Media Centre
2011/10/27

Maple Leaf Foods Reports Results for Third Quarter 2011

TORONTO, Ontario - Oct. 27, 2011, 2011 (Canada NewsWire via COMTEX) --

TSX: MFI www.mapleleaffoods.com

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

    --  Adjusted Operating Earnings((1)) increased 17% to $73.3
        million.
    --  Net earnings increased to $43.0 million from a loss of $19.9
        million.
    --  Adjusted Earnings per Share((2)) increased to $0.34, including
        $0.07 per share related to a tax adjustment associated with a
        prior acquisition, from $0.22 last year.
    --  Value creation initiatives on track and contributing to margin
        growth.


"Our third quarter reflects strong earnings growth in our protein business, and we are particularly pleased with the performance of our consumer-facing prepared meats operations," said Michael H. McCain, President and CEO. "We are managing high commodity costs through pricing, cost reduction and continuing to drive higher value product innovation. Our strategic value creation initiatives are also contributing to results and we are on track to deliver sustained earnings growth."

(1): Adjusted Operating Earnings measures are defined as earnings from operations before restructuring and other related costs and associated gains, 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.

(2): 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 associated gains, 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 at the end of this news release.

Financial Overview

Sales for the third quarter of 2011 decreased 2% to $1,262.2 million compared to $1,293.2 million last year. After adjusting for the impacts of divestitures and a stronger Canadian dollar, sales increased by 6%, primarily as a result of higher selling prices.

Adjusted Operating Earnings increased to $73.3 million compared to $62.7 million last year, driven by stronger performance in the Protein Group. Adjusted Earnings per Share increased to $0.34, including $9.8 million ($0.07 per share) related to a tax adjustment associated with a prior acquisition, compared to $0.22 last year.

Net earnings increased to $43.0 million ($0.29 basic earnings per share) in the third quarter compared to a net loss of $19.9 million ($0.16 basic loss per share) last year. Net earnings included $4.9 million ($0.03 per share) of pre-tax costs related to restructuring activities (2010: $50.0 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)                 Third Quarter         Year-to-Date

($ thousands)               2011       2010       2011       2010

Meat Products Group     $777,194   $834,655 $2,257,647 $2,418,570

Agribusiness Group        67,934     47,468    196,145    143,333

Protein Group           $845,128   $882,123 $2,453,792 $2,561,903

Bakery Products Group    417,025    411,088  1,194,504  1,194,181

Sales                 $1,262,153 $1,293,211 $3,648,296 $3,756,084




The following table summarizes Adjusted Operating Earnings by business segment:




(Unaudited)                       Third Quarter      Year-to-Date

($ thousands)                      2011    2010     2011     2010

Meat Products Group             $20,766 $19,546  $68,515  $43,574

Agribusiness Group               25,440  15,644   67,151   35,609

Protein Group                   $46,206 $35,190 $135,666  $79,183

Bakery Products Group            28,094  28,286   70,165   71,983

Non-allocated Costs in Adjusted   (953)   (800)  (4,261)  (6,610)
Operating Earnings((i))

Adjusted Operating Earnings     $73,347 $62,676 $201,570 $144,556





(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.

Meat Products Group sales for the third quarter decreased 7% to $777.2 million from $834.7 million in the third quarter last year, largely due to the sale of the Company's Burlington, Ontario primary pork processing operation in November 2010. After adjusting for this divestiture and the impact of a stronger Canadian dollar that reduced the sales value of pork exports, sales increased by 4%. Higher market prices in fresh pork, price increases in prepared meats and value-added poultry, and improved sales mix in the prepared meats business contributed to higher sales. These benefits were partly offset by lower retail sales volumes in prepared meats.

Adjusted Operating Earnings in the Meat Products Group for the third quarter were $20.8 million, compared to $19.5 million last year, as margin expansion driven by price increases, improved mix, and cost reduction in prepared meats was largely offset by weaker primary processing markets.

Prepared meats earnings and margins increased as a result of price increases implemented earlier in the year to offset rising input costs, improved sales product mix, and early benefits from the Company's value creation plan. These benefits were partly offset by lower sales volumes and higher selling, general and administrative expenses.

Earnings in primary pork processing operations declined slightly, as the benefits of strong exports and better product sales mix were offset by compression in primary pork processor margins in North America and the unfavourable impact of a stronger Canadian dollar.

Earnings from poultry processing operations declined significantly driven by a continued rise in live birds costs as a result of increased feed prices.

On October 19th the Company announced the approval by its Board of Directors to invest approximately $560 million in its prepared meats manufacturing and distribution network as part of its broader value creation plan. Over the next three years the Company will close six plants, consolidating production into four scale facilities, and close four distribution centres, consolidating operations at its existing distribution centre in Saskatoon and into a new facility in Ontario. These changes, and the implementation of world-class technologies, are expected to significantly enhance productivity and contribute to continued margin expansion in this business.

Related to the early execution of initiatives within the value creation plan, on September 30th the Company completed the sale of its Surrey, B.C., plant and recorded a gain before taxes on the sale of $4.1 million. In addition, the Company estimated that it would record $170 million in restructuring and other related costs from 2012 to 2015 related to its three key strategic projects;the prepared meats manufacturing and distribution network, the implementation of SAP and the new fresh bakery in Hamilton, Ontario. This estimate includes $120 million in cash restructuring and other related costs.

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

Sales in the Agribusiness Group increased 43% to $67.9 million compared to $47.5 million last year driven by higher sales prices in the by-products recycling business, which reflect higher commodity values.

Adjusted Operating Earnings in the Agribusiness Group in the third quarter increased to $25.4 million compared to $15.6 million last year, also benefited from higher prices for recycled by-products. Lower earnings in hog production resulted from higher feed costs that outpaced increases in hog prices, combined with the unfavourable impact of a stronger Canadian dollar.

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(TM), and many leading regional brands.

Bakery Products Group sales for the third quarter increased to $417.0 million compared to $411.1 million last year. After adjusting for the sale of the Company's fresh sandwich product line in February of 2011 and currency translation on sales in the U.S. and U.K., sales increased 5%, primarily due to price increases implemented earlier in 2011. A modest increase in overall sales volumes reflected higher retail sales volume in fresh bakery operations and continued strength in bagel volumes in the U.K. bakery business following the re-launch of the New York Bakery Co.(TM) brand earlier in the year. Sales volumes in North American frozen bakery operations declined slightly compared to last year.

Adjusted Operating Earnings in the Bakery Products Group for the third quarter were $28.1 million, compared to $28.3 million last year. The Company experienced some margin compression as price increases implemented earlier in the year were not sufficient to fully offset the impact of the continued rise of raw material costs. Lower costs resulting from improved operating efficiencies in the Company's frozen bakery business and lower selling, general and administrative expenses contributed to earnings. During the quarter the Company also benefited from the sale of its fresh sandwich product line in the first quarter of 2011.

During the quarter, the fresh bakery business recorded approximately $2.3 million of duplicative overhead costs as the Company continues to operate three sub-scale bakeries as it gradually transitions production to its newly commissioned fresh bakery in Hamilton, Ontario, which officially opened on September 28, 2011. Production lines for rolls and breads are now in operation, and another two lines are planned to start commercial production by the end of 2011. The final four lines, including flat breads, are planned for 2012. The Company plans to gradually transfer production from three bakeries in the Greater Toronto Area, and proceed with their closures between the end of 2011 through to early 2013.

Other Matters

On October 26, 2011 Maple Leaf Foods Inc. declared a dividend of $0.04 per share payable December 30, 2011 to shareholders of record at the close of business December 7, 2011. Unless indicated otherwise by the Company in writing on or before the time the dividend is paid, the dividend will be considered an Eligible Dividend for the purposes of the "Enhanced Dividend Tax Credit System".

In the third quarter of 2011, the Company paid two separate dividends for total aggregate dividends of $0.04 per share. The Company designated the second dividend of $0.015 per share to be an Eligible Dividend, while the first dividend of $0.025 was not eligible for purposes of the "Enhanced Dividend Tax Credit System".

The dividends of $0.04 per share paid by the Company in each of the first and second quarters of 2011 were not designated as Eligible Dividends for purposes of the "Enhanced Dividend Tax Credit System".

An investor presentation related to the Company's third quarter financial results is available at www.mapleleaffoods.com and can be found under Investor Relations on the Quarterly Results page. A conference call will be held at2:30p.m. EDT on October 27, 2011 to review Maple Leaf Foods' third quarter financial results. To participate in the call, please dial 416-340-8018 or 866-223-7781. For those unable to participate, playback will be made available an hour after the event at 905-694-9451 / 800-408-3053 (Passcode2453483).

A webcast presentation of the third 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=4213105

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 and associated gains, 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 September 30, 2011

                Meat
               Products Agribusiness  Bakery   Unallocated
                                     Products
($ thousands)   Group      Group       Group      costs    Consolidated

Net earnings                                                    $43,007

Income taxes                                                      4,192

Earnings from                                                  $ 47,199
operations
before income
taxes

Interest                                                         17,927
expense

Change in the                                                    10,423
fair value of
non-designated
interest rate
swaps

Other income    (4,059)        (680)     (286)       (123)      (5,148)

Restructuring     2,966            -     1,598         318        4,882
and other
related costs

Earnings from  $ 20,766      $25,440   $28,094        $983      $75,283
Operations

(Increase)            -            -         -     (3,227)      (3,227)
decrease in
fair value of
biological
assets

Unrealized            -            -         -       1,291        1,291
(gains) losses
on commodity
futures
contracts

Adjusted       $ 20,766     $ 25,440  $ 28,094     $ (953)     $ 73,347
Operating
Earnings









(Unaudited)                  Three months ended September 30, 2010

                Meat
               Products Agribusiness  Bakery   Unallocated
                                     Products
($ thousands)   Group      Group       Group      costs    Consolidated

Net earnings                                                $  (19,856)

Income taxes                                                    (4,169)

Earnings from                                               $  (24,025)
operations
before income
taxes

Interest                                                         16,312
expense

Change in the                                                    14,582
fair value of
non-designated
interest rate
swaps

Other income        168         (51)      (67)         (3)           47

Restructuring    39,405           70    10,512           3       49,990
and other
related costs

Earnings from  $ 19,546     $ 15,644  $ 28,286   $ (6,570)     $ 56,906
Operations (
(i)( ))

(Increase)            -            -         -       3,256        3,256
decrease in
fair value of
biological
assets

Unrealized            -            -         -       2,514        2,514
(gains) losses
on commodity
futures
contracts

Adjusted       $ 19,546     $ 15,644  $ 28,286   $   (800)     $ 62,676
Operating
Earnings ((i)
( ))

((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 nine 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 associated gains, 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.




                                         Three months    Nine months
(Unaudited)                              ended Sep 30,   ended Sep 30,

($ per share)                             2011     2010   2011     2010

Basic earnings per share                $ 0.29 $ (0.16)  $0.53 $ (0.00)

Restructuring and other related costs(
(i))                                      0.03     0.27   0.24     0.34

Gains associated with restructuring and
other related activities((ii))          (0.02)        - (0.02)        -

Change in the fair value of
non-designated
   interest rate swaps((iii))             0.05     0.08   0.06     0.18

Change in the fair value of unrealized
(gains)
   losses on commodity futures
contracts((iii))                          0.01     0.01 (0.01)   (0.01)

Change in the fair value of biological
assets ((iii))                          (0.02)     0.02   0.01   (0.06)

Adjusted Earnings per Share ((iv))      $ 0.34   $ 0.22  $0.81   $ 0.46





(i)       Includes per share impact of restructuring and other related
          costs, net of tax and non-controlling interest.

(ii)      Gains associated with restructuring and other related
          activities are net of tax.

(iii)     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.

(iv)      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 nine months ended September 30, 2011 and 2010

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




                        As at          As at          As at          As at

                    September      September
                          30,            30,   December 31,     January 1,

                         2011           2010           2010           2010



ASSETS



Current assets

  Cash and cash
  equivalents     $         -    $    10,303    $         -    $    29,316

  Accounts
  receivable           90,176        343,047         84,117        375,143

  Notes
  receivable          159,968              -        136,663              -

  Inventories         302,864        299,707        275,643        298,320

  Biological
  assets               49,154         45,079         45,440         42,568

  Income and
  other taxes
  recoverable          47,530         20,641         29,957         18,067

  Prepaid
  expenses and
  other assets         16,855         17,403         14,766         15,328

  Assets held
  for sale                  -         24,086              -              -

                  $   666,547    $   760,266    $   586,586    $   778,742



  Property and
  equipment         1,041,824      1,032,036      1,025,012      1,084,147

  Investment
  property             11,584          6,927          6,832          6,646

  Employee
  benefits            128,613        220,212        173,243        206,584

  Other
  long-term
  assets                9,304          9,579          6,426          5,407

  Deferred tax
  asset               138,263         97,286        101,688         83,170

  Goodwill            754,935        753,920        752,911        755,059

  Other
  intangible
  assets              186,070        158,611        164,178        137,239

  Assets held
  for sale                  -          1,835              -              -

  Total assets    $ 2,937,140    $ 3,040,672    $ 2,816,876    $ 3,056,994



LIABILITIES AND
EQUITY



Current
liabilities

  Bank
  indebtedness    $    17,729    $     8,070    $    15,858    $     4,247

  Accounts
  payable and
  accruals            493,780        651,569        481,816        638,146

  Provisions           38,760         33,546         35,062         20,612

  Current
  portion of
  long-term debt      221,792        385,377        496,835        206,147

  Other current
  liabilities          73,153         10,692         63,465         37,837

  Liabilities
  held for sale             -         10,230              -              -

                  $   845,214    $ 1,099,484    $ 1,093,036    $   906,989



  Long-term
  debt                715,986        569,338        389,078        834,557

  Employee
  benefits            363,479        225,358        223,331        203,577

  Other
  long-term
  liabilities          85,163        140,369         98,417         98,918

  Deferred tax
  liability            26,444         27,739         26,183         31,091

  Total
  liabilities     $ 2,036,286    $ 2,062,288    $ 1,830,045    $ 2,075,132



Shareholders'
equity

Share capital     $   902,810    $   872,639    $   902,810    $   869,353

Retained
deficit              (81,975)          3,944        (5,208)         24,135

Contributed
surplus                71,820         64,292         59,002         57,486

Accumulated
other
comprehensive
loss                 (18,332)        (8,017)       (22,585)        (5,055)

Treasury stock       (38,915)       (17,164)       (10,078)       (24,499)

Total
shareholders'     $
equity                835,408    $   915,694    $   923,941    $   921,420

Non-controlling
interest               65,446         62,690         62,890         60,442

Total equity      $   900,854    $   978,384    $   986,831    $   981,862

Total
liabilities and   $
equity              2,937,140    $ 3,040,672    $ 2,816,876    $ 3,056,994




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





                               Three months ended           Nine months ended


                                    September 30,               September 30,

                              2011           2010         2011           2010



Sales                  $ 1,262,153    $ 1,293,211  $ 3,648,296    $ 3,756,084



Cost of goods
sold                     1,062,392      1,109,102    3,067,773      3,214,239



Gross margin           $   199,761    $   184,109  $   580,523    $   541,845



Selling, general
and administrative
expenses                   124,478        127,203      378,619        385,869



Earnings from
operations before the
following:             $    75,283    $    56,906  $   201,904    $   155,976



Restructuring and
other related
costs                      (4,882)       (49,990)     (47,602)       (61,406)

Change in fair
value of
non-designated

  interest rate
  swaps                   (10,423)       (14,582)     (11,382)       (35,330)

Other income
(expense)                    5,148           (47)        5,227            484



Earnings (loss) from
operations before
interest

  and income
  taxes                $    65,126    $   (7,713)  $   148,147    $    59,724

Interest
expense                     17,927         16,312       52,952         48,789



Earnings (loss) from
operations before
income


  taxes                $    47,199    $  (24,025)  $    95,195    $    10,935

Income taxes                 4,192        (4,169)       17,059          5,965



Net earnings
(loss)                 $    43,007    $  (19,856)  $    78,136    $     4,970



Attributed
to:



Common
shareholders           $    39,943    $  (21,313)  $    73,708    $        55

Non-controlling
interest                     3,064          1,457        4,428          4,915



                       $    43,007    $  (19,856)  $    78,136    $     4,970



Earnings per
share
attributable to

  common
  shareholders

Basic earnings
(loss) per share       $      0.29    $    (0.16)  $      0.53    $      0.00

Diluted earnings
(loss) per share       $      0.28    $    (0.16)  $      0.52    $      0.00





Weighted average
number of shares             138.0          135.5        138.8          135.2


  (millions)




MAPLE LEAF FOODS INC. Consolidated Statements of Comprehensive Income (Loss) (In thousands of Canadian dollars) (Unaudited)




                                Three months ended         Nine months ended

                                     September 30,             September 30,

                                2011          2010         2011         2010



Net earnings
(loss)                   $    43,007    $ (19,856)  $    78,136    $   4,970



Other comprehensive
income (loss)

  Change in
  accumulated
  foreign

    currency
    translation
    adjustment                10,991       (4,771)       10,085      (6,521)

  Change in unrealized
  gains and losses

    on cash
    flow hedges              (7,056)         2,835      (4,872)        2,841

  Change in actuarial
  gains and losses         (134,959)            -     (134,959)           -


                         $ (131,024)    $  (1,936)  $ (129,746)    $ (3,680)



Comprehensive            $  (88,017)
income (loss)                           $ (21,792)  $  (51,610)    $   1,290



Attributed
to:



Common
shareholders             $  (91,276)    $ (22,569)  $  (55,598)    $ (2,907)

Non-controlling
interest                       3,259           777        3,988        4,197




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




                                         Attributable to Common Shareholders

                                                                  Total

                                                            accumulated

                                                                  other                        Non-

                     Share       Retained   Contributed   comprehensive      Treasury   controlling          Total

(Unaudited)        capital       earnings       surplus            loss         stock      interest         equity



Balance at
January 1, 2011  $ 902,810    $   (5,208)    $   59,002    $   (22,585)    $ (10,078)    $   62,890    $   986,831



  Net
  earnings               -         73,708             -               -             -         4,428         78,136

  Other
  comprehensive

     income
    (loss)               -      (133,559)             -           4,253             -         (440)      (129,746)

  Dividends
  declared

    ($0.12 per
    share)               -       (16,916)             -               -             -       (1,322)       (18,238)

  Stock-based
  compensation

    expense              -              -        12,818               -             -             -         12,818

  Decrease in
  minority
  interest               -              -             -               -             -         (110)          (110)

  Re-purchase
  of Treasury
  Stock                  -              -             -               -      (28,837)             -       (28,837)

Balance at
September 30,
2011             $ 902,810    $  (81,975)    $   71,820    $   (18,332)    $ (38,915)    $   65,446    $   900,854







                                         Attributable to Common Shareholders

                                                                  Total

                                                            accumulated

                                                                  other                        Non-

                     Share       Retained   Contributed   comprehensive      Treasury   controlling          Total

(Unaudited)        capital       earnings       surplus            loss         stock      interest         equity





Balance at
January 1, 2010  $ 869,353    $    24,135    $   57,486    $    (5,055)    $ (24,499)    $   60,442    $   981,862



  Net
  earnings               -             55             -               -             -         4,915          4,970

  Other
  comprehensive
  loss                   -              -             -         (2,962)             -         (718)        (3,680)

  Dividends
  declared

    ($0.12 per
    share)               -       (16,243)             -               -             -         (598)       (16,841)

  Stock-based
  compensation

    expense              -              -        11,984               -             -             -         11,984

  Share options
  exercised          3,273              -             -               -             -             -          3,273

  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
September 30,
2010             $ 872,639    $     3,944    $   64,292    $    (8,017)    $ (17,164)    $   62,690    $   978,384




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




                               Three months ended              Nine months ended

                                    September 30,                  September 30,

                               2011          2010            2011           2010



CASH PROVIDED BY
(USED IN):



Operating
activities

  Net earnings
  (loss)                 $   43,007    $ (19,856)     $    78,136    $     4,970

  Add (deduct)
  items not
  affecting cash:

    Change in fair
    value of
    biological
    assets                  (3,227)         3,256           1,094       (10,129)

    Depreciation
    and
    amortization             32,356        34,631          97,622        108,791

    Stock-based
    compensation              4,270         3,989          12,818         11,984

    Deferred
    income taxes              8,677      (12,547)          11,946       (18,739)

    Income tax
    current                 (4,485)         8,376           5,113         24,704

    Interest
    expense                  17,927        16,312          52,952         48,789

    Loss (gain) on
    sale of property
    and equipment           (3,884)            84         (3,766)        (1,015)

    Change in fair
    value of
    non-designated

      interest
      rate swaps             10,423        14,582          11,382         35,330

    Change in fair
    value of
    derivative
    financial

      instruments             4,754         5,839           2,832            563

  Decrease in
  pension asset               2,011         3,108           3,819          7,356

  Income taxes
  paid (net of
  refunds)                    (505)       (7,731)        (18,799)       (25,519)

  Interest
  paid                     (12,740)       (5,218)        (36,588)       (36,890)

  Change in
  provision for
  restructuring
  and

    other related
    costs                   (7,429)        43,678          20,638         47,903

  Other                     (1,890)          (64)         (3,714)        (1,073)

  Change in non-cash
  operating working          39,844
  capital                                  29,684        (69,530)         25,407

Cash provided by
operating
activities               $  129,109    $  118,123    $    165,955    $   222,432



Financing
activities

  Dividends
  paid                   $  (5,600)    $  (5,432)     $  (16,916)    $  (16,243)

  Dividends paid
  to
  non-controlling
  interest                    (564)         (155)         (1,322)          (598)

  Net increase
  (decrease) in
  long-term debt           (55,724)      (81,770)          32,041      (108,379)

  Increase in
  share capital                   -         3,233               -          3,273

  Increase in
  financing costs             (272)          (63)         (6,396)        (1,757)

  Purchase of
  treasury stock           (28,837)             -        (28,837)          (495)

  Other                       (396)           972         (1,145)          (281)

Cash provided by
(used in)
financing
activities               $ (91,393)    $ (83,215)     $  (22,575)    $ (124,480)



Investing
activities

  Additions to
  long term assets       $ (52,328)    $ (49,073)     $ (160,583)    $ (119,937)

  Capitalization
  of interest
  expense                   (1,154)         (444)         (4,491)          (708)

  Purchase of
  Canada Bread
  Shares                          -             -               -        (2,690)

  Proceeds from
  long term assets           11,068            56          18,743          2,545

  Other                       1,032            85           1,080              2

Cash used in
investing
activities               $ (41,382)    $ (49,376)     $ (145,251)    $ (120,788)



Increase (decrease) in
cash and cash           $  (3,666)
equivalents                            $ (14,468)     $   (1,871)    $  (22,836)

Net cash and cash
equivalents,
beginning

    of                                                                    25,069
    period                 (14,063)        16,701        (15,858)

Net cash and cash
equivalents, end
of period               $  (17,729)    $    2,233     $  (17,729)    $     2,233



Net cash and cash
equivalents is
comprised of:



Cash and cash
equivalents              $        -    $   10,303     $         -    $    10,303

Bank indebtedness          (17,729)       (8,070)        (17,729)        (8,070)

Net cash and cash
equivalents, end
of period                $ (17,729)    $    2,233     $  (17,729)    $     2,233




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




                                     Three months ended             Nine months ended

                                           September 30,                 September 30,

                            2011                    2010          2011           2010



Sales

  Meat Products
  Group              $   777,194             $   834,655  $  2,257,647    $ 2,418,570

  Agribusiness
  Group                   67,934                  47,468       196,145        143,333

  Bakery Products
  Group                  417,025                 411,088     1,194,504      1,194,181


                    $  1,262,153             $ 1,293,211  $  3,648,296    $ 3,756,084



Earnings from
operations before

  restructuring
  and other
  related

  costs and other
  income

     Meat Products
  Group              $    20,766             $    19,546  $     68,515    $    43,574

     Agribusiness
  Group                   25,440                  15,644        67,151         35,609

     Bakery
  Products Group          28,094                  28,286        70,165         71,983

     Non-allocated
  costs                      983                 (6,570)       (3,927)          4,810

                     $    75,283             $    56,906  $    201,904    $   155,976



Capital
expenditures

  Meat Products
  Group              $    19,296             $    16,676  $     51,946    $    49,366

  Agribusiness
  Group                    3,546                   3,554         8,708         13,267

  Bakery Products
  Group                   29,486                  28,843        99,929         57,304

                     $    52,328             $    49,073  $    160,583    $   119,937



Depreciation and
amortization

  Meat Products
  Group              $    15,784             $    16,981  $     47,416    $    56,155

  Agribusiness
  Group                    3,805                   3,991        11,653         12,248

  Bakery Products
  Group                   12,767                  13,659        38,553         40,388

                     $    32,356             $    34,631  $     97,622    $   108,791



                                     September               September       December
                                          30,                     30,            31,

                                          2011                    2010           2010



Total
assets

  Meat Products
  Group                           $  1,450,924            $  1,657,224    $ 1,487,804

  Agribusiness
  Group                                215,731                 259,701        247,102

  Bakery Products Group                953,572                 896,742        836,447

  Non-allocated
  assets                               316,913                 227,005        245,523

                                  $  2,937,140            $  3,040,672    $ 2,816,876



Goodwill

  Meat Products
  Group                           $    442,336            $    442,336    $   442,336

  Agribusiness
  Group                                 13,845                  13,939         13,939

  Bakery Products Group                298,754                 297,645        296,636

                                  $    754,935            $    753,920    $   752,911




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SOURCE: Maple Leaf Foods Inc.

Investor Contact: Nick Boland, VP Investor Relations: 416-926-2005 Media Contact:
416-926-2020

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