (b) a forbearance date specified in any
agreement by the holders of more than 75% of the outstanding senior subordinated
notes to not accelerate the principal of such notes or enforce any other
remedies for the enforcement of collection of such notes. The expiration of the
Standstill Period would, however, be no later than February 28, 2001.


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        A breach of any of the terms and conditions of the waiver, or subsequent
breaches of conditions of the senior credit facility not covered by the waiver
could result in acceleration of our indebtedness, in which case the debt would
become immediately due and payable. Although no assurances can be given, we
expect that we will be in compliance throughout the period of the current waiver
with respect to the financial covenants regarding minimum sales, minimum net
worth and capital expenditure limits.

        We are exploring strategic opportunities for the Company, which is
likely to result in the sale of the Company in whole or in parts. The investment
banking firm of Lazard Freres & Co. has been hired to assist with this strategic
review and to solicit bids on our behalf. However, since this process is still
on-going, no assurances can be given that any proposed plans and actions can be
effectively executed.

        Our ability to operate as a going concern is dependent upon our ability
to avoid default under the senior credit facility. Either the process of selling
the Company in whole or in parts must be complete by the expiration of the
Standstill Period described above and all the loans under the senior credit
facility repaid or there must have been sufficient progress demonstrated in the
opinion of the senior credit facility bank group so that it extends the current
waiver through the expected completion date of the sale process. If the Company
is not sold by the expiration of the Standstill Period described above or the
waiver has not been extended, there will be an event of default and it is
probable that the Company could not raise the funds to pay off all of its debts.
However, the Company expects that so long as demonstrable progress satisfactory
to the senior credit facility bank group has been made towards the completion of
a sale or other transaction pursuant to the strategic review process, funding
will be available to make the January Interest Payment.


                              PRODUCTS AND MARKETS

FROZEN FOOD OPERATIONS

        We manufacture and market frozen food products in the United States,
primarily frozen dinners, pot pies and breakfasts, under the Swanson,
Hungry-Man, Traditional Favorites, Potato Topped, Great Starts and Fun Feast
brands. In Canada, we market frozen food products manufactured by contract
manufacturers, primarily frozen dinners and pot pies, under the Swanson and
Hungry-Man brands.

        The Swanson brand is the leading national brand of frozen, traditional
dinners in the United States, with approximately 28% of the $1.3 billion frozen
dinner market. Swanson frozen pot pies are the market leader in their product
category with approximately 29% of the $329 million frozen pot pie market. In
August 1999, we launched the Swanson line of Potato Topped pot pies and it is
estimated that this new category commands a 5% share of the entire pot pie
category. In addition, Swanson's Great Starts breakfasts are in the top of their
product categories.

        We manufacture a variety of frozen foods including entrees for
consumption by restaurants and cafeterias, under the terms of a contract packing
agreement with Campbell Soup Company that has been extended through March 30,
2001. By amendment, either party may terminate the agreement effective March 30,
2001 with notice given no later than December 1, 2000. However, we received
notice on September 29, 2000 that if the contract is extended, it would not be
on the terms of the current contract. Approximately 30% of the sales value of
production at our Omaha, Nebraska facility is devoted to this contract. If the
contract is not extended and alternative sources of sales volume are not
secured, it is likely that the loss of production volume would result in
significant layoffs and higher manufacturing costs.

GROCERY PRODUCTS OPERATIONS

        The main product offerings of our grocery products operations are
pickles and relishes under the Vlasic brand name and barbecue sauce under the
Open Pit brand name.

        Pickles and Relishes. Our Vlasic brand is the leading national retail
brand of jarred, shelf-stable pickles with approximately 32% of the $785 million
U.S. national retail market. We also manufacture and sell jarred, shelf-stable
pickles under the Milwaukee's brand, and relishes, peppers and pickles under the
Vlasic name. We sell shelf-stable pickles and other condiments to foodservice
customers, including quick service restaurants such as McDonald's.

        Barbecue Sauce. Our Open Pit barbecue sauce is the leading retail brand
of barbecue sauce in the Midwest U.S., with a 29% market share in this region. A
new line of sweet Open Pit barbecue sauces was introduced in February 2000 under
the Grill Classics brand name. Open Pit is manufactured through a co-pack
arrangement.


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UNITED KINGDOM OPERATIONS

        Our United Kingdom operations manufacture and distribute frozen foods
such as sausages, pies and savory-filled pastries under our Freshbake brand, as
well as the private label brands of certain customers. A microwavable line of
puff pastry meat pies was introduced in fiscal 2000 under the Microbake brand
name. Our primary customers are retail grocery chains and foodservice operators
such as restaurants and cafeterias.

        We produce canned beans and fruits and vegetables under our SonA brand
and pickled products under our Rowats brand. Canned products are sold directly
to restaurants and cafeterias or through foodservice distributors. Pickled
products are sold to retail outlets by our direct sales force. We also
manufacture private label brand grocery products consisting of pickled products
and canned beans, fruits and vegetables for large supermarket chains.

DIVESTED BUSINESSES OPERATIONS

        We sold our Kattus German distribution business in January 1999 and our
Swift-Armour Argentine beef business in July 1999.

DISCONTINUED OPERATIONS

        In January 2000, we sold our fresh mushroom business, Vlasic Farms, Inc.
The sale of this business has been treated as a discontinued operation.


                        MARKETING, SALES AND DISTRIBUTION

        Our marketing programs consist of trade promotions and consumer-based
marketing, such as advertising and coupons. Trade promotions focus on obtaining
retail display support, achieving temporary price reduction and securing and
increasing retail shelf space. We engage in radio, television and print
advertising to build brand equity by emphasizing the heritage and
characteristics of our products and promoting new products within brand
segments. Other consumer promotions include couponing to generate trial usage
and increase purchase frequency. Our coupons are printed in magazines and in
advertising inserted in magazines and newspapers.

        Although sales to Campbell accounted for over 10% of our net sales in
previous years (due to a combination of sales under a contract packing
agreement, as well as sales of Argentine beef and fresh mushrooms), none of our
customers accounted for 10% or more of our net sales in fiscal 2000.

        We manage the sales and distribution of our products based on the
channels through which they are sold. We use an independent broker sales force
to sell frozen foods and grocery products in the United States and Canada to
grocery chains and wholesalers. We have an established broker website to improve
effectiveness and communication between the brokers and us. In some instances,
we sell directly to mass merchandisers such as Wal-Mart. We use independent
commercial carriers to distribute these products from our manufacturing
facilities directly to our customers or third party warehouses. Historically,
our frozen foods and grocery products have been sold through the same brokers.
While the delivery of domestic retail grocery products has been integrated into
a single system, frozen foods are delivered separately because of the need for
refrigeration during shipping. Brokers also sell frozen foods to frozen foods
distributors and grocery products to grocery distributors, both of which in turn
sell and deliver the products to smaller grocery chains and retailers.


                                   COMPETITION

        We face intense competition in each of our product lines. We compete
with other producers of similar products on the basis of, among other things,
product quality, convenience, price, brand recognition and loyalty, customer
service, effective advertising and promotional activities, and the ability to
identify and satisfy emerging consumer preferences. We compete with a
significant number of companies of varying sizes, including divisions,
subdivisions, or subsidiaries of much larger companies with more substantial
financial and other resources available to them. Our ability to grow our
business could be impacted by the relative effectiveness of and competitive
response to our new product efforts, product innovation and new advertising and
promotional activities. In addition, from time to time, we experience margin
pressure in certain markets as a result of competitors' pricing practices or as
a result of price increases for the ingredients used in our products. Although
we compete in a highly competitive industry for representation in the retail
food and foodservice channels, we believe that our brand strength in our various
markets has resulted in a strong competitive position. We are restricted from
entering certain product lines due to the terms of the


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separation and distribution agreement governing the terms of our spin-off from
Campbell, as well as the foodservice supply agreement and Swanson trademark
license with Campbell.


                                   INGREDIENTS

        We believe that sources of raw materials used in the frozen food
businesses are readily available. Our frozen foods business entered into an
exclusive five-year supply agreement for frozen cooked beef produced by the
divested Swift-Armour operations. It also purchases beef and poultry from third
party suppliers.

        Our grocery products businesses rely primarily on cucumbers, peppers and
other produce supplied by third party growers. We purchase many of these
ingredients during the warmer growing seasons, when they are readily available
and are of top quality. We buy from a variety of growers, and alternate sources
of supply are readily available.

        Prices and quality of raw materials can fluctuate due to a number of
factors, including changes in crop size, government-sponsored agricultural
programs and weather conditions during the growing and harvesting seasons.
Although we enter into advance commodity purchase agreements from time to time,
increases in raw material costs could have a material adverse effect on our
businesses, financial condition or results of operations.

        We purchase a variety of packaging materials, which we believe are
readily available from a number of suppliers.


                           SEASONALITY OF THE BUSINESS

        Our sales and cash flows vary depending on the time of year. Sales of
frozen foods tend to be marginally higher during the winter months. Sales of
pickles, relishes and barbecue sauce tend to be higher in the summer months. The
majority of pickles are packed during a season extending from May through
September. This makes our working capital requirements higher in the first
quarter.


                             TRADEMARKS AND PATENTS

        We own many popular trademarks registered in various countries,
including Vlasic, Hungry-Man, Sandwich Stackers, Hamburger Stackers, Great
Starts, Fun Feast, Open Pit, Freshbake, SonA and Rowats. All of our trademarks
are very important to the Vlasic businesses. We protect our trademarks by
obtaining registrations where appropriate and aggressively opposing any
infringement. We have a perpetual, royalty-free license to use the Swanson
trademark for certain frozen foods (other than broth, stock and soup). This
license agreement contains standard provisions, including those dealing with
quality control, marketing materials approval and termination. The previous
owners of Open Pit have a license to use the Open Pit trademark in the
foodservice industry.

        Although we own a number of patents covering manufacturing processes, we
do not believe the Vlasic businesses depend on any of these patents to a
material extent.


                            RESEARCH AND DEVELOPMENT

        Our research and development is conducted at multiple sites within and
outside the United States. The research and development organization consists of
approximately 60 people. About 40 people are located in the United States and
the rest are located outside the United States. Expenditures for research and
development in fiscal 2000, 1999 and 1998 were $7.7 million, $7.5 million and
$7.4 million.


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                            GOVERNMENTAL REGULATION

        Our operations in the United States are extensively regulated by the
Food and Drug Administration (FDA), the U.S. Department of Agriculture (USDA)
and other federal, state and local authorities. Outside the United States,
similar regulatory authorities have jurisdiction over our operations. Such
authorities regulate the processing, packaging, storage, distribution and
labeling of our products and inspect our processing facilities and products. We
believe that we are in substantial compliance with all applicable laws and
regulations.


                             ENVIRONMENTAL MATTERS

        We are subject to numerous federal, state and local environmental laws
and regulations of the United States and other countries in which we have
operations. Laws and regulations relating to worker health and workplace safety
also apply to our operations.

        As is the case with many companies, we face exposure to actual or
potential claims or lawsuits involving environmental matters. We believe that
any liabilities resulting from this exposure, after taking into consideration
amounts already provided for, should not have a material adverse effect on our
businesses, financial position, or results of operations. Of course, we cannot
predict what environmental or occupational health and safety laws and
regulations will be enacted in the future or the amount of future expenditures
we may be required to make in order to comply with such new laws. We believe
that our operations are in substantial compliance with existing environmental
and occupational health and safety regulations.


                                   EMPLOYEES

        Our work force consists of approximately 3,455 employees. Of the total
number of employees, approximately 3,200 are engaged in manufacturing,
approximately 255 are engaged in marketing, sales and administration.

        Our United States work force consists of approximately 2,690 employees,
approximately 2,206 of whom are represented by collective bargaining agreements
with various unions. Such collective bargaining agreements expire on various
dates beginning in February 2001. Outside of the United States, our work force
consists of approximately 765 employees, the substantial majority of whom are
represented by unions. A prolonged work stoppage or strike at any facility with
union employees could have a material adverse effect on our businesses,
financial condition or results of operations. In addition, there can be no
assurance that upon the expiration of existing collective bargaining or similar
agreements new agreements will be reached without union action or that any such
new agreements will be on terms satisfactory to us.


                                WORKING CAPITAL

        For information relating to our cash and other working capital items,
see pages 20 through 22 in the section entitled "Management's Discussion and
Analysis of Results of Operations and Financial Condition".


                    SEGMENT AND GEOGRAPHIC AREA INFORMATION

        For information with respect to the revenue, operating profitability and
identifiable assets attributable to our operating segments and foreign
operations, see pages 34 to 35 in the section of the Notes to Consolidated
Financial Statements entitled "Segment and Geographic Area Information".


                              RECENT DEVELOPMENTS

        For information relating to recent developments, see pages 23 to 24 in
the section entitled "Management's Discussion and Analysis of Results of
Operations and Financial Condition".


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               CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

        From time to time, we make oral and written statements that may
constitute "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995 (the "Act") or by the SEC in its rules,
regulations and releases. We desire to take advantage of the "safe harbor"
provisions in the Act for forward-looking statements made from time to time,
including, but not limited to, the forward-looking statements made in this
Fiscal 2000 Annual Report, including Management's Discussion and Analysis of
Results of Operations and Financial Condition (pages 11 through 24), and other
statements made in the Form 10-K and in other filings with the SEC.

        We caution readers that any such forward-looking statements made by us
or on our behalf are based on our current expectations and beliefs but are not
guarantees of future performance. Actual results could differ materially from
those expressed or implied in the forward-looking statements. Important factors
that could cause such differences include, but are not limited to:

        - our ability to successfully maintain necessary financing arrangements;
        - the results of our strategic review process;
        - our ability to utilize our net operating loss carryforwards and
          realize the related deferred tax asset;
        - our ability to continue to comply with covenants and the terms of the
          senior credit facility (and any waivers thereto), and the senior
          subordinated notes;
        - changes in accounting estimates developed in connection with the
          application of generally accepted accounting principles;
        - changes in accounting policies and practices;
        - our ability to successfully execute measures and processes and
          procedures to properly capture and analyze trade marketing spending
          and customer deductions;
        - our ability to maintain capital expenditures within the forecast
          limits, which are based on assumptions about infrastructure
          requirements;
        - issues associated with our business and information systems and
          embedded technology;
        - the likelihood that Campbell Soup Company will not extend its current
          contract for frozen foodservice products or that the contract will be
          extended on terms less than favorable to the Company;
        - the impact of strong competitive response to our efforts to leverage
          our brand power with product innovation and new advertising;
        - the inherent risks in the marketplace associated with our products,
          including uncertainties about trade and consumer acceptance;
        - changes in prices of raw materials and other inputs;
        - the impact of unforeseen economic and political changes in
          international markets where we compete;
        - the market risks associated with financial instruments which may be
          subject to unforeseen economic changes, such as currency exchange
          rates, interest rates, inflation rates and recessionary trends;
        - our ability to achieve the gains anticipated from our cost
          productivity programs; and
        - our ability to achieve the forecasted savings related to restructuring
          programs.

        Vlasic has no intention of or obligation to update forward-looking
statements even if new information, future events or other circumstances make
them incorrect or misleading.


ITEM 2.   PROPERTIES

        We currently own or lease 7 production facilities in the United States
and the United Kingdom. We believe that these facilities are suitable for our
operations and provide sufficient capacity to meet our requirements for the
foreseeable future. Our corporate headquarters is leased. The chart below lists
the location and principal products produced at our key production facilities.

<TABLE>
<CAPTION>
     FACILITY LOCATION                              PRINCIPAL PRODUCTS
     -----------------                              ------------------
<S>                                        <C>
   FROZEN FOODS
    Fayetteville, Arkansas                             Frozen Foods
    Omaha, Nebraska                                    Frozen Foods

   GROCERY PRODUCTS
    Imlay City, Michigan                          Pickles and Condiments
    Millsboro, Delaware                           Pickles and Condiments

   UNITED KINGDOM OPERATIONS
    Salford, England                                   Frozen Foods
    Glasgow, Scotland                                  Frozen Foods
    Stratford Upon Avon, England           Pickles, Canned Beans and Vegetables
</TABLE>


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ITEM 3.   LEGAL PROCEEDINGS

        We, in the ordinary course of business, are involved in various legal
proceedings. We are, however, not aware of any pending claims or litigation the
outcome of which would have a material adverse effect on our business, financial
position or results of operations.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None.


EXECUTIVE OFFICERS OF VLASIC

        The following list of executive officers as of October 6, 2000, is
included herein as an item in Part I of this Form 10-K:

<TABLE>
<CAPTION>
                                                                                                    DATE  FIRST
                                                                                                      ELECTED
NAME                      PRESENT TITLE                                                  AGE          OFFICER
----                      -------------                                                  ---          -------
<S>                       <C>                                                            <C>        <C>
Robert F. Bernstock (1)   President and Chief Executive Officer                          49            1998

Norma B. Carter (2)       Vice President, General Counsel and Corporate Secretary        53            1998

Mark I. McCallum (3)      Vice President
                          President - North America Division                             45            1998

Joseph Adler (4)          Vice President and Controller                                  46            1998*
</TABLE>


        (1) Mr. Bernstock has been President and Chief Executive Officer of
            Vlasic since March 1998. Mr. Bernstock served as Executive Vice
            President of Campbell Soup Company and President of its Specialty
            Foods Division from July 1997 to March 1998. Prior to that, he was
            appointed President - U.S. Grocery Division and Senior Vice
            President of Campbell Soup Company in March 1996. Mr. Bernstock
            served as President - International Grocery Division of Campbell
            Soup Company from August 1994 to February 1996. He served as
            President - International Soup Division of Campbell Soup Company
            from June 1993 to July 1994 and was Vice President of Campbell Soup
            Company.

        (2) Prior to joining Vlasic, Ms. Carter served in the Legal Department
            of Campbell Soup Company since January 1981, most recently as Vice
            President - Legal.

        (3) Mr. McCallum was named President of the North America Division of
            Vlasic in February 2000. In June 1998, Mr. McCallum was named
            President of the Grocery Division, and served as Vice President and
            General Manager - Grocery since March 1998. Prior to joining Vlasic,
            Mr. McCallum served Campbell Soup Company as General Manager for the
            Mushroom, Open Pit and the Canadian Swanson Frozen Food businesses.
            Prior to that, he served as Vice President and General Manager for
            the Sanwa, Campbell's Fresh (mushrooms) and the Prepared Foods
            divisions of Campbell. He joined Campbell in January 1993 as the
            General Manager for Campbell Australia and progressed to become the
            Managing Director for Campbell Asia in Hong Kong.

        (4) Mr. Adler has been Vice President and Controller since March 1998.
            Prior to joining Vlasic, Mr. Adler served as the Controller for the
            Speciality Foods division of Campbell Soup Company from October 1997
            to March 1998. Prior to that, he was Vice President - Finance and
            Controller for the Meal Enhancement Group of Campbell's U.S. Grocery
            division, and served as the interim controller of the U.S. Grocery
            division.

        *   Mr. Adler has been Vice President and Controller since 1998. He was
            designated an Executive Officer in December 1999.

        There is no family relationship among any of our executive officers or
between any such officer and any director of Vlasic. Executive officers of
Vlasic will be elected at the December 5, 2000 meeting of the Board of
Directors.


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<PAGE>   10
FISCAL 2000 ANNUAL REPORT (CONTINUED)          [VLASIC FOODS INTERNATIONAL LOGO]

--------------------------------------------------------------------------------


                                    PART II

ITEM 5.   MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREOWNER
          MATTERS

        Vlasic's Common Stock is listed and principally traded on the New York
Stock Exchange. On October 6, 2000, there were 17,453 holders of record of
Vlasic Common Stock. The market price with respect to Vlasic's Common Stock is
set forth on page 49 in the section of the Notes to Consolidated Financial
Statements entitled "Quarterly Data (unaudited)". We currently anticipate that
no cash dividends will be paid on the Vlasic Common Stock in the foreseeable
future due to restrictive covenants in our credit agreements and in order to
conserve cash for the repayment of debt and for working capital requirements.


ITEM 6.   SELECTED FINANCIAL DATA
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                              2000(1)           1999(2)           1998(3)          1997(4)(5)          1996(6)
                                            -----------       -----------       -----------       ------------       -----------
<S>                                         <C>               <C>               <C>               <C>                <C>
STATEMENT OF OPERATIONS DATA:
Net sales                                   $   901,564       $ 1,188,271       $ 1,237,294       $  1,381,151       $ 1,377,390
Earnings (loss) from continuing
  operations                                $   (28,639)      $  (119,823)      $   (10,407)      $     74,842       $    55,367
Discontinued operations                          (1,423)           (6,508)            4,608              3,298             5,500
                                            -----------       -----------       -----------       ------------       -----------
Earnings (loss) before cumulative
  effect of accounting change                   (30,062)         (126,331)           (5,799)            78,140            60,867
Cumulative effect of accounting
  change                                             --                --              (600)                --                --
                                            -----------       -----------       -----------       ------------       -----------
Net earnings (loss)                         $   (30,062)      $  (126,331)      $    (6,399)      $     78,140       $    60,867
                                            ===========       ===========       ===========       ============       ===========

Earnings (loss) per share (7)
  Continuing operations                     $     (0.63)      $     (2.64)      $     (0.23)
  Discontinued operations                   $     (0.03)      $     (0.14)      $      0.10
  Cumulative effect of
   accounting change                        $      0.00       $      0.00       $     (0.01)
                                            -----------       -----------       -----------
Net loss                                    $     (0.66)      $     (2.78)      $     (0.14)
                                            ===========       ===========       ===========

Weighted average shares outstanding (9)          45,418            45,418            45,371

BALANCE SHEET DATA:
Total assets                                $   582,173       $   655,929       $   950,863       $    839,045       $   865,799
Notes payable                                   285,287               146            12,487                191               257
Long-term debt (8)                              197,230           469,054           558,793              2,079             2,901
Total debt (8)                                  482,517           469,200           571,280              2,270             3,158
Shareowners' equity (deficit) (8)               (59,468)          (20,401)          106,604            632,298           659,866
</TABLE>


(1) Includes after-tax special items which increased earnings by $842, or $0.02
per share, consisting of $1,622 from the reversal of prior years' charges
related to the divestitures of our Kattus and Swift-Armour Argentine beef
businesses, partially offset by net restructuring charges of $780.
(2) Includes after-tax special charges of $140,529, or $3.09 per share,
consisting of $134,529 relating to the divestitures of our Kattus and
Swift-Armour Argentine beef businesses, a $7,000 income tax charge for the
impact of the repatriation of foreign dividends partially offset by a net
benefit of $1,000 related to restructuring programs.
(3) Includes after-tax special charges of $35,850, or $0.79 per share,
consisting of restructuring charges of $21,450 and an impairment loss of
$14,400. Also includes the cumulative effect of a change in accounting principle
for business process engineering costs - a charge of $600 or $0.01 per share.
(4) Fiscal 1997 includes 53 weeks compared to 52 weeks in fiscal 2000, 1999,
1998 and 1996.
(5) Includes after-tax restructuring charges of $7,757.
(6) Includes after-tax restructuring charges of $22,842.
(7) Per share data for years prior to 1998 have not been presented because
Vlasic was not a publicly held company.
(8) At the March 30, 1998 spin-off, Vlasic assumed $500 million of long-term
debt from Campbell.
(9) Excludes potentially dilutive shares as the result would be antidilutive.


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<PAGE>   11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION

--------------------------------------------------------------------------------


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
          FINANCIAL CONDITION

INTRODUCTION

        On March 30, 1998, Campbell Soup Company distributed one share of Vlasic
common stock to shareowners of Campbell for every ten shares of Campbell capital
stock held at the record date in a tax-free distribution (the "spin-off"). At
the time of the spin-off, we began operations as a separate independent
publicly-owned company. In connection with the spin-off, Campbell contributed
the following businesses: Swanson frozen foods in the United States and Canada,
Vlasic retail and foodservice pickles and condiments in the United States, Open
Pit barbecue sauce in the United States, Campbell's mushrooms in the United
States, Freshbake and non-branded frozen foods and SonA and Rowats pickles and
beans in the United Kingdom, Swift and non-branded processed beef in Argentina
and Kattus gourmet foods distribution in Germany. Our historical financial
statements at dates and for periods ended prior to the date of the spin-off
present the combined historical financial position, results of operations and
cash flows of these businesses. We sold the Kattus business in January 1999 and
sold our Argentine beef business, Swift-Armour, in July 1999. The mushroom
business was sold during the third quarter of fiscal 2000 and has been treated
as a discontinued operation. Prior to the spin-off, the businesses contributed
by Campbell had been separately managed within multiple Campbell business
divisions.

        In connection with the spin-off, we incurred debt of approximately $560
million under a five-year $750 million unsecured revolving credit facility,
consisting of $500 million of indebtedness assumed from Campbell and $60
million incurred to repay certain intercompany payables representing advances
from Campbell to subsidiaries of Vlasic. On an historical basis, we were not
allocated any amount of Campbell's debt and our historical financial statements
prior to the spin-off do not reflect the interest expense associated with the
debt incurred in connection with the spin-off.

        For periods prior to the spin-off, our historical financial statements
reflect expenses allocated by Campbell for selling, general and administrative
services (including finance, legal, information technology, research and
development, benefits, facilities and shared sales and distribution support).
Such expenses were allocated based on net sales, utilization or other methods.
The allocated expenses for these services are not necessarily indicative of the
expenses that we would have incurred had we been a separate, independent entity
that managed these functions. As described above, Campbell had been providing
certain of these services to us on a transitional basis after the spin-off. We
established a new corporate infrastructure to operate on a stand-alone basis,
and as of April 1999 we had substantially completed all of the operating and
management systems and capabilities necessary to handle internally the services
that had previously been provided by Campbell.

        The discussion below summarizes the significant factors affecting our
consolidated operating results, financial condition and liquidity for the fiscal
years ended July 30, 2000, August 1, 1999 and August 2, 1998. The results of
operations for the periods prior to the spin-off may not necessarily be
indicative of the results of operations that would have occurred if we had
operated as an independent company prior to the spin-off and are not necessarily
indicative of our future performance. The following discussion of results of
operations and liquidity and capital resources should be read in conjunction
with our historical consolidated financial statements and the related
accompanying notes. Unless otherwise noted, fiscal years in the discussion below
refer to our fiscal years ended on the Sunday closest to July 31. There were 52
weeks in each of fiscal 2000, 1999 and 1998.


GOING CONCERN MATTERS

        The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As discussed in Note 26, we
have significant borrowings which require, among other things, compliance with
certain financial ratios, specifically a debt/EBITDA ratio and a fixed charge
coverage ratio, on a quarterly basis. As a result of operating losses incurred
during the second, third, and fourth quarters in fiscal 2000, we were not in
compliance with the financial ratio covenants under our senior credit facility;
however, we requested and received a waiver through February 28, 2001 in
consideration for the payment of a fee and an increase in interest rates. There
are three key provisions of the waiver: (1) an escrow deposit to pay the January
2, 2001 interest payment on the senior subordinated notes ("January Interest
Payment") must be established by December 28, 2000 and cannot be funded with
funds generated from operations or proceeds of asset sales, as is more fully
described below; (2) certain events, including the


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<PAGE>   12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

--------------------------------------------------------------------------------


payment in full of our indebtedness outstanding under the senior credit
facility, must take place by the expiration of the waiver, or if there is a
Standstill Period (as defined and discussed below), the Standstill Period, or
else we will be required to pay an additional fee in the amount of $1.5 million
to the senior credit facility bank syndicate; and (3) we must comply with
certain monthly tests of minimum sales and net worth and maximum capital
expenditures.

        If the January Interest Payment is not paid within 30 days of the due
date, there would be an event of default which upon a vote of the holders of at
least 25% of the senior subordinated notes could cause them to be accelerated.

        The terms of the waiver require the Company to deposit an amount in
escrow on or before December 28, 2000 for payment of the January Interest
Payment ("Escrow"). The waiver as presently in force precludes the Escrow from
being funded with funds generated from operations or proceeds of asset sales.
Failure to timely fund the Escrow would cause the waiver to expire on December
28, 2000. In such event, the waiver provides for a "Standstill Period" following
expiration of the waiver during which Events of Default would continue to be
waived. However, the principal of the bank loans could be accelerated and a
"payment blockage notice" could be delivered on the Company preventing it from
making the January Interest Payment. The Standstill Period would expire on the
later of (a) January 30, 2001 or (b) a forbearance date specified in any
agreement by the holders of more than 75% of the outstanding senior subordinated
notes to not accelerate the principal of such notes or enforce any other
remedies for the enforcement of collection of such notes. The expiration of the
Standstill Period would, however, be no later than February 28, 2001.

        A breach of any of the terms and conditions of the waiver, or subsequent
breaches of conditions of the senior credit facility not covered by the waiver
could result in acceleration of our indebtedness, in which case the debt would
become immediately due and payable. Although no assurances can be given, we
expect that we will be in compliance throughout the period of the current waiver
with respect to the financial covenants regarding minimum sales, minimum net
worth and capital expenditure limits.

        We are exploring strategic opportunities for the Company, which is
likely to result in the sale of the Company in whole or in parts. The investment
banking firm of Lazard Freres & Co. has been hired to assist with this strategic
review and to solicit bids on our behalf. However, since this process is still
on-going, no assurances can be given that any proposed plans and actions can be
effectively executed.

        Our ability to operate as a going concern is dependent upon our ability
to avoid default under the senior credit facility. Either the process of selling
the Company in whole or in parts must be complete by the expiration of the
Standstill Period described above and all the loans under the senior credit
facility repaid or there must have been sufficient progress demonstrated in the
opinion of the senior credit facility bank group so that it extends the current
waiver through the expected completion date of the sale process. If the Company
is not sold by the expiration of the Standstill Period described above or the
waiver has not been extended, there will be an event of default and it is
probable that the Company could not raise the funds to pay off all of its debts.
However, the Company expects that so long as demonstrable progress satisfactory
to the senior credit facility bank group has been made towards the completion of
a sale or other transaction pursuant to the strategic review process, funding
will be available to make the January Interest Payment.


RESULTS OF OPERATIONS

OVERVIEW

        Net sales for the fiscal year ended July 30, 2000 were $901.6 million,
compared to net sales of $1.2 billion for the fiscal year ended August 1, 1999,
or a decrease of 24.1%. However, excluding net sales from the Kattus and
Swift-Armour businesses (which were divested in January 1999 and July 1999,
respectively), net sales decreased approximately 6.7% in fiscal 2000 compared to
fiscal 1999. All businesses experienced sales declines in fiscal 2000. The key
drivers were a 4% decrease in Swanson U.S. consumption, unfavorable product mix
in the Vlasic pickle business, and pricing and competitive pressures in our
United Kingdom businesses.


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<PAGE>   13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

--------------------------------------------------------------------------------


        The loss from continuing operations for fiscal 2000 was $(28.6) million,
or $(0.63) per share, compared to $(119.8) million, or $(2.64) per share for
fiscal 1999. However, included in the loss from continuing operations were
special items that in fiscal 2000 resulted in a net benefit of $0.4 million
pre-tax ($0.8 million after-tax), or $0.02 per share, and special items that in
fiscal 1999 resulted in a net charge of $132.2 million pre-tax ($140.5 million
after-tax), or $(3.09) per share. The decline in earnings (loss) from continuing
operations excluding special items was primarily driven by a $68.8 million
decrease in earnings (loss) before interest and taxes caused by the reasons
outlined below as well as a $6.2 million increase in net interest expense due to
higher interest rates.

        -   The divested Kattus and Swift-Armour businesses contributed
            approximately $7 million to fiscal 1999 earnings before interest and
            taxes;
        -   An overall decline in net sales of 6.7% (excluding the impact of the
            Kattus and Swift Armour divestitures) that was driven by a 4%
            decrease in Swanson U.S. consumption, unfavorable product mix in the
            Vlasic pickle business, and pricing and competitive pressures in our
            United Kingdom businesses, reduced earnings (loss) before interest
            and taxes by approximately $23 million in fiscal 2000 compared to
            fiscal 1999;
        -   Reduced gross margins from unfavorable pickle mix, lower
            manufacturing cost absorption due to lower sales volumes, and poor
            manufacturing operational performance in the Freshbake frozen food
            business in the United Kingdom resulted in reduced earnings (loss)
            before interest and taxes of approximately $10 million in fiscal
            2000 compared to fiscal 1999;
        -   Higher marketing costs of approximately $19 million (including trade
            marketing related to fiscal 2000 new product introductions of
            approximately $10 million) also added to the decline;
        -   Additional charges of approximately $15 million related to changes
            in estimates for trade marketing and customer deductions resulting
            from revised estimates principally for fiscal 1999 and earlier,
            based on new information following our conversion to new billing and
            trade marketing systems and processes; and
        -   Partially offsetting the declines discussed above were lower selling
            and administrative expenses approximating $5 million resulting from
            cost reduction initiatives as well as lower sales volume.

        The loss from discontinued operations for fiscal 2000 was $(6.7)
million, or $(0.15) per share, that was partially offset by a gain on the sale
of the discontinued business of $5.3 million, or $0.12 per share. In total, the
loss from discontinued operations in fiscal 2000 was $(0.03) per share. The loss
from discontinued operations for fiscal 1999 was $(6.5) million, or $(0.14) per
share.

        Net loss for fiscal 2000 was $(30.1) million, or $(0.66) per share
compared to $(126.3) million, or $(2.78) per share for fiscal 1999.

        Net sales for the fiscal year ended August 1, 1999 were $1.2 billion, a
decrease of approximately 4.0% from the net sales for the fiscal year ended
August 2, 1998. The loss from continuing operations of $(119.8) million for
fiscal 1999, or $(2.64) per share represented a significant decline from the
fiscal 1998 loss from continuing operations of $(10.4) million, or $(0.23) per
share. The fiscal 1999 loss from continuing operations included:

        -   Divestitures. The $137.7 million non-cash loss (with no associated
            tax impact) associated with the divestiture of our Swift-Armour
            Argentine beef business partially offset by the $3.2 million gain
            (with no associated tax impact) on the divestiture of our Kattus
            business ($14.4 million impairment loss recorded in fiscal 1998);
        -   Restructuring. The charge of $1.0 million (with no associated tax
            impact) related to administrative staff reductions in the United
            Kingdom, partially offset by a $3.2 million benefit ($2.0 million
            after-tax) from completion of the fiscal 1998 restructuring program
            at amounts less than originally planned;
        -   Dividend Repatriation. The third quarter fiscal 1999 income tax
            charge of $7.0 million for the impact of the repatriation of foreign
            dividends; and
        -   One-Time Costs. One-time costs of $7.0 million ($4.4 million
            after-tax) for duplicative administrative transition costs and costs
            related to the development of our information technology
            infrastructure.

        The loss from discontinued operations for fiscal 1999 was $(6.5)
million, or $(0.14) per share, compared to earnings from discontinued operations
for fiscal 1998 of $4.6 million, or $0.10 per share.

        Net loss for fiscal 1999 was $(126.3) million, or $(2.78) per share,
compared to $(6.4) million, or $(0.14) per share for fiscal 1998.


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<PAGE>   14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

--------------------------------------------------------------------------------


CONSOLIDATED STATEMENTS OF OPERATIONS

        The following table sets forth certain items in our consolidated
statements of operations as percentages of net sales for the fiscal years
indicated:

<TABLE>
<CAPTION>
                                                                             2000              1999              1998
                                                                          ----------        ----------        ----------
<S>                                                                       <C>               <C>               <C>
Net sales                                                                     100.0%            100.0%            100.0%
                                                                          ----------        ----------        ----------
Cost of products sold                                                          65.9%             67.8%             70.5%
Marketing and selling expenses                                                 26.9%             20.3%             19.6%
Administrative expenses                                                         5.3%              4.8%              4.9%
Research and development expenses                                               0.8%              0.6%              0.6%
Other expense (income)                                                          0.2%              0.1%             (0.2%)
Special items                                                                   0.0%             11.1%              3.4%
                                                                          ----------        ----------        ----------
    Total costs and expenses                                                   99.1%            104.7%             98.8%
                                                                          ----------        ----------        ----------
Earnings (loss) before interest and taxes from continuing operations            0.9%             (4.7%)             1.2%
                                                                          ==========        ==========        ==========
</TABLE>


FISCAL YEAR ENDED JULY 30, 2000 COMPARED TO FISCAL YEAR ENDED AUGUST 1, 1999

        NET SALES. Net sales of $901.6 million in fiscal 2000 decreased 24.1%
from net sales of $1.2 billion in fiscal 1999. However, included in the net
sales for fiscal 1999 were $221.7 million from the divested Kattus and
Swift-Armour businesses. Excluding net sales from these divested businesses, net
sales decreased approximately 6.7% in fiscal 2000 compared to fiscal 1999. All
businesses experienced sales declines in fiscal 2000. The key drivers were a 4%
decrease in Swanson U.S. consumption, unfavorable product mix in the Vlasic
pickle business and pricing and competitive pressures in our United Kingdom
businesses.

        COST OF PRODUCTS SOLD. Cost of products sold as a percentage of net
sales decreased to 65.9% in fiscal 2000 compared to 67.8% in fiscal 1999.
However, excluding the divested Kattus and Swift-Armour businesses, cost of
products sold as a percentage of net sales would have been 64.8% for fiscal
1999. This increase in cost of products sold as a percentage of net sales on a
comparative basis was largely attributable to the impact of product mix as well
as sales volume declines in our Swanson and Vlasic businesses resulting in
higher absorption of fixed manufacturing costs in fiscal 2000. Operational
difficulties at our United Kingdom businesses also contributed to the increase
in fiscal 2000.

        MARKETING AND SELLING EXPENSES. Marketing and selling expenses as a
percentage of net sales increased to 26.9% for fiscal 2000 compared to 20.3% for
fiscal 1999. Excluding the divested Kattus and Swift-Armour businesses,
marketing and selling as a percentage of net sales would have been 21.9% for
fiscal 1999. The increase in fiscal 2000 was predominately caused by additional
charges recorded in the second quarter of fiscal 2000 for trade marketing and
customer deductions resulting from revised estimates principally for fiscal 1999
and earlier, based on new information following our conversion to new billing
and trade marketing systems and processes. Marketing and selling expenses as a
percentage of net sales excluding the impact of these charges in fiscal 2000
would have been approximately 25.3%. Total marketing costs alone as a percentage
of net sales increased in fiscal 2000 due to greater trade marketing costs
related to new product introductions in both our Swanson and Vlasic businesses,
lower sales volumes and higher coupon redemptions. These charges were partially
offset by lower selling expenses that were sales volume driven and a decline in
advertising, principally in our Swanson business, due to relatively heavier
fiscal 1999 advertising campaigns.

        ADMINISTRATIVE EXPENSES. Administrative expenses were $48.1 million or
5.3% of net sales in fiscal 2000 compared to $57.0 million or 4.8% of net sales
in fiscal 1999. However, excluding the divested Kattus and Swift-Armour
businesses, administrative expenses in fiscal 1999 would have been $50.0 million
or 5.2% of sales. Cost reduction initiatives in fiscal 2000 reduced
administrative expenses by $5.7 million. These reductions were offset by
incentive program expenses of $1.8 million and a higher provision for medical
expenses of $2.0 million in fiscal 2000.

        RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses as
a percentage of net sales increased to 0.8% in fiscal 2000 compared to 0.6% in
fiscal 1999. However, excluding the divested Kattus and Swift-Armour businesses,
research and development expenses as a percentage of net sales would have been
0.8% in 1999.


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<PAGE>   15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

--------------------------------------------------------------------------------


        OTHER EXPENSE (INCOME). Other expense is principally goodwill
amortization and was comparable year to year.

        SPECIAL ITEMS. During fiscal 2000, we recorded a net benefit of $(0.4)
million on the Special items line on the Statement of Operations which included
the following:

        -   a $1.2 million restructuring charge ($0.8 million after-tax)
            associated with reductions in the United States headquarters
            workforce;
        -   a $(1.3) million benefit (with no associated tax impact) resulting
            from the divestiture of the Kattus business because certain costs
            were lower than originally estimated; and
        -   a $(0.3) million benefit (with no associated tax impact) resulting
            from the divestiture of the Swift-Armour beef business because
            certain costs were lower than originally estimated.

        During fiscal 1999, a net charge of $132.3 million ($133.5 million
after-tax) was recorded on the Special items line in the Statement of Operations
which consisted principally of a non-cash loss of $137.7 million (with no
associated tax impact) associated with the divestiture of our Swift-Armour
Argentine beef business. Partially offsetting this charge was a $(3.2) million
gain (with no associated tax impact) on the divestiture of our Kattus business
and a $(3.2) million benefit ($2.0 million after-tax) resulting from the
completion of a fiscal 1998 restructuring program at amounts less than
originally planned. A restructuring charge of $1.0 million (with no associated
tax impact) related to administrative staff reductions in the United Kingdom was
also recorded.

        Special items are more fully discussed below under the heading "Special
Items."

        EARNINGS (LOSS) BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS.
Earnings before interest and taxes from continuing operations in fiscal 2000
were $7.7 million, or 0.9% of net sales compared to a loss before interest and
taxes from continuing operations of $(56.3) million, or (4.7%) of net sales in
fiscal 1999. Excluding the fiscal 2000 and 1999 special items discussed above,
earnings before interest and taxes from continuing operations were $7.3 million,
or 0.8% of net sales in fiscal 2000, compared to $76.0 million, or 6.4% of net
sales in fiscal 1999. The large decrease in fiscal 2000 was driven by:

        -   The divested Kattus and Swift-Armour businesses contributed
            approximately $7 million to fiscal 1999 earnings before interest and
            taxes;
        -   An overall decline in net sales of 6.7% (excluding the impact of the
            Kattus and Swift Armour divestitures) that was driven by a 4%
            decrease in Swanson U.S. consumption,unfavorable product mix in the
            Vlasic pickle business, and pricing and competitive pressures in our
            United Kingdom businesses, reduced earnings (loss) before interest
            and taxes by approximately $23 million in fiscal 2000 compared to
            fiscal 1999;
        -   Reduced gross margins from unfavorable pickle mix, lower
            manufacturing cost absorption due to lower sales volumes, and poor
            manufacturing operational performance in the Freshbake frozen food
            business in the United Kingdom resulted in reduced earnings (loss)
            before interest and taxes of approximately $10 million in fiscal
            2000 compared to fiscal 1999;
        -   Higher marketing costs of approximately $19 million (including trade
            marketing related to fiscal 2000 new product introductions of
            approximately $10 million) also added to the decline;
        -   Additional charges of approximately $15 million related to changes
            in estimates for trade marketing and customer deductions resulting
            from revised estimates principally for fiscal 1999 and earlier,
            based on new information following our conversion to new billing and
            trade marketing systems and processes; and
        -   Partially offsetting the declines discussed above were lower selling
            and administrative expenses approximating $5 million resulting from
            cost reduction initiatives as well as lower sales volume.

        INTEREST EXPENSE, NET. Interest expense, net, for fiscal 2000 was $50.0
million compared to $43.8 million for fiscal 1999. We incurred higher interest
expense in fiscal 2000 as a result of higher interest rates on our bank
borrowings and higher interest rates on our bonds issued in June 1999 as
compared to the bank borrowings that they replaced.

        TAXES ON EARNINGS. The effective tax rate was 32.3% for fiscal 2000.
However, excluding the impact of our special items in fiscal 2000, the effective
tax rate was 31.0% for fiscal 2000 compared to an effective tax rate of 36.1%
excluding special items in fiscal 1999. The fiscal 2000 rate was lower than the
fiscal 1999 rate predominately due to net operating losses incurred that
required substantial valuation allowances of state tax loss carryforwards.
Although we incurred operating losses in fiscal 2000, we recorded a federal tax
credit and the related deferred tax asset.


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<PAGE>   16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

--------------------------------------------------------------------------------


        We have available federal net operating loss carryforwards of
approximately $77 million in the United States of which $24 million, $2 million
and $51 million will expire in 2018, 2019 and 2020, respectively. Included in
the July 30, 2000 Consolidated Balance Sheet is a deferred tax asset of $16.6
million. This asset relates to our federal net operating loss carryforwards.
Realization of this deferred tax asset would require approximately $50 million
of future taxable income in the U.S. It is unlikely that ongoing operations will
be sufficient to generate such future taxable income. However, as discussed in
Note 3, Going Concern Matters, management is currently in a strategic review
process which will likely result in the sale of the Company in whole or in
parts. Management believes such a sale is probable and would result in a taxable
gain in excess of $50 million. Because such a transaction is not assured, the
amount of the deferred tax asset considered realizable could be reduced in the
near term if the anticipated transaction results in a lower gain or does not
occur.

        LOSS FROM DISCONTINUED OPERATIONS. The divested Vlasic Farms mushroom
business has been classified as a discontinued operation in accordance with
Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations
- Reporting the Effect of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions." The
loss from operations of the discontinued business for fiscal 2000 was $(6.7)
million compared to a loss from discontinued operations of $(6.5) million in
fiscal 1999. During the third quarter of fiscal 2000, the sale of the business
closed and we recorded a net gain on the sale of $5.3 million.

FISCAL YEAR ENDED AUGUST 1, 1999 COMPARED TO FISCAL YEAR ENDED AUGUST 2, 1998

        NET SALES. Net sales of $1.2 billion in fiscal 1999 decreased
approximately 4.0% from net sales in fiscal 1998. Excluding sales from the
divested Kattus and Swift-Armour businesses, net sales were even in fiscal 1999
compared to fiscal 1998. Our core Swanson U.S.and Vlasic businesses experienced
an increase in net sales of approximately 2.2% and 8.4%, respectively, from the
prior year, while our international business in the United Kingdom suffered an
overall decrease in net sales year on year.

        COST OF PRODUCTS SOLD. Cost of products sold as a percentage of net
sales decreased to 67.8% in fiscal 1999 compared to 70.5% in fiscal 1998
resulting primarily from lower cattle costs in Argentina in fiscal 1999 and cost
savings in the Swanson and Vlasic plants.

        MARKETING AND SELLING EXPENSES. Marketing and selling expenses as a
percentage of net sales increased in fiscal 1999 to 20.3% from 19.6% in fiscal
1998. This increase was predominately caused by an increase in advertising and
greater trade spending resulting from heavier promotions and new product
introductions such as Vlasic Hamburger Stackers and the relaunch of the Swanson
frozen fried chicken line. Partially offsetting this increase was lower selling
costs in fiscal 1999 compared to fiscal 1998.

        ADMINISTRATIVE EXPENSES. Administrative expenses as a percentage of net
sales decreased slightly in fiscal 1999 to 4.8% from 4.9% in fiscal 1998.
Increased expenses as we reached a completed infrastructure staffing level were
mostly offset by a significant reduction in incentive based program expense.

        RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses as
a percentage of net sales remained unchanged in fiscal 1999 compared to fiscal
1998.

        OTHER EXPENSE (INCOME). Other expense in fiscal 1999 is principally
goodwill amortization. Other income in fiscal 1998 included a gain on a fire
insurance settlement, which was partially offset by expenses pertaining to a
Campbell-related long term incentive program that ended in fiscal 1998.

        SPECIAL ITEMS. During fiscal 1999, special items of $132.3 million were
recorded which included the following:

        -   the $137.7 million non-cash loss (with no associated tax impact)
            associated with the divestiture of our Swift-Armour Argentine beef
            business partially offset by the $3.2 million (with no associated
            tax impact) gain on the divestiture of our Kattus business; and
        -   the fourth quarter fiscal 1999 restructuring charge of $1.0 million
            (with no associated tax impact) related to administrative staff
            reductions in the United Kingdom partially offset by a $3.2 million
            benefit ($2.0 million after-tax) from completion of the fiscal 1998
            restructuring program at amounts less than originally planned.

        During fiscal 1998, special items of $42.1 million were recorded which
included third quarter fiscal 1998 restructuring charges of $27.7 million ($21.5
million after-tax) and the fourth quarter fiscal 1998 impairment loss of $14.4
million (with no associated tax impact) related to the Kattus business. Special
items are more fully described below under the heading "Special Items".


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CONDITION (CONTINUED)

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        EARNINGS (LOSS) BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS.
The loss before interest and taxes from continuing operations in fiscal 1999 was
$(56.3) million compared to earnings of $15.2 million in fiscal 1998. Excluding
the fiscal 1999 and 1998 special items discussed above, earnings before interest
and taxes from continuing operations were $76.0 million, or 6.4% of net sales in
fiscal 1999, compared to $57.3 million, or 4.6% of net sales in fiscal 1998. The
net increase from fiscal 1998 was driven by:

        -   improvements in Argentine cattle costs experienced in fiscal 1999
            compared to fiscal 1998;
        -   lower incentive based expenses in fiscal 1999; and
        -   reduction of the one-time costs from $17.5 million incurred in
            fiscal 1998 to $7.0 million in fiscal 1999.

        These increases were partially offset by increased marketing and
advertising costs in fiscal 1999.

        INTEREST EXPENSE, NET. Interest expense, net, for fiscal 1999 was $43.8
million. The historical financial statements for fiscal 1998 reflected minimal
interest expense prior to the spin-off as there was no allocation of interest
expense on Campbell's net investment. Subsequent to the spin-off, interest
expense included interest on the $500 million of debt assumed from Campbell as
well as the $60 million incurred to repay certain intercompany payables
representing advances from Campbell to Vlasic's subsidiaries. We believe that
pro forma earnings, reflecting pro forma interest expense for the spin-off,
provide more meaningful comparisons. Assuming that the spin-off had been
consummated as of the beginning of fiscal 1998, pro forma net interest expense
would have been approximately $38.6 million for fiscal 1998. We incurred higher
interest expense in fiscal 1999 as a result of certain costs related to the
amended bank facility, higher average debt balances and higher interest rates.

        TAXES ON EARNINGS. Included in taxes on earnings for fiscal 1999 was
$7.0 million for the impact of the repatriation of foreign dividends. Excluding
the impact of our special items and the $7.0 million tax charge related to
dividend repatriation, the effective tax rate was 36.1% in fiscal 1999. For
fiscal year 1998, we had an effective tax rate of 42.1% excluding special items.
The fiscal 1999 tax rate was lower than the fiscal 1998 tax rate principally due
to losses in Germany for which no tax benefit was available in fiscal 1998.

        EARNINGS (LOSS) FROM DISCONTINUED OPERATIONS. The loss from operations
of the discontinued business for fiscal 1999 was $(6.5) million, compared to
earnings from discontinued operations of $4.6 million in fiscal 1998. The fiscal
1999 loss was due to poor mushroom yields, higher costs and reduced contract
sales.

        CUMULATIVE EFFECT OF ACCOUNTING CHANGE. In the second quarter of fiscal
1998, we recorded the cumulative effect of an accounting change of a charge of
$0.6 million, after tax, for the adoption of the Emerging Issues Task Force
(EITF) Issue 97-13, "Accounting for Costs Incurred in Connection with a
Consulting Contract that Combines Business Process Reengineering and Information
Technology Transformation."

SPECIAL ITEMS

        A special charge of $1.5 million ($1.0 million after-tax) was recorded
in the second quarter of fiscal 2000 associated with reductions in the United
States headquarters workforce. This restructuring program was designed to
streamline the organization and reflects the need for a smaller infrastructure.
In the fourth quarter of fiscal 2000, it was estimated that $0.3 million ($0.2
million after-tax) of the original reserve would not be utilized due to higher
than anticipated voluntary employee turnover. Accordingly, this amount was
reversed and recorded as a Special item on the Statement of Operations. The $1.2
million charge ($0.8 million after-tax) represents severance and employee
benefit costs that will be paid in cash. As of July 30, 2000, 21 individuals
have been severed. This restructuring program is substantially complete.

        A special charge of $1 million (with no associated tax impact) was
recorded in the fourth quarter of fiscal 1999 associated with administrative
staff reductions in the United Kingdom. This restructuring program was designed
to align fixed employee costs with the needs of the SonA and Freshbake
businesses. There were 40 individuals severed as part of this program and the $1
million charge represented severance and employee benefit costs that were paid
in cash. This restructuring program was completed in the third quarter of fiscal
2000.

        During the third quarter of fiscal 1999 we entered into a divestiture
agreement to sell our Argentine beef business, Swift-Armour. The sale closed in
July 1999. The sale price was $85 million and the net proceeds were used to
repay a portion of the indebtedness outstanding under our senior credit
facility. The net charge to fiscal 1999 earnings related to this divestiture was


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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CONDITION (CONTINUED)

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$137.7 million (with no associated tax impact). During the third quarter of
fiscal 1999, we recorded as a Special item a $140.0 million charge to reduce the
carrying value of the Argentine beef assets held for sale to their fair value
based on the estimated sale price less the estimated costs to sell. Since the
assets were written-down to their estimated fair value and in accordance with
accounting standards, we excluded $2.7 million of depreciation and amortization
expense from fourth quarter fiscal 1999 earnings. Additionally in the fourth
quarter of fiscal 1999, we recognized a $2.3 million benefit (with no associated
tax impact) on the final closing of the sale as a Special item in the Statement
of Operations because certain costs were lower than originally estimated. The
SAFRA trademark and equipment acquired during the second quarter of fiscal 1998
were included in the divestiture. In the fourth quarter of fiscal 2000, we
recognized a $0.3 million benefit (with no associated tax impact) because
certain costs were lower than originally estimated.

        Special items of $42.1 million ($35.9 million after-tax) were recorded
in fiscal 1998. A special charge of $27.7 million ($21.5 million after-tax) was
recorded in the third quarter of fiscal 1998 to cover the costs of a
restructuring program. The restructuring program was designed to improve
operational efficiency by exiting certain U.S. and European administrative
offices and production facilities. The restructuring program provided for the
reduction of our worldwide workforce by approximately 425 full-time
administrative and operational positions. In September 1998 we sold our Peterlee
frozen foods facility in the United Kingdom. Additionally during November 1998,
we commenced closing our seasonal pickle plant in Bridgeport, Michigan. The
plant employed approximately 25 full time workers and an additional 375 seasonal
workers from May through September. The restructuring charge included
approximately $11.3 million in cash charges primarily related to severance and
employee benefit costs. The balance of the restructuring charge, amounting to
$16.4 million, related to non-cash charges for losses on the disposition of
plant assets. This program was completed during the third quarter of fiscal
1999. Third quarter fiscal 1999 results included a $3.2 million benefit ($2.0
million after-tax) recorded as a Special item in the Statement of Operations
resulting from completion of the fiscal 1998 restructuring plan at amounts less
than originally planned. The fiscal 1998 restructuring program resulted in
approximately $7 million in aggregate savings in fiscal 1999 primarily from
reductions in plant overhead and depreciation and employee salaries and
benefits.

        During the fourth quarter of fiscal 1998, we designed and began to
implement a program to pursue asset reduction and cost improvement
opportunities. As part of that plan, we decided to sell our Kattus business in
Germany and began to actively seek buyers. The carrying value of the assets held
for sale was reduced to fair value based on estimates of selling values less
costs to sell. Fourth quarter fiscal 1998 earnings reflected a $14.4 million
special charge (with no associated tax benefit) to reduce assets held for sale
to fair value of which approximately $10 million represented a charge for
goodwill impairment with the balance of the charge recorded against the other
long-lived assets. In January 1999, we sold the business for a gain on sale of
$3.2 million (with no associated tax impact) that is recorded on the Special
items line of our Statement of Operations in fiscal 1999. In fiscal 2000, a
benefit of $1.3 million (with no associated tax impact) was recognized resulting
from the favorable resolution of certain matters related to the divested Kattus
business.


RESULTS BY SEGMENT

        Beginning with our financial statements issued for the six months ended
January 30, 2000, we restated our segment reporting structure as a result of the
divestiture of three businesses and to align with changes to our internal
structure. We have four segments that are organized based upon similar economic
characteristics, manufacturing processes, marketing strategies and distribution
channels. The FROZEN FOODS segment consists of Swanson frozen foods in the
United States and Canada and contract manufacturing of primarily frozen
foodservice products in the United States. The GROCERY PRODUCTS segment includes
Vlasic retail and foodservice pickles and condiments and Open Pit barbecue sauce
in the United States. The UNITED KINGDOM OPERATIONS segment includes Freshbake
frozen foods and SonA and Rowats pickles, canned beans and vegetables in the
United Kingdom. Results for the Freshbake frozen foods and SonA and Rowats
businesses had previously been in the Frozen Foods and Grocery Products
segments. The DIVESTED BUSINESSES segment includes the aggregated results from
the Kattus gourmet foods distribution business in Germany (which was sold in
January 1999) and the Swift-Armour Argentine beef business (which was sold in
July 1999), that were previously in the Grocery Products and Agricultural
Products segments. With the divestitures of Swift-Armour and Vlasic Farms, we
eliminated the Agricultural Products segment and reclassified contract
manufacturing of frozen foodservice products into the Frozen Foods segment. The
Vlasic Farms mushroom business has been classified as a discontinued operation
and excluded from segment information. General corporate expenses and assets had
previously been allocated to the segments. We evaluate segment performance based
on earnings before interest and taxes. The corresponding items of segment
information for all periods presented have been restated.


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

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        The following table sets forth certain segment information for the
fiscal years indicated (in thousands):

<TABLE>
<CAPTION>
                                                           2000             1999             1998
                                                        ----------       ----------       ----------
<S>                                                     <C>              <C>              <C>
Net Sales
    Frozen Foods                                        $  480,078       $  506,927       $  507,388
    Grocery Products                                       287,274          303,524          285,647
    United Kingdom Operations                              134,212          156,163          176,918
    Divested Businesses                                         --          221,657          267,341
                                                        ----------       ----------       ----------
      Total                                             $  901,564       $1,188,271       $1,237,294
                                                        ==========       ==========       ==========

Earnings (Loss) Before Interest and Taxes
from Continuing Operations
    Frozen Foods                                        $   10,719       $   40,117       $   35,978
    Grocery Products                                         6,899           35,611           15,129
    United Kingdom Operations                               (2,521)           6,122           (5,052)
    Divested Businesses                                      1,622         (127,946)         (22,293)
    Unallocated Corporate Expenses                          (9,027)         (10,173)          (8,546)
                                                        ----------       ----------       ----------
      Total                                             $    7,692       $  (56,269)      $   15,216
                                                        ==========       ==========       ==========
</TABLE>


FISCAL YEAR ENDED JULY 30, 2000 COMPARED TO FISCAL YEAR ENDED AUGUST 1, 1999

        Net sales of the frozen foods segment decreased 5.3% to $480.1 million
in fiscal 2000 compared to fiscal 1999. The decrease in net sales was driven
principally by a 4% decline in consumption in our Swanson U.S. business as a
result of increased competition. Sales of contract manufactured foodservice
products also declined approximately 10%. This segment's earnings before
interest and taxes were $10.7 million in fiscal 2000 compared to $40.1 million
in fiscal 1999. The decrease in earnings resulted from lower Swanson U.S. sales,
marketing costs related to new product introductions and higher other trade
marketing costs.

        Net sales of the grocery products segment decreased 5.4% to $287.3
million in fiscal 2000 compared to fiscal 1999. The decrease was primarily
driven by unfavorable product mix in Vlasic retail pickles. Open Pit sales also
declined as shipments to retailers were less than consumption. Sales of
foodservice pickles increased approximately 22%. Consumption levels in Vlasic
pickles and Open Pit increased approximately 3% and 4%, respectively, compared
to last year. This segment's earnings before interest and taxes decreased to
$6.9 million in fiscal 2000 from $35.6 million in fiscal 1999 due to the
unfavorable sales mix and higher marketing expenses in Vlasic retail pickles as
well as lower net sales and higher marketing in Open Pit.

        Net sales of the United Kingdom operations segment decreased 14.1% to
$134.2 million in fiscal 2000 compared to fiscal 1999. The decrease in net sales
was attributable to increased competition that impacted both selling price and
volume. This segment's loss before interest and taxes was $(2.5) million in
fiscal 2000 compared to earnings before interest and taxes of $6.1 million in
fiscal 1999. Excluding a $1 million credit in special items related to this
segment in fiscal 1999, this segment's earnings before income and taxes was $5.1
million. The decline in fiscal 2000 earnings compared to fiscal 1999 was
primarily due to lower sales and pricing pressures as a result of intense
competition, as well as manufacturing inefficiencies.

        The divested businesses segment included net sales in fiscal 1999 and
1998 from the Kattus and Argentine beef businesses which were sold in January
1999 and July 1999, respectively.

FISCAL YEAR ENDED AUGUST 1, 1999 COMPARED TO FISCAL YEAR ENDED AUGUST 2, 1998

        Net sales of the frozen foods segment was relatively unchanged in fiscal
1999 compared to fiscal 1998. A modest increase in Swanson U.S. customer sales,
attributable to the re-launch of our fried chicken products and increased
marketing efforts, was offset by declines in net sales of frozen foodservice
products under the contract manufacturing agreement. The segment's earnings
before interest and taxes were $40.1 million in fiscal 1999 compared to $36.0
million in fiscal 1998. Excluding the impact of special items recorded in fiscal
1999 and 1998, earnings before interest and taxes for the segment were $40.1
million and $37.5 million, respectively, an increase of 6.9%.

        Net sales of the grocery products segment increased 6.3% to $303.5
million in fiscal 1999 compared to fiscal 1998. This increase was primarily
driven by increased sales in our core Vlasic pickles business. The segment's
earnings before interest and taxes were $35.6 million for fiscal 1999 compared
to $15.1 million in fiscal 1998. Excluding the impact of special items in fiscal


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

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1999 and 1998, earnings before interest and taxes for this segment were $34.5
million and $28.8 million, respectively, an increase of 19.7%. This improvement
was attributable to sales growth in our Vlasic pickles business in fiscal 1999
partially offset by greater marketing and advertising costs in fiscal 1999, and
charges incurred in fiscal 1998 associated with start-up costs of new technology
at our pickle plants.

        Net sales of the United Kingdom operations decreased 11.7% to $156.2
million in fiscal 1999 compared to fiscal 1998 principally due to a decline in
case volumes, lower selling prices and a lack of major new product
introductions. The segment's earnings before interest and taxes were $6.1
million for fiscal 1999 compared to a loss before interest and taxes of $(5.1)
million in fiscal 1998. Excluding the impact of special items in fiscal 1999 and
1998, earnings before interest and taxes for the segment were $5.0 million and
$6.0 million, respectively.


LIQUIDITY AND CAPITAL RESOURCES

        In connection with the spin-off, we incurred incremental debt of
approximately $560 million under a five-year $750 million unsecured revolving
credit facility, consisting of $500 million indebtedness assumed from Campbell
and $60 million incurred to repay certain intercompany payables representing
advances from Campbell to subsidiaries of Vlasic.

        In fiscal 1999, we issued senior subordinated notes with an aggregate
principle amount of $200 million at an issue price of 98.472%. The notes mature
on July 1, 2009. Interest on the notes accrues at the rate of 10 1/4% per annum
and is payable semi-annually in arrears on January 1 and July 1 of each year,
commencing on January 1, 2000. On or after July 1, 2004, the notes may be
redeemed in whole or in part at a stated price.

        The senior credit facility consists of (1) a senior secured term loan in
a principal amount of $100 million and (2) senior secured revolving credit
commitments providing for revolving loans, initially in the aggregate amount of
up to $550 million. The senior credit facility has a final maturity date of
February 20, 2003. We are required to make mandatory prepayments on the senior
credit facility and permanently reduce revolving credit commitments under
certain circumstances, including upon certain asset sales, issuance of debt
securities, issuance of equity securities and receipt of casualty proceeds which
includes property insurance proceeds and condemnation awards. At our option,
subject to certain requirements, loans may be prepaid in whole or in part. As a
result of the application of the net proceeds from the sale of our senior
subordinated notes in fiscal 1999 and the divestiture of our Swift-Armour
Argentine beef business in fiscal 1999, the amount available to be borrowed
under the revolving credit commitments was permanently reduced to $279 million.
In conjunction with the sale of our Vlasic Farms mushroom business in the third
quarter fiscal 2000 (see Note 5), a portion of the net proceeds received was
used to reduce amounts outstanding under our revolving credit facility and the
revolving credit commitment was permanently reduced by $37.8 million. In
February 2000, we also made an additional voluntary reduction to the revolving
credit commitment of $16.2 million, as we did not anticipate requiring the
additional liquidity. As a result, the amount available to be borrowed under the
revolving credit commitments was permanently reduced to $225 million. The amount
available was reduced to $223.5 million subsequent to year-end. Under the
revolving credit facility, the maximum amount of borrowings available is equal
to the revolving credit commitment less any outstanding revolving loans.

        As discussed below, we have received a waiver under the senior credit
facility for violations of certain covenants which extend through February 28,
2001. A condition of the waiver received includes repayment in full of the
indebtedness outstanding under the senior credit facility by the expiration of
the waiver, or if there is a Standstill Period (as defined and discussed below),
the Standstill Period, or a penalty of $1.5 million will be incurred. Borrowings
under the senior credit facility bear interest at rates that, at our option,
vary with the prime rate, CD rate, LIBOR or money market rates plus applicable
credit margins. The average interest rate at July 30, 2000 was 10.04%. We are
obligated to pay a facility fee of 0.5% on the credit exposure of the banks.
Because we were not in compliance with certain financial covenants and because
mutually acceptable documentation of the June 28, 2000 waiver discussed below
was not complete, no further borrowings were available at July 30, 2000.
Documentation was completed August 10, 2000 and borrowings of up to $35 million
then became available. However, there were no needed borrowings at July 30, 2000
because we had sufficient cash balances.

        The senior credit facility and our senior subordinated debt described
above, contain a number of significant covenants that, among other things,
restrict our ability to engage in mergers and sales of assets, create liens on
our assets, incur additional indebtedness, make investments and acquisitions, or
engage in transactions with our subsidiaries and affiliates. In addition, under
the senior credit facility, we are required to comply with specified ratios and
tests, including maximum debt/EBITDA ratio, minimum fixed charge coverage ratio,
minimum sales and minimum net worth and a limitation on capital expenditures. A
breach of any of these covenants could result in a default under our debt
agreements.


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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

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        As a result of operating losses incurred during the second, third and
fourth quarters of fiscal 2000, we were not in compliance with the financial
ratio covenants under our senior credit facility; however, we requested and
received waivers covering the debt/EBITDA ratio and the fixed charge coverage
ratio of the facility through June 28, 2000. The waivers required the payment of
a fee, an increase in interest rates, delivery and compliance with a cash
budget, and also established a minimum EBITDA test. The waiver also required
that the senior credit facility be secured by liens on substantially all U.S.
owned real property on or before April 30, 2000. With the addition of the real
property liens, the senior credit facility is secured by liens on substantially
all of the Company assets.

        On June 28, 2000, the Company executed an amendment of the senior credit
facility and waiver through February 28, 2001. The waiver required the payment
of a fee, an increase in interest rates, delivery and compliance with a cash
budget and also established minimum sales, minimum net worth, and revised
capital expenditure limits. The amendment/waiver also provided for usage of up
to $35 million of borrowings under the facility for the working capital purposes
subject to being in compliance with tests related to the cash budget. The
amendment/waiver provides for the funding of the $35 million availability to be
made 50% by the bank senior credit facility syndicate and 50% by participation
of certain descendants of Dr. John T. Dorrance (Dorrance Family Participants).
The Dorrance Family Participants will provide funding to the Company through
participation in the senior credit facility bank syndicate by providing $1 of
funding for each $1 supplied by the bank syndicate up to a maximum participation
of $17.5 million. The Dorrance Family Participants will receive a one-time fee
of $350,000, interest of 2% per annum over that otherwise payable under the
terms of the senior credit facility, and a fee equal to 5% of the total
outstanding shares multiplied by the excess of the closing price of Vlasic
common stock (on any date of their choice) over $1.94 per share. The loans
provided by the Dorrance Family Participants, together with all fees and accrued
interest, are payable February 28, 2001. The Company believes that the terms of
the transaction discussed above between the Company and the Dorrance Family
Participants, are similar to those that would have been obtained in like
transactions with others considering the nature of the transactions and the
availability of comparable funding.

        In addition, the amendment/waiver restricts payments of interest on the
senior subordinated notes after December 31, 2000, to funds generated other than
from operations, asset sales, or borrowings under the senior credit facility.
The amendment/waiver also includes provision for an additional fee of $1.5
million to the syndicate if the loans are not paid in full by the expiration of
the waiver, or if there is a Standstill Period (as defined and discussed below),
the Standstill Period.

        There are three key provisions of the waiver: (1) an escrow deposit to
pay the January 2, 2001 interest payment on the senior subordinated notes
("January Interest Payment") must be established by December 28, 2000 and cannot
be funded with funds generated from operations or proceeds of asset sales, as is
more fully described below; (2) certain events, including the payment in full of
our indebtedness outstanding under the senior credit facility, must take place
by the expiration of the waiver, or if there is a Standstill Period (as defined
and discussed below), the Standstill Period, or else we will be required to pay
an additional fee in the amount of $1.5 million to the senior credit facility
bank syndicate; and (3) we must comply with certain monthly tests of minimum
sales and net worth and maximum capital expenditures. For the complete waiver
and related agreements, please see our Form 8-K filed on August 22, 2000.

        A breach of any of the terms and conditions of the waiver, or subsequent
breaches of conditions of the senior credit facility not covered by the waiver
could result in acceleration of our indebtedness, in which case the debt would
become immediately due and payable. Although no assurances can be given, we
expect that we will be in compliance throughout the period of the current waiver
with respect to the financial covenants regarding minimum sales, minimum net
worth and capital expenditure limits.

        We are exploring strategic opportunities for the Company, which is
likely to result in the sale of the Company in whole or in parts. The investment
banking firm of Lazard Freres & Co. has been hired to assist with this strategic
review and to solicit bids on our behalf. However, since this process is still
on-going, no assurances can be given that any proposed plans and actions can be
effectively executed.

        Our ability to operate as a going concern is dependent upon our ability
to avoid default under the senior credit facility. Either the process of selling
the Company in whole or in parts must be complete by the expiration of the
Standstill Period described below and all the loans under the senior credit
facility repaid or there must have been sufficient progress demonstrated in the
opinion of the senior credit facility bank group so that it extends the current
waiver through the expected completion date of the sale process. If the Company
is not sold by the expiration of the Standstill Period described below or the
waiver has not been extended, there will be an event of default and it is
probable that the Company could not raise the funds to pay off all of its debts.
However, the Company expects that so long as demonstrable progress satisfactory
to the senior credit facility bank group has been made towards the completion of
a sale or other transaction pursuant to the strategic review process, funding
will be available to make the January Interest Payment.


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CONDITION (CONTINUED)

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        Since the present waiver to the senior credit facility expires on
February 28, 2001, the indebtedness under the senior credit facility has been
classified as a current liability in the Consolidated Balance Sheet at July 30,
2000. Because the Company is not in default of any covenants related to the
Senior Subordinated notes that could or would require early repayment of the
notes, and does not expect to be in default within the next twelve months, these
notes are classified as long term debt at July 30, 2000.

        If the senior subordinated notes interest payment due and payable on
January 2, 2001 ("January Interest Payment") is not paid within 30 days of the
due date, there would be an event of default which upon a vote of the holders of
at least 25% of the senior subordinated notes could cause them to be
accelerated.

        The terms of the waiver require the Company to deposit an amount in
escrow on or before December 28, 2000 for payment of the January Interest
Payment ("Escrow"). The waiver as presently in force precludes the Escrow from
being funded with funds generated from operations or proceeds of asset sales.
Failure to timely fund the Escrow would cause the waiver to expire on December
28, 2000. In such event, the waiver provides for a "Standstill Period" following
expiration of the waiver during which Events of Default would continue to be
waived. However, the principal of the bank loans could be accelerated and a
"payment blockage notice" could be delivered on the Company preventing it from
making the January Interest Payment. The Standstill Period would expire on the
later of (a) January 30, 2001 or (b) a forbearance date specified in any
agreement by the holders of more than 75% of the outstanding senior subordinated
notes to not accelerate the principal of such notes or enforce any other
remedies for the enforcement of collection of such notes. The expiration of the
Standstill Period would, however, be no later than February 28, 2001.

        Our liquidity needs will be primarily for working capital and interest
service requirements on our debt obligations as well as capital expenditures.
Capital expenditures for fiscal year 2001 are expected to approximate $20
million. We believe that our capital expenditures for the foreseeable future
will be focused on equipment replacement.

        We anticipate being in compliance throughout the waiver period ending
February 28, 2001 with respect to the financial covenants regarding minimum
sales, minimum net worth and capital expenditure limits. Therefore, we will have
access to borrowings under the senior credit facility for working capital,
interest (except for the January 2, 2000 senior subordinated notes interest
payment as discussed above) and capital expenditures during the waiver period.
For a discussion of our liquidity for periods beyond February 28, 2001 is
dependent on the outcome of the strategic review process see also "Going Concern
Matters" on page 3.


        CASH FLOWS STATEMENT ANALYSIS

        Net cash used in operating activities was $2.7 million in fiscal 2000
compared to net cash provided of $46.0 million in fiscal 1999. The change in
cash flows from operations was principally driven by significantly lower
earnings excluding special items in fiscal 2000 compared to last year. This was
partially offset by a reduction of our accounts receivable resulting from
improved collections, lower inventories on hand at year-end and higher accrual
balances, offset by lower accounts payable balances related to lower
manufacturing activities and shorter vendor terms in fiscal 2000.

        Net cash provided by investing activities was $20.1 million in fiscal
2000 compared to $61.4 million in fiscal 1999. Cash proceeds, net of costs and
cash divested, of $38.1 million in fiscal 2000 from the sale of Vlasic Farms,
Inc. compared to $20.7 million and $77.7 million from the divestitures of the
Kattus and Swift-Armour businesses, respectively, in fiscal 1999. Capital
expenditures were $20.3 million in fiscal 2000 compared to $47.3 million in
fiscal 1999.

        Net cash used in financing activities of $0.3 million in fiscal 2000 was
principally a $13.3 million increase in borrowings under the senior credit
facility offset by a decrease in the bank overdraft balance as well as less
amounts paid for deferred financing costs in fiscal 2000 compared to fiscal
1999.


        MARKET RISK SENSITIVITY

        We use or are permitted to use financial instruments, including fixed
and variable rate debt, as well as swap, forward and option contracts, to
finance our operations and to hedge interest rate and currency exposures. The
swap, forward and option contracts are entered into for periods consistent with
related underlying exposures and do not constitute positions independent of
those exposures. We do not enter into contracts for speculative purposes, nor
are we a party to any leveraged instrument.

        The information below summarizes our market risk associated with debt
obligations and other significant financial instruments outstanding as of July
30, 2000. Fair values included herein have been determined based on quoted
market prices.


                                      (22)
<PAGE>   23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

--------------------------------------------------------------------------------


        The information presented below should be read in conjunction with Note
26 and Note 27 to our historical consolidated financial statements.

        We rely primarily on bank and public bond market borrowings to meet our
funding requirements. In the United States, the borrowings are supported by a
senior credit facility of $223.5 million. For debt obligations, the table
presents principal cash flows (in thousands) and related interest rates by
fiscal year of maturity. Capital lease obligations of $0.2 million are not
included in the table. Our fixed rate debt is net of unamortized original issue
discount of $2.9 million. Variable interest rates disclosed represent the
weighted average rates of the portfolio at the period end. For interest rate
swaps, the table presents notional amounts and related interest rates by fiscal
year of maturity.

<TABLE>
<CAPTION>
                                                Year of Maturity
                                           -------------------------
Debt                                          2003           2009           Total         Fair Value
                                           ----------     ----------     -----------     ------------
<S>                                        <C>            <C>            <C>             <C>
Fixed rate                                                $  197,146     $   197,146     $     90,000
Average interest rate                                        10 1/4%
Variable rate                              $  285,200                    $   285,200     $    252,400
Average interest rate                          10.04%
Interest Rate Swaps:
Variable to fixed (1)                      $   50,000                    $    50,000     $      1,331
Average pay rate                                 5.9%
Average receive rate                             6.8%
</TABLE>

(1) Hedges U.S. Bank borrowings.

        As of July 30, 2000, we had no forward currency exchange contracts.

        We are exposed to credit loss in the event of non-performance by the
counterparties in swap and forward contracts. We minimize our credit risk on
these transactions by only dealing with leading, credit-worthy financial
institutions having long-term credit ratings of "A" or better and, therefore, do
not anticipate non-performance.


SEASONALITY

        Our sales and cash flows are affected by seasonal cyclicality during
certain parts of the year. Sales of frozen foods tend to be marginally higher
during the winter months. Sales of pickles, relishes and barbecue sauce tend to
be higher in the summer months. The majority of pickles are packed during a
season extending from May through September. As a result, our inventory levels
tend to be higher in the first quarter of the fiscal year which makes our
working capital requirements higher in the first quarter, requiring us to draw
more heavily on the revolving credit commitments under our senior credit
facility.


RECENT DEVELOPMENTS

        In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement established accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
statement required that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement 133," which postponed the adoption date of SFAS No. 133. We
must adopt the statement beginning fiscal 2001. We anticipate that, due to the
limited use of derivative instruments, the adoption of SFAS No. 133 will not
have a significant effect on our results of operations or financial position.

        In May 2000, the Emerging Issues Task Force (EITF) issued EITF No.
2000-14, "Accounting for Coupons, Rebates and Discounts" that addressed
accounting for sales incentives. The Task Force concluded that in accounting for
cash sales incentives offered by a manufacturer (for example, coupons to be used
at the point of retail sale or mailed in after the retail sale), the
manufacturer should recognize the incentive as a reduction of revenue on the
later date of the manufacturer's sale to the retailer or the date the offer is
made to the public. The reduction of revenues should be measured based on the
estimated amount of incentives to be claimed by the ultimate customers. We are
currently evaluating the effect that implementation of this pronouncement will
have to our financial statements. We must adopt this pronouncement in our fourth
quarter of fiscal 2001.


                                      (23)
<PAGE>   24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL            [VLASIC FOODS INTERNATIONAL LOGO]
CONDITION (CONTINUED)

--------------------------------------------------------------------------------


        In September 2000, the EITF reached a final consensus on issued
EITF No.2000-10, "Accounting for Shipping and Handling Revenues and Costs." The
Task Force concluded that amounts billed to customers related to shipping and
handling should be classified as cost of products sold. Implementation of this
standard will result in a reclassification of outbound freight costs from a
reduction of net sales to cost of products sold on our Consolidated Statements
of Operations. We must adopt this pronouncement in our fourth quarter of fiscal
2001.


FORWARD-LOOKING INFORMATION

        This report and our filings with the Securities and Exchange Commission
contain certain forward-looking statements within the meaning of the Securities
Act of 1933 and the Securities Exchange Act of 1934. We caution readers that any
such forward-looking statements made by us or on our behalf are based on our
current expectations and beliefs but are not guarantees of future performance.
Actual results could differ materially from those expressed or implied in the
forward-looking statements. Important factors that could cause such differences
include, but are not limited to:

        -   our ability to successfully maintain necessary financing
            arrangements;
        -   the results of our strategic review process;
        -   our ability to utilize our net operating loss carryforwards and
            realize the related deferred tax asset;
        -   our ability to continue to comply with covenants and the terms of
            the senior credit facility (and any waivers thereto), and the senior
            subordinated notes;
        -   changes in accounting estimates developed in connection with the
            application of generally accepted accounting principles;
        -   changes in accounting policies and practices;
        -   our ability to successfully execute measures and processes and
            procedures to properly capture and analyze trade marketing spending
            and customer deductions;
        -   our ability to maintain capital expenditures within the forecast
            limits, which are based on assumptions about infrastructure
            requirements;
        -   issues associated with our business and information systems and
            embedded technology;
        -   the likelihood that Campbell Soup Company will not extend its
            current contract for frozen foodservice products or that the
            contract will be extended on terms less than favorable to us;
        -   the impact of strong competitive response to our efforts to leverage
            our brand power with product innovation and new advertising;
        -   the inherent risks in the marketplace associated with our products,
            including uncertainties about trade and consumer acceptance;
        -   changes in prices of raw materials and other inputs;
        -   the impact of unforeseen economic and political changes in
            international markets where we compete;
        -   the market risks associated with financial instruments which may be
            subject to unforeseen economic changes, such as currency exchange
            rates, interest rates, inflation rates and recessionary trends;
        -   our ability to achieve the gains anticipated from our cost
            productivity programs; and
        -   our ability to achieve the forecasted savings related to
            restructuring programs.


ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        For information with respect to the Quantitative and Qualitative
disclosures about market risk, see pages 22 to 23 in the section entitled
"Management's Discussion and Analysis of Results of Operations and Financial
Condition".


ITEM 8.   FINANCIAL STATEMENTS

        -   Consolidated Statements of Operations for 2000, 1999, and 1998

        -   Consolidated Balance Sheets as of July 30, 2000 and August 1, 1999

        -   Consolidated Statements of Cash Flows for 2000, 1999, and 1998

        -   Consolidated Statements of Shareowner's Equity (Deficit) for 2000,
            1999, and 1998

        -   Notes to Consolidated Financial Statements

        -   Report of Independent Accountants


                                      (24)
<PAGE>   25
CONSOLIDATED STATEMENTS OF OPERATIONS          [VLASIC FOODS INTERNATIONAL LOGO]

--------------------------------------------------------------------------------
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                  2000            1999            1998
                                                                52 WEEKS        52 WEEKS        52 WEEKS
                                                               ----------      ----------      ----------
<S>                                                            <C>             <C>             <C>
Net sales                                                      $  901,564      $1,188,271      $1,237,294
                                                               ----------      ----------      ----------

Costs and expenses
  Cost of products sold                                           594,531         805,547         872,836
  Marketing and selling expenses                                  242,364         240,796         242,527
  Administrative expenses                                          48,110          56,950          60,162
  Research and development expenses                                 7,739           7,497           7,422
  Other expense (income)                                            1,550           1,436          (2,919)
  Special items                                                      (422)        132,314          42,050
                                                               ----------      ----------      ----------
    Total costs and expenses                                      893,872       1,244,540       1,222,078
                                                               ----------      ----------      ----------

Earnings (loss) before interest and taxes                           7,692         (56,269)         15,216
  Interest expense                                                 51,308          44,521          13,446
  Interest income                                                   1,336             739             388
                                                               ----------      ----------      ----------
Earnings (loss) before taxes                                      (42,280)       (100,051)          2,158
Taxes on earnings                                                 (13,641)         19,772          12,565
                                                               ----------      ----------      ----------
Loss from continuing operations                                   (28,639)       (119,823)        (10,407)
Discontinued operations
  Earnings (loss) from discontinued
   operations, net of tax                                          (6,699)         (6,508)          4,608
  Gain on sale of discontinued operations, net of tax               5,276              --              --
                                                               ----------      ----------      ----------
Loss before cumulative effect of
  accounting change                                               (30,062)       (126,331)         (5,799)
Cumulative effect of accounting change                                 --              --            (600)
                                                               ----------      ----------      ----------
Net loss                                                       $  (30,062)     $ (126,331)     $   (6,399)
                                                               ==========      ==========      ==========

Earnings (loss) per share - basic:
  Loss from continuing operations                              $    (0.63)     $    (2.64)     $    (0.23)
  Earnings (loss) from discontinued operations                 $    (0.03)     $    (0.14)     $     0.10
  Loss from cumulative effect of accounting change             $     0.00      $     0.00      $    (0.01)
                                                               ----------      ----------      ----------
Net loss                                                       $    (0.66)     $    (2.78)     $    (0.14)
                                                               ==========      ==========      ==========

Weighted average shares outstanding - basic                        45,418          45,418          45,371

Earnings (loss) per share - assuming dilution:
  Loss from continuing operations                              $    (0.63)     $    (2.64)     $    (0.23)
  Earnings (loss) from discontinued operations                 $    (0.03)     $    (0.14)     $     0.10
  Loss from cumulative effect of accounting change             $     0.00      $     0.00      $    (0.01)
                                                               ----------     -----------      ----------
Net loss                                                       $    (0.66)     $    (2.78)     $    (0.14)
                                                               ==========      ==========      ==========
  Weighted average shares outstanding - assuming dilution *        45,418          45,418          45,371
</TABLE>


* Excludes potentially dilutive shares as the result would be antidilutive.

See accompanying Notes to Consolidated Financial Statements.


                                      (25)
<PAGE>   26
CONSOLIDATED BALANCE SHEETS                    [VLASIC FOODS INTERNATIONAL LOGO]

--------------------------------------------------------------------------------
(in thousands)

<TABLE>
<CAPTION>
                                                                           JULY 30,        AUGUST 1,
                                                                             2000            1999
                                                                          ----------      -----------
<S>                                                                       <C>             <C>
Current assets
 Cash and cash equivalents                                                $   24,092      $    11,316
 Restricted cash                                                               9,873               --
 Accounts receivable                                                          55,836           79,746
 Inventories                                                                 129,973          141,933
 Other current assets                                                          3,079           16,246
                                                                          ----------      -----------
  Total current assets                                                       222,853          249,241
                                                                          ----------      -----------
 Plant assets, net                                                           266,347          281,677
 Net assets of discontinued operations                                            --           45,429
 Deferred income taxes                                                        16,193               --
 Other assets, principally intangible assets, net                             76,780           79,582
                                                                          ----------      -----------
  Total assets                                                            $  582,173      $   655,929
                                                                          ==========      ===========
Current liabilities
 Notes payable                                                            $  285,287      $       146
 Payable to suppliers and others                                              51,245           95,207
 Accrued liabilities                                                          60,423           49,280
                                                                          ----------      -----------
  Total current liabilities                                                  396,955          144,633
                                                                          ----------      -----------
Long-term debt                                                               197,230          469,054
Deferred income taxes                                                          3,171           13,429
Other liabilities                                                             44,285           49,214
                                                                          ----------      -----------
  Total liabilities                                                          641,641          676,330
                                                                          ----------      -----------

Shareowners' deficit

 Preferred stock, no par value; authorized 4,000 shares;
  none issued                                                                       --               --
 Common stock, no par value; authorized 56,000 shares;
  issued 45,418 shares at July 30, 2000 and August 1,1999                    137,758          137,758
 Accumulated deficit                                                        (181,508)        (151,446)
 Accumulated other comprehensive loss                                        (15,718)          (6,713)
                                                                          ----------      -----------
  Total shareowners' deficit                                                 (59,468)         (20,401)
                                                                          ----------      -----------
Total liabilities and shareowners' deficit                                $  582,173      $   655,929
                                                                          ==========      ===========
</TABLE>




See accompanying Notes to Consolidated Financial Statements.


                                      (26)
<PAGE>   27
CONSOLIDATED STATEMENTS OF CASH FLOWS          [VLASIC FOODS INTERNATIONAL LOGO]

--------------------------------------------------------------------------------
(in thousands)

<TABLE>
<CAPTION>
                                                                                 2000           1999           1998
                                                                              ----------     ----------     ----------
<S>                                                                           <C>            <C>            <C>
Cash flows from operating activities
  Loss from continuing operations                                             $  (28,639)    $ (119,823)    $  (10,407)
  Non-cash charges (credits) to loss from continuing operations
    Loss on sale of businesses, net                                                   --        134,529         14,400
    Special items                                                                   (422)        (2,215)        27,650
    Depreciation and amortization                                                 31,389         39,313         39,947
    Deferred income taxes                                                        (11,798)        12,834         (4,888)
    Postretirement healthcare benefits                                             2,952          3,428            963
    Other, net                                                                     2,140         (1,263)        (5,211)
  Changes in working capital
    Accounts receivable                                                           22,765        (16,379)       (12,404)
    Inventories                                                                    9,305            677        (18,724)
    Payable to suppliers and others                                              (32,155)         2,959         17,884
    Other current assets and liabilities                                           1,795         (8,063)       (29,522)
                                                                              -----------    ----------     ----------
       Net cash provided by (used in) operating activities                        (2,668)        45,997         19,688
                                                                              -----------    ----------     ----------

Cash flows from investing activities
  Purchases of plant assets                                                      (20,348)       (47,340)       (57,369)
  Sales of plant assets                                                              885          8,777          6,348
  Proceeds from businesses sold                                                   38,149         98,425             --
  Proceeds from insurance recoveries                                               1,801             --          2,814
  Business acquired                                                                   --             --         (6,350)
  Other, net                                                                        (368)         1,521         (1,014)
                                                                              -----------    ----------     ----------
       Net cash provided by (used in) investing activities                        20,119         61,383        (55,571)
                                                                              -----------    ----------     ----------

Cash flows from financing activities
  Borrowings of senior credit facility                                           121,100        214,700         99,000
  Repayment of senior credit facility                                           (107,800)      (499,800)       (42,000)
  Proceeds from bond offering                                                         --        196,962             --
  Repayment of short-term debt and capital lease obligations                        (167)       (12,222)        11,620
  Deferred financing fees                                                         (2,972)       (11,661)            --
  Change in bank overdrafts                                                      (10,416)         3,315        (19,547)
  Issuance of common stock                                                            --            285            519
  Net transactions with Campbell                                                      --             --         (6,500)
                                                                              -----------    ----------     ----------
       Net cash provided by (used in) financing activities                          (255)      (108,421)        43,092
                                                                              -----------    ----------     ----------

  Net cash used in discontinued operations                                        (3,769)        (3,657)           (49)
  Effect of exchange rate changes on cash                                           (651)           (50)           (20)
                                                                              -----------    ----------     ----------
       Net change in cash and cash equivalents                                     12,776        (4,748)         7,140

Cash and cash equivalents - beginning of period                                    11,316        16,064          8,924
                                                                              -----------    ----------     ----------
Cash and cash equivalents - end of period                                     $    24,092    $   11,316     $   16,064
                                                                              ===========    ==========     ==========
</TABLE>




See accompanying Notes to Consolidated Financial Statements.


                                      (27)
<PAGE>   28
CONSOLIDATED STATEMENTS                        [VLASIC FOODS INTERNATIONAL LOGO]
OF SHAREOWNERS' EQUITY (DEFICIT)

--------------------------------------------------------------------------------
(in thousands)


<TABLE>
<CAPTION>
                                               Common Stock                            Campbell         Other            Total
                                         -------------------------     Accumulated       Net        Comprehensive     Shareowners'
                                           Shares         Amount         Deficit      Investment         Loss       Equity (Deficit)
                                         ----------     ----------     -----------    ----------    -------------   ---------------
<S>                                      <C>            <C>            <C>            <C>           <C>             <C>
Balance at August 3, 1997                                                             $  633,168     $      (870)     $   632,298
Comprehensive earnings (loss):
 Net earnings prior to spin-off                                                           18,716                           18,716
 Net loss after the spin-off                                           $   (25,115)                                       (25,115)
                                                                                                                      -----------
  Total net loss                                                                                                           (6,399)
 Other comprehensive loss
  Foreign currency translation
    adjustments                                                                                           (4,884)          (4,884)
                                                                                                                      -----------
 Comprehensive loss                                                                                                       (11,283)
Net transactions with Campbell as of
 the spin-off date:
 Assumption of debt, pension and
    postretirement obligations and net
    deferred tax liabilities                                                            (514,930)                        (514,930)
 Contribution to capital of remaining
  Campbell net investment                               $  136,954                      (136,954)                              --
Issuance of shares of common stock
 in connection with the spin-off             45,371
Issuance of shares of common stock as
 a result of exercised stock options             33            519                                                            519
                                         ----------     ----------     -----------    ----------     -----------      -----------
Balance at August 2, 1998                    45,404        137,473         (25,115)   $       --          (5,754)         106,604
                                                                                      ==========

Comprehensive loss:
 Net loss                                                                 (126,331)                                      (126,331)
 Other comprehensive loss
  Foreign currency translation
    adjustments                                                                                             (282)            (282)
  Reclassification adjustment for
    business sold                                                                                           (677)            (677)
                                                                                                                      -----------
 Comprehensive loss                                                                                                      (127,290)

Issuance of shares of common stock as
 a result of exercised stock options             14            285                                                            285
                                         ----------     ----------     -----------                   -----------      -----------
Balance at August 1, 1999                    45,418        137,758        (151,446)                       (6,713)         (20,401)


Comprehensive loss:
 Net loss                                                                  (30,062)                                       (30,062)
 Other comprehensive loss
  Foreign currency translation
    adjustments                                                                                           (9,005)          (9,005)
                                                                                                                      -----------
  Comprehensive loss                                                                                                      (39,067)
                                         ----------     ----------     -----------                   -----------      -----------
Balance at July 30, 2000                     45,418     $  137,758     $ (181,508)                   $   (15,718)     $   (59,468)
                                         ==========     ==========     ===========                   ===========      ===========
</TABLE>




See accompanying Notes to Consolidated Financial Statements.


                                      (28)
<PAGE>   29
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS

--------------------------------------------------------------------------------
(in thousands, except per share amounts)


1.   VLASIC FOODS INTERNATIONAL SPIN-OFF FROM CAMPBELL SOUP COMPANY

     On March 30, 1998, Campbell distributed one share of Vlasic common stock to
shareowners of Campbell for every ten shares of Campbell capital stock held at
the record date in a tax-free distribution (the "spin-off"). At the time of the
spin-off, we began operations as a separate independent publicly-owned company.
In connection with the spin-off, Campbell contributed the following businesses:
Swanson frozen foods in the United States and Canada, Vlasic retail and
foodservice pickles and condiments in the United States, Open Pit barbecue sauce
in the United States, Campbell's mushrooms in the United States, Freshbake and
non-branded frozen foods and SonA and Rowats pickles and beans in the United
Kingdom, Swift and non-branded processed beef in Argentina and Kattus gourmet
foods distribution in Germany. Our historical financial statements at dates and
for periods ended prior to the date of the spin-off present the combined
historical financial position, results of operations and cash flows of these
businesses. We sold the Kattus business in January 1999 and sold our Argentine
beef business, Swift-Armour, in July 1999. The mushroom business was sold during
the third quarter of fiscal 2000 and has been treated as a discontinued
operation. Prior to the spin-off, the businesses contributed by Campbell had
been separately managed within multiple Campbell business divisions.

     In connection with the spin-off, we incurred debt of approximately $560
million under a five-year $750 million unsecured revolving credit facility,
consisting of $500 million of indebtedness assumed from Campbell and $60 million
incurred to repay certain intercompany payables representing advances from
Campbell to subsidiaries of Vlasic. On a historical basis, we were not allocated
any amount of Campbell's debt and our historical financial statements prior to
the spin-off do not reflect the interest expense associated with the debt
incurred in connection with the spin-off.

     For periods prior to the spin-off, our historical financial statements
reflect expenses allocated by Campbell for selling, general and administrative
services (including finance, legal, information technology, research and
development, benefits, facilities and shared sales and distribution support).
Such expenses were allocated based on net sales, utilization or other methods.
The allocated expenses for these services are not necessarily indicative of the
expenses that we would have incurred had we been a separate, independent entity
that managed these functions.

     See also Note 3, "Going Concern Matters".


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     CONSOLIDATION. The consolidated financial statements include the accounts
of Vlasic Foods International Inc. and its wholly-owned subsidiaries.
Significant intercompany transactions have been eliminated in consolidation.

     FISCAL YEAR. Our fiscal year ends on the Sunday nearest July 31. There were
52 weeks in fiscal 2000, fiscal 1999 and fiscal 1998. Certain fiscal years may
have 53 weeks.

     CASH AND CASH EQUIVALENTS. All highly liquid debt instruments purchased
with an initial maturity of three months or less are classified as cash
equivalents.

     INVENTORIES. Substantially all domestic inventories are valued at the lower
of cost or market, with cost determined by the last-in, first-out method. Other
inventories are valued at the lower of average cost or market.

     PLANT ASSETS. Plant assets are stated at historical cost. Alterations and
major overhauls which extend the lives or increase the capacity of plant assets
are capitalized. The amounts for property disposals are removed from plant asset
and accumulated depreciation accounts and any resultant gain or loss is included
in earnings. Ordinary repairs and maintenance are charged to operating costs.

     DEPRECIATION. Depreciation provided in costs and expenses is calculated
using the straight-line method. Buildings and machinery and equipment are
depreciated over periods not exceeding 45 years and 15 years, respectively.
Accelerated methods of depreciation are used for income tax purposes in certain
jurisdictions.

     LONG-LIVED ASSETS. Intangible assets consist principally of excess purchase
price over net assets of businesses acquired and trademarks, and are amortized
on a straight-line basis over periods not exceeding 40 years. The recoverability
of plant assets and intangibles is periodically reviewed based principally on an
analysis of cash flows.


                                      (29)
<PAGE>   30
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)

--------------------------------------------------------------------------------
(in thousands, except per share amounts)


     REVENUE RECOGNITION. Revenue from product sales is recognized upon
completed delivery of the shipment to our customers at which point title is
transferred. This completes the revenue-earning process, specifically that an
arrangement exists, delivery has occurred, the price is fixed and collectibility
is reasonably assured. Provisions for discounts and rebates to customers, and
returns and other adjustments are provided for in the same period the related
sales are recorded.

     TRADE MARKETING EXPENSE. Trade marketing expense is comprised of amounts
paid to retailers for programs designed to promote our products. These costs
include standard introductory allowances for new products. They also include the
cost of in-store product displays, feature pricing in retailers' advertisements
and other temporary price reductions. These programs are offered to our
customers both in fixed and variable (rate per case) amounts. The ultimate cost
of these programs depends on retailer performance and is the subject of
significant management estimates. We record as expense the estimated ultimate
cost of the program in the year during which the program occurs.

     ADVERTISING. Advertising costs include the cost of working media
(advertising on television, radio or in print), the cost of producing
advertising, and the cost of coupon insertion and distribution. Working media
and coupon insertion and distribution costs are expensed in the period the
advertising is run or the coupons are distributed. The cost of producing
advertising is expensed as of the first date the advertisements takes place.
Advertising included in marketing and selling expenses was $15,379 in fiscal
2000, $19,921 in fiscal 1999 and $16,230 in fiscal 1998. There were no amounts
of advertising included in assets on the Consolidated Balance Sheets.

     EARNINGS PER SHARE. Earnings per share have been calculated in accordance
with Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share." For fiscal 1998, weighted average shares outstanding assuming dilution
exclude 513 shares relating to outstanding stock option grants as the result
would be antidilutive.

     RECLASSIFICATIONS. Certain prior year amounts have been reclassified to
conform to fiscal 2000 presentation. These changes had no impact on previously
reported results of operations or shareowners' deficit.

     USE OF ESTIMATES. The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.

3.   GOING CONCERN MATTERS

     The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As discussed in Note 26, we have
significant borrowings which require, among other things, compliance with
certain financial ratios, specifically a debt/EBITDA ratio and a fixed charge
coverage ratio, on a quarterly basis. As a result of operating losses incurred
during the second, third, and fourth quarters in fiscal 2000, we were not in
compliance with the financial ratio covenants under our senior credit facility;
however, we requested and received a waiver through February 28, 2001 in
consideration for the payment of a fee and an increase in interest rates. There
are three key provisions of the waiver: (1) an escrow deposit to pay the January
2, 2001 interest payment on the senior subordinated notes ("January Interest
Payment") must be established by December 28, 2000 and cannot be funded with
funds generated from operations or proceeds of asset sales, as is more fully
described below; (2) certain events, including the payment in full of our
indebtedness outstanding under the senior credit facility, must take place by
the expiration of the waiver, or if there is a Standstill Period (as defined and
discussed below), the Standstill Period, or else we will be required to pay an
additional fee in the amount of $1.5 million to the senior credit facility bank
syndicate; and (3) we must comply with certain monthly tests of minimum sales
and net worth and maximum capital expenditures.

     If the January Interest Payment is not paid within 30 days of the due date,
there would be an event of default which upon a vote of the holders of at least
25% of the senior subordinated notes could cause them to be accelerated.


                                      (30)
<PAGE>   31
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)

--------------------------------------------------------------------------------
(in thousands, except per share amounts)


     The terms of the waiver require the Company to deposit an amount in escrow
on or before December 28, 2000 for payment of the January Interest Payment
("Escrow"). The waiver as presently in force precludes the Escrow from being
funded with funds generated from operations or proceeds of asset sales. Failure
to timely fund the Escrow would cause the waiver to expire on December 28, 2000.
In such event, the waiver provides for a "Standstill Period" following
expiration of the waiver during which Events of Default would continue to be
waived. However, the principal of the bank loans could be accelerated and a
"payment blockage notice" could be delivered on the Company preventing it from
making the January Interest Payment. The Standstill Period would expire on the
later of (a) January 30, 2001 or (b) a forbearance date specified in any
agreement by the holders of more than 75% of the outstanding senior subordinated
notes to not accelerate the principal of such notes or enforce any other
remedies for the enforcement of collection of such notes. The expiration of the
Standstill Period would, however, be no later than February 28, 2001.

     A breach of any of the terms and conditions of the waiver, or subsequent
breaches of conditions of the senior credit facility not covered by the waiver
could result in acceleration of our indebtedness, in which case the debt would
become immediately due and payable. Although no assurances can be given, we
expect that we will be in compliance throughout the period of the current waiver
with respect to the financial covenants regarding minimum sales, minimum net
worth and capital expenditure limits.

     We are exploring strategic opportunities for the Company, which is likely
to result in the sale of the Company in whole or in parts. The investment
banking firm of Lazard Freres & Co. has been hired to assist with this strategic
review and to solicit bids on our behalf. However, since this process is still
on-going, no assurances can be given that any proposed plans and actions can be
effectively executed.

     Our ability to operate as a going concern is dependent upon our ability to
avoid default under the senior credit facility. Either the process of selling
the Company in whole or in parts must be complete by the expiration of the
Standstill Period described above and all the loans under the senior credit
facility repaid or there must have been sufficient progress demonstrated in the
opinion of the senior credit facility bank group so that it extends the current
waiver through the expected completion date of the sale process. If the Company
is not sold by the expiration of the Standstill Period described above or the
waiver has not been extended, there will be an event of default and it is
probable that the Company could not raise the funds to pay off all of its debts.
However, the Company expects that so long as demonstrable progress satisfactory
to the senior credit facility bank group has been made towards the completion of
a sale or other transaction pursuant to the strategic review process, funding
will be available to make the January Interest Payment.

4.   DIVESTED BUSINESSES

     During the third quarter of fiscal 1999 we entered into a divestiture
agreement to sell our Argentine beef business, Swift-Armour. The sale closed in
July 1999. The sale price was $85 million and the net proceeds were used to
repay a portion of the indebtedness outstanding under our senior credit
facility. The net charge to fiscal 1999 earnings related to this divestiture was
$137,729. During the third quarter of fiscal 1999 we recorded as a special item
a $140,000 charge to reduce the carrying value of the Argentine beef assets held
for sale to their fair value based on the estimated sale price less the
estimated costs to sell. Since the assets were written-down to their estimated
fair value and in accordance with accounting standards, we excluded $2,739 of
depreciation and amortization expense from fourth quarter fiscal 1999 earnings.
Additionally in the fourth quarter of fiscal 1999, we recognized a benefit of
$2,271 on the final closing of the sale as a Special item on the Statement of
Operations. The SAFRA trademark and equipment acquired during the second quarter
of fiscal 1998 were included in the divestiture. In fiscal 2000, we recognized a
benefit of $317 as a Special item on the Statement of Operations because certain
costs were lower than originally estimated.

     In the fourth quarter of 1998, we recorded a $14,400 special charge to
reduce the Kattus assets held for sale to fair value. We sold the Kattus
business in January 1999 for a gain on sale of $3,200 that is recorded on the
Special items line on the Statement of Operations. In fiscal 2000, a benefit of
$1,305 was recognized resulting from the favorable resolution of certain matters
related to the divested Kattus business.


                                      (31)
<PAGE>   32
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)

--------------------------------------------------------------------------------
(in thousands, except per share amounts)


5.   DISCONTINUED OPERATIONS

     In an effort to focus on our core "Vlasic" and "Swanson" businesses and to
pay down debt, we sold Vlasic Farms, Inc., our fresh mushroom business to
Money's Mushrooms Ltd. on January 31, 2000. The sale price was $50,000, less
post-closing purchase price adjustments amounting to $4,751 that were paid from
our general cash account in July 2000. The net proceeds, net of transaction
closing costs and amounts held on deposit to cover certain future costs related
to the transaction, were used to repay a portion of the indebtedness outstanding
under our senior credit facility. Funds of $7,100 were held on deposit for the
anticipated purchase price adjustments, severance payments and certain other
indemnified costs and are included in the Restricted cash amounts on the
Consolidated Balance Sheet at July 30, 2000. Subsequent to year-end in August
2000, we received $4,751 from the escrow account to reimburse us for the July
2000 disbursement from our general cash account. Any remaining funds held on
deposit after payment of the specified items will be used to repay a portion of
the indebtedness outstanding under our senior credit facility.

     In accordance with Accounting Principles Board Opinion No. 30 (APB 30),
"Reporting the Results of Operations - Reporting the Effect of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions", the results of Vlasic Farms, Inc. have been reported
separately as a discontinued operation for all periods presented. The loss from
discontinued operations for fiscal 2000 included the results of our mushroom
business through December 17, 1999, the date on which our Board of Directors
authorized the divestiture (the measurement date). The loss from discontinued
operations subsequent to the measurement date through January 30, 2000 (the
phase-out period) of $839 was deferred and recorded as a reduction to the net
gain on disposal in the third quarter fiscal 2000. Net sales, earnings (loss)
before taxes and net earnings (loss) applicable to discontinued operations were
as follows:

<TABLE>
<CAPTION>
                                                                       2000             1999             1998
                                                                    ----------       ----------       ----------
<S>                                                                 <C>              <C>              <C>
Net sales                                                           $   60,717       $  119,715       $  119,980
Earnings (loss) before taxes                                        $  (10,973)      $  (10,480)      $    7,421
Taxes on earnings                                                        4,274            3,972           (2,813)
                                                                    ----------       ----------       ----------
Earnings (loss) from discontinued operations, net of tax            $   (6,699)      $   (6,508)      $    4,608
                                                                    ==========       ==========       ==========
Gain on sale of discontinued operations                             $    8,645
Taxes on gain                                                           (3,369)
                                                                    ----------
Gain on sale of discontinued operations, net of tax                 $    5,276
                                                                    ==========
</TABLE>

     The components of net assets of discontinued operations included in the
Consolidated Balance Sheet were:

<TABLE>
<CAPTION>
                                                                     August 1, 1999
                                                                     --------------
<S>                                                                  <C>
  Accounts receivable                                                        11,947
  Inventories                                                                 6,698
  Plant assets, net                                                          35,974
  Payable to suppliers and other current liabilities                         (9,190)
                                                                     --------------
    Net assets of discontinued operations                            $       45,429
                                                                     ==============
</TABLE>

     Liabilities retained by us included certain indemnified costs, property
taxes and medical claims totalling $1,463 and are included in Accrued
liabilities on the Consolidated Balance Sheet at July 30, 2000. We also retained
a pre-sale projected benefit obligation for pensions of approximately $14,100
and a pre-sale projected benefit obligation for other postretirement benefits of
approximately $8,100. The projected benefit obligations for pension and other
postretirement benefits are included in our net pension and other postretirement
amounts recognized in Note 10.

     In conjunction with the sale we entered into a Transition Services
Agreement with the buyers through January 31, 2001, whereby we will continue to
perform certain administrative and accounting functions for fees that
approximate cost. In fiscal 2000, we received $840 that is included in Other
expense (income) on the Statement of Operations.

     We remain contingently liable for workers' compensation claims incurred
prior to the sale of the mushroom business of approximately $4,000 in the event
that the buyer fails to satisfy this liability.


                                      (32)
<PAGE>   33
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)

--------------------------------------------------------------------------------
(in thousands, except per share amounts)


6.   SPECIAL ITEMS

<TABLE>
<CAPTION>
SPECIAL CHARGES (CREDITS)                                         2000            1999           1998
                                                                ----------     ----------     ----------
<S>                                                             <C>            <C>            <C>
Fiscal 2000 restructuring program (Note 7)                      $    1,200     $       --     $       --
Kattus divestiture (Note 4)                                         (1,305)        (3,200)        14,400
Swift-Armour divestiture (Note 4)                                     (317)       137,729             --
Fiscal 1998 restructuring program (Note 7)                              --         (3,215)        27,650
United Kingdom restructuring (Note 7)                                   --          1,000             --
                                                                ----------     ----------     ----------
   Total                                                        $     (422)    $  132,314     $   42,050
                                                                ==========     ==========     ==========
</TABLE>

     Also, during the third quarter of fiscal 1999, we recorded a special
provision for taxes of $7,000 on the repatriation of foreign dividends (Note 9).

7.   RESTRUCTURING CHARGES

<TABLE>
<CAPTION>
                                                          Loss on Asset        Severance
                                                           Disposition        and Benefits           Other              Total
                                                           -----------        ------------        -----------        -----------
<S>                                                       <C>                 <C>                 <C>                <C>
Balance at August 3, 1997                                        5,524               2,920              1,390              9,834
   Restructuring accrual                                        16,400               8,200              3,050             27,650
   Fiscal 1998 spending                                         (7,345)             (4,169)            (1,636)           (13,150)
                                                           -----------        ------------        -----------        -----------
Balance at August 2, 1998                                       14,579               6,951              2,804             24,334
   Restructuring accrual                                            --               1,000                 --              1,000
   Fiscal 1999 spending                                        (13,877)             (4,517)            (2,725)           (21,119)
   Reversal of restructuring charge                               (702)             (2,434)               (79)            (3,215)
                                                           -----------        ------------        -----------        -----------
Balance at August 1, 1999                                           --               1,000                 --              1,000
   Restructuring accrual                                            --               1,500                 --              1,500
   Fiscal 2000 spending                                             --              (1,713)                --             (1,713)
   Reversal of restructuring charge                                 --                (300)                --               (300)
                                                           -----------        ------------        -----------        -----------
Balance at July 30, 2000                                   $        --        $        487        $        --        $       487
                                                           ===========        ============        ===========        ===========
</TABLE>

     A special charge of $1,500 ($975 after-tax) was recorded in the second
quarter of fiscal 2000 associated with reductions in the United States
headquarters workforce. This restructuring program was designed to streamline
the organization and reflects the need for a smaller infrastructure. In the
fourth quarter of fiscal 2000, it was estimated that $300 ($195 after-tax) of
the original reserve would not be utilized due to higher than anticipated
voluntary employee turnover. Accordingly, this amount was reversed and recorded
as a Special item on the Statement of Operations. The $1,200 net charge ($780
after-tax) represents severance and employee benefit costs that will be paid in
cash. As of July 30, 2000, 21 individuals had been severed. This restructuring
program is substantially complete.

     A special charge of $1,000 (with no associated tax impact) was recorded in
the fourth quarter of fiscal 1999 associated with administrative staff
reductions in the United Kingdom. This restructuring program was designed to
align fixed employee costs with the needs of the SonA and Freshbake businesses.
There were 40 positions eliminated as part of this program and the $1,000 charge
represented severance and employee benefit costs that were paid in cash. This
restructuring program was completed in the third quarter of fiscal 2000.

     A special charge of $27,650 ($21,450 after-tax) was recorded in the third
quarter of fiscal 1998 to cover the costs of a restructuring program. The
restructuring program was designed to improve operational efficiency by exiting
certain U.S. and European administrative offices and production facilities. The
restructuring program provided for the reduction of our worldwide workforce by
approximately 425 full-time administrative and operational positions. In
September 1998 we sold our Peterlee frozen foods facility in the United Kingdom.
Additionally, during November 1998, we commenced closing our seasonal pickle
plant in Bridgeport, Michigan. The plant employed approximately 25 full-time
workers and an additional 375 seasonal workers from May through September. The
restructuring charge included approximately $11,250 in cash charges primarily
related to severance and employee benefit costs. The balance of the
restructuring charge, amounting to $16,400, related to non-cash charges for
losses on the disposition of plant assets. This program was completed during the
third quarter of fiscal 1999. Third quarter fiscal 1999 results included a
benefit of $3,215 ($2,075 after-tax) recorded as a Special item on the Statement
of Operations resulting from completion of the fiscal 1998 restructuring plan at
amounts less than originally planned.

     The balance of the restructuring accruals were included in Accrued
liabilities on the Consolidated Balance Sheets.


                                      (33)
<PAGE>   34
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)

--------------------------------------------------------------------------------
(in thousands, except per share amounts)


8.   SEGMENT AND GEOGRAPHIC AREA INFORMATION

     Beginning with our financial statements issued for the six months ended
January 30, 2000, we restated our segment reporting structure as a result of the
divestiture of three businesses and to align with changes to our internal
structure. We have four segments that are organized based upon similar economic
characteristics, manufacturing processes, marketing strategies and distribution
channels. The FROZEN FOODS segment consists of Swanson frozen foods in the
United States and Canada and contract manufacturing of primarily frozen
foodservice products in the United States. The GROCERY PRODUCTS segment includes
Vlasic retail and foodservice pickles and condiments and Open Pit barbecue sauce
in the United States. The UNITED KINGDOM OPERATIONS segment includes Freshbake
frozen foods and SonA and Rowats pickles, canned beans and vegetables in the
United Kingdom. Results for the Freshbake frozen foods and SonA and Rowats
businesses had previously been in the Frozen Foods and Grocery Products
segments. The DIVESTED BUSINESSES segment includes the aggregated results from
the Kattus gourmet foods distribution business in Germany (which was sold in
January 1999) and the Swift-Armour Argentine beef business (which was sold in
July 1999), that were previously in the Grocery Products and Agricultural
Products segments. With the divestitures of Swift-Armour and Vlasic Farms, we
eliminated the Agricultural Products segment and reclassified contract
manufacturing of frozen foodservice products into the Frozen Foods segment. The
Vlasic Farms mushroom business has been classified as a discontinued operation
and excluded from segment information. General corporate expenses and assets had
previously been allocated to the segments. We evaluate segment performance based
on earnings before interest and taxes. The corresponding items of segment
information for all periods presented have been restated.

<TABLE>
<CAPTION>
SEGMENT INFORMATION                                              2000              1999              1998
                                                              ----------        ----------        ----------
<S>                                                           <C>               <C>               <C>
Net Sales
   Frozen Foods                                               $  480,078        $  506,927        $  507,388
   Grocery Products                                              287,274           303,524           285,647
   United Kingdom Operations                                     134,212           156,163           176,918
   Divested Businesses                                                --           221,657           267,341
                                                              ----------        ----------        ----------
     Total                                                    $  901,564        $1,188,271        $1,237,294
                                                              ==========        ==========        ==========

Earnings (Loss) Before Interest and Taxes
from Continuing Operations
   Frozen Foods                                               $   10,719        $   40,117        $   35,978
   Grocery Products                                                6,899            35,611            15,129
   United Kingdom Operations                                      (2,521)            6,122            (5,052)
   Divested Businesses                                             1,622          (127,946)          (22,293)
   Unallocated Corporate Expenses                                 (9,027)          (10,173)           (8,546)
                                                              ----------        ----------        ----------
     Total                                                    $    7,692        $  (56,269)       $   15,216
                                                              ==========        ==========        ==========

Total Assets
   Frozen Foods                                               $  262,828        $  251,180        $  225,109
   Grocery Products                                              182,351           203,636           198,994
   United Kingdom Operations                                     136,994           155,684           178,947
   Divested Businesses                                                --                --           295,561
   Discontinued Operations                                            --            45,429            52,252
                                                              ----------        ----------        ----------
     Total                                                    $  582,173        $  655,929        $  950,863
                                                              ==========        ==========        ==========

Depreciation and Amortization
   Frozen Foods                                               $   15,347        $   14,190        $   13,000
   Grocery Products                                                9,145             8,957             8,658
   United Kingdom Operations                                       6,897             7,131             7,682
   Divested Businesses                                                --             9,035            10,607
                                                              ----------        ----------        ----------
     Total                                                    $   31,389        $   39,313        $   39,947
                                                              ==========        ==========        ==========
</TABLE>


                                      (34)
<PAGE>   35
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


<TABLE>
<CAPTION>
Capital Expenditures                                 2000          1999           1998
                                                 -----------   -----------    -----------
<S>                                              <C>           <C>            <C>
   Frozen Foods                                  $     9,424   $    20,665    $    19,752
   Grocery Products                                    5,768        15,079         13,417
   United Kingdom Operations                           5,156         6,299          6,009
   Divested Businesses                                    --         5,297         18,191
                                                 -----------   -----------    -----------
     Total                                       $    20,348   $    47,340    $    57,369
                                                 ===========   ===========    ===========
</TABLE>


<TABLE>
<CAPTION>
GEOGRAPHIC INFORMATION                               2000          1999           1998
                                                 -----------   -----------    -----------
<S>                                              <C>           <C>            <C>
Net Sales
   United States                                 $   742,558   $   784,669    $   763,308
   Europe and Canada                                 159,006       225,915        276,679
   South America                                          --       177,687        197,307
                                                 -----------   -----------    -----------
     Total                                       $   901,564   $ 1,188,271    $ 1,237,294
                                                 ===========   ===========    ===========

Earnings (Loss) Before Interest and Taxes from
Continuing Operations
   United States                                 $     5,599   $    61,833    $    37,512
   Europe and Canada                                   1,776        13,044        (22,427)
   South America                                         317      (131,146)           131
                                                 -----------   -----------    -----------
     Total                                       $     7,692   $   (56,269)   $    15,216
                                                 ===========   ===========    ===========

Total Assets
   United States                                 $   439,483   $   493,441    $   472,572
   Europe and Canada                                 142,690       162,488        216,795
   South America                                          --            --        261,496
                                                 -----------   -----------    -----------
     Total                                       $   582,173   $   655,929    $   950,863
                                                 ===========   ===========    ===========
</TABLE>

     Transfers between segments and geographic areas are recorded at cost plus
markup or at market. Identifiable assets are those assets, including goodwill,
which are identified with the operations in each segment or geographic region.
Contributions to earnings (loss) before interest and taxes from continuing
operations include the impact of special items (see Note 6) as detailed below by
segment.

SPECIAL ITEMS IMPACT BY SEGMENT

<TABLE>
<CAPTION>
                                             2000         1999         1998
                                          ---------    ---------    ---------
<S>                                       <C>          <C>          <C>
Frozen Foods                              $     793    $      --    $   1,550
Grocery Products                                407       (1,100)      13,700
United Kingdom Operations                        --       (1,115)      11,100
Divested Businesses                          (1,622)     134,529       15,700
                                          ---------    ---------    ---------
   Total                                  $    (422)   $ 132,314    $  42,050
                                          =========    =========    =========
</TABLE>

SPECIAL ITEMS IMPACT BY GEOGRAPHIC AREA

<TABLE>
<CAPTION>
                                             2000         1999         1998
                                          ---------    ---------    ---------
<S>                                       <C>          <C>          <C>
United States                             $   1,200    $  (1,100)   $  15,250
Europe and Canada                            (1,305)      (4,315)      26,800
South America                                  (317)     137,729           --
                                          ---------    ---------    ---------
   Total                                  $    (422)   $ 132,314    $  42,050
                                          =========    =========    =========
</TABLE>

                                      (35)
<PAGE>   36
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)

9.  TAXES ON EARNINGS

<TABLE>
<CAPTION>
                                                                       2000         1999         1998
                                                                   ---------    ---------    ---------
PROVISION FOR INCOME TAXES
<S>                                                                <C>          <C>          <C>
Currently payable
   Federal                                                         $      --    $   2,051    $  16,340
   State                                                               1,097          714        4,285
   Non-U.S                                                             1,141        4,173        2,454
                                                                   ---------    ---------    ---------
                                                                       2,238        6,938       23,079
                                                                   ---------    ---------    ---------
Deferred
   Federal                                                           (16,563)       7,504       (5,238)
   State                                                                 800        1,263       (2,835)
   Non-U.S                                                            (1,021)          95          372
                                                                   ---------    ---------    ---------
                                                                     (16,784)       8,862       (7,701)
                                                                   ---------    ---------    ---------

Total income taxes                                                   (14,546)      15,800       15,378
Less income taxes related to discontinued operations                    (905)      (3,972)       2,813
                                                                   ---------    ---------    ---------
     Total provision for income taxes from continuing operations   $ (13,641)   $  19,772    $  12,565
                                                                   =========    =========    =========

Earnings (loss) before income taxes from continuing operations
   United States                                                   $ (39,936)   $  18,674    $  33,616
   Non-U.S                                                            (2,344)    (118,725)     (31,458)
                                                                   ---------    ---------    ---------
     Total                                                         $ (42,280)   $(100,051)   $   2,158
                                                                   =========    =========    =========

Earnings (loss) before income taxes from discontinued operations
   United States                                                   $  (2,328)   $ (10,480)   $   7,421
                                                                   =========    =========    =========
</TABLE>


<TABLE>
<CAPTION>
EFFECTIVE INCOME TAX RATES ON CONTINUING OPERATIONS           2000     1999     1998
                                                              ----     ----     ----
<S>                                                          <C>      <C>       <C>
Federal statutory income tax rate                            35.0%    35.0%     35.0%
State income taxes (net of federal benefit)                  (1.0%)    2.4%      1.6%
Tax effect resulting from other international activities     (0.3%)   (2.0%)     4.6%
Tax loss carryforwards                                       (1.9%)   (0.8%)    (0.9%)
Other                                                        (0.8%)    1.5%      1.8%
                                                             ----     ----     -----
Effective income tax rate, excluding special items           31.0%    36.1%     42.1%
                                                             ====     ====     =====
Effective income tax rate, including special items           32.3%   (19.8%)   582.3%
                                                             ====     ====     =====
</TABLE>


<TABLE>
<CAPTION>
DEFERRED TAX LIABILITIES AND ASSETS                                             2000        1999
                                                                              --------    --------
<S>                                                                          <C>         <C>
Depreciation                                                                 $(28,494)   $(30,239)
Inventory                                                                      (3,762)     (3,919)
Intangibles                                                                    (3,295)     (2,997)
Capitalized interest                                                           (1,673)     (1,183)
Other                                                                          (7,418)     (1,648)
                                                                             --------    --------
   Deferred tax liabilities                                                   (44,642)    (39,986)
                                                                             --------    --------
Benefits and compensation                                                      19,211      20,788
Restructuring accruals                                                            747       4,000
Tax loss and credit carryforwards                                              71,719      46,801
Other                                                                           3,902       2,281
                                                                             --------    --------
   Deferred tax assets                                                         95,579      73,870
Valuation allowance                                                           (37,818)    (36,149)
                                                                             --------    --------
   Deferred tax assets, net                                                    57,761      37,721
                                                                             --------    --------
   Net deferred tax asset (liability)                                        $ 13,119    $ (2,265)
                                                                             ========    ========
</TABLE>

                                      (36)
<PAGE>   37
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)

     The valuation allowance for net deferred tax assets increased by $1.7
million in fiscal 2000. This change results primarily from an increase in the
valuation allowance related to state net operating loss carryforwards of
approximately $4.5 million and a decrease in the valuation allowance related to
federal capital loss carryforwards of approximately $2.8 million. This decrease
was due to a change in estimate of the taxable loss from our fiscal 1999
Swift-Armour divestiture and to the gain from our fiscal 2000 mushroom business
divestiture.

     We have available federal net operating loss carryforwards of approximately
$77 million in the United States of which $24 million, $2 million and $51
million will expire in 2018, 2019 and 2020, respectively. Included in the July
30, 2000 Consolidated Balance Sheet is a deferred tax asset of $16.3 million.
This asset relates to our federal net operating loss carryforwards. Realization
of this deferred tax asset would require approximately $50 million of future
taxable income in the U.S. It is unlikely that on-going operations will be
sufficient to generate such future taxable income. However, as discussed in Note
3, "Going Concern Matters", management is currently in a strategic review
process which will likely result in the sale of the Company in whole or in
parts. Management believes such a sale is probable and would result in a taxable
gain in excess of $50 million. Because such a transaction is not assured, the
amount of the deferred tax asset considered realizable could be reduced in the
near term if the anticipated transaction results in a lower gain or does not
occur.

     We also have available in the United States net operating loss
carryforwards in various states that expire between 2003 and 2020 and a federal
capital loss carryforward of approximately $87 million that expires 2004. The
capital loss was primarily generated from the divestiture of our Swift-Armour
Argentine beef business in fiscal 1999. A valuation allowance has been provided
for the full value of the deferred tax assets related to the state net operating
loss carryforwards and the capital loss carryforward.

     In the United Kingdom we have available a net operating loss carryforward
of approximately $23 million which may be carried forward indefinitely. A
partial valuation allowance of $0.6 million is recorded as a reduction to our
estimate of the deferred tax assets relating to the United Kingdom tax loss
carryforwards due to the uncertainty of the ultimate realization of future
benefits of such assets.

     During fiscal 1999, $15 million of non-U.S. earnings from the United
Kingdom and Canada were repatriated. We recorded a special provision for taxes
in fiscal 1999 of $7 million on the repatriation of the foreign dividends. In
general, it is our practice and intention to reinvest the earnings of our
non-U.S. subsidiaries in those operations. Applicable federal taxes are provided
only on amounts planned to be remitted. Accumulated net earnings of non-U.S.
subsidiaries, that would be subject to U.S. taxes at the statutory rate if
remitted, for which no federal taxes have been provided as of July 30, 2000 were
approximately $8 million.


10. PENSION PLANS AND RETIREMENT BENEFITS

     PENSION PLANS. Substantially all U.S. employees participate in Vlasic
sponsored noncontributory defined benefit pension plans and our United Kingdom
businesses also sponsor a noncontributory defined benefit plan for substantially
all U.K. employees. Prior to the spin-off, the participants in the plans were
included in plans with similar benefits sponsored by Campbell. Under an
agreement with Campbell, we assumed pension liabilities related to the active
Vlasic participants, but not to pre-spin retirees from the Vlasic businesses.
Campbell will transfer certain trust assets from its funded plans to our plans
based upon actuarial determinations consistent with regulatory requirements.
Approximately 80% of the U.S. assets were transferred in September 2000 with the
balance to be transferred prior to December 31, 2000. The transfer of assets for
the U.K. plans occurred within fiscal 2000. Benefits are generally based on
years of service and employees' compensation during the last years of
employment. All plans are funded and contributions are made in amounts not less
than minimum statutory funding requirements nor more than the maximum amount
that can be deducted for U.S. income tax purposes.

     Pension benefits for operations outside the United States and the United
Kingdom are provided principally through government plans. Pension expense for
operations outside the United States and the United Kingdom was $0 in fiscal
2000, $3,274 in fiscal 1999 and $4,007 in fiscal 1998.

     RETIREE BENEFITS. We provide postretirement benefits, including health care
and life insurance, to most U.S. employees retiring after the spin-off and their
dependents. Employees who have 10 years of service after the age of 45 and
retire are eligible to participate in the postretirement benefit plans.
Obligations related to non-U.S. postretirement benefit plans are not significant
since these benefits are generally provided through government-sponsored plans.

                                      (37)
<PAGE>   38
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                                 Pension Benefits                Other Postretirement Benefits
                                                           ------------------------------       ------------------------------

                                                              2000               1999              2000               1999
                                                           -----------        -----------       -----------        -----------
<S>                                                        <C>                <C>               <C>                <C>
CHANGE IN BENEFIT OBLIGATION
   Net benefit obligation at beginning of year             $    84,499        $    85,049       $    23,896        $    24,786
   Service cost                                                  4,807              5,774             2,606              2,888
   Interest cost                                                 6,486              5,981             1,907              1,619
   Actuarial (gain) loss                                          (500)           (11,742)            5,132             (5,068)
   Curtailments                                                 (3,847)                --            (2,801)                --
   Gross benefits paid                                          (2,436)              (561)             (621)              (329)
   Foreign exchange rate changes                                  (772)                (2)               --                 --
                                                           -----------        -----------       -----------        -----------
       Net benefit obligation at end of year                    88,237             84,499            30,119             23,896
                                                           -----------        -----------       -----------        -----------
CHANGE IN PLAN ASSETS
   Fair value of plan assets at beginning of year               83,753             80,546
   Actual return on plan assets                                  8,660              8,111
   Employer contributions                                          719                829               621                329
   Change in estimated assets to be
     transferred by Campbell                                     4,213             (5,139)
   Gross benefits paid                                          (2,433)              (561)            (621)               (329)
   Foreign exchange rate changes                                  (995)               (33)               --                 --
                                                           -----------        -----------       -----------        -----------
       Fair value of plan assets at end of year                 93,917             83,753                --                 --
                                                           -----------        -----------       -----------        -----------
   Funded status at end of year                                  5,680               (746)          (30,119)           (23,896)
   Unrecognized net actuarial (gain) loss                       (9,555)            (4,159)           (5,953)           (12,025)
   Unrecognized prior service cost                               1,778              2,572
   Unrecognized net transition asset                               (48)              (236)
                                                           -----------        -----------       -----------        -----------
       Net amount recognized at end of year                $    (2,145)       $    (2,569)      $   (36,072)       $   (35,921)
                                                           ===========        ===========       ===========        ===========
   Amounts recognized in the Consolidated
     Balance Sheets:
       Prepaid benefit cost                                $        --        $       461                --                 --
       Accrued benefit cost                                     (2,145)            (3,030)      $   (36,072)       $   (35,921)
                                                           -----------        -----------       -----------        -----------
         Net amount recognized at end of year              $    (2,145)       $    (2,569)      $   (36,072)       $   (35,921)
                                                           ===========        ===========       ===========        ===========
WEIGHTED AVERAGE ASSUMPTIONS AS OF AUGUST 1
   Discount rate                                                  7.50%              7.50%             7.75%              7.75%
   Expected return on plan assets                                 9.50%              8.75%
   Rate of compensation increase                                  4.15%              4.15%             4.25%              4.25%
   Healthcare cost trend on covered charges                                                            5.00%              5.00%
</TABLE>


     In accordance with the agreement with Campbell, the pension trust assets to
be transferred to us are equal to the projected benefit obligation at March 30,
1998, the date of the spin-off, plus or minus investment performance from March
30, 1998 to the actual date of transfer. Due to changes in estimates of the
projected benefit obligation at the date of the spin-off as a result of the
finalization in August 2000, the estimated assets to be transferred have
changed. This change in estimate is not indicative of any change in the value of
the underlying assets or the investment performance of such assets.

     The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for pension plans with accumulated benefit obligations in
excess of plan assets were $3,989, $1,851, and $0, respectively as of July 30,
2000 and $3,506, $899, and $0, respectively as of August 1, 1999.

                                      (38)
<PAGE>   39
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


<TABLE>
<CAPTION>
                                                   Pension Benefits          Other Postretirement Benefits
                                                   ----------------          -----------------------------
                                              2000      1999       1998       2000       1999        1998
                                              ----      ----       ----       ----       ----        ----
<S>                                        <C>        <C>        <C>        <C>        <C>        <C>
COMPONENTS OF
NET PERIODIC BENEFIT COST
   Service cost                            $ 4,807    $ 5,774    $ 1,582    $ 2,606    $ 2,888    $   727
   Interest cost                             6,486      5,981      1,827      1,906      1,619        481
   Expected return on assets                (7,556)    (6,867)    (1,952)
   Amortization of:
     Actuarial (gain) loss                     (50)       330        181       (939)      (751)      (245)
     Prior service cost                        185        212         71
     Transition obligation                    (188)      (188)       (63)
                                           -------    -------    -------    -------    -------    -------
                                             3,684      5,242      1,646      3,573      3,756        963
   Curtailment gain                         (3,260)        --         --     (2,801)        --         --
                                           -------    -------    -------    -------    -------    -------
       Total net periodic benefit cost     $   424    $ 5,242    $ 1,646    $   772    $ 3,756    $   963
                                           =======    =======    =======    =======    =======    =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                        Other
                                                                                   Postretirement
                                                                                      Benefits
                                                                                    ------------
                                                                                        2000
                                                                                    ------------
<S>                                                                                <C>
SENSITIVITY OF RETIREE WELFARE RESULTS
  Effect of a one percentage point increase in assumed
  health care cost trend
    - on total service and interest cost components                                   $    768
    - on postretirement benefit obligation                                            $  4,069

   Effect of a one percentage point decrease in assumed
   health care cost trend
     - on total service and interest cost components                                  $   (628)
     - on postretirement benefit obligation                                           $ (3,403)
</TABLE>

     In conjunction with the sale of our fresh mushroom business, we recognized
a curtailment gain in fiscal 2000. We retained pre-sale pension and other
postretirement projected benefit obligations for the vested mushroom employees
in the amount of $14,100 and $8,100, respectively, which are included in the
"Net benefit obligations at end of year" above. Excluding the curtailment gain,
the net periodic pension benefit cost attributable to the divested mushroom
employees amounted to approximately $250 in fiscal 2000, $973 in fiscal 1999 and
$247 in fiscal 1998. Excluding the curtailment gain, the net periodic other
postretirement benefit cost attributable to the divested mushroom employees
amounted to approximately $777 in fiscal 2000, $1,131 in fiscal 1999 and $291 in
fiscal 1998.

     PRIOR TO THE SPIN-OFF. Net periodic U.S. pension expense allocated to
Vlasic was $2,396 for the first eight months of fiscal 1998 prior to the
spin-off (resulting in total U.S. pension expense of $3,506 in fiscal year
1998). Postretirement benefit expense allocated to Vlasic was $2,493 for the
first eight months of fiscal 1998 prior to the spin-off (resulting in total
expense of $3,456 in fiscal 1998).

     SAVINGS PLANS. Vlasic U.S. employees participate in Vlasic's savings plans
and formerly in Campbell's savings plans. After one year of continuous service,
Vlasic matches 50% of employee contributions up to five percent of compensation.
In fiscal 1998 Campbell increased its contribution to 60% because earnings goals
were achieved. In fiscal 2000 and 1999 the matching contribution was 50%.
Employer contributions relating to these savings plans were $1,208 in fiscal
2000, $1,316 in fiscal 1999 and $1,834 in fiscal 1998.

                                      (39)
<PAGE>   40
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


11.  STOCK OPTIONS AND RESTRICTED STOCK

     In connection with the spin-off from Campbell, we adopted the Vlasic Foods
Long-Term Incentive Plan (the Plan). Employees who held vested Campbell stock
options as of the spin-off retained Campbell options to purchase Campbell's
capital stock in accordance with the grants' original terms and conditions as
long as they remain Vlasic employees, except that the number of options and
exercise price were adjusted to preserve the inherent economic value of the
options taking into account the spin-off. Stock options held by employees which
were not vested were converted into options to purchase Vlasic stock. For each
Campbell option that was converted to a Vlasic option, the number of options and
exercise price were converted based upon a formula that preserved the inherent
economic value and vesting and term provisions of original Campbell options.

     Under the Plan restricted stock and stock options may be granted to certain
officers and key employees. The Plan authorized the issuance of up to 5.8
million shares of Vlasic common stock pursuant to the exercise of nonqualified
stock options. Options are granted at a price not less than the fair value of
the shares on the date of grant and expire not later than ten years after the
date of grant. Options vest over a three-year period. Our officers and key
employees participate in this plan.

     We account for the stock option grants and restricted stock awards in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations. Accordingly, no
compensation expense has been recognized in the Statements of Operations because
options are granted at a price not less than the fair value of the shares on the
date of the grant. In fiscal 1997, we adopted the disclosure provisions of SFAS
No.123, "Accounting for Stock-Based Compensation."

     Had the compensation cost for the stock option plan been determined based
on the fair value at the grant dates for awards under the plan, consistent with
the alternative method set forth under SFAS 123, our net loss would have been
changed to the pro forma (for the purpose of applying SFAS 123) amounts set
forth below:

<TABLE>
<CAPTION>
                                                                                 2000              1999               1998
                                                                              -----------       -----------        -----------
<S>                                                                         <C>               <C>                <C>
Reported net loss                                                           $     (30,062)    $    (126,331)     $      (6,399)
Pro forma (for the purpose of applying SFAS 123) net loss                   $     (32,988)    $    (130,270)     $      (8,843)
Reported loss per share                                                     $      (0.66)     $       (2.78)     $      (0.14)
Pro forma (for the purpose of applying SFAS 123) loss per share             $      (0.73)     $       (2.87)     $      (0.19)
</TABLE>

     The fair value of each option grant was estimated on the date of the grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in fiscal 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                                 2000              1999               1998
                                                                              -----------       -----------        -----------
<S>                                                                           <C>               <C>                <C>
Risk-free interest rate                                                             4.9%              4.9%              5.6%
Expected life of option                                                         6 years           6 years           6 years
Expected volatility of Vlasic stock                                                71.6%             55.0%             27.0%
Expected dividend yield on Vlasic stock                                               0%                0%                0%
</TABLE>


     The weighted-average fair value of options granted during fiscal 2000, 1999
and 1998 is as follows:

<TABLE>
<CAPTION>
                                                                                 2000              1999               1998
                                                                              -----------       -----------        -----------
<S>                                                                           <C>              <C>                 <C>
Fair value of each option granted                                             $      4.88      $       9.04               8.72
Number of options granted                                                             780               113              1,665
                                                                              -----------       -----------        -----------
Total fair value of all options granted                                       $     3,806      $      1,022             14,519
                                                                              ===========       ===========        ===========
</TABLE>


     In accordance with SFAS 123, the weighted-average fair value of stock
options granted is required to be based on a theoretical statistical model in
accordance with assumptions noted above. In actuality, because employee stock
options do not trade on a secondary exchange, employees receive no benefit and
derive no value from holding stock options under these plans without an increase
in the market price of our stock.

                                      (40)
<PAGE>   41
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


     The following table summarizes the stock option transactions under the
Vlasic incentive plan:

<TABLE>
<CAPTION>

                                                                                                                    Weighted
                                                                                                                     Average
                                                                                                                    Exercise
                                                                                                  Shares              Price
                                                                                                -----------        -----------
<S>                                                                                             <C>                <C>
Converted from Campbell as of the spin-off date, March 30, 1998                                       2,287        $    15.02
   Granted                                                                                            1,665             22.66
   Exercised                                                                                            (33)            12.87
                                                                                                -----------        ----------
Outstanding, August 2, 1998                                                                           3,919             18.29
                                                                                                -----------        ----------
   Granted                                                                                              113             16.29
   Exercised                                                                                            (14)            13.63
   Forfeitures                                                                                         (408)            21.06
                                                                                                -----------        ----------
Outstanding, August 1, 1999                                                                           3,610             17.93
                                                                                                -----------        ----------
   Granted                                                                                              780              7.50
   Forfeitures                                                                                         (771)            16.06
                                                                                                -----------        ----------
Outstanding, July 30, 2000                                                                            3,619        $    16.08
                                                                                                ===========        ==========
</TABLE>

     The following table summarizes information for options currently
outstanding at July 30, 2000:

<TABLE>
                                                       Options Outstanding                            Exercisable Options
                                             ---------------------------------------              --------------------------
                                                            Weighted           Weighted                             Weighted
                                                             Average            Average                              Average
                                                            Remaining          Exercise                             Exercise
Range of Prices                           Shares              Life               Price            Shares              Price
                                        -----------        -----------       -----------        -----------       -----------
<S>                                     <C>                <C>               <C>                <C>               <C>
$   7.50                                        608              9 yrs       $      7.50                 --        $       --
$   9.71  - $ 13.70                           1,265              6 yrs             12.97              1,223             13.02
$  14.28  - $ 19.87                             641              7 yrs             19.00                621             18.93
$  19.91  - $ 22.94                           1,105              8 yrs             22.66                492             22.34
                                        -----------        -----------        ----------        -----------        ----------
$   7.50  - $ 22.94                           3,619              7 yrs        $    16.08              2,336        $    16.56
                                        ===========        ===========        ==========        ===========        ==========
</TABLE>

     RESTRICTED STOCK. In connection with the separation from Campbell,
restricted stock on which the earnings-based restriction period ended in fiscal
1998 was issued in the form of Campbell stock. Restricted stock for Vlasic's
employees with an earnings-based restriction period ending in fiscal 1999 were
canceled.


12.  TRANSACTIONS WITH CAMPBELL PRIOR TO THE SPIN-OFF

     Certain Vlasic businesses participated in Campbell's centralized cash
management system to finance operations. Cash deposits from Vlasic were
transferred to Campbell on a daily basis and Campbell funded Vlasic disbursement
bank accounts as required. Unpaid balances of checks were included in accounts
payable. No interest was charged on transactions with Campbell. Campbell
provided certain selling, general and administrative services to Vlasic
including finance, legal, information technology, research and development,
benefits, facilities and shared sales and distribution support. These expenses
were allocated to Vlasic based on net sales, utilization or other methods which
management believes to be reasonable. These allocations were $33,601 in the
first eight months of fiscal 1998 prior to the spin-off, and are included in the
appropriate lines of the Consolidated Statements of Operations. The expenses
allocated to Vlasic for these services are not necessarily indicative of the
expenses that would have been incurred if Vlasic had been a separate,
independent entity and had managed these functions. Subsequent to the spin-off,
Vlasic manages these functions. Vlasic was included in the combined federal and
certain state income tax returns of Campbell prior to spin-off. Income tax
expense was calculated as if Vlasic had filed separate income tax returns for
the entire fiscal year.

                                      (41)
<PAGE>   42
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


13.  TRANSACTIONS WITH CAMPBELL SUBSEQUENT TO THE SPIN-OFF

     We sold to Campbell frozen foodservice finished products from our frozen
foods segment and beef and mushrooms used as ingredients in Campbell's finished
products from our divested Swift-Armour Argentine beef business and our divested
Vlasic Farms mushroom business. We also purchased from Campbell retail frozen
food finished products in Canada, and in fiscal 1998, purchased Open Pit
barbeque sauce from Campbell. These transactions were at negotiated prices.
Included in the Consolidated Statements of Operations are sales to Campbell from
our frozen foods segment and our divested businesses segment of $72,014 in
fiscal 2000, $115,752 in fiscal 1999 and $122,722 in fiscal 1998. We also sold
mushrooms to Campbell of $17,251 in fiscal 2000, $32,331 in fiscal 1999 and
$32,042 in fiscal 1998, which are included in net sales of the discontinued
operations (see Note 5). Included in Costs of product sold are purchases from
Campbell of $10,107 in fiscal 2000, $11,585 in fiscal 1999, and $24,696 in
fiscal 1998.

     At the time of the spin-off, we entered into a multi-year agreement with
Campbell for the continued supply of beef and mushrooms, and the production of
frozen foodservice products in the United States by us as well as a one-year
agreement for the production of frozen retail products in Canada by Campbell. As
a result of the divestiture of our Swift-Armour Argentine beef business, the
beef supply contract was terminated in July 1999. As a result of the divestiture
of our fresh mushroom business, the mushroom supply contract was terminated in
January 2000. Campbell continues to produce frozen retail products for our
Canadian business. The frozen foodservice contract packing agreement with
Campbell has been extended through March 30, 2001. By amendment, either party
may terminate the agreement effective March 30, 2001 with notice given no later
than December 1, 2000. However, we received notice on September 29, 2000 that if
the contract is extended, it would not be on the terms of the current contract.
If the contract is not extended and alternative sources of sales volume are not
secured, it is likely that the loss of production volume would result in
significant layoffs and higher manufacturing costs. In connection with the
spin-off, we entered into an agreement with Campbell for transitional services
such as administrative and support services that terminated April 1999. The
transitional service agreement provided that we pay a fee intended to
approximate Campbell's cost to provide such services. These fees amounted to
$8,943 in fiscal 1999 and $9,078 in fiscal 1998 for the four months following
the spin-off.


14.  OTHER EXPENSE (INCOME)

<TABLE>
<CAPTION>
                                                                                 2000              1999               1998
                                                                              -----------       -----------        -----------
<S>                                                                           <C>               <C>                <C>
Amortization of intangible and other assets                                   $     2,298       $     2,833        $     2,738
Campbell stock related incentive programs                                              --                --              3,207
Gains on asset sales                                                                 (508)               --             (3,957)
Gains on fire insurance settlement                                                     --                --             (2,814)
Expenses in excess of insurance proceeds on boiler explosion                        1,138                --                 --
Transition services fee related to mushroom divestiture                              (840)               --                 --
Other, net                                                                           (538)           (1,397)            (2,093)
                                                                              -----------       -----------        -----------
   Total                                                                      $     1,550       $     1,436        $    (2,919)
                                                                              ===========       ===========        ===========
</TABLE>

     Expenses of $2,939 were incurred associated with a boiler explosion at one
of our frozen foods facilities in fiscal 2000. As of July 30, 2000, we received
insurance proceeds of $1,801. We are continuing to pursue further insurance
recovery although no amounts can be determined at this time.


15. INTEREST EXPENSE

<TABLE>
<CAPTION>
                                                                                 2000              1999               1998
                                                                              -----------       -----------        -----------
<S>                                                                           <C>               <C>                <C>
Interest expense                                                              $    51,689       $    45,245        $    13,894
Less: Interest capitalized                                                            381               724                448
                                                                              -----------       -----------        -----------
   Total                                                                      $    51,308       $    44,521        $    13,446
                                                                              ===========       ===========        ===========
</TABLE>


16.  CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

     In the second quarter of fiscal 1998, we adopted Emerging Issues Task Force
(EITF) Issue 97-13, "Accounting for Costs Incurred in Connection with a
Consulting Contract that Combines Business Process Reengineering and Information
Technology Transformation." The EITF provided that costs of business process
reengineering activities that are part of a systems development project are to
be expensed as incurred. We previously capitalized certain consulting costs
related to business process reengineering. The cumulative effect of this change
in accounting principle was a $600 charge (net of $370 tax), or $(0.01) per
diluted share for the fiscal year ended August 2, 1998.

                                      (42)
<PAGE>   43
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


17.  RESTRICTED CASH

<TABLE>
<CAPTION>
                                                                                                   2000               1999
                                                                                                -----------      -----------
<S>                                                                                             <C>              <C>
Funds held on deposit related to mushroom divestiture                                           $     7,272      $        --
Funds held on deposit related to workers' compensation letter of credit                               2,039               --
Proceeds from asset sale                                                                                562               --
                                                                                                -----------      -----------
   Total                                                                                        $     9,873      $        --
                                                                                                ===========      ===========
</TABLE>

     In connection with the divestiture of Vlasic Farms, Inc. (see Note 5),
funds of $7,272 including interest to date of $172 were held on deposit for
anticipated purchase price adjustments, severance payments and certain other
indemnified costs. In July 2000, upon determination of the final purchase price,
we paid to the buyer $4,751 from our general cash account. A like amount was
released to us subsequent to year-end from funds held on deposit. The remaining
deposit amount held in restricted cash will be used for payment of severance and
other indemnified costs.

     In order to satisfy certain workers' compensation self-insurance security
deposit requirements, we have an irrevocable letter of credit for which we were
required to collaterize in the amount of $2,000. Interest earned to date
amounted to $39.

     Additionally, in conjunction with an asset sale in July 2000, we received
proceeds of $562 which in accordance with the terms and conditions of our senior
credit facility are required to be used to pay down amounts under the senior
credit facility. As such, this amount was held in restricted cash at July 30,
2000 and subsequent to year-end, in August 2000, was used to repay a portion of
the indebtedness outstanding under our senior credit facility.


18.  ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                                                                                   2000               1999
                                                                                                -----------        -----------
<S>                                                                                             <C>                <C>
Customers                                                                                       $    57,395        $    78,784
Allowances for cash discounts and bad debts                                                          (4,669)            (3,339)
                                                                                                -----------        -----------
                                                                                                     52,726             75,445
Other                                                                                                 3,110              4,301
                                                                                                -----------        -----------
   Total                                                                                        $    55,836        $    79,746
                                                                                                ===========        ===========
</TABLE>

19.  INVENTORIES

<TABLE>
<CAPTION>
                                                                                                   2000               1999
                                                                                                -----------        -----------
<S>                                                                                             <C>                <C>
Raw materials, containers and supplies                                                          $    31,148        $    36,427
Finished product                                                                                    108,560            118,848
                                                                                                -----------        -----------
                                                                                                    139,708            155,275
Less: Adjustment to LIFO basis                                                                       (9,735)           (13,342)
                                                                                                -----------        -----------
   Total                                                                                        $   129,973        $   141,933
                                                                                                ===========        ===========
</TABLE>


     Inventories for which the last in, first out (LIFO) method of determining
cost is used represented approximately 73% of inventories at July 30, 2000 and
75%of inventories at August 1,1999.

     Liquidation of LIFO inventory quantities increased net earnings by $913 in
fiscal 2000, $412 in fiscal 1999 and $196 in fiscal 1998.


20.  OTHER CURRENT ASSETS

<TABLE>
<CAPTION>
                                                                                                   2000               1999
                                                                                                -----------        -----------
<S>                                                                                             <C>               <C>
Prepaid expenses                                                                                $     2,982       $      5,082
Deferred taxes                                                                                           97             11,164
                                                                                                -----------        -----------
   Total                                                                                        $     3,079       $     16,246
                                                                                                ===========        ===========
</TABLE>

                                      (43)
<PAGE>   44
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


21.  PLANT ASSETS

<TABLE>
<CAPTION>
                                                                                                   2000               1999
                                                                                                -----------        -----------
<S>                                                                                             <C>                <C>
Land                                                                                            $     4,606        $     4,986
Building                                                                                            143,748            142,730
Machinery and equipment                                                                             349,539            326,640
Projects in progress                                                                                 16,621             31,877
                                                                                                -----------        -----------
                                                                                                    514,514            506,233
Accumulated depreciation                                                                           (248,167)          (224,556)
                                                                                                -----------        -----------
   Total                                                                                        $   266,347        $   281,677
                                                                                                ===========        ===========
</TABLE>

     Depreciation provided in costs and expenses was $29,092 in fiscal 2000,
$36,817 in fiscal 1999, and $37,382 in fiscal 1998. Fiscal 2001 capital
expenditures are expected to approximate $20 million.

     We own all significant operating facilities and equipment. We lease certain
offices, distribution facilities and equipment under operating leases expiring
on various dates through 2008. Total rental expense charged to operations was
$4,562 in fiscal 2000, $5,652 in fiscal 1999 and $6,658 in fiscal 1998. The
minimum future rental commitments under non-cancelable leases payable over the
remaining lives of these leases approximate $2,200 in years 2001 through 2005
and $800 in years 2006 through 2008. The single largest operating lease is for
our corporate offices in Cherry Hill, New Jersey. Under the terms of this lease
agreement, we may be required to pay additional costs if we terminate the lease
early. We estimate these costs to be approximately $6,000.


22.  OTHER ASSETS, PRINCIPALLY INTANGIBLE ASSETS

<TABLE>
<CAPTION>
                                                                                                   2000               1999
                                                                                                -----------        -----------
<S>                                                                                             <C>                <C>
Purchase price in excess of net assets of businesses acquired (goodwill)                        $    39,572        $    41,117
Trademarks                                                                                           13,875             13,875
Other intangibles                                                                                    36,920             36,920
                                                                                                -----------        -----------
                                                                                                     90,367             91,912
Accumulated amortization                                                                            (25,350)           (23,249)
                                                                                                -----------        -----------
   Total intangible assets                                                                           65,017             68,663
                                                                                                -----------        -----------
Deferred financing costs, net                                                                        11,502             10,458
Prepaid pension benefit costs                                                                            --                461
Other assets                                                                                            261                 --
                                                                                                -----------        -----------
   Total                                                                                        $    76,780        $    79,582
                                                                                                ===========        ===========
</TABLE>

     Deferred financing costs were incurred in connection with our senior
subordinated notes and our senior credit facility.


23.  PAYABLES TO SUPPLIERS AND OTHERS

<TABLE>
<CAPTION>
                                                                                                   2000               1999
                                                                                                -----------        -----------
<S>                                                                                             <C>                <C>
Trade payables                                                                                  $    50,476        $    84,022
Book overdrafts                                                                                         769             11,185
                                                                                                -----------        -----------
   Total                                                                                        $    51,245        $    95,207
                                                                                                ===========        ===========
</TABLE>

     Book overdrafts represent outstanding checks in excess of funds on deposit.

                                      (44)
<PAGE>   45
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


24.  ACCRUED LIABILITIES

<TABLE>
<CAPTION>
                                                                                                   2000               1999
                                                                                                -----------        -----------
<S>                                                                                             <C>                <C>
Employee compensation and benefits                                                              $    11,975        $     2,552
Accrued pension benefit costs                                                                         2,145              3,030
Trade marketing programs                                                                             16,922              8,947
Consumer coupons                                                                                      2,162              1,105
Restructuring reserves                                                                                  487              1,000
Interest payable                                                                                      5,731              4,364
Other                                                                                                21,001             28,282
                                                                                                -----------        -----------
   Total                                                                                        $    60,423        $    49,280
                                                                                                ===========        ===========
</TABLE>


     The increase in the fiscal 2000 accrual for employee compensation and
benefits is partially a result of amounts reclassified to current liabilities
from postemployment benefits in Other liabilities in the prior year.
Additionally, the accrual for employee compensation and benefits increased in
fiscal 2000 due to a higher provision for medical expenses, incentive program
accruals and the timing of ordinary payrolls.


25.  OTHER LIABILITIES

<TABLE>
<CAPTION>
                                                                                                    2000              1999
                                                                                                -----------        -----------
<S>                                                                                             <C>                <C>
Postretirement benefits                                                                         $    36,072        $    35,921
Deferred compensation                                                                                 6,213              6,459
Postemployment benefits                                                                               2,000              6,834
                                                                                                -----------        -----------
   Total                                                                                        $    44,285        $    49,214
                                                                                                ===========        ===========
</TABLE>

     The decrease in the accrual for postemployment benefits from fiscal 1999 is
a result of amounts reclassified to current liabilities relating to employee
compensation and benefit accruals in fiscal 2000.

     As part of the spin-off from Campbell Soup Company, a Special Severance
Protection Program covering all U.S. employees not covered by a collective
bargaining agreement with the exception of the Chief Executive Officer was
established. This program becomes effective upon a Change in Control as defined
in the Program. Generally, a Change in Control happens when any of the following
occurs: 1) the acquisition of 25% or more of the outstanding stock of Vlasic by
any person or entity, 2) the replacement or termination of 2/3 of the existing
Board, except under certain circumstances, 3) a merger, consolidation or share
exchange in which the current shareowners of Vlasic end up owning 80% or less of
the surviving corporation or 4) a complete liquidation or dissolution of Vlasic
or substantially all of its assets. The total cost if everyone eligible were
terminated within one year of a Change in Control would be approximately $27
million. In addition, we entered into three agreements with the Chief Executive
Officer: 1) a Severance Protection Agreement, 2) a Confidential Information and
Non-Competition Agreement and 3) an Incentive Compensation Agreement. In the
event of the Chief Executive Officer's termination and other events, the total
cost of these programs may range from $4.0 - $7.2 million. No liability has been
included in the financial statements for these programs.

                                      (45)
<PAGE>   46
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


26.  DEBT

<TABLE>
<CAPTION>
Notes Payable                                                                                      2000               1999
-------------                                                                                   -----------        -----------
<S>                                                                                             <C>                <C>
Senior credit facility, due 2003                                                                $   285,200        $        --
Capital lease obligations                                                                                87                146
                                                                                                -----------        -----------
   Total notes payable                                                                          $   285,287        $       146
                                                                                                ===========        ===========
</TABLE>

<TABLE>
<CAPTION>
Long-Term Debt                                                                                     2000               1999
--------------                                                                                  -----------        -----------
<S>                                                                                             <C>                <C>
Senior credit facility, due 2003                                                                $        --        $   271,900
$200 million 10 1/4% Senior subordinated notes due 2009,
   less unamortized discount                                                                        197,146            196,962
Capital lease obligations                                                                                84                192
                                                                                                -----------        -----------
   Total                                                                                        $   197,230        $   469,054
                                                                                                ===========        ===========
</TABLE>

     In fiscal 1999, we issued senior subordinated notes with an aggregate
principle amount of $200 million at an issue price of 98.472%. The notes mature
on July 1, 2009. Interest on the notes accrues at the rate of 10 1/4% per annum
and is payable semi-annually in arrears on January 1 and July 1 of each year,
commencing on January 1, 2000. On or after July 1, 2004, the notes may be
redeemed in whole or in part at a stated price.

     The senior credit facility consists of (1) a senior secured term loan in a
principal amount of $100 million and (2) senior secured revolving credit
commitments providing for revolving loans, initially in the aggregate amount of
up to $550 million. The senior credit facility has a final maturity date of
February 20, 2003. We are required to make mandatory prepayments on the senior
credit facility and permanently reduce revolving credit commitments under
certain circumstances, including upon certain asset sales, issuance of debt
securities, issuance of equity securities and receipt of casualty proceeds which
includes property insurance proceeds and condemnation awards. At our option,
subject to certain requirements, loans may be prepaid in whole or in part. As a
result of the application of the net proceeds from the sale of our senior
subordinated notes in fiscal 1999 and the divestiture of our Swift-Armour
Argentine beef business in fiscal 1999, the amount available to be borrowed
under the revolving credit commitments was permanently reduced to $279 million.
In conjunction with the sale of our Vlasic Farms mushroom business in the third
quarter fiscal 2000 (see Note 5), a portion of the net proceeds received was
used to reduce amounts outstanding under our revolving credit facility and the
revolving credit commitment was permanently reduced by $37.8 million. In
February 2000, we also made an additional voluntary reduction to the revolving
credit commitment of $16.2 million, as we did not anticipate requiring the
additional liquidity. As a result, the amount available to be borrowed under the
revolving credit commitments was permanently reduced to $225 million. The amount
available was reduced to $223.5 million subsequent to year-end. Under the
revolving credit facility, the maximum amount of borrowings available is equal
to the revolving credit commitment less any outstanding revolving loans.

     As discussed below, we have received a waiver under the senior credit
facility for violations of certain covenants which extend through February 28,
2001. A condition of the waiver received includes repayment in full of the
indebtedness outstanding under the senior credit facility by the expiration of
the waiver, or if there is a Standstill Period (as defined and discussed below),
the Standstill Period, or a penalty of $1.5 million will be incurred. Borrowings
under the senior credit facility bear interest at rates that, at our option,
vary with the prime rate, CD rate, LIBOR or money market rates plus applicable
credit margins. The average interest rate at July 30, 2000 was 10.04%. We are
obligated to pay a facility fee of 0.5% on the credit exposure of the banks.
Because we were not in compliance with certain financial covenants and because
mutually acceptable documentation of the June 28, 2000 waiver discussed below
was not complete, no further borrowings were available at July 30, 2000.
Documentation was completed August 10, 2000 and borrowings of up to $35 million
then became available. However, there were no needed borrowings at July 30, 2000
because we had sufficient cash balances.

     The senior credit facility and our senior subordinated debt described
above, contain a number of significant covenants that, among other things,
restrict our ability to engage in mergers and sales of assets, create liens on
our assets, incur additional indebtedness, make investments and acquisitions, or
engage in transactions with our subsidiaries and affiliates. In addition, under
the senior credit facility, we are required to comply with specified ratios and
tests, including maximum debt/EBITDA ratio, minimum fixed charge coverage ratio,
minimum sales and minimum net worth and a limitation on capital expenditures. A
breach of any of these covenants could result in a default under our debt
agreements.

     As a result of operating losses incurred during the second, third and
fourth quarters of fiscal 2000, we were not in compliance with the financial
ratio covenants under our senior credit facility; however, we requested and
received waivers

                                      (46)
<PAGE>   47
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)

covering the debt/EBITDA ratio and the fixed charge coverage ratio of the
facility through June 28, 2000. The waivers required the payment of a fee, an
increase in interest rates, delivery and compliance with a cash budget, and also
established a minimum EBITDA test. The waiver also required that the senior
credit facility be secured by liens on substantially all U.S. owned real
property on or before April 30, 2000. With the addition of the real property
liens, the senior credit facility is secured by liens on substantially all of
the Company assets.

     On June 28, 2000, the Company executed an amendment of the senior credit
facility and waiver through February 28, 2001. The waiver required the payment
of a fee, an increase in interest rates, delivery and compliance with a cash
budget and also established minimum sales, minimum net worth, and revised
capital expenditure limits. The amendment/waiver also provided for usage of up
to $35 million of borrowings under the facility for working capital purposes
subject to being in compliance with tests related to the cash budget. The
amendment/waiver provides for the funding of the $35 million availability to be
made 50% by the senior credit facility bank syndicate and 50% by participation
of certain descendants of Dr. John T. Dorrance (Dorrance Family Participants).
The Dorrance Family Participants will provide funding to the Company through
participation in the senior credit facility bank syndicate by providing $1 of
funding for each $1 supplied by the bank syndicate up to a maximum participation
of $17.5 million. The Dorrance Family Participants will receive a one-time fee
of $350,000, interest of 2% per annum over that otherwise payable under the
terms of the senior credit facility, and a fee equal to 5% of the total
outstanding shares multiplied by the excess of the closing price of Vlasic
common stock (on any date of their choice) over $1.94 per share. The loans
provided by the Dorrance Family Participants, together with all fees and accrued
interest, are payable February 28, 2001. The Company believes that the terms of
the transaction discussed above between the Company and the Dorrance Family
Participants, are similar to those that would have been obtained in like
transactions with others considering the nature of the transactions and the
availability of comparable funding.

     In addition, the amendment/waiver restricts payments of interest on the
senior subordinated notes after December 31, 2000, to funds generated other than
from operations, asset sales, or borrowings under the senior credit facility.
The amendment/waiver also includes provision for an additional fee of $1.5
million to the syndicate if the loans are not paid in full by the expiration of
the waiver, or if there is a Standstill Period (as defined and discussed below),
the Standstill Period.

     There are three key provisions of the waiver: (1) an escrow deposit to pay
the January 2, 2001 interest payment on the senior subordinated notes ("January
Interest Payment") must be established by December 28, 2000 and cannot be funded
with funds generated from operations or proceeds of asset sales, as is more
fully described below; (2) certain events, including the payment in full of our
indebtedness outstanding under the senior credit facility, must take place by
the expiration of the waiver, or if there is a Standstill Period (as defined and
discussed below), the Standstill Period, or else we will be required to pay an
additional fee in the amount of $1.5 million to the senior credit facility bank
syndicate; and (3) we must comply with certain monthly tests of minimum sales
and net worth and maximum capital expenditures. For the complete waiver and
related agreements, please see our Form 8-K filed on August 22, 2000.

     A breach of any of the terms and conditions of the waiver, or subsequent
breaches of conditions of the senior credit facility not covered by the waiver
could result in acceleration of our indebtedness, in which case the debt would
become immediately due and payable. Although no assurances can be given, we
expect that we will be in compliance throughout the period of the current waiver
with respect to the financial covenants regarding minimum sales, minimum net
worth and capital expenditure limits.

     We are exploring strategic opportunities for the Company, which is likely
to result in the sale of the Company in whole or in parts. The investment
banking firm of Lazard Freres & Co. has been hired to assist with this strategic
review and to solicit bids on our behalf. However, since this process is still
on-going, no assurances can be given that any proposed plans and actions can be
effectively executed.

     Our ability to operate as a going concern is dependent upon our ability to
avoid default under the senior credit facility. Either the process of selling
the Company in whole or in parts must be complete by the expiration of the
Standstill Period described below and all the loans under the senior credit
facility repaid or there must have been sufficient progress demonstrated in the
opinion of the senior credit facility bank group so that it extends the current
waiver through the expected completion date of the sale process. If the Company
is not sold by the expiration of the Standstill Period described below or the
waiver has not been extended, there will be an event of default and it is
probable that the Company could not raise the funds to pay off all of its debts.
However, the Company expects that so long as demonstrable progress satisfactory
to the senior credit facility bank group has been made towards the completion of
a sale or other transaction pursuant to the strategic review process, funding
will be available to make the January Interest Payment.

     Since the present waiver to the senior credit facility expires on February
28, 2001, the indebtedness under the senior credit facility has been classified
as a current liability in the Consolidated Balance Sheet at July 30, 2000.
Because the Company is not

                                      (47)
<PAGE>   48
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)

     in default of any covenants related to the senior subordinated notes that
could or would require early repayment of the notes, and does not expect to be
in default within the next twelve months, these notes are classified as
Long-term debt at July 30, 2000.

     If the senior subordinated notes interest payment due and payable on
January 2, 2001 ("January Interest Payment") is not paid within 30 days of the
due date, there would be an event of default which upon a vote of the holders of
at least 25% of the senior subordinated notes could cause them to be
accelerated.

     The terms of the waiver require the Company to deposit an amount in escrow
on or before December 28, 2000 for payment of the January Interest Payment
("Escrow"). The waiver as presently in force precludes the Escrow from being
funded with funds generated from operations or proceeds of asset sales. Failure
to timely fund the Escrow would cause the waiver to expire on December 28, 2000.
In such event, the waiver provides for a "Standstill Period" following
expiration of the waiver during which Events of Default would continue to be
waived. However, the principal of the bank loans could be accelerated and a
"payment blockage notice" could be delivered on the Company preventing it from
making the January Interest Payment. The Standstill Period would expire on the
later of (a) January 30, 2001 or (b) a forbearance date specified in any
agreement by the holders of more than 75% of the outstanding senior subordinated
notes to not accelerate the principal of such notes or enforce any other
remedies for the enforcement of collection of such notes. The expiration of the
Standstill Period would, however, be no later than February 28, 2001.


27.  FINANCIAL INSTRUMENTS

     We utilize derivative financial instruments to enhance our ability to
manage risks, including interest rate and foreign currency, which exist as part
of on-going business operations. We do not enter into contracts for speculative
purposes, nor are we a party to any leveraged derivative instrument. The use of
derivative financial instruments is monitored through regular communication with
senior management and the utilization of written guidelines.

     We rely primarily on bank and public bond market borrowings to meet our
funding requirements. We utilize interest rate swap agreements to reduce the
potential exposure to interest rate movements and to achieve a desired
proportion of variable versus fixed rate debt. The amounts paid or received on
hedges related to debt are recognized as an adjustment to interest expense. The
notional amount of the outstanding interest rate swap was $50 million at July
30, 2000.

     We utilize irrevocable standby letters of credit with one-year renewable
terms to satisfy workers' compensation self-insurance security deposit
requirements. The contract value of the outstanding standby letters of credit as
of July 30, 2000 was $6.1 million, which approximates fair value. As discussed
in Note 17, we were required to collaterize one of the standby letters of credit
in fiscal 2000 in the amount of $2,000 that is included in Restricted cash on
the Consolidated Balance Sheet at July 30, 2000. Subsequent to year-end in
August 2000, we were required to collaterize another standby letter of credit in
the amount of $2,900.

     We also utilize foreign currency exchange contracts, including swap and
forward contracts, to hedge existing foreign currency exposures. Foreign
exchange gains and losses on derivative financial instruments are recognized and
offset foreign exchange gains and losses on the underlying exposures. At July
30, 2000, we had no outstanding foreign exchange contracts in place.

     We are exposed to credit loss in the event of non-performance by the
counterparties in swap and forward contracts. We minimize our credit risk on
these transactions by only dealing with leading, credit-worthy financial
institutions having long-term credit ratings of "A" or better and, therefore, do
not anticipate non-performance.

     The carrying values of cash and cash equivalents, accounts receivable and
accounts payable approximate fair value. The estimated fair value of our senior
credit facility bank debt that is classified as Notes payable on the
Consolidated Balance Sheet at July 30, 2000, is approximately 88.5% of its
carrying value. The estimated fair value of our public bond debt that is
included in Long-term debt on the Consolidated Balance Sheet at July 30, 2000 is
approximately 45% of its carrying value.

                                      (48)
<PAGE>   49
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)

28.  STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 2000              1999               1998
                                                                              -----------       -----------        -----------
<S>                                                                           <C>               <C>                <C>
Interest paid                                                                 $    49,934       $    43,031        $    10,572
Interest received                                                             $     1,215       $       739        $       388
Income taxes paid                                                             $     1,588       $     6,938        $    20,266
</TABLE>


29. QUARTERLY DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          2000
                                                           -------------------------------------------------------------------
                                                              First             Second             Third             Fourth
                                                           -----------        -----------       -----------        -----------
<S>                                                        <C>                <C>               <C>                <C>
Net sales                                                  $   234,935        $   238,648       $   221,750        $   206,231
Cost of products sold                                      $   155,261        $   161,611       $   147,000        $   130,659

Earnings (loss) from continuing operations                 $     5,356        $   (16,214)      $    (6,842)       $   (10,939)
Discontinued operations                                         (1,247)            (5,452)            4,571                705
                                                           -----------        -----------       -----------        -----------
Net earnings (loss)                                        $     4,109        $   (21,666)      $    (2,271)       $   (10,234)
                                                           ===========        ===========       ===========        ===========
Earnings (loss) per share
   Continuing operations                                   $      0.12        $    (0.36)*      $     (0.15)*      $    (0.24)*
   Discontinued operations                                 $     (0.03)*      $    (0.12)*      $      0.10        $     0.02
                                                           -----------        -----------       -----------        ----------
   Net earnings (loss)                                     $      0.09        $    (0.48)*      $     (0.05)*      $    (0.22)*
                                                           ===========        ===========       ===========        ==========
Market price
   High                                                    $    8 1/16        $    7  3/4       $   4  1/2         $   2  1/4
   Low                                                     $    6 3/8         $    4  3/8       $   1 11/16        $   1  1/2
</TABLE>

<TABLE>
<CAPTION>
                                                                                          1999
                                                           -------------------------------------------------------------------
                                                              First             Second             Third             Fourth
                                                           -----------        -----------       -----------        -----------
<S>                                                        <C>                <C>               <C>                <C>
Net sales                                                  $   295,493        $   324,393       $   293,261        $   275,124
Cost of products sold                                      $   207,700        $   218,969       $   196,297        $   182,581

Earnings (loss) from continuing operations                 $     4,278        $    11,865       $  (137,507)       $     1,541
Discontinued operations                                            386                (60)           (2,621)            (4,213)
                                                           -----------        -----------       -----------        ----------
Net earnings (loss)                                        $     4,664        $    11,805       $  (140,128)       $    (2,672)
                                                           ===========        ===========       ===========        ==========

Earnings (loss) per share
   Continuing operations                                   $      0.09        $     0.26        $     (3.02)*      $     0.03
   Discontinued operations                                 $      0.01        $     0.00        $     (0.06)*      $    (0.09)*
                                                           -----------        -----------       -----------        ----------
   Net earnings (loss)                                     $      0.10        $     0.26        $     (3.08)*      $    (0.06)*
                                                           ===========        ===========       ===========        ==========

Market price
   High                                                    $  19 15/16        $ 23 13/16        $  21              $  9 1/4
   Low                                                     $  14  3/16        $ 18  1/2         $   7 15/16        $  6 15/16
</TABLE>

* Excludes potentially dilutive shares as the result would be antidilutive.

                                      (49)
<PAGE>   50
NOTES TO CONSOLIDATED FINANCIAL                [VLASIC FOODS INTERNATIONAL LOGO]
STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
(in thousands, except per share amounts)


     Net earnings (loss) for fiscal 2000 included special items resulting in a
net benefit of $422 pre-tax, or $0.02 per share. The impact to each quarter was
as follows:

     -    the second quarter of fiscal 2000 included net special charges of $345
          pre-tax.
     -    the fourth quarter of fiscal 2000 included a net special benefit of
          $767 pre-tax.

     In addition to these special items, the second quarter fiscal 2000 results
were impacted by charges from changes in estimates of trade marketing and
customer deductions of approximately $14,500 pre-tax, or $0.20 per share, and in
the fourth quarter of fiscal 2000 as part of the normal year-end closing and
accounting analysis process, year-end adjustments were recorded that in the
aggregate increased earnings before taxes by $320.

     Net earnings (loss) for fiscal 1999 included the impact of special items
totaling $132,314 pre-tax ($140,529 after-tax), or $(3.09) per share. The impact
to each quarter was as follows:

     -    the second quarter of fiscal 1999 included a special benefit of $3,200
          pre-tax (with no associated tax impact), or $0.07 per share;
     -    the third quarter of fiscal 1999 included net special charges of
          $136,785 pre-tax ($138,000 after-tax) or $(3.04) per share, and a
          $7,000 income tax charge on repatriated dividends, or $(0.15) per
          share.
     -    the fourth quarter fiscal 1999 included a net special benefit of
          $1,271 pre-tax (with no associated tax impact) or $0.03 per share.


30.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement established accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. The statement required that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. In June 1999,
the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement 133," which
postponed the adoption date of SFAS No. 133. We must adopt the statement
beginning fiscal 2001. We anticipate that, due to the limited use of derivative
instruments, the adoption of SFAS No. 133 will not have a significant effect on
our results of operations or financial position.

     In May 2000, the Emerging Issues Task Force (EITF) issued EITF No. 2000-14,
"Accounting for Coupons, Rebates and Discounts" that addressed accounting for
sales incentives. The Task Force concluded that in accounting for cash sales
incentives offered by a manufacturer (for example, coupons to be used at the
point of retail sale or mailed in after the retail sale), the manufacturer
should recognize the incentive as a reduction of revenue on the later date of
the manufacturer's sale to the retailer or the date the offer is made to the
public. The reduction of revenues should be measured based on the estimated
amount of incentives to be claimed by the ultimate customers. We are currently
evaluating the effect that implementation of this pronouncement will have to our
financial statements. We must adopt this pronouncement in our fourth quarter of
fiscal 2001.

     In September 2000, the EITF reached a final consensus on issue EITF No.
2000-10, "Accounting for Shipping and Handling Revenues and Costs." The Task
Force concluded that amounts billed to customers related to shipping and
handling should be classified as cost of products sold. Implementation of this
standard will result in a reclassification of outbound freight costs from a
reduction of net sales to cost of products sold on our Consolidated Statements
of Operations. We must adopt this pronouncement in our fourth quarter of fiscal
2001.


ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
           FINANCIAL DISCLOSURE

     None.

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                                    PART III


ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The sections entitled "Election of Directors" and "Directors and Executive
Officers Stock Ownership Reports" set forth on pages 2 through 4 and page 9 of
Vlasic's Notice of Annual Meeting and Proxy Statement dated October 20, 2000
(the "2000 Proxy Statement") are incorporated herein by reference.

         The information required by this Item relating to the executive
officers of Vlasic is set forth in Part I of this report on page 9 under the
heading "Executive Officers of Vlasic".


ITEM 11.   EXECUTIVE COMPENSATION

     The information set forth on pages 11 through 12 of the 2000 Proxy
Statement in the section entitled "Compensation of Executive Officers" is
incorporated herein by reference.


ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item is set forth at pages 7 through 9 of
the 2000 Proxy Statement in the sections entitled "Ownership by Directors and
Executive Officers" and "Principal Shareowners" and is incorporated herein by
reference.


ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is set forth on page 13 of the 2000
Proxy Statement in the section entitled "Related Party Transactions" and is
incorporated herein by reference.

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                                     PART IV


ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a) 1. Financial Statements

         Vlasic Foods International, Inc.  See Part II pages 24 through 50.

     2. Financial Statement Schedules

         None.


<TABLE>
<CAPTION>
     3. EXHIBITS
<S>               <C>
         NO.      DESCRIPTION

         2.0      Stock Purchase Agreement entered into among Aligar, Inc. and Cargal, Inc. and Swift Armour Holdings Co. on
                  April 28, 1999, as amended on June 7, 1999.  The Stock Purchase Agreement and the amendment thereto were
                  filed with the Securities and Exchange Commission ("SEC") with Vlasic's Forms 8-K dated May 24, 1999, and
                  August 16, 1999, respectively, and are incorporated herein by reference.

         2.1      Stock Purchase Agreement entered into among Vlasic Foods International Inc., Money's Foods (U.S.)Ltd. and
                  Money's Mushrooms Ltd. on December 17, 1999 was filed as Exhibit 2.1 to Vlasic's Form 8-K dated December
                  17, 1999, and is incorporated herein by reference.

         3.1      Vlasic's Amended and Restated Certificate of Incorporation, as amended through March 30, 1998, was filed as
                  Exhibit 3.1 to Vlasic's Form 10 dated March 5, 1998, and is incorporated herein by reference.

         3.2      Vlasic's Amended and Restated By-Laws, effective March 2, 1999, were filed as Exhibit 3 (ii) to Vlasic's Form 10-Q
                  for the quarter ended January 31, 1999 and are incorporated herein by reference.

         4.1      Indenture, dated as of June 29, 1999, between Vlasic Foods International Inc. and the Bank of New York, as
                  Trustee, and related Form of Certificate of Senior Subordinated Note were filed as Exhibit 4.1 and 4.2
                  respectively to Vlasic's Form S-4 filed August 18, 1999 and is incorporated herein by reference.

         4.2      Exchange and Registration Rights Agreement, dated as of June 29, 1999, among Vlasic Foods International
                  Inc., Goldman, Sachs & Co., Chase Securities Inc., Lehman Brothers Inc. and J.P. Morgan & Co., was filed
                  as Exhibit 4.3 to Vlasic's Form S-4 filed August 18, 1999 and is incorporated herein by reference.

         9.1      Major Stockholders' Voting Trust Agreement dated June 2, 1990, as amended, was filed as Exhibit 9.1 to Vlasic's
                  Form 10 dated March 5, 1998, and is incorporated herein by reference.

         9.2      Amendment to the Major Stockholders' Voting Trust Agreement dated March 2, 2000, as filed on Form 13D.

        10.1      Transition Services Agreement between Campbell Soup Company and Vlasic Foods International Inc., effective
                  March 30, 1998, was filed as Exhibit 10.1 to Vlasic's Form 10 dated March 5, 1998, and is incorporated
                  herein by reference.

        10.2      Benefits Sharing Agreement between Campbell Soup Company and Vlasic Foods International Inc., effective
                  March 30, 1998, was filed as Exhibit 10.2 to Vlasic's Form 10 dated March 5, 1998, and is incorporated
                  herein by reference.

        10.3      Swanson Trademark License Agreement between Campbell Soup Company and Vlasic Foods International Inc.,
                  effective March 30, 1998, was filed as Exhibit 10.3 to Vlasic's Form 10 dated March 5, 1998, and is
                  incorporated herein by reference.

        10.4      Technology Sharing Agreement between Campbell Soup Company and Vlasic Foods International Inc., effective
                  March 30, 1998, was filed as Exhibit 10.4 to Vlasic's Form 10 dated March 5, 1998, and is incorporated
                  herein by reference.

        10.5      Tax Sharing and Indemnification Agreement between Campbell Soup Company and Vlasic Foods International
                  Inc., effective March 30, 1998, was filed as Exhibit 10.5 to Vlasic's Form 10 dated March 5, 1998, and is
                  incorporated herein by reference.
</TABLE>

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<TABLE>
<S>               <C>
        10.6      Amended and Restated Credit Agreement dated as of September 30, 1998 among Vlasic Foods International Inc., the
                  banks party hereto, Morgan Guaranty Trust Company of New York and The Chase Manhattan Bank, as agents was filed as
                  Exhibit 10.6 to the Form 10-K dated October 20, 1998 and is incorporated herein by reference. Exhibit 10.15 and
                  Exhibit 10.18 further amended this agreement. Exhibit 10.16 and Exhibit 10.17 contain certain waivers related to
                  this Exhibit.

        10.7*     Personal Choice, a supplemental compensation program for Vlasic Executives as amended was filed as exhibit 10.7 to
                  the Form 10-K dated October 20, 1998 and is incorporated herein by reference.

        10.8*     Deferred Compensation Plan effective March 30, 1998 was filed as Exhibit 10.8 to the Form 10-K dated
                  October 20, 1998 and is incorporated herein by reference.

        10.9*     1998 Long-Term Incentive Plan effective March 30, 1998 was filed as Exhibit 10.9 to the Form 10-K dated
                  October 20, 1998 and is incorporated herein by reference.

        10.10*    Annual Incentive Plan effective March 30, 1998 was filed as Exhibit 10.10 to the Form 10-K dated October
                  20, 1998 and is incorporated herein by reference.

        10.11*    Director Compensation Plan effective March 30, 1998 was filed as Exhibit 10.11 to the Form 10-K dated
                  October 20, 1998 and is incorporated herein by reference.

        10.12*    Mid-Career Hire Pension Agreement for Robert F. Bernstock, President and Chief Executive Officer, dated March 30,
                  1998 was filed as Exhibit 10.1 with Vlasic's Form 10-Q for the Quarter ended May 3, 1998, and is incorporated
                  herein by reference.

        10.13*    Severance Protection Agreement dated June 22, 1998, with Robert F. Bernstock, President and Chief Executive
                  Officer was filed as Exhibit 10.13 to the Form 10-K dated October 20, 1998 and is incorporated herein by
                  reference.

        10.14     Trust Agreement dated April 12, 1999, by and between Vlasic Foods International Inc. and Wachovia Bank, N.A.
                  providing for the funding of certain compensation plans and arrangements under certain circumstances including a
                  change of control was filed as exhibit 10.1 to the Form 10-Q for the Quarter ended May 2, 1999, and is
                  incorporated herein by reference.

        10.15     Amendment No. 1 to Amended and Restated Credit Agreement dated June 9, 1999 among Vlasic Foods
                  International Inc., the banks party hereto, Morgan Guaranty Trust Company of New York and The Chase
                  Manhattan Bank, as agents, was filed as Exhibit 10.2 to the Form 10-Q for the Quarter ended May 2, 1999,
                  and is incorporated herein by reference.

        10.16     Waiver No. 3 under Amended and Restated Credit Agreement dated as of February 29, 2000 among Vlasic Foods
                  International Inc., the banks party hereto, Morgan Guaranty Trust Company of New York and The Chase Manhattan
                  Bank, as agents, was filed as Exhibit 10.1 to the Form 10-Q for the Quarter ended January 30, 2000, and is
                  incorporated herein by reference.

        10.17     Waiver No. 4 under Amended and Restated Credit Agreement dated as of June 14, 2000 among Vlasic Foods
                  International Inc., the banks party hereto, Morgan Guaranty Trust Company of New York and The Chase Manhattan
                  Bank, as agents, was filed as Exhibit 10.1 to Vlasic's Form 8-K dated June 16, 2000, and is incorporated herein by
                  reference.

        10.18     Amendment No. 2 and Waiver No. 5 under Amended and Restated Credit Agreement dated as of June 28, 2000
                  among Vlasic Foods International Inc., the banks party hereto, Morgan Guaranty Trust Company of New York
                  and The Chase Manhattan Bank, as agents, was filed as Exhibit 10.1 to Vlasic's Form 8-K dated June 28,
                  2000, and is incorporated herein by reference.

        10.19     Supplemental Term Sheet dated June 26, 2000 Dealing with Family Participation for Amendment No. 2 and
                  Waiver No. 5 Under Amended and Restated Credit Agreement was filed as Exhibit 10.2 to Vlasic's Form 8-K
                  dated June 28, 2000, and is incorporated herein by reference.

        10.20     Master Loan Participation Agreement dated as of August 2, 2000 among the Dorrance Family Participants, the
                  Participating Banks, Morgan Guaranty Trust Company of New York as administrative agent and Vlasic Foods
                  International Inc. was filed as Exhibit 10.3 to Vlasic's Form 8-K dated June 28, 2000, and is incorporated herein
                  by reference.
</TABLE>



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<TABLE>
<S>               <C>

        10.21     Escrow Agreement dated as of August 2, 2000 by and among Vlasic Foods International Inc. the Dorrance Family
                  Participants, the Morgan Guaranty Trust Company of New York as administrative agent and Wells Fargo Bank
                  Minnesota, National Association was filed as Exhibit 10.4 to Vlasic's Form 8-K dated June 28, 2000, and is
                  incorporated herein by reference.

        10.22*    Severance Protection Agreement for Robert F. Bernstock, President and Chief Executive Officer, dated
                  August 11, 2000.

        10.23*    Confidential Information and Non-Competition Agreement for Robert F. Bernstock, President and Chief
                  Executive Officer, dated August 11, 2000.

        10.24*    Incentive Compensation Agreement for Robert F. Bernstock, President and Chief Executive Officer, dated
                  August 11, 2000.

        20.1      Foodservice Supply Amendment Agreement between Vlasic Foods International Inc. and Campbell Soup Company
                  dated March 24, 2000 was filed as Exhibit 20.1 to the Form 8-K dated March 24, 2000, and is incorporated
                  herein by reference.

        20.2      Foodservice Supply Agreement between Vlasic Foods International Inc. and Campbell Soup Company dated March
                  30, 1998 was filed as Exhibit 20.2 to the Form 8-K dated March 24, 2000, and is incorporated herein by
                  reference.

        21.1      Subsidiaries of Vlasic.

        23.1      Consent of Independent Accountants.

        24.1      Power of Attorney.

        24.2      Certified copy of the resolution of Vlasic's Board of Directors authorizing signatures pursuant to a power
                  of attorney.

        27.1      Financial Data Schedule (not considered to be filed)
</TABLE>


     (b) Reports on Form 8-K

     We filed a Current Report on Form 8-K, dated June 16, 2000, with the
Securities and Exchange Commission on June 30, 2000 regarding the extension of
our existing waivers under our senior credit facility bank obligations.

     We also filed a Current Report on Form 8-K , dated June 28, 2000, with the
Securities and Exchange Commission on August 22, 2000 regarding the finalization
of the extension of such waiver under our senior credit facility through
February 2001.

     *    Management contract or compensatory plan or arrangement required to be
          filed pursuant to Item 14(c) of this report.

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FISCAL 2000 ANNUAL REPORT (continued)          [VLASIC FOODS INTERNATIONAL LOGO]

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                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") and Rule 12b-15 promulgated by the
Securities and Exchange Commission under the Exchange Act, Vlasic has duly
caused this amended report to be signed on its behalf by the undersigned,
thereunto duly authorized.


<TABLE>
<S>                                                           <C>
     Date:   October 17, 2000                                 VLASIC FOODS INTERNATIONAL INC.


                                                              By:       /s/ Joseph Adler
                                                                    ------------------------------------
                                                                                Joseph Adler
                                                                        Vice President and Controller
</TABLE>


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
amended report has been signed below by the following persons on behalf of
Vlasic and in the capacity and on the date indicated.


<TABLE>
<S>                                                           <C>
     Date:    October 17, 2000

                                                              By:       /s/ Joseph Adler
                                                                    ------------------------------------
                                                                                Joseph Adler
                                                                 Principal Financial and Accounting Officer
</TABLE>


<TABLE>
<S>                                 <C>                                <C>      <C>
     Donald J. Keller               Chairman and Director              }
     Robert F. Bernstock            President, Chief Executive         }
                                    Officer and Director               }
     Robert T. Blakely              Director                           }        By: /s/ Norma B. Carter
     Morris A. Cohen                Director                           }           -------------------------------
     Tristram C. Colket, Jr.        Director                           }        Norma B. Carter
     Lawrence C. Karlson            Director                           }        Vice President, General Counsel and
     Shaun F. O'Malley              Director                           }        Corporate Secretary
</TABLE>

                                      (55)
<PAGE>   56
REPORT OF MANAGEMENT                           [VLASIC FOODS INTERNATIONAL LOGO]

--------------------------------------------------------------------------------

     The accompanying financial statements have been prepared by our management
in conformity with generally accepted accounting principles to reflect the
financial position of Vlasic and our operating results. Financial information
appearing throughout this Annual Report is consistent with that in the financial
statements. Management is responsible for the information and representations in
such financial statements, including the estimates and judgements required for
their preparation. In order to meet its responsibility, management maintains a
system of internal controls designed to assure that assets are safeguarded and
that financial records properly reflect all transactions. We also maintain a
worldwide auditing function to periodically evaluate the adequacy and
effectiveness of such internal controls, as well as our administrative
procedures and reporting practices.

     The report of PricewaterhouseCoopers LLP, our independent accountants,
covering their audit of the financial statements, is included in this annual
report. Their independent audit of our financial statements includes a review of
the system of internal accounting controls to the extent they consider necessary
to evaluate the system as required by generally accepted auditing standards. Our
internal auditors report directly to the Audit Committee of the Board of
Directors, which is composed entirely of Directors who are not officers or
employees of Vlasic.

     The Audit Committee meets periodically with the internal auditors, other
management personnel, and the independent accountants. The independent
accountants and the internal auditors have had, and continue to have, direct
access to the Audit Committee without the presence of other management
personnel, and have been directed to discuss the results of their audit work and
any matters they believe should be brought to the Committee's attention.


<TABLE>
<S>                                                                            <C>
                         /s/ Robert F. Bernstock                                   /s/ Joseph Adler
                           Robert F. Bernstock                                         Joseph Adler
                             President and                                     Vice President and Controller
                         Chief Executive Officer
</TABLE>

September 13, 2000


REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------

To the Board of Directors and Shareowners of Vlasic Foods International, Inc.


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, shareowners' equity (deficit) and cash
flows present fairly, in all material respects, the financial position of Vlasic
Foods International, Inc. and its subsidiaries at July 30, 2000 and August 1,
1999, and the results of their operations and their cash flows for each of the
three years in the period ended July 30, 2000, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes 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. We believe that our audits provide a
reasonable basis for the opinion expressed above.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has suffered recurring losses from operations and has a
net capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regards to these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
September 13, 2000

                                      (56)