Media Centre
2006/02/22

Maple Leaf Foods Reports 2005 Year-End and Fourth Quarter Financial Results

TORONTO, Feb. 22, 2006 (Canada NewsWire via COMTEX News Network) -- Maple Leaf Foods Inc. (TSX:MFI) today reported its financial results for the fourth quarter ended December 31, 2005.

"We had a year of many extraordinary accomplishments, achieving strong financial results in the first three quarters despite underlying commodity challenges," said Michael McCain, President and CEO. "However, we ended the year on a disappointing note, as our growth engines in the consumer products and fresh bakery businesses were impacted by high energy and related inflationary costs. A downturn in the performance of our Japanese pork business, mostly driven by a rapid decline in the Japanese currency, compounded the earnings decline in the quarter, overshadowing the significant improvements we made throughout the year in our fresh pork operations."

"We will be implementing price increases in 2006 to offset higher costs, and are maintaining a steady focus on increasing margins and shareholder value through innovation, brand and market leadership - adding value at every step in our food chain."

Sales for the fourth quarter decreased 10% to $1.6 billion compared with $1.8 billion for the prior year, due to lower commodity prices that affected the Company's pork, poultry, feed and rendering businesses, and lower sales to Japan. Sales for the year increased 2% to $6.5 billion, primarily due to the acquisition of Schneider Foods in April 2004 and an increase in fresh bakery sales.

Earnings from operations before restructuring costs decreased 31% to $51.7 million for the fourth quarter and increased 3% to $263.0 million for the year. Earnings from operations for the year excluded $13.2 million ($8.3 million after tax and minority interest) in restructuring costs incurred in the first quarter of 2005. Management believes that this is the most appropriate basis on which to evaluate operating results, as restructuring costs are not representative of continuing operations.

Sales and earnings comparisons are also affected by the inclusion of an additional week of operations in the fourth quarter of 2004 which affect sales and earnings comparisons in the fourth quarter and full year.

Net earnings for the fourth quarter declined to $18.2 million ($0.14 per share) from $32.4 million ($0.28 per share) last year. Net earnings for the year before restructuring costs were $102.6 million ($0.81 per share), compared to $102.3 million ($0.90 per share) last year. Including restructuring costs, net earnings for the year were $94.2 million ($0.74 per share).

Operating Review
----------------

The Company's Meat Products Group and the Agribusiness Group together comprise the Protein Value Chain operations, which are involved in producing animal protein products. These operations are highly interrelated and are strategically linked through the Company's Vertical Coordination business model. While each operation maintains a strong external customer focus, they are tightly coordinated to deliver superior performance where their operations intersect. Accordingly, it is more meaningful to review the combined results of the Protein Value Chain rather than each segment independently.

The following table, which forms the basis of discussion in this document of the Company's results of operations, reflects operating earnings by business segment before restructuring costs:

Earnings from Operations
------------------------


    ($ millions)                 Fourth Quarter            Full Year(ii)
                             ----------------------   ----------------------
                              2005    2004   Change    2005    2004   Change
                             ------  ------  ------   ------  ------  ------
    Meat Products Group       10.4    30.6    (66%)    59.9    68.5    (13%)
    Agribusiness Group(i)     18.9    21.6    (13%)   101.8    98.7      3%
                             ----------------------   ----------------------
    Protein Value Chain       29.3    52.2    (44%)   161.7   167.2     (3%)
    Bakery Products Group     22.4    23.1     (3%)   101.3    89.2     14%
                             ----------------------   ----------------------
                              51.7    75.3    (31%)   263.0   256.4      3%
                             ----------------------   ----------------------
                             ----------------------   ----------------------

    (i)  Full year figures include $0.2 million of gains related to sales of
         poultry production quota compared to $5.2 million in 2004, which
         were recorded primarily in the first quarter.
    (ii) Full year excludes $13.2 million of restructuring costs in the first
         quarter of 2005.

Protein Value Chain
-------------------

Protein Value Chain earnings for the fourth quarter declined 44% to $29.3 million from $52.2 million last year, primarily due to increased energy and related costs, lower hog prices and lower earnings from the Japanese pork market. These impacts more than offset contributions from the consumer products business, an improvement in underlying commodity pork and poultry processor margins, and lower feed costs in the quarter. Protein Value Chain earnings for the year declined 3%, reflecting the portfolio balance in the Protein Value Chain as industry-wide decreases in both pork and poultry commodity processor margins were offset by increased contributions from packaged meats and favourable feed costs. In addition, strong earnings from full year Japanese sales were offset by higher energy costs and lower prices for rendered products.

Meat Products Group
-------------------
(branded value-added prepared meat products; fresh, frozen and branded value-added pork products; fresh, frozen and branded value-added chicken and turkey products; and global food marketing, distribution and trading)

Meat Products Group sales for the fourth quarter decreased 13% to $1.0 billion primarily as a result of lower commodity pork and poultry prices and a decline in pork sales values and volume to Japan, although somewhat offset by sales growth in the consumer foods operations. Sales for the year were up 4% to $4.3 billion compared to $4.1 billion last year, due to the acquisition of Schneider Foods in April 2004.

Earnings from operations for the fourth quarter declined 66% to $10.4 million from $30.6 million last year, primarily due to lower profits from pork sales to Japan and higher energy costs. Margins in the Japanese market were impacted by a 16% depreciation of the Japanese yen against the Canadian dollar compared to the first half of 2005, which resulted in an immediate decline in the sales value and profitability of pork exports. The impact of the Japanese market, compounded by high energy and related inflationary costs, outweighed the benefit of improved underlying pork and poultry commodity markets and improved manufacturing efficiencies and sales mix. Earnings from the consumer foods operations declined due to higher energy costs, timing of advertising and promotional spending to support brand positioning and new product launches, and weaker U.S. sales. This business will implement price increases through early 2006 to offset inflationary costs.

Earnings from operations for the year declined 13% to $59.9 million from $68.5 million in 2004, primarily due to a significant decline in industry- wide fresh poultry processor margins. The consumer products operations recorded excellent results in the year, benefiting from the full-year contribution of Schneider Foods, lower raw material costs, and the contribution of higher margin products such as Maple Leaf Fully Cooked Roasts and Schneiders Lunchmate kits. Fresh pork operations recorded improvements in the year, benefiting from a higher value product sales mix, including strong results from sales to Japan in the first three quarters, lower manufacturing costs, and a modest improvement in the underlying North American pork processor spread in the latter half of 2005. Increasing margins through innovation and value added processing continues to be a major focus. In the year, Maple Leaf Fresh Grill! marinated pork, chicken and beef products were launched, along with Maple Leaf Fresh Roast!, a line of ready-to-cook, seasoned and marinated pork, poultry and beef roasts.

Agribusiness Group
------------------
(research, development and supply of quality livestock nutrition products and services; pet food; swine production; and animal by-products recycling)

Agribusiness Group sales for the fourth quarter decreased 9% to $216.6 million from $238.9 million last year, while sales for the year declined 12% to $816.8 million from $924.9 million. This decline in sales in the fourth quarter was mainly due to lower market prices for feed and rendered products, reflecting lower underlying commodity prices.

Earnings from operations for the fourth quarter declined 13% to $18.9 million from $21.6 million last year, due to underperformance in the Company's hog production operations, start-up costs at the new Moncton feed mill, higher energy related costs, and a 16% decline in hog prices compared to the fourth quarter last year. The Company had effective ownership of 20% of the hogs it processed in the fourth quarter. Earnings from rendering operations increased in the quarter, although results were impacted by high energy costs and lower exports and commodity prices.

Earnings for the year increased 3% to $101.8 million from $98.7 million in 2004, benefiting from lower feed costs and higher hog prices. Although hog profits were higher, the Company's hog production operations underperformed in the face of a high Canadian dollar. A number of initiatives are underway to improve performance and reduce costs in this business. Increased efficiencies in the rendering operations, which benefited from significant capital investment in environmental upgrades, contributed positively to earnings although this was more than offset by a reduction in export volumes, poor underlying commodity prices and high energy costs. The Company is commissioning a new commercial scale bio-diesel plant in Quebec, which is expected to reach full production by mid-2006 and provide an alternate higher value market for tallow. The animal nutrition operations continued to post steady results for the quarter and year.

Bakery Products Group
---------------------
(fresh, frozen and branded value-added bakery products, including frozen par-baked bakery products; and specialty pasta and sauces)

Bakery Product Group sales for the fourth quarter decreased 2% to $338.8 million compared to $345.9 million last year, reflecting the inclusion of an additional week of operating results in the fourth quarter of 2004. Not including the effect of this additional week, sales increased across the bakery operations in the fourth quarter of 2005 by 5% over the prior year. Sales for the year increased 3% to $1.3 billion, reflecting higher prices and continued growth in higher value whole grain and specialty products.

Earnings from operations in the fourth quarter decreased 3% to $22.4 million compared to $23.1 million last year, due to higher energy and distribution costs and the inclusion of an additional week of financial results in the fourth quarter last year. The business also incurred increased advertising and promotional spending to support the Dempster's new brand positioning, "Nourish Yourself", and extensions to its WholeGrains line of high nutrition products. These factors outweighed growth in higher margin whole grain and higher nutrition fresh bakery products. The Company will begin implementing price increases in the first quarter of 2006 to offset higher input costs. Frozen bakery earnings increased over last year, as improved operating performance in the North American operations offset higher energy and other inflationary costs. Earnings from the U.K. bakery operations also increased, benefiting from the commissioning of the new bagel plant in Rotherham, England earlier in the year.

Earnings from operations for the year increased 14% to $101.3 million from $89.2 million in 2004. The Bakery Products Group benefited significantly from a sales mix that is weighted towards health and well-being categories. Strong sales of branded whole grain, whole wheat and specialty breads and higher prices contributed to strong earnings growth for the year, offsetting the impact of rising energy and flour costs, increased advertising and promotional spending, and costs related to the commissioning of a new bagel plant in the United Kingdom.

Cash Flow and Financing
-----------------------

Total debt, net of cash balances, adjusted for the Brandon operating lease and securitization, was significantly lower than the prior year. The reduction was primarily due to strong operating cash flows that were partially offset by the consolidation of several hog investments due to new Canadian accounting rules.

Interest expense for the fourth quarter was consistent with last year at $23.6 million, as lower debt balances were offset by higher interest rates. Interest expense for the year increased to $98.3 million compared to $89.8 million last year. In the fourth quarter of 2004, the Company re-financed a significant portion of its debt, replacing short-term, lower rate debt with longer-term, fixed rate notes that have higher interest rates than short-term floating debt and therefore contributed to higher interest rates paid compared to last year. A full year impact of the acquisition of Schneider Foods also contributed to higher interest expense in the current year. At December 2005, 86% of indebtedness was not exposed to interest rate fluctuations.

Cash flow from operating activities for the fourth quarter was $120.6 million compared to $143.3 million last year driven primarily by lower net earnings. Cash flow from operating activities for the year increased to $259.7 million from $235.5 million in 2004. The increase in cash flow for 2005 was largely due to a reduction in long term receivables and an improvement in operating working capital offset by an increase in future tax assets.

Capital expenditures on plant and equipment for the fourth quarter decreased to $36.2 million from $48.7 million last year, while expenditures for the year were $152.1 million compared to $156.8 last year. The most significant capital investments in 2005 included the construction of a new feed mill in Atlantic Canada, a biodiesel plant in Quebec, and environmental upgrades in the rendering operations earlier in the year.

Other Income
------------

Other income for the fourth quarter of $2.9 million increased from $0.1 million last year, reflecting increased earnings from equity investments and insurance proceeds from a claim earlier in the year. Other income for the year increased to $7.0 million, up from $2.7 million in 2004, due to higher earnings from equity investments, insurance proceeds, and gains on fixed asset disposals that were partly offset by a loss on conversion of the convertible debenture in the first quarter.

Other Matters
-------------

Maple Leaf Foods declared a dividend of $0.04 per share payable on March 31, 2006, to shareholders of record on March 10, 2006.

Maple Leaf Foods Inc. is a leading Canadian food processing company committed to delivering quality food products to consumers around the world. Headquartered in Toronto, Canada, the Company employs approximately 24,000 people at its operations across Canada and in the United States, Europe and Asia. The Company had sales of $6.5 billion in 2005.

An investor presentation related to the Company's fourth quarter financial results is available at www.mapleleaf.com and can be found under Investor Relations on the Quarterly Results page. A conference call will be held at 3:00 p.m. EDT on February 22, 2006 to review Maple Leaf Foods' fourth quarter financial results. To participate in the call, please dial 416-641- 6113 or 866-542-4239. For those unable to participate, playback will be made available an hour after the event at 416-695-5800 / 800-408-3053 (Passcode 3176430 ).

A webcast presentation of the fourth quarter financial results will also be available at http://investor.mapleleaf.ca at 2:30 p.m. EDT via a link. An archived replay of the webcast will be available following the call at each of the above links.

This document may contain forward looking information within the meaning of applicable securities legislation. Forward looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Maple Leaf's control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward looking information. Any forward looking information in this press release speaks as of the date of this press release. Maple Leaf does not undertake to update any such forward looking information whether as a result of new information, future events or otherwise. Additional information about these risks and uncertainties is contained in the filings with securities regulators including the annual information form and Management's Discussion and Analysis accompanying the financial statements in the reports to shareholders. These filings are also available on the Company's website at www.mapleleaf.com.



            Consolidated Interim Financial Statements
            (Expressed in Canadian dollars)

            MAPLE LEAF FOODS INC.

            Three and twelve months ended December 31, 2005 and 2004



    MAPLE LEAF FOODS INC.
    Consolidated Balance Sheets
    (In thousands of Canadian dollars)
    -------------------------------------------------------------------------
                                                           As at December 31,
                                                           2005         2004
    -------------------------------------------------------------------------
                                                                (As restated
                                                                   Note 2(a))

    ASSETS

    Current assets
      Cash and cash equivalents                     $    80,502  $   111,770
      Accounts receivable                               247,014      292,462
      Inventories                                       400,848      385,128
      Future tax asset - current                         15,329        6,708
      Prepaid expenses and other assets                  12,104       13,218
      -----------------------------------------------------------------------
                                                        755,797      809,286

    Investments in associated companies                  61,939       82,302

    Property and equipment                            1,137,317      973,718

    Other long-term assets                              261,907      246,603

    Future tax asset - non-current                       38,499       26,976

    Goodwill                                            847,853      816,408

    Other intangibles                                    86,468       82,840

    -------------------------------------------------------------------------
                                                    $ 3,189,780  $ 3,038,133
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Accounts payable and accrued charges          $   669,941  $   637,966
      Income and other taxes payable                     31,727       27,651
      Current portion of long-term debt                 110,428      105,910
      -----------------------------------------------------------------------
                                                        812,096      771,527

    Long-term debt                                    1,032,829    1,052,195

    Future tax liability                                 56,183       29,207

    Other long-term liabilities                         202,576      205,542

    Minority interest                                    87,425       74,109

    Shareholders' equity                                998,671      905,553

    -------------------------------------------------------------------------
                                                    $ 3,189,780  $ 3,038,133
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes to the consolidated financial statements are an
    integral part of these statements.



    MAPLE LEAF FOODS INC.
    Consolidated Statements of Earnings
    (In thousands of Canadian dollars, except share amounts)
    -------------------------------------------------------------------------
                                Three months ended       Twelve months ended
                                       December 31,              December 31,
                                 2005         2004         2005         2004
    -------------------------------------------------------------------------
                           (Unaudited)  (Unaudited)             (As restated
                                       (As restated              Note 2(a))
                                         Note 2(a))

    Sales                 $ 1,598,248  $ 1,782,254  $ 6,462,581  $ 6,364,983

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

    Earnings from
     operations before
     restructuring costs       51,653       75,271  $   263,034  $   256,364
    Restructuring costs             -            -      (13,157)           -
    -------------------------------------------------------------------------

    Earnings from operations   51,653       75,271      249,877      256,364
    Other income (Note 3)       2,896          131        6,977        2,650
    -------------------------------------------------------------------------

    Earnings before interest
     and income taxes          54,549       75,402      256,854      259,014
    Interest expense           23,603       24,697       98,317       89,798
    -------------------------------------------------------------------------

    Earnings before
     income taxes              30,946       50,705      158,537      169,216
    Income taxes                9,176       15,581       51,308       57,018
    -------------------------------------------------------------------------

    Earnings before
     minority interest         21,770       35,124      107,229      112,198
    Minority interest           3,574        2,701       12,987        9,915

    -------------------------------------------------------------------------
    Net earnings for
     the period           $    18,196  $    32,423  $    94,242  $   102,283
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share
     - basic (Note 5)     $      0.14  $      0.28  $      0.74  $      0.90

    Earnings per share
     - diluted (Note 5)   $      0.14  $      0.27  $      0.72  $      0.89

    Weighted average
     number of shares
     (millions)                 127.5        114.4        126.8        113.6

    Dividends declared
     per share            $      0.04  $      0.04  $      0.16  $      0.16

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

    The accompanying notes to the consolidated financial statements are an
    integral part of these statements.


    Consolidated Statements of Retained Earnings
    (In thousands of Canadian dollars)
    -------------------------------------------------------------------------
                                             Twelve months ended December 31,
                                                           2005         2004
    -------------------------------------------------------------------------
                                                                (As restated
                                                                   Note 2(a))

    Retained earnings, beginning of period          $   159,129  $    74,982
    Net earnings for the period                          94,242      102,283
    Dividends declared                                  (20,327)     (18,136)
    Premium on repurchase of share capital               (1,237)           -

    -------------------------------------------------------------------------
    Retained earnings, end of period                $   231,807  $   159,129

    The accompanying notes to the consolidated financial statements are an
    integral part of these statements.



    MAPLE LEAF FOODS INC.
    Consolidated Statements of Cash Flows
    (In thousands of Canadian dollars)
    -------------------------------------------------------------------------
                                Three months ended       Twelve months ended
                                       December 31,              December 31,
                                 2005         2004         2005         2004
    -------------------------------------------------------------------------
                           (Unaudited)  (Unaudited)
                                      (As restated              (As restated
                                         Note 2(a))                Note 2(a))
    CASH PROVIDED BY (USED) IN

    Operating activities
      Net earnings        $    18,196  $    32,423  $    94,242  $   102,283
      Add (deduct) items
       not affecting cash:
        Depreciation and
         amortization          33,550       34,230      132,489      125,494
        Stock-based
         compensation
         (Note 4)               2,826        1,590        8,425        4,095
        Minority interest       3,574        2,701       12,987        9,915
        Future income taxes   (18,474)      (9,051)      (8,921)       7,985
        Undistributed
         earnings of
         associated companies  (1,829)      (2,985)      (7,620)      (6,289)
        Loss on repayment of
         convertible debenture      -            -        1,108            -
        (Gain) loss on sale
         of property and
         equipment             (4,394)         220       (5,814)        (892)
        (Gain) loss on sale
         of investments             -           95          363         (417)
      Other                   (17,837)     (13,543)      (3,026)     (21,053)
      Change in other
       long-term receivables      (45)        (493)       6,840       (6,018)
      Increase in net pension
       asset                  (14,822)     (26,024)     (39,226)     (38,247)
      Change in operating
       working capital        119,820      124,146       67,836       58,614
      -----------------------------------------------------------------------
                          $   120,565  $   143,309  $   259,683  $   235,470
    Financing activities
      Dividends paid           (5,105)      (4,547)     (20,327)     (18,136)
      Dividends paid to
       minority interest         (320)        (234)      (1,031)        (956)
      Net increase
       (decrease) in
       long-term debt         (58,768)    (154,054)    (122,356)     250,906
      Increase in share
       capital                  5,710      165,030       19,421      166,243
      Shares repurchased
       for cancellation        (1,989)           -       (1,989)           -
      Other                    (8,459)     (17,529)     (13,454)     (17,529)
      -----------------------------------------------------------------------
                          $   (68,931) $   (11,334) $  (139,736) $   380,528
    Investing activities
      Additions to property
       and equipment          (36,190)     (48,669)    (152,130)    (156,777)
      Proceeds from sale
       of property and
       equipment                6,491        3,583       14,778       12,649
      Purchase of net
       assets of businesses         -      (20,676)     (10,625)    (401,575)
      Change in other
       investments, net             -       (1,443)           -        1,111
      Other                    (1,495)         274       (3,238)       1,456
      -----------------------------------------------------------------------
                              (31,194)     (66,931)    (151,215)    (543,136)
    Increase (decrease)
     in cash and cash
     equivalents               20,440       65,044      (31,268)      72,862
    Cash and cash
     equivalents,
     beginning of period       60,062       46,726      111,770       38,908
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period        $    80,502  $   111,770  $    80,502  $   111,770
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes to the consolidated financial statements are an
    integral part of these statements.



    MAPLE LEAF FOODS INC.
    Segmented Financial Information
    (In thousands of Canadian dollars)
    -------------------------------------------------------------------------
                                Three months ended       Twelve months ended
                                       December 31,              December 31,
                                 2005         2004         2005         2004
    -------------------------------------------------------------------------
                           (Unaudited)  (Unaudited)

    Sales
      Meat Products Group $ 1,042,924  $ 1,197,449  $ 4,300,290  $ 4,127,255
      Agribusiness Group      216,560      238,911      816,776      924,912
      Bakery Products
       Group                  338,764      345,894    1,345,515    1,312,816
    -------------------------------------------------------------------------
                          $ 1,598,248  $ 1,782,254  $ 6,462,581  $ 6,364,983
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings from
     operations, before
     restructuring costs
      Meat Products Group $    10,425  $    30,607  $    59,881  $    68,440
      Agribusiness Group       18,883       21,585      101,862       98,736
      Bakery Products
       Group                   22,345       23,079      101,291       89,188
    -------------------------------------------------------------------------
                          $    51,653  $    75,271  $   263,034  $   256,364
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Additions to property
     and equipment
      Meat Products Group $    12,933  $    15,471  $    59,287  $    51,832
      Agribusiness Group        9,626        9,268       36,266       34,879
      Bakery Products
       Group                   13,631       23,930       56,577       70,066
    -------------------------------------------------------------------------
                          $    36,190  $    48,669  $   152,130  $   156,777
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Depreciation and
     amortization
      Meat Products Group $    15,427  $    17,420  $    62,782  $    60,816
      Agribusiness Group        6,141        5,484       24,502       21,323
      Bakery Products
       Group                   11,976       11,326       45,199       43,355
    -------------------------------------------------------------------------
                          $    33,544  $    34,230  $   132,483  $   125,494
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                           As at December 31,
                                                           2005         2004
    -------------------------------------------------------------------------

    Total assets
      Meat Products Group                           $ 1,550,439  $ 1,463,253
      Agribusiness Group                                639,622      603,055
      Bakery Products Group                             694,519      702,137
      Non-allocated assets                              305,200      269,688
    -------------------------------------------------------------------------
                                                    $ 3,189,780  $ 3,038,133
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes to the consolidated financial statements are an
    integral part of these statements.



    1.  THE COMPANY

        Maple Leaf Foods Inc. ("Maple Leaf Foods" or the "Company") is a
        leading Canadian-based food processing company, serving wholesale,
        retail, food service, industrial and agricultural customers across
        North America and internationally. The Company's results are
        organized into three segments: Meat Products Group, Agribusiness
        Group and Bakery Products Group.

    2.  SIGNIFICANT ACCOUNTING POLICIES

        (a) Convertible Debentures

              Effective January 1, 2005, the Company adopted an amendment to
              Canadian accounting principles, section 3860, "Financial
              Instruments - Disclosure and Presentation", on a retroactive
              basis with restatement of prior periods. The revised standard,
              which is effective for January 1, 2005, requires obligations of
              a fixed amount that may be settled, at the issuer's option, by
              a variable number of the issuer's own equity instruments to be
              presented as liabilities. As a result of adopting the revised
              standard, the Company reclassified the principal component of
              its convertible debenture as a debt instrument and
              reclassified the interest, accretion charges and related tax
              effects in the statement of earnings in the comparative
              periods. The impact of the revised standard was a reduction in
              net earnings of $4.5 million (net of tax) for the year ended
              December 31, 2004. There was no impact to basic or diluted
              earnings per share for prior periods as a result of adopting
              this change.

        (b) Variable Interest Entities

              The Company adopted the guidance in Accounting Guideline 15,
              "Consolidation of Variable Interest Entities", retroactively
              without restatement of prior periods, effective January 1,
              2005. As a result of the adoption, there are several previously
              unconsolidated entities that are now consolidated with the
              results of the Company. The most significant was the
              consolidation of the Company's hog processing facility in
              Brandon, Manitoba. This resulted in an increase in assets and
              long-term debt of approximately $87.8 million as of
              December 31, 2005. In addition, several of the Company's
              investments in various previously equity accounted hog
              facilities are now consolidated. The results of the
              consolidation of these hog production facilities is an increase
              in debt of approximately $19.7 million and an increase in total
              assets of approximately $29.0 million. There was no impact on
              the net earnings of the Company arising from the consolidation
              of these entities.

        (c) Comparative figures

              Certain 2004 comparative figures have been reclassified to
              conform with the financial statement presentation adopted in
              2005.

    3.  OTHER INCOME (EXPENSE)

        ---------------------------------------------------------------------
                                    Three months ended   Twelve months ended
                                           December 31,          December 31,
                                       2005       2004       2005       2004
        ---------------------------------------------------------------------

        Earnings from associated
         companies                $     492  $     286  $   3,131  $     985
        Gain (loss) on sale of
         property and equipment       2,077       (220)     3,498        892
        Dividends received               71         32        510        144
        Gain (loss) on disposal
         of investments                   -        (95)       363        417
        Rental income                   539        178        300        458
        Earnings (loss) from
         real estate operations        (283)       (50)       283       (246)
        Loss on redemption of
         convertible debenture            -          -     (1,108)         -
        ---------------------------------------------------------------------
                                  $   2,896  $     131  $   6,977  $   2,650
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    4.  STOCK-BASED COMPENSATION

        The stock compensation expense during the fourth quarter was
        $2.8 million (2004: $1.6 million) and $8.4 million for the full year
        (2004: $4.1 million). The Company granted 17,500 stock options
        (2004: 23,750) at a weighted average exercise price per share of
        $14.90 (2004: $14.56) and 14,500 restricted stock units (2004:
        12,625) in the quarter. The fair value of the stock options and
        restricted stock units granted during the quarter was immaterial
        (2004: immaterial) and $0.1 million (2004: $0.1 million),
        respectively.

    5.  EARNINGS PER SHARE

        The following table sets forth the calculation of basic and fully
        diluted earnings per share:

    -------------------------------------------------------------------------
                                   Three months ended December 31,
                                 2005                          2004
    -------------------------------------------------------------------------
                             Weighted                      Weighted
                       Net    Average                Net    Average
                  Earnings  Shares(ii)     EPS  Earnings  Shares(ii)     EPS
                  ----------------------------- -----------------------------

    Basic         $ 18,196     127.5  $   0.14  $ 32,423     114.4  $   0.28
      Stock
       options(i)        -       2.9         -         -       1.8         -
      Convertible
       debt              -         -         -     1,223       6.1         -
    -------------------------------------------------------------------------
    Diluted       $ 18,196     130.4  $   0.14  $ 33,646     122.3  $   0.27
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                  Twelve months ended December 31,
                                 2005                          2004
    -------------------------------------------------------------------------
                             Weighted                      Weighted
                       Net    Average                Net    Average
                  Earnings  Shares(ii)     EPS  Earnings  Shares(ii)     EPS
                  ----------------------------- -----------------------------

    Basic         $ 94,242     126.8  $   0.74  $102,283     113.6  $   0.90
      Stock
       options(i)        -       3.2         -         -       1.1         -
      Convertible
       debt              -         -         -     4,882       6.1         -
    -------------------------------------------------------------------------
    Diluted       $ 94,242     130.0  $   0.72  $107,165     120.8  $   0.89
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (i)  Excludes the effect of approximately 10.7 million options and
         restricted stock units to purchase common shares for the three
         months ended December 31 (2004: 11.4 million) and 10.3 million
         options and restricted stock units to purchase common shares for the
         twelve months ended December 31 (2004: 12.1 million) that are
         anti-dilutive
    (ii) In millions

    >>

SOURCE: Maple Leaf Foods Inc.

Contact: Lynda Kuhn, Vice-President, Public & Investor Relations, (416) 926-2026
www.mapleleaf.com


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