Media Centre
2006/04/26

Maple Leaf Foods Reports 2006 First Quarter Financial Results

TORONTO, Apr 26, 2006 (Canada NewsWire via COMTEX News Network) -- Maple Leaf Foods Inc. (TSX:MFI) today reported its financial results for the first quarter ended March 31, 2006.

"We made good progress in earnings recovery during our first quarter of 2006, as we addressed factors that challenged us in late 2005," said Michael H. McCain, President and CEO. "However, as expected, protein markets were weak on a number of fronts coming into this year."

"We are delighted with the performance of our balanced portfolio in the midst of these very, very challenging protein markets around the world. We have been successful implementing price increases to offset the inflationary effects of higher energy costs. We achieved excellent results from our consumer foods and fresh bakery operations, benefiting from innovative product marketing and merger synergies. These achievements were successful in muting the ongoing impact of weak fresh pork and poultry markets, driven by currency challenges and global supply and demand of all proteins."

Sales for the first quarter decreased 5% to $1.4 billion compared with $1.5 billion for the prior year, primarily due to lower commodity prices of export products.

Earnings from operations before restructuring costs decreased to $51.8 million from $61.2 million last year. Earnings from operations for the first quarter last year exclude $13.2 million ($8.3 million after tax and minority interest) in restructuring costs. Management believes that this is the most appropriate basis on which to evaluate operating results, as restructuring costs are not representative of continuing operations.

Net earnings declined to $17.3 million ($0.14 per share) from $21.1 million ($0.17 per share) excluding restructuring costs in the first quarter last year. Including restructuring costs, net earnings for the quarter in 2005 were $12.7 million ($0.10 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)                                          First Quarter
                                                   --------------------------
                                                     2006     2005    Change
                                                     ----     ----    ------
    Meat Products Group                              13.7     18.7     (26%)
    Agribusiness Group                               13.4     21.9     (39%)
                                                   --------------------------
    Protein Value Chain                              27.1     40.6     (33%)
    Bakery Products Group                            24.7     20.6      20%
                                                   --------------------------
                                                     51.8     61.2     (15%)
                                                   --------------------------
                                                   --------------------------

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

Protein Value Chain earnings for the first quarter declined 33% to $27.1 million from $40.6 million last year, primarily due to lower earnings from pork operations and reduced earnings from hog production operations. Energy costs, which impacted the Company's results in the back half of 2005, are being addressed through price increases.

    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 first quarter decreased 10% to $924 million primarily as a result of lower commodity pork prices and a decline in pork sales values and volume to Japan.

Earnings from operations for the first quarter declined 26% to $13.7 million from $18.7 million last year, primarily due to lower profits from pork sales and higher energy and indirect related costs. Margins in the Japanese market were impacted by a 19% depreciation of the Japanese yen against the Canadian dollar, and challenges in achieving compensatory price increases due to the current global protein markets. Frozen pork exports to this market also declined compared to last year. The profitability of North American fresh pork and poultry operations were also pressured by increased quantities of protein in the market and resulting lower prices.

The consumer foods operations earnings improved significantly in the quarter, benefiting from lower raw material costs, price increases to offset higher energy and related costs, as well as costs synergies related to the Schneider Foods merger. This business continues to benefit from leading brands and market shares, and consumer trends towards ready-to-eat meal solutions. Extending its leadership in the fast growing Canadian "home meal assembly" market, Maple Leaf launched Grilled Meat Strips, a line of seasonal frozen and refrigerated pre-cooked chicken and beef strips.

    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 first quarter increased 8% to $201 million from $186 million last year, largely due to increased rendering sales.

Earnings from operations for the first quarter declined 39% to $13.4 million from $21.9 million last year. A 17% decline in hog prices and currency impact on the Company's hog production operations substantially reduced earnings compared to the first quarter last year. The Company has a number of measures in place to restore competitiveness in this business, which has been significantly affected by the decline in the U.S. dollar and a corresponding lower selling price for hogs. The Company had effective ownership of 22% of the hogs it processed in the first quarter. Earnings from rendering operations increased in the quarter as a result of volume and service charge increases to cover high energy and related costs. The Company also commissioned its new biodiesel plant in Quebec, where it converts inedible tallow into an alternate fuel for industrial and commercial applications.

    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 first quarter increased 4% to $301 million compared to $289 million last year driven by improvement in sales mix and price increases, offset by some short term market softness.

Earnings from operations in the first quarter increased 20% to $24.7 million compared to $20.6 million last year, due to a very strong contribution from the fresh bakery operations. This business benefited significantly from growth in branded and higher margin higher nutrition categories as part of its overall sales mix. A focus on innovation and brand building continues to drive significant margin and market expansion. In the first quarter, the Company launched Dempster's Smart, a white bread product made with a new enriched whole wheat flour that provides the health attributes of whole grain bread. This is the first product of its type in the Canadian market, and provides a higher nutrition alternative to white bread consumers, who represent a large segment of the Canadian bread market. The business also benefited from a price increase implemented in February to offset high fuel prices.

Frozen bakery earnings declined despite increased volumes, largely due to higher freight and energy costs, due to the slower pace of price increases in this market. Earnings from the U.K. Bakery operations increased in the quarter, benefiting from the commissioning of the new bagel plant in Rotherham, England early in 2005 and related sales and earnings growth. This plant is the largest bagel producer in the U.K., and in addition to meeting rising consumer demand for bagels in the U.K., is manufacturing for export markets including the Netherlands, Iceland and Ireland. The pasta business also increased earnings in the quarter due to increased volume and sales of higher margin products.

Cash Flow and Financing

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

Interest expense for the first quarter of $24.2 million compared to $25.0 million last year as lower debt balances were mostly offset by higher interest rates. At March 2006, 86% of indebtedness was not exposed to interest rate fluctuations.

Cash used in operations of $18.7 million compared to $40.9 million last year, an improvement of $22.2 million. This improvement was due to an increase in the Company's accounts receivable securitization program of $33.8 million. This was offset by increased contributions to the Company's pension plans during the quarter.

Total debt, net of cash balances, of $1.1 billion as at March 31, 2006 decreased from $1.2 billion in the prior year.

Capital expenditures on plant and equipment for the first quarter decreased to $25.8 million from $40.0 million last year due to reduced spending in the Meat and Agribusiness Groups.

Other Income

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

Other income for the first quarter of $2.0 million compared to an expense of $0.5 million reflecting a gain on the sale of real estate in 2006 and a loss on conversion of a convertible debenture in the first quarter of 2005.

Acquisitions

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

During the quarter, the Company made two acquisitions totaling $5.3 million. In March 2006, Canada Bread acquired the assets of Harvestime Limited ("Harvestime"), a U.K.-based bakery. This acquisition broadens the U.K. bakery's operating capabilities to manufacture par-baked bread products and also positions the Company as a major supplier to the in-store bakery market. Also in the quarter, the Company purchased the assets of a Quebec hatchery which supplies chick embryos for production of influenza vaccines.

Forward-Looking Statements

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

This document contains, and the Company's oral and written public communications often contain, forward-looking statements that are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates and beliefs and assumptions made by the management of the Company. Such statements include, but are not limited to, statements with respect to our objectives and goals, as well as statements with respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. Words such as "expect," "anticipate," "intend," "attempt," "may," "plan," "believe," "seek," "estimate," and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve assumptions and risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. The Company does not intend, and the Company disclaims any obligation to update any forward-looking statements, whether written or oral, or whether as a result of new information, future events or otherwise. Refer to the Company's annual report, management proxy circular, annual information form and other filings with the Ontario Securities Commission and Toronto Stock Exchange for further information on risks and uncertainties that could cause actual results to differ materially from forward-looking statements.

These forward-looking statements are based on a variety of factors and assumptions including, but not limited to: the condition of the Canadian and U.S. economies, the rate of appreciation of the Canadian dollar versus the U.S. dollar and Japanese Yen, the availability and prices of livestock, raw materials, energy and supplies, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards, adverse results from ongoing litigation and actions of domestic and foreign governments. These assumptions have been derived from information currently available to the Company including information obtained by the Company from third-party industry analysts. Actual results may differ materially from those predicted by such forward-looking statements. While the Company does not know what impact any of these differences may have, its business, results of operations, financial condition and the market price of its securities may be materially adversely affected. Factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking statements include, among other things: the risks posed by food contamination, consumer liability and product recalls; the risks related to the health status of livestock; the risks related to the creditworthiness of customers to whom the Company extends credit; the Company's exposure to currency exchange risks; the impact of international events on commodity prices and the free flow of goods; the cyclical nature of the cost and supply of hogs and the pork market generally; the risks posed by compliance with extensive government regulation; the impact of the rate of duty imposed by the United States government on the shipment of live swine to the United States; the risk due to the consolidating customer environment; leverage risk and the risk posed by pandemic.

Other Matters

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

Maple Leaf Foods declared a dividend of $0.04 per share payable on June 30, 2006, to shareholders of record on June 9, 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 $6.1 billion in 2005.

An investor presentation related to the Company's first 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 2:30 p.m. EDT on April 26, 2006 to review Maple Leaf Foods' first 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 3182617 followed by the number sign).

A webcast presentation of the first quarter financial results will also be available at http://investor.mapleleaf.ca at 2:00 p.m. EDT via a link. An archived replay of the webcast will be available following the call at each of the above links.



                 Consolidated Financial Statements
                 (Expressed in Canadian dollars)

                 MAPLE LEAF FOODS INC.

                 Three months ended March 31, 2006 and 2005



    MAPLE LEAF FOODS INC.
    Consolidated Balance Sheets
    (In thousands of Canadian dollars)

    -------------------------------------------------------------------------
                                           As at         As at         As at
                                        March 31,     March 31,  December 31,
                                            2006          2005          2005
    -------------------------------------------------------------------------
                                      (Unaudited)   (Unaudited)

    ASSETS

    Current assets
      Cash and cash equivalents      $     8,674   $    89,011   $    80,502
      Accounts receivable (Note 3)       230,111       277,953       247,014
      Inventories                        432,792       417,212       400,848
      Future tax asset - current          15,896        20,020        15,329
      Prepaid expenses and
       other assets                       11,888        14,035        12,104
      -----------------------------------------------------------------------
                                         699,361       818,231       755,797

    Investments in associated
     companies                            48,262        83,824        61,939

    Property and equipment             1,151,116     1,090,020     1,137,317

    Other long-term assets               268,097       232,875       261,907

    Future tax asset - non-current        39,881        32,353        38,499

    Goodwill                             848,032       850,732       847,853

    Other intangibles                     86,350        81,552        86,468

    -------------------------------------------------------------------------
                                     $ 3,141,099   $ 3,189,587   $ 3,189,780
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities
      Accounts payable and
       accrued charges               $   629,275   $   559,425   $   669,941
      Income and other taxes payable      18,803        17,783        31,727
      Current portion of
       long-term debt                    102,584        64,049       110,428
      -----------------------------------------------------------------------
                                         750,662       641,257       812,096

    Long-term debt                     1,037,077     1,250,112     1,032,829

    Future tax liability                  55,172        43,359        56,183

    Other long-term liabilities          196,130       247,835       202,576

    Minority interest                     91,147        76,831        87,425

    Shareholders' equity               1,010,911       930,193       998,671

    -------------------------------------------------------------------------
                                     $ 3,141,099   $ 3,189,587   $ 3,189,780
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 March 31,
    (Unaudited)                                           2006          2005
    -------------------------------------------------------------------------
                                                                (As restated)
                                                                  (Note 1(a))

    Sales                                          $ 1,425,951   $ 1,500,643
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings from operations before
     restructuring costs                                51,802        61,150

    Restructuring costs (Note 2)                             -        13,157
    -------------------------------------------------------------------------

    Earnings from operations                            51,802        47,993

    Other income (expense) (Note 4)                      1,969          (542)
    -------------------------------------------------------------------------

    Earnings before interest and income taxes           53,771        47,451

    Interest expense                                    24,215        25,046
    -------------------------------------------------------------------------

    Earnings before income taxes                        29,556        22,405

    Income taxes                                         9,829         7,554
    -------------------------------------------------------------------------

    Earnings before minority interest                   19,727        14,851

    Minority interest                                    2,455         2,103

    -------------------------------------------------------------------------
    Net earnings                                   $    17,272   $    12,748
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share - basic (Note 7)            $      0.14   $      0.10

    Earnings per share - diluted (Note 7)          $      0.13   $      0.10

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

    Weighted average number of shares (millions)         127.7         126.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Retained Earnings
    (In thousands of Canadian dollars)

    -------------------------------------------------------------------------
                                                 Three months ended March 31,
    (Unaudited)                                           2006          2005


    Retained earnings, beginning of period         $   231,807   $   159,129

    Net earnings                                        17,272        12,748

    Dividends declared ($0.04 per share;
     2005: $0.04 per share)                             (5,100)       (5,050)

    Premium on repurchase of share capital
     (Note 6)                                           (3,456)            -

    -------------------------------------------------------------------------
    Retained earnings, end of period               $   240,523   $   166,827
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 March 31,
    (Unaudited)                                           2006          2005
    -------------------------------------------------------------------------

    CASH PROVIDED BY (USED IN)

    Operating activities
      Net earnings                                 $    17,272   $    12,748
      Add (deduct) items not affecting cash:
        Depreciation and amortization                   35,522        32,620
        Stock-based compensation                         2,591         1,768
        Minority interest                                2,455         2,103
        Future income taxes                             (2,854)       (4,538)
        Undistributed earnings of associated
         companies                                        (137)       (1,276)
        Loss on redemption of convertible
         debenture                                           -         1,108
        Gain on sale of property and equipment            (566)         (171)
        Loss on sale of investments                          8            11
      Other                                              3,089        (1,372)
      Change in other long-term receivables              1,587         6,036
      Increase in pension asset                        (12,441)       (5,627)
      Change in operating working capital              (65,242)      (84,306)
      -----------------------------------------------------------------------
                                                       (18,716)      (40,896)

    Financing activities
      Dividends paid                                    (5,100)       (5,050)
      Dividends paid to minority interest                 (655)         (311)
      Increase (decrease) in long-term debt            (13,045)       55,830
      Increase in share capital (Note 6)                 2,943         4,723
      Shares repurchased for cancellation (Note 6)      (6,229)            -
      Other                                              2,057           758
      -----------------------------------------------------------------------
                                                       (20,029)       55,950

    Investing activities
      Additions to property and equipment              (25,814)      (39,958)
      Proceeds from sale of property and equipment       3,439         3,703
      Purchase of net assets of businesses (Note 8)     (5,323)       (2,746)
      Change in other investments, net                  (5,265)            -
      Other                                               (120)        1,188
      -----------------------------------------------------------------------
                                                       (33,083)      (37,813)

    Decrease in cash and cash equivalents              (71,828)      (22,759)

    Cash and cash equivalents, beginning of period      80,502       111,770

    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period       $     8,674   $    89,011
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 March 31,
    (Unaudited)                                           2006          2005
    -------------------------------------------------------------------------
                                                                (As restated)
                                                                  (Note 1(a))

    Sales
      Meat Products Group                          $   923,527   $ 1,025,887
      Agribusiness Group                               201,081       186,065
      Bakery Products Group                            301,343       288,691
    -------------------------------------------------------------------------
                                                   $ 1,425,951   $ 1,500,643
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings from operations, before
     restructuring costs
      Meat Products Group                          $    13,727   $    18,656
      Agribusiness Group                                13,344        21,851
      Bakery Products Group                             24,731        20,643
    -------------------------------------------------------------------------
                                                   $    51,802   $    61,150
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Additions to property and equipment
      Meat Products Group                          $    11,028   $    17,759
      Agribusiness Group                                 4,367         9,743
      Bakery Products Group                             10,419        12,456
    -------------------------------------------------------------------------
                                                   $    25,814   $    39,958
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Depreciation and amortization
      Meat Products Group                          $    16,993   $    16,353
      Agribusiness Group                                 6,952         5,370
      Bakery Products Group                             11,577        10,897
    -------------------------------------------------------------------------
                                                   $    35,522   $    32,620
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                           As at         As at         As at
                                        March 31,     March 31,  December 31,
                                            2006          2005          2005
    -------------------------------------------------------------------------
                                      (Unaudited)   (Unaudited) (As Restated)
                                                                  (Note 1(b))
    Total assets
      Meat Products Group            $ 1,502,768   $ 1,566,451   $ 1,501,295
      Agribusiness Group                 692,870       631,358       688,766
      Bakery Products Group              706,094       697,529       694,519
      Non-allocated assets               239,367       294,249       305,200
    -------------------------------------------------------------------------
                                     $ 3,141,099   $ 3,189,587   $ 3,189,780
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    MAPLE LEAF FOODS INC.
    Notes to Consolidated Financial Statements
    (Tabular amounts in thousands of Canadian dollars, except share amounts)

    Three months ended March 31, 2006 and 2005

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

    1.  SIGNIFICANT ACCOUNTING POLICIES

        The unaudited interim consolidated financial statements should be
        read in conjunction with the annual consolidated financial statements
        for the year ended December 31, 2005. These unaudited interim
        consolidated financial statements have been prepared in accordance
        with Canadian generally accepted accounting principles using the same
        accounting policies as were applied in the consolidated financial
        statements for the year ended December 31, 2005, except for the
        following:

        a) Accounting changes

           Effective January 1, 2006 the Company retroactively adopted, with
           restatement of prior periods, the guidance presented in EIC
           Abstract 156 "Accounting by a Vendor for Consideration Given to a
           Customer including a Reseller of the Vendor's Products". The EIC
           requires vendors to classify certain consideration provided to
           customers as a reduction of revenue rather than as cost of sales
           unless the vendor receives, or will receive an identifiable
           benefit in exchange for the consideration. The impact of the
           adoption of this standard was a reduction in sales during the
           quarter of approximately $90.7 million (2005: 81.6 million).

        b) Comparative figures

           The December 31, 2005 segmented total assets for the purposes of
           the segmented financial information have been revised to reflect
           the allocation of certain assets relating to Schneiders'
           acquisition that are now being managed by the Agribusiness group.

           Certain other 2005 comparative figures have been reclassified to
           conform to the financial statement presentation adopted in 2006
           and year-end 2005.

    2.  RESTRUCTURING COSTS

        During the first quarter of 2005, the Company recorded $13.2 million
        in restructuring costs ($8.8 million after-tax) in respect of certain
        plant closures and operational restructuring for several of its
        businesses associated with the integration of Schneider Corporation
        ("Schneider Foods"), the closure of the Company's bakery in
        Peterborough, England and certain other operational restructuring
        items. Of the $13.2 million, $5.0 million represents the write-down
        of certain capital assets that were disposed of or that have become
        impaired as a result of restructuring and $8.2 million relates to
        provisions for employee terminations, facility exit costs, and other
        restructuring costs. Of the $8.2 million in provisions, $0.5 million
        was paid during the quarter (2005: $nil), leaving an outstanding
        balance of $5.0 million as at March 31, 2006.

    3.  ACCOUNTS RECEIVABLE

        Under revolving securitization programs, the Company has sold, with
        limited recourse, certain of its trade accounts receivable to
        financial institutions. The Company retains servicing
        responsibilities and assumes limited recourse obligations for
        delinquent receivables. At March 31, 2006, trade accounts receivable
        being serviced under this program amounted to $238.0 million
        (March 31, 2005: $204.2 million; December 31, 2005: $230.1 million).

    4.  OTHER INCOME (EXPENSE)

        ---------------------------------------------------------------------
                                                 Three months ended March 31,
                                                          2006          2005
        ---------------------------------------------------------------------

        Earnings (loss) from real estate
         operations                                $     1,178        $ (142)
        Gain on sale of property and equipment             566           171
        Earnings from associated companies                 137           186
        Dividends received                                  32           230
        Loss on redemption of convertible
         debenture                                           -        (1,108)
        Other                                               56           121
        ---------------------------------------------------------------------
                                                   $     1,969   $      (542)
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    5.  PENSIONS

        During the quarter, the Company recorded income of $2.9 million
        related to net benefit plan income including post-retirement benefit
        costs (2005: $1.0 million).

    6.  SHARE CAPITAL

        The following table sets forth the continuity for shares issued and
        outstanding during the quarter and the corresponding value:

        ---------------------------------------------------------------------
                                  Number of shares          Share capital
                              ------------------------- ---------------------
                                     2006         2005       2006       2005
        ---------------------------------------------------------------------
        Opening balance       127,704,812  125,174,627  $ 765,666  $ 731,291
        Exercise of options       252,767      416,069      2,943      4,723
        Repurchased for
         cancellation(i)         (461,900)           -     (2,773)         -
        Conversion of
         convertible
         debentures                     -      763,933          -     12,217
        ---------------------------------------------------------------------
                              127,495,679  126,354,629  $ 765,836  $ 748,231
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        (i) During the quarter, the Company repurchased for cancellation
            461,900 common shares pursuant to a normal course issuer bid at
            an average exercise price of $13.48 per share. The excess of the
            purchase cost over the book value of the shares was charged to
            retained earnings.


    7.  EARNINGS PER SHARE

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

        ---------------------------------------------------------------------
                                     Three months ended March 31,
                                   2006                       2005
        ---------------------------------------------------------------------
                                  Weighted                    Weighted
                                  Average                     Average
                         Net     Number of           Net     Number of
                       Earnings  Shares(ii)  EPS   Earnings  Shares(ii)  EPS
                      --------------------------- ---------------------------
        Basic          $ 17,272   127.7   $ 0.14   $ 12,748   126.0   $ 0.10
          Stock
           options(i)         -     2.4    (0.01)         -     3.2        -
        ---------------------------------------------------------------------
        Diluted        $ 17,272   130.1   $ 0.13   $ 12,748   129.2   $ 0.10
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        (i)  Excludes the effect of 11.3 million options and restricted stock
             units (2005: 10.0 million) to purchase common shares that are
             anti-dilutive
        (ii) In millions


    8.  ACQUISITIONS

        During the quarter, the Company made two acquisitions totaling
        $5.3 million. On March 24, 2006 Canada Bread acquired Harvestime
        Limited (Harvestime), a bakery in Walsall, England. Harvestime is a
        producer of par-baked breads, rolls and specialty bakery products. In
        January 2006, the Company purchased the assets of a hatchery in
        Quebec that supplies chick embryos for the production of influenza
        vaccines. The Company has not yet finalized the purchase price
        allocations for either of these acquisitions.

    9.  SUPPLEMENTAL CASH FLOW INFORMATION

        ---------------------------------------------------------------------
                                                 Three months ended March 31,
                                                          2006          2005
        ---------------------------------------------------------------------
        Net interest paid                          $    12,141   $    14,891
        Net income taxes paid                           27,438        20,581
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    >>

SOURCE: Maple Leaf Foods Inc.

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


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