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Maple Leaf Foods Reports Results for Second Quarter 2011

TORONTO, July 28, 2011 /PRNewswire via COMTEX/ —

TSX: MFI
www.mapleleaffoods.com

Maple Leaf Foods Inc. (TSX: MFI) today
reported its financial results for the second quarter ended June 30,
2011.
Second quarter highlights include:

  • Adjusted Operating Earnings(1) increased 54% to $77.5 million
  • Value creation initiatives on track and contributing to margin growth
  • Net earnings increased to $24.6 million from $4.9 million
  • Adjusted Earnings per Share(1) increased 83% to $0.30 from $0.16 last year

“Maple Leaf Foods delivered outstanding results and our ninth
consecutive quarter of earnings growth,” said Michael H. McCain,
President and CEO. “We are successfully managing the impact of rising
costs through price increases and cost reduction initiatives, and our
value creation plan is on track and contributing to earnings. We are
making steady progress in increasing our profitability and delivering
on our commitments.”

(1): Adjusted Operating Earnings measures are defined as earnings from
operations before restructuring and other related costs, other income
and the impact of the change in fair value of non-designated interest
rate swaps, unrealized (gains)losses on commodity futures contracts and
the change in fair value of biological assets. Adjusted Earnings per
Share (“Adjusted EPS”) measures are defined as basic earnings per share
adjusted for the impact of restructuring and other related costs and
the impact of the change in fair value of non-designated interest rate
swaps, unrealized (gains)losses on commodity futures contracts and the
change in fair value of biological assets, net of tax and
non-controlling interest. Please refer to the section entitled
Reconciliation of Non-IFRS Financial Measures in this news release.

Financial Overview

Sales for the second quarter of 2011 decreased 3% to $1,238.2 million
compared to $1,271.4 million last year, primarily due to business
divestitures. After adjusting for the impact of divestitures and the
impact of a stronger Canadian dollar, sales increased by 4%.

Adjusted Operating Earnings increased to $77.5 million compared to $50.4
million
last year, largely due to improved performance in the Protein
Group. Adjusted Earnings per Share increased to $0.30 compared to $0.16
last year.

Net earnings increased to $24.6 million ($0.17 basic earnings per share)
compared to net earnings of $4.9 million ($0.02 basic earnings per
share) last year. Net earnings in the quarter included $16.6 million of
pre-tax costs related to restructuring activities (2010: $7.5 million).

Several items are excluded from the discussions of underlying earnings
performance during the quarter. These include restructuring charges,
mark-to-market adjustments on hedging contracts that are not designated
in a hedging relationship and mark-to-market adjustments related to
biological assets. Restructuring charges are excluded as they do not
reflect the continuing earnings performance of the business. Mark to
market adjustments do not reflect the economic effect of the hedging
transactions and are excluded from earnings discussions until the
underlying asset is sold or transferred. Refer to the section entitled
Reconciliation of Non-IFRS Financial Measures in this news release.

Business Segment Review

Following is a summary of sales by business segment:

(Unaudited) Second Quarter Year-to-Date
($ thousands) 2011 2010 2011 2010
Meat Products Group $762,212 $815,735 $1,480,453 $1,583,915
Agribusiness Group 70,918 54,057 128,211 95,865
Protein Group $833,130 $869,792 $1,608,664 $1,679,780
Bakery Products Group 405,071 401,574 777,479 783,093
Sales $1,238,201 $1,271,366 $2,386,143 $2,462,873

The following table summarizes Adjusted Operating Earnings by business
segment:

(Unaudited) Second Quarter Year-to-Date
($ thousands) 2011 2010 2011 2010
Meat Products Group $16,102 $12,477 $42,749 $24,028
Agribusiness Group 32,706 13,641 46,711 19,965
Protein Group $48,808 $26,118 $89,460 $43,993
Bakery Products Group 29,884 26,595 42,071 43,697
Non-allocated Costs in Adjusted Operating Earnings(i) (1,156) (2,288) (3,308) (5,810)
Adjusted Operating Earnings $77,536 $50,425 $128,223 $81,880
(i) Non-allocated costs in Adjusted Operating Earnings comprise costs
related to systems conversion and consulting fees. Management believes
that not allocating these costs provides a more comparable assessment
of operating results.

Meat Products Group

Includes value-added prepared meats, chilled meal entrees and lunch
kits; and fresh pork, poultry and turkey products sold to retail,
foodservice,industrial and convenience channels. Includes leading
Canadian brands such as Maple Leaf
®, Schneiders ® and many leading sub-brands.

Sales for the second quarter decreased 7% to $762.2 million from $815.7
million
in the second quarter last year, largely due to the sale of the
Company’s Burlington, Ontario primary pork processing operation in
November 2010. After adjusting for the impact of this divestiture and
the impact of a stronger Canadian dollar that reduced the sales value
of exports, sales increased by 3% compared to last year. Higher market
prices in fresh pork, combined with price increasesand higher value
sales mix in the prepared meats business contributed to stronger sales.
These benefits were partly offset by lower sales volumes, primarily in
prepared meats, due to lower export and retail sales volumes.

Adjusted Operating Earnings in the Meat Products Group for the second
quarter increased 29% to $16.1 million compared to $12.5 million last
year, driven by margin expansion in prepared meats and stronger primary
pork processing results.

Prepared meats margins strengthened as price increases offset the impact
of rising input costs, although the business experienced some volume
decline. Margins also benefited from operational improvements and the
contribution of higher-margin products, such as the Natural Selections™
and the newly launched Schneiders® Country Naturals™sliced meat lines.

Primary pork processing margins increased as a result of strong export
sales, and improved product mix and operating efficiencies. Earnings
from poultry processing operations declined compared to those of last
year as a result of higher live birds costs that compressed
industry-wide poultry processor margins.

During the quarter the Company continued to progress in the
implementation of its value creation plan. This plan includes
initiatives to reduce costs and increase supply chain efficiencies
through product and packaging simplification, price management, network
consolidation, and investments to reduce costs and build scale.
Initiatives underway to standardize product ingredients, sizes and
packaging and eliminate non-value added product lines contributed to
margin growth in the quarter. The Company closed and subsequently sold
a prepared meats facility located in Berwick, Nova Scotia, and
consolidated the production into other existing plants. The Company has
also announced the scheduled closure of a prepared meats plant in
Surrey, British Columbia, in the second half of 2011 and began
transferring production to other facilities in June 2011.

Agribusiness Group

Consists of Canadian hog production and animal by-product recycling
operations.

Sales in the Agribusiness Group for the second quarter increased 31% to
$70.9 million from $54.1 million last year mostly reflecting higher
sales values in the by-products recycling business.

Adjusted Operating Earnings in the Agribusiness Group in the second
quarter increased by 140% to $32.7 million compared to $13.6 million
last year, driven by the benefit of higher prices for by-products and
hogs. Earnings in the by-products recycling business increased due to
higher market prices in both rendering and bio-diesel operations. Hog
prices also increased 15% since last year and outpaced increases in the
Company’s net cost of grain.

Bakery Products Group

Includes fresh and frozen bakery products, including breads, rolls,
bagels, specialty and artisan breads, sweet goods, and fresh pasta and
sauces sold to retail, foodservice and convenience channels. It
includes national brands such as Dempster’s
®, Tenderflake®, Olivieri® and New York Bakery Co™, and many leading regional brands.

Sales in the Bakery Products Group for the second quarter were
consistent with prior year at $405.1 million compared to $401.6 million
last year. After adjusting for the impact of the sale of the Company’s
fresh sandwich product line in February 2011 and the impact of currency
translation on sales in the U.S. and U.K., sales increased 4% primarily
reflecting higher selling prices as a result of price increases
implemented in the first half of 2011. Overall sales volumes declined
slightly in the fresh bakery business as consumers adjust to higher
prices.

Adjusted Operating Earnings in the Bakery Products Group for the second
quarter increased 12% to $29.9 million, compared to $26.6 million last
year. Overall, earnings improved due to the benefit of price increases,
largely in fresh bakery, to offset higher raw material costs. The North
American frozen bakery business continues to implement price increases
to fully offset higher costs. Benefits from operational efficiencies
offset remaining inflationary pressures. Lower promotional costs and
the benefit from cost reduction initiative implemented early in 2011
and the sale of the fresh sandwich product line earlier this year also
contributed to higher earnings.

In the United Kingdom, the Company sold a small scale bakery in Cumbria
in April 2011 and closed a bakery in London in May 2011, with
production consolidated into its bakeries in Maidstone and Walsall.

The new fresh bakery in Hamilton, Ontario, which is a significant
element of the Company’s value creation plan, began initial production
in July 2011 as planned. Construction and commissioning of this bakery,
one of the largest fresh bakeries in North America, is on schedule and
on budget. The Company will gradually transfer production from three
bakeries in the Greater Toronto Area, which are scheduled for closure
starting at the end of 2011 up until early 2013.

Capital Expenditures

The Company currently estimates its capital expenditures for the full
year of 2011 to be between $270 million to $290 million, which is below
its prior estimates of $320 million. The level of investment in
strategic projects is tracking to plan; however, Management now
anticipates that capital investments in base business operations will
be lower than previous estimates.

Other Matters

On July 27, 2011 Maple Leaf Foods Inc. declared a dividend of $0.04 per
share payable on September 30, 2011 to shareholders of record at the
close of business on September 9, 2011. Unless indicated otherwise by
the Company in writing or by a posting to its internet website, at or
before the time the dividend is paid, the dividend will not be
considered an eligible dividend for the purposes of the “Enhanced
Dividend Tax Credit System”. If prior to the payment of the dividend,
the Company determines that a portion of this dividend may be
designated as an eligible dividend, then the portion so determined
shall be paid as a dividend and the portion that is not an eligible
dividend shall also be paid as a dividend, such that the total amount
of the dividends paid is $0.04 per share.

The dividends paid in the first and second quarter of 2011 were not
considered eligible dividends for purposes of the “Enhanced Dividend
Tax Credit System”. It is currently anticipated that a portion of the
dividend in the third quarter and the dividend for the fourth quarter
will be considered eligible dividends for the purposes of the “Enhanced
Dividend Tax Credit System”.

An investor presentation related to the Company’s second 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 at2:30p.m. EDT on July 28, 2011
to review Maple Leaf Foods’ second quarter financial results. To
participate in the call, please dial 416-340-2219 or 877-240-9772. For
those unable to participate, playback will be made available an hour
after the event at 905-694-9451 / 800-408-3053 (Passcode5725811).

A webcast presentation of the second quarter financial results will also
be available at http://investor.mapleleaf.ca via a link:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=88490&eventID=4149788

The Company’s full financial statements and related Management’s
Discussion and Analysis are available for download on the Company’s
website.

Reconciliation of Non-IFRS Financial Measures

The Company uses the following non-IFRS measures: Adjusted Operating
Earnings and Adjusted EPS. Management believes that these non-IFRS
measures provide useful information to both Management and investors in
measuring the financial performance of the Company for the reasons
outlined below. These measures do not have a standardized meaning
prescribed by IFRS and therefore they may not be comparable to
similarly titled measures presented by other publicly traded companies
and should not be construed as an alternative to other financial
measures determined in accordance with IFRS.

Adjusted Operating Earnings

The following table reconciles earnings from operations before
restructuring and other related costs, other income (expense) and the
impact of the change in fair value of non-designated interest rate
swaps, unrealized gains/losses on commodity futures contracts and the
change in fair value of biological assets to net earnings as reported
under IFRS in the unaudited condensed consolidated interim statements
of earnings for the three month periods ended as indicated below.
Management believes that this is the most appropriate basis on which to
evaluate operating results, as restructuring and other related costs,
other income (expense) and the change in fair value of non-designated
interest rate swaps, unrealized gains/losses on commodity futures
contracts and the change in fair value of biological assets are not
representative of operational results during the period.

(Unaudited) Three months ended June 30, 2011
($ thousands) Meat

Products

Group

Agribusiness Group Bakery

Products

Group

Unallocated

costs

Consolidated
Net earnings $24,582
Income taxes 10,441
Earnings from operations before income taxes $35,023
Interest expense 17,074
Change in the fair value of non-designated interest rate swaps 5,623
Other income (25) 26 76 77
Restructuring and other related costs 4,049 12,547 16,595
Earnings from Operations $16,102 $32,706 $29,884 ($4,300) $74,392
(Increase) / decrease in fair value of biological assets 9,828 9,828
Unrealized (gains) / losses on commodity futures contracts (6,684) (6,684)
Adjusted Operating Earnings $16,102 $32,706 $29,884 ($1,156) $77,536
(Unaudited) Three months ended June 30, 2010
($ thousands) Meat

Products

Group

Agribusiness

Group

Bakery

Products

Group

Unallocated

costs

Consolidated
Net earnings $4,934
Income taxes 2,623
Earnings from operations before income taxes $7,557
Interest expense 16,408
Change in the fair value of non-designated interest rate swaps 20,748
Other income (100) (18) (55) (29) (202)
Restructuring and other related costs 4,616 78 805 1,954 7,453
Earnings from Operations (i ) $12,477 $13,641 $26,595 ($749) $51,964
(Increase) / decrease in fair value of biological assets 827 827
Unrealized (gains) / losses on commodity futures contracts (2,367) (2,367)
Adjusted Operating Earnings (i ) $12,477 $13,641 $26,595 ($2,288) $50,424
(i) May not add due to rounding

Adjusted Earnings per Share

The following table reconciles Adjusted Earnings per Share to basic
earnings per share as reported under IFRS in the unaudited condensed
consolidated interim statements of earnings for the three and six month
periods ended as indicated below. Management believes this is the most
appropriate basis on which to evaluate financial results as
restructuring and other related costs and the changes in the fair value
of non-designated interest rate swaps, unrealized (gains)losses on
commodity futures contracts and the change in fair value of biological
assets net of tax and non-controlling interests are not representative
of operational results.

(Unaudited) Three months ended

June 30,

Six months ended

June 30,

($ per share) 2011 2010 2011 2010
Basic earnings per share $0.17 $0.02 $0.24 $0.16
Restructuring and other related costs(i) 0.08 0.04 0.21 0.06
Change in the fair value of non-designated interest rate swaps(ii) 0.03 0.11 0.00 0.11
Change in the fair value of unrealized gains/losses on commodity futures
contracts(ii)
(0.03) (0.01) (0.01) (0.02)
Change in the fair value of biological assets (ii) 0.05 0.00 0.02 (0.07)
Adjusted Earnings per Share (iii) $0.30 $0.16 $0.47 $0.23
(i) Includes per share impact of restructuring and other related costs, net
of tax and non-controlling interest.
(ii) Includes per share impact of the change in fair value of non-designated
interest rate swaps, unrealized (gains)Losses on commodity futures
contracts and the change in fair value of biological assets, net of
tax.
(iii) May not add due to rounding.

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 objectives and goals, as
well as statements with respect to beliefs, plans, objectives,
expectations, anticipations, estimates and intentions. Specific
forward-looking statements in this document include, but are not
limited to, statements with respect to improving business trends,
expectations regarding actions to reduce costs, restore and/or promote
volumes and/or increase prices, improve efficiencies, the expected use
of cash balances, source of funds for ongoing business requirements,
capital investments and debt repayment, and expectations regarding
sufficiency of the allowance for uncollectible accounts. Words such as
“expect”, “anticipate”, “intend”, “attempt”, “may”, “will”, “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.

In addition, these statements and expectations concerning the
performance of the Company’s business in general are based on a number
of factors and assumptions including, but not limited to: the condition
of the Canadian, United States, United Kingdom and Japanese economies;
the rate of exchange of the Canadian dollar to the U.S. dollar, British
pound and the Japanese yen; the availability and prices of raw
materials, energy and supplies; product pricing; the availability of
insurance; the competitive environment and related market conditions;
improvement of operating efficiencies whether as a result of the
protein business transformation or otherwise; continued access to
capital; the cost of compliance with environmental and health
standards; no adverse results from ongoing litigation; no unexpected
actions of domestic and foreign governments; and the general assumption
that none of the risks identified below or elsewhere in this document
will materialize. All of these assumptions have been derived from
information currently available to the Company including information
obtained by the Company from third-party sources. These assumptions may
prove to be incorrect in whole or in part. In addition, actual results
may differ materially from those expressed, implied or forecasted in
such forward-looking statements, which reflect the Company’s
expectations only as of the date hereof.

Factors that could cause actual results or outcomes to differ materially
from the results expressed, implied or forecasted by forward-looking
statements are discussed more fully in the Company’s Annual
Management’s Discussion and Analysis for the period ended December 31,
2010
including the section entitled “Risk Factors”, that are updated
each quarter in the Management’s Discussion and Analysis, and are
available on SEDAR at www.sedar.com. The Company does not intend to, 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 except as required by law.

Maple Leaf Foods Inc. (“Maple Leaf” or the “Company”) is a leading
Canadian value-added meat, meals and bakery company committed to
delivering quality food products to consumers around the world.
Headquartered in Toronto, Canada, the Company employs approximately
21,000 people at its operations across Canada and in the United States,
Europe and Asia.

Condensed Consolidated Interim Financial Statements
(Expressed in Canadian dollars)
(Unaudited)

MAPLE LEAF FOODS INC.

Three and six months ended June 30, 2011 and 2010

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

As at
June 30,
2011
As at
June 30,
2010
As at
December 31,
2010
As at
January 1,
2010
ASSETS
Current assets
Cash and cash equivalents $ $ 24,772 $ $ 29,316
Accounts receivable 120,739 348,963 84,117 375,143
Notes receivable 158,429 136,663
Inventories 286,704 329,878 275,643 298,320
Biological assets 44,881 49,181 45,440 42,568
Income and other taxes recoverable 41,130 21,478 29,957 18,067
Prepaid expenses and other assets 21,669 24,092 14,766 15,328
$ 673,552 $ 798,364 $ 586,586 $ 778,742
Property and equipment 1,032,413 1,062,439 1,025,012 1,084,147
Investment property 11,436 7,098 6,832 6,646
Employee benefits 51,644 103,113 55,761 104,386
Other long-term assets 9,613 11,366 6,426 5,407
Deferred tax asset 96,051 89,248 101,688 83,170
Goodwill 751,535 755,894 752,911 755,059
Other intangible assets 174,983 152,026 164,178 137,239
Total assets $ 2,801,227 $ 2,979,548 $ 2,699,394 $ 2,954,796
LIABILITIES AND EQUITY
Current liabilities
Bank indebtedness $ 14,063 $ 8,071 $ 15,858 $ 4,247
Accounts payable and accruals 463,813 635,327 481,816 638,146
Provisions 47,128 23,392 35,062 20,612
Current portion of long-term debt 205,337 466,950 496,835 206,147
Other current liabilities 71,605 16,006 63,465 37,837
$ 801,946 $ 1,149,746 $ 1,093,036 $ 906,989
Long-term debt 746,202 582,670 389,078 834,557
Employee benefits 103,540 105,151 105,849 101,379
Other long-term liabilities 104,937 112,282 98,417 98,918
Deferred tax liability 24,890 31,159 26,183 31,091
Total liabilities $ 1,781,515 $ 1,981,008 $ $ 1,712,563 $ 1,972,934
Shareholders’ equity
Share capital $ 902,810 $ 869,406 $ 902,810 $ 869,353
Retained earnings 50,052 30,689 27,603 24,135
Contributed surplus 67,550 60,302 59,002 57,486
Accumulated other comprehensive loss (53,483) (6,760) (55,396) (5,055)
Treasury stock (10,078) (17,164) (10,078) (24,499)
Total shareholders’ equity $ 956,851 $ 936,473 $ 923,941 $ 921,420
Non-controlling interest 62,861 62,067 62,890 60,442
Total equity $ 1,019,712 $ 998,540 $ 986,831 $ 981,862
Total liabilities and equity $ 2,801,227 $ 2,979,548 $ 2,699,394 $ 2,954,796

MAPLE LEAF FOODS INC.
Consolidated Statements of Earnings
(In thousands of Canadian dollars, except share amounts)

Three months ended June 30, Six months ended June 30,
2011 2010 2011 2010
Sales $ 1,238,201 $ 1,271,366 $ 2,386,143 $ 2,462,873
Cost of goods sold 1,038,693 1,089,055 2,005,381 2,105,137
Gross margin $ 199,508 $ 182,311 $ 380,762 $ 357,736
Selling, general and administrative expenses 125,116 130,347 254,141 258,666
Earnings from operations before the following: $ 74,392 $ 51,964 $ 126,621 $ 99,070
Restructuring and other related costs (16,595) (7,453) (42,720) (11,416)
Change in fair value of non-designated interest rate swaps (5,623) (20,748) (958) (20,748)
Other income (77) 202 78 531
Earnings from operations before interest and income taxes $ 52,097 $ 23,965 $ 83,021 $ 67,437
Interest expense 17,074 16,408 35,025 32,477
Earnings from operations before income taxes $ 35,023 $ 7,557 $ 47,996 $ 34,960
Income taxes 10,441 2,623 12,867 10,134
Net earnings $ 24,582 $ 4,934 $ 35,129 $ 24,826
Attributed to:
Common shareholders $ 23,103 $ 2,803 $ 33,765 $ 21,368
Non-controlling interest 1,479 2,131 1,364 3,458
$ 24,582 $ 4,934 $ 35,129 $ 24,826
Earnings per share attributable to common shareholders
Basic earnings per share $ 0.17 $ 0.02 $ 0.24 $ 0.16
Diluted earnings per share $ 0.16 $ 0.02 $ 0.24 $ 0.15
Weighted average number of shares (millions) 139.2 135.2 139.2 135.0

MAPLE LEAF FOODS INC.
Consolidated Statement of Comprehensive Income
(In thousands of Canadian dollars)

Three months ended June 30, Six months ended June 30,
2011 2010 2011 2010
Net earnings $ 24,582 $ 4,934 $ 35,129 $ 24,826
Other comprehensive income (loss)
Change in accumulated foreign currency translation adjustment 305 9,884 (906) (1,750)
Change in unrealized (gain) loss on cash flow hedges (2,854) (827) 2,184 6
$ (2,549) $ 9,057 $ 1,278 $ (1,744)
Comprehensive income $ 22,033 $ 13,991 $ 36,407 $ 23,082
Attributed to:
Common shareholders $ 20,529 $ 10,587 $ 35,678 $ 19,663
Non-controlling interest 1,504 3,404 729 3,419

MAPLE LEAF FOODS INC.
Consolidated Statements of Changes in Shareholders’ Equity
(In thousands of Canadian dollars)

Attributable to Common Shareholders
(Unaudited) Share
capital
Retained
earnings
Contributed
surplus
Total
accumulated
other
comprehensive
loss
Treasury
stock
Non-
controlling
interest
Total
equity
Balance at January 1, 2010 $ 869,353 $ 24,135 $ 57,486 $ (5,055) $ (24,499) $ 60,442 $ 981,862
Net earnings 21,368 3,458 24,826
Other comprehensive loss (1,705) (39) (1,744)
Dividends declared ($0.08 per share) (10,811) (443) (11,254)
Stock-based compensation expense 7,994 7,994
Share options exercised 40 40
Shares issued from Treasury 13 (13)
Premium on shares issued from Restricted Share Unit Trust (2,665) (5,165) 7,830
Re-purchase of Treasury Stock (495) (495)
Increase in subsidiary interest (1,338) (1,351) (2,689)
Balance at June 30, 2010 $ 869,406 $ 30,689 $ 60,302 $ (6,760) $ (17,164) $ 62,067 $ 998,540
Attributable toCommonShareholders
(Unaudited) Share
capital
Retained
earnings
Contributed
surplus
Total
accumulated
other
comprehensive
loss
Treasury
stock
Non-
controlling
interest
Total
equity
Balance atJanuary 1, 2011 $ 902,810 $ 27,603 $ 59,002 $ (55,396) $ (10,078) $ 62,890 $ 986,831
Net earnings 33,765 1,364 35,129
Other comprehensive income (loss) 1,913 (635) 1,278
Dividends declared ($0.08 per share) (11,316) (758) (12,074)
Stock-based compensation expense 8,548 8,548
Balance at June 30, 2011 $ 902,810 $ 50,052 $ 67,550 $ (53,483) $ (10,078) $ 62,861 $ 1,019,712

MAPLE LEAF FOODS INC.
Consolidated Statements of Cash Flows
(In thousands of Canadian dollars)

Three months ended June 30, Six months ended June 30,
(Unaudited) 2011 2010 2011 2010
CASH PROVIDED BY (USED IN):
Operating activities
Net earnings $ 24,582 $ 4,934 $ 35,129 $ 24,826
Add (deduct) items not affecting cash:
Change in fair value of biological assets 9,828 827 4,321 (13,385)
Depreciation and amortization 32,398 36,456 65,266 74,160
Stock-based compensation 4,271 3,994 8,548 7,994
Deferred income taxes 2,139 621 3,269 (6,192)
Income tax current 8,312 2,480 9,598 16,328
Interest expense 17,074 16,408 35,025 32,477
Loss (gain) on sale of property and equipment 142 144 118 (1,099)
Change in fair value of non-designated interest rate swaps 5,623 20,748 958 20,748
Change in fair value of derivative financial instruments (6,295) (2,304) (1,922) (5,276)
Decrease (increase) in pension asset (648) 1,386 1,808 4,248
Income taxes paid (8,296) (6,280) (18,294) (17,788)
Interest paid (20,484) (28,713) (23,848) (31,672)
Change in provision for restructuring and other related costs 7,415 4,043 28,067 4,225
Other 377 1,441 (1,820) (1,010)
Change in non-cash operating working capital (47,286) (16,358) (109,374) (4,277)
Cash provided by operating activities $ 29,152 $ 39,827 $ 36,849 $ 104,307
Financing activities
Dividends paid $ (5,722) $ (5,417) $ (11,316) $ (10,811)
Dividends paid to non-controlling interest (508) (156) (758) (443)
Net increase (decrease)in long-term debt 9,960 (36,084) 87,765 (26,609)
Increase in share capital 40
Increase in financing costs (3,986) (1,694) (6,124) (1,694)
Purchase of treasury stock (496) (496)
Other (750) (575) (749) (1,252)
Cash provided by (used in) financing activities $ (1,006) $ (44,422) $ 68,818 $ (41,265)
Investing activities
Additions to property and equipment $ (57,920) $ (42,161) $ (108,255) $ (70,864)
Capitalization of interest expense (1,960) (206) (3,337) (264)
Purchase of Canada Bread Shares (2,690) (2,690)
Proceeds from sale of property and equipment 2,238 317 7,675 2,489
Other (503) (131) 45 (81)
Cash used in investing activities $ (58,145) $ (44,871) $ (103,872) $ (71,410)
Increase (decrease) in cash and cash equivalents $ (29,999) $ (49,466) $ 1,795 $ (8,368)
Net cash and cash equivalents, beginning of period 15,936 66,167 (15,858) 25,069
Net cash and cash equivalents, end of period $ (14,063) $ 16,701 $ (14,063) $ 16,701
Net cash and cash equivalents is comprised of:
Cash and cash equivalents $ $ 24,772 $ $ 24,772
Bank indebtedness (14,063) (8,071) (14,063) (8,071)
Net cash and cash equivalents, end of period $ (14,063) $ 16,701 $ (14,063) $ 16,701

MAPLE LEAF FOODS INC.
Segmented Financial Information
(In thousands of Canadian dollars)

Three months ended June 30, Six months ended June 30,
2011 2010 2011 2010
Sales
Meat Products Group $ 762,212 $ 815,735 $ 1,480,453 $ 1,583,915
Agribusiness Group 70,918 54,057 128,211 95,865
Bakery Products Group 405,071 401,574 777,479 783,093
$ 1,238,201 $ 1,271,366 $ 2,386,143 $ 2,462,873
Earnings from operations before restructuring and other related costs and other income
Meat Products Group $ 16,102 $ 12,477 $ 42,749 $ 24,028
Agribusiness Group 32,706 13,641 46,711 19,965
Bakery Products Group 29,884 26,595 42,071 43,697
Non-allocated costs (4,300) (749) (4,910) 11,380
$ 74,392 $ 51,964 $ 126,621 $ 99,070
Capital expenditures
Meat Products Group $ 18,232 $ 19,064 $ 32,650 $ 32,690
Agribusiness Group 2,529 5,522 5,162 9,713
Bakery Products Group 37,159 17,575 70,443 28,461
$ 57,920 $ 42,161 $ 108,255 $ 70,864
Depreciation andamortization
Meat Products Group $ 15,814 $ 19,073 $ 31,632 $ 39,174
Agribusiness Group 3,908 4,146 7,848 8,257
Bakery Products Group 12,676 13,237 25,786 26,729
$ 32,398 $ 36,456 $ 65,266 $ 74,160
June 30,
2011
June 30,
2010
December 31,
2010
Total assets
Meat Products Group $ 1,430,039 $ 1,621,382 $ 1,405,566
Agribusiness Group 214,880 228,183 211,858
Bakery Products Group 903,669 893,165 836,447
Non-allocated assets 252,639 236,818 245,523
$ 2,801,227 $ 2,979,548 $ 2,699,394
Goodwill
Meat Products Group $ 442,336 $ 442,439 $ 442,336
Agribusiness Group 13,939 13,939 13,939
Bakery Products Group 295,260 299,516 296,636
$ 751,535 $ 755,894 $ 752,911

SOURCE Maple Leaf Foods Inc.