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Maple Leaf Foods Reports Second Quarter Financial Results; Operating Earnings Up 22%

TORONTO–(BUSINESS WIRE)–July 28, 2005–Maple Leaf Foods Inc.
(TSX:MFI) today reported its financial results for the second quarter
ended June 30, 2005.

“Our strong earnings performance in the second quarter benefited
significantly from our balanced portfolio of bakery and protein value
chain operations,” said Michael McCain, President and Chief Executive
Officer. “Our earnings from operations for the quarter increased 22%
despite a major decline in industry wide fresh pork and poultry
margins. Earnings from our fresh bakery, processed meats and hog
production operations more than offset these underlying commodity
influences and contributed to an excellent quarter. ”

Sales for the second quarter decreased 1% to $1.7 billion
compared with the prior year, due to lower commodity prices in the
Company’s pork, poultry, feed and rendering businesses. Sales for the
first six months of 2005 increased 13% to $3.2 billion, due primarily
to the acquisition of Schneider Foods in April 2004. This is the
first quarter that Schneider Foods results are included in prior year
comparatives.

Earnings from operations before restructuring costs for the
second quarter increased 22% to $78.7 million, and 24% for the first
six months to $139.8 million. Comparisons of year-to-date earnings
from operations exclude $13.2 million ($8.8 million after tax) in
restructuring costs incurred in the first quarter of 2005. Management
believes that this is the most appropriate basis on which to evaluate
operating results, as restructuring costs are not representative of
continuing operations.

Net earnings for the second quarter increased to $33.2 million
($0.26 per share) compared to $25.0 million ($0.22 per share) last
year, which equated to an 18% increase in earnings per share.
Year-to-date earnings before restructuring costs were $54.3 million
($0.43 per share), compared to $43.2 million ($0.38 per share) last
year. Including restructuring costs, year-to-date net earnings were
$46.0 million ($0.36 per share).

Operating Review

Following is a summary of operating earnings by segment. The
combination of the Company’s Meat Products Group and the Agribusiness
Group comprises 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.

Earnings from operations, before restructuring costs
($ millions)                   Second Quarter      Year-to-Date (ii)
                        ---------------------  ---------------------
                         2005   2004   Change   2005   2004   Change
                        -----  -----  -------  -----  -----  -------
Meat Products Group      17.5   12.6       39%  36.1   22.6       60%
Agribusiness Group (i)   34.3   31.6        9%  56.2   51.8        8%
                        ---------------------  ---------------------
Protein Value Chain      51.8   44.2       17%  92.3   74.4       24%
Bakery Products Group    26.9   20.5       31%  47.5   38.3       24%
                        ---------------------  ---------------------
                         78.7   64.7       22% 139.8  112.7       24%
                        --------------------------------------------
                        --------------------------------------------

(i) Year-to-date figures include $0.2 million (2004: $4.6
million) of gains related to sales of poultry production quota. There
are no gains related to sales of poultry production quota in the
second quarter of 2005 (2004: $0.5 million).

(ii) Year-to-date excludes $13.2 million of restructuring costs
in the first quarter of 2005.

The Protein Value Chain earnings improvement reflects positive
contributions from processed meats and hog production operations,
which more than offset decreases in industry wide fresh pork and
poultry processing margins and lower rendering returns.

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 second quarter of 2005 were
consistent with last year at $1.1 billion, while year-to-date sales
were up 22% to $2.2 billion due to the acquisition of Schneider Foods
in April 2004.

Earnings from operations increased 39% to $17.5 million from
$12.6 in the second quarter of 2004. Year-to-date earnings from
operations increased 60% to $36.1 million from $22.6 million in 2004.
The significant increase in profitability was largely due to the
consumer processed meats operations, including Maple Leaf and
Schneiders branded products, supported by strong sales of sliced
meats, hot dogs, boxed meats and new product innovation. Four new
lines of summer season Maple Leaf Fully Cooked Roasts were launched
in the quarter with strong early results. Fresh pork operations
benefited from an improved value added sales mix and plant
performance, and stronger export markets, despite a significant
industry wide decline in fresh pork margins. The Company launched
Maple Leaf Fresh Grill!, a portion packed line of pork, chicken and
beef marinated ready to cook products, with very strong retail and
consumer response. Earnings from the fresh poultry operations
declined from last year, as supply continued to depress processor
margins and meat prices decreased from last year.

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 second quarter decreased 15% to
$206.7 million from $243.3 million last year, while year-to-date
sales declined 13% to $396.2 million from $455.4 million. This
decline in sales was mainly due to lower market prices for feed and
rendered products, reflecting lower prices for the underlying
commodities.

Earnings from operations for the second quarter increased 9% to
$34.3 million from $31.6 million last year, while year-to-date
earnings from operations increased 8% to $56.2 million from $51.8
million in 2004. Although industry hog prices declined from the
second quarter last year, earnings from the Company’s hog growing
operations increased significantly due to higher volumes and lower
prices for feed grains. The Company had 19% effective ownership of
hogs processed in the second quarter. Offsetting the strong hog
production results were lower market prices and reduced export
volumes affecting the Company’s rendering operations, as well as a
reduction in poultry production quota sales.

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 second quarter increased 4% to
$344.6 million compared to $330.5 million last year, supported by
increased sales of fresh and frozen bakery products in North America.
Year-to-date sales increased 4% to $660.7 million compared to $634.5
million in 2004.

Earnings from operations increased 31% to $26.9 million compared
to $20.5 million last year, primarily driven by increased earnings in
the fresh bakery operations. For the first half of 2005, earnings
from operations increased 24% to $47.5 million from $38.3 million in
2004. An improved sales mix of higher margin premium nutrition and
specialty breads, operating cost reductions, particularly in the
western and eastern bakery operations, and price increases that
offset cost increases all contributed to strong earnings in the
quarter. Earnings from frozen bakery operations declined from last
year primarily due to higher advertising and promotional spending at
the U.K. bakery operations, as a new marketing campaign was launched
to support increased production from the new bagel plant in Rotherham.

Cash Flow and Financing

Total debt, net of cash balances, at the end of the second
quarter declined to $1.2 billion from $1.3 billion last year, due to
positive cash flow from operating activities and an equity issue in
late 2004.

Cash flow from operating activities for the second quarter was
$70.7 million compared to $24.5 million last year. This
year-over-year change was largely due to a decrease in working
capital in the second quarter of 2005, as a result of increased
accounts payable and reduced inventory balances. Cash flow from
operating activities for the year-to-date was $29.8 million compared
to $47.6 million in 2004. This decrease reflects a greater investment
in working capital in the first quarter partially offset by a
reduction in working capital in the second quarter.

Capital expenditures were $44.9 million for the second quarter
compared to $41.4 million last year. Included in the capital
expenditures were the completion of a new bagel plant in the United
Kingdom and a new feed mill in Atlantic Canada, which were both
commissioned in the second quarter, and ongoing construction of a new
biodiesel plant in Quebec.

Interest expense for the second quarter increased to $26.0
million from $23.0 million last year. Last year, the Company’s debt
included a high percentage of short-term, lower rate debt. In the
fourth quarter of 2004, the Company re-financed a significant portion
of its debt, replacing short-term debt with longer-term, fixed rate
notes that have higher interest rates than short-term floating debt.
While the Company paid higher interest expense compared to last year,
over 90% of the debt at June 2005 was not exposed to interest rate
fluctuations.

Other Matters

Maple Leaf Foods declared a dividend of $0.04 per share payable
on June 30, 2005 to shareholders of record on June 10, 2005.

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 23,000 people at its operations across Canada
and in the United States, Europe and Asia. The Company had sales of
$6.4 billion in 2004.

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 at 2:30 p.m. EDT on July 28, 2005 to review Maple
Leaf Foods’ second quarter financial results. To participate in the
call, please dial 1-416-340-2216 or 866-898-9626. For those unable to
participate, playback will be made available an hour after the event
at 416-695-5800 / 800-408-3053 (Passcode 3158418#).

A webcast presentation of the second quarter financial results
will also be available at
(phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=88490&eventI
D=1101794) (Due to the length of this URL, you may have to copy and
paste the URL into your browser address bar) at 2:30 p.m. EDT and via
a link on the Company’s website www.mapleleaf.com. 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.

Six months ended June 30, 2005 and 2004


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

---------------------------------------------------------------------
---------------------------------------------------------------------
                                    As at        As at         As at
                                 June 30,     June 30,  December 31,
                                     2005         2004          2004
---------------------------------------------------------------------
                               (Unaudited)  (Unaudited)

ASSETS                                    (As restated)
                                            (Note 1(a))

Current assets
 Cash and cash equivalents       $ 43,319     $ 74,598     $ 111,770
 Accounts receivable (Note 3)     318,630      333,412       292,462
 Inventories                      401,816      404,886       385,128
 Future tax asset - current        20,599        5,856         6,708
 Prepaid expenses and
  other assets                     16,900       18,627        13,218
 --------------------------------------------------------------------
                                  801,264      837,379       809,286

Investments in associated
 companies                         79,313       78,650        82,302

Property and equipment          1,111,369      980,736       973,718

Other long-term assets            235,023      194,270       230,201

Future tax asset
 - non-current                     29,608       31,307        26,976

Goodwill                          851,005      806,707       816,408

Other intangibles                  81,204       45,319        82,840

---------------------------------------------------------------------
                              $ 3,188,786  $ 2,974,368   $ 3,021,731
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES AND
 SHAREHOLDERS' EQUITY

Current liabilities
 Accounts payable and
  accrued charges               $ 584,364    $ 610,075     $ 621,564
 Income and other
  taxes payable                    22,610       11,977        27,651
 Current portion of
  long-term debt                   62,471       82,146       105,910
 --------------------------------------------------------------------
                                  669,445      704,198       755,125

Long-term debt                  1,202,488    1,312,013     1,052,195

Future tax liability               41,469       39,358        29,207

Other long-term liabilities       235,600      147,665       205,542

Minority interest                  75,044       77,249        74,109

Shareholders' equity              964,740      693,885       905,553

---------------------------------------------------------------------
                              $ 3,188,786  $ 2,974,368   $ 3,021,731
---------------------------------------------------------------------
---------------------------------------------------------------------

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        Six months ended
                                    June 30,                June 30,
(Unaudited)                 2005        2004        2005        2004
---------------------------------------------------------------------
                                (As restated)           (As restated)
                                  (Note 1(a))             (Note 1(a))

Sales                $ 1,666,243 $ 1,689,490 $ 3,248,521 $ 2,884,221


Earnings from
 operations before
 restructuring costs      78,670      64,686     139,820     112,688
Restructuring costs
 (Note 2)                      -           -      13,157           -
---------------------------------------------------------------------

Earnings from
 operations               78,670      64,686     126,663     112,688
Other income (Note 4)      2,258         701       1,716       1,797
---------------------------------------------------------------------

Earnings before interest
 and income taxes         80,928      65,387     128,379     114,485
Interest expense          26,044      22,967      51,090      41,370
---------------------------------------------------------------------

Earnings before
 income taxes             54,884      42,420      77,289      73,115
Income taxes              18,183      14,930      25,737      25,767
---------------------------------------------------------------------

Earnings before
 minority interest        36,701      27,490      51,552      47,348
Minority interest          3,464       2,455       5,567       4,198

---------------------------------------------------------------------
Net earnings for
 the period             $ 33,237    $ 25,035    $ 45,985    $ 43,150
---------------------------------------------------------------------

Earnings per share
 - basic (Note 10)        $ 0.26      $ 0.22      $ 0.36      $ 0.38

Earnings per share
 - diluted (Note 10)      $ 0.25      $ 0.22      $ 0.35      $ 0.38

Weighted average number
 of shares (millions)      126.6       113.2       126.3       113.2

Dividends declared
 per share                $ 0.04      $ 0.04      $ 0.08      $ 0.08

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

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


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

---------------------------------------------------------------------
---------------------------------------------------------------------
                                           Six months ended June 30,
(Unaudited)                                     2005            2004
---------------------------------------------------------------------
                                                        (As restated)
                                                          (Note 1(a))

Retained earnings, beginning of period     $ 159,129        $ 74,982

Net earnings for the period                   45,985          43,150
Dividends declared                           (10,123)         (9,057)

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Retained earnings, end of period           $ 194,991       $ 109,075
---------------------------------------------------------------------
---------------------------------------------------------------------

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        Six months ended
                                    June 30,                June 30,
(Unaudited)                 2005        2004        2005        2004
---------------------------------------------------------------------
                                (As restated)           (As restated)
CASH PROVIDED BY (USED IN)        (Note 1(a))             (Note 1(a))

Operating activities
 Net earnings           $ 33,237    $ 25,035    $ 45,985    $ 43,150
 Add (deduct) items not
  affecting cash:
  Depreciation and
   amortization           33,261      31,964      65,881      58,268
  Stock-based
   compensation (Note 5)   1,742         840       3,510       1,465
  Minority interest        3,464       2,455       5,567       4,198
  Future income taxes      4,265       5,881        (273)     11,837
  Increase in pension
   asset                  (5,599)     (6,471)    (10,830)    (11,558)
  Undistributed earnings
   of associated
   companies              (1,988)     (1,948)     (3,264)     (1,505)
  Gain on sale of
   property and equipment   (651)       (191)       (822)     (1,240)
  Gain on sale of
   investments               (11)        (20)          -         (20)
 Other                    (1,562)      4,151      (2,222)      1,069
 Change in other
  long-term receivables      450      (5,144)      6,486      (5,799)
 Change in operating
  working capital          4,056     (32,084)    (80,250)    (52,262)
 --------------------------------------------------------------------
                          70,664      24,468      29,768      47,603

Financing activities
 Dividends paid           (5,073)     (4,529)    (10,123)     (9,057)
 Dividends paid to
  minority interest         (200)       (233)       (511)       (467)
 Net increase (decrease)
  in long-term debt      (65,681)    413,373      (9,851)    419,338
 Increase in share
  capital                  3,756         394       8,479         671
 Other                      (758)          -           -           -
 --------------------------------------------------------------------
                         (67,956)    409,005     (12,006)    410,485

Investing activities
 Additions to property
  and equipment          (44,930)    (41,379)    (84,888)    (62,494)
 Proceeds from sale of
  property and equipment   2,900       5,182       6,603       8,856
 Purchase of net assets
  of businesses (Note 7)  (7,879)   (370,561)    (10,625)   (370,561)
 Other                     1,509       1,798       2,697       1,801
 --------------------------------------------------------------------
                         (48,400)   (404,960)    (86,213)   (422,398)

Increase (decrease)
 in cash and cash
 equivalents             (45,692)     28,513     (68,451)     35,690

Cash and cash equivalents,
 beginning of period      89,011      46,085     111,770      38,908

---------------------------------------------------------------------
Cash and cash equivalents,
 end of period          $ 43,319    $ 74,598    $ 43,319    $ 74,598
---------------------------------------------------------------------
---------------------------------------------------------------------

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        Six months ended
                                    June 30,                June 30,
(Unaudited)                 2005        2004        2005        2004
---------------------------------------------------------------------

Sales
 Meat Products Group $ 1,114,978 $ 1,115,672 $ 2,191,606 $ 1,794,305
 Agribusiness Group      206,708     243,317     396,182     455,442
 Bakery Products
  Group                  344,557     330,501     660,733     634,474
---------------------------------------------------------------------
                     $ 1,666,243 $ 1,689,490 $ 3,248,521 $ 2,884,221
---------------------------------------------------------------------
---------------------------------------------------------------------

Earnings from
 operations, before
 restructuring costs
 Meat Products Group    $ 17,491    $ 12,602    $ 36,147    $ 22,587
 Agribusiness Group       34,302      31,545      56,153      51,820
 Bakery Products Group    26,877      20,539      47,520      38,281
---------------------------------------------------------------------
                        $ 78,670    $ 64,686   $ 139,820   $ 112,688
---------------------------------------------------------------------
---------------------------------------------------------------------

Additions to property
 and equipment
 Meat Products Group    $ 15,423    $ 19,216    $ 33,182    $ 25,917
 Agribusiness Group        8,934       7,830      18,677      10,568
 Bakery Products Group    20,573      14,333      33,029      26,009
---------------------------------------------------------------------
                        $ 44,930    $ 41,379    $ 84,888    $ 62,494
---------------------------------------------------------------------
---------------------------------------------------------------------

Depreciation and
 amortization
 Meat Products Group    $ 15,911    $ 16,130    $ 32,264    $ 26,620
 Agribusiness Group        6,320       5,187      11,690      10,254
 Bakery Products Group    11,030      10,647      21,927      21,394
---------------------------------------------------------------------
                        $ 33,261    $ 31,964    $ 65,881    $ 58,268
---------------------------------------------------------------------
---------------------------------------------------------------------


---------------------------------------------------------------------
---------------------------------------------------------------------
                                    As at        As at         As at
                                 June 30,     June 30,  December 31,
                                     2005         2004          2004
---------------------------------------------------------------------
                               (Unaudited)  (Unaudited)

Total assets
 Meat Products Group          $ 1,579,737  $ 1,424,480   $ 1,452,100
 Agribusiness Group               646,408      585,475       597,806
 Bakery Products Group            723,915      711,166       702,137
 Non-allocated assets             238,726      253,247       269,688
---------------------------------------------------------------------
                              $ 3,188,786  $ 2,974,368   $ 3,021,731
---------------------------------------------------------------------
---------------------------------------------------------------------

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


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

Six months ended June 30, 2005 and 2004

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

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, 2004. 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, 2004, except for the
following:

a) Convertible debentures

Effective January 1, 2005, the Company adopted an amendment to
Canadian accounting principles, section 3860, “Financial Instruments
– Disclosure and Presentation”, on a retroactive basis with
restatement of prior periods. The revised standard, which is
effective for January 1, 2005, requires obligations of a fixed amount
that may be settled, at the issuer’s option, by a variable number of
the issuer’s own equity instruments to be presented as liabilities.
As a result of adopting the revised standard, the Company
reclassified the principal component of its convertible debenture
(see Note 9) as a debt instrument and reclassified the interest,
accretion charges and related tax effects in the statement of
earnings in the comparative periods. Retroactive application of this
standard resulted in a reclassification of $89.4 million from equity
to debt as at June 30, 2004. The impact of the revised standard was a
reduction in net earnings of $2.4 million (net of tax) for the six
months ended June 30, 2004 and $4.5 million for the twelve months
ended December 31, 2004. There was no impact to basic or diluted
earnings per share for prior periods as a result of adopting this
change retroactively.

b) Variable interest entities

The Company adopted the guidance in Accounting Guideline 15,
“Consolidation of Variable Interest Entities”, retroactively without
restatement of prior periods, effective January 1, 2005. As a result
of the adoption, there are several entities that have now been
consolidated with the results of the Company. The most significant
impact was the consolidation of the hog processing facility in
Brandon, Manitoba, as described in Note 22 of the Company’s financial
statements for the year ended December 31, 2004. This resulted in an
increase in assets of approximately $94.9 million and an increase in
long-term debt of approximately $94.3 million as of June 30, 2005.
The remaining impact of the adoption of Accounting Guideline 15 was
the consolidation of several of the Company’s investments in various
hog facilities. The result of the consolidation of the hog facilities
is an increase in debt of approximately $12.1 million and an increase
in total assets of approximately $34.4 million. There was no impact
on the net earnings of the Company from the consolidation of these
entities.

c) Comparative figures

Certain 2004 comparative figures have been reclassified to
conform to the financial statement presentation adopted in 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 the 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, $0.8 million
was paid in the quarter.

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 June 30, 2005, trade accounts receivable
being serviced under this program amounted to $195.0 million (June
30, 2004: $205.4 million; December 31, 2004: $209.7 million).

4. OTHER INCOME (EXPENSE)

---------------------------------------------------------------------
---------------------------------------------------------------------
                          Three months ended        Six months ended
                                    June 30,                June 30,
                            2005        2004        2005        2004
---------------------------------------------------------------------

Earnings from associated
 companies               $ 1,172       $ 500     $ 1,358       $ 488
Gain on sale of property
 and equipment               651         191         822       1,240
Gain (loss) from real
 estate operations           284        (104)        142        (147)
Dividends received            78           -         308           -
Other                         73         114         194         216
Loss on redemption of
 convertible debenture         -           -      (1,108)          -

---------------------------------------------------------------------
                         $ 2,258       $ 701     $ 1,716     $ 1,797
---------------------------------------------------------------------
---------------------------------------------------------------------

5. STOCK-BASED COMPENSATION

The stock compensation expense during the second quarter was $1.7
million (2004: $0.8 million) and $3.5 million year to date (2004:
$1.5 million). The Company granted 12,500 stock options (2004:
127,600) at a weighted average exercise price per share of $16.60 and
6,250 restricted share units (2004: nil) in the quarter. The combined
fair value of the stock options and restricted share units granted
during the quarter was not significant (2004: $0.4 million).

6. PENSIONS

During the quarter, the Company recorded income of $2.9 million
related to net benefit plan income including post-retirement benefit
costs (2004: $0.3 million expense). For the six months of 2005, the
Company recorded $3.9 million in net benefit plan income (2004: $1.0
million income).

7. ACQUISITIONS

On April 5, 2004, the Company acquired Schneider Foods for cash
consideration of $376.7 million including transaction costs of $8.1
million and the assumption of Schneider Foods debt. As at June 30,
2005, the purchase price allocation has been completed. Goodwill
resulting from this transaction is included in the total assets of
the Meat Products Group.

Details of purchase adjustments made in respect of this
transaction for the year are as follows:

---------------------------------------------------------------------
---------------------------------------------------------------------
                                     As at                     As at
                              December 31,                  June 30,
                                      2004    Adjustments       2005
---------------------------------------------------------------------
Net working capital (deficit)     $ 79,590       $ (4,443)  $ 75,147
Investments                         21,191              -     21,191
Property and equipment             152,604         (2,976)   149,628
Other assets                         7,689         (1,977)     5,712
Goodwill                           291,402         28,149    319,551
Other intangibles                   72,480              -     72,480
Long-term debt                    (146,691)             -   (146,691)
Future income taxes                 27,014         19,886     46,900
Pension benefit liability          (75,993)          (250)   (76,243)
Post employment benefit
 liability                         (49,631)           (53)   (49,684)
Other long-term liabilities         (1,255)       (38,336)   (39,591)
Minority interest                   (1,737)             -     (1,737)
---------------------------------------------------------------------
Total purchase cost              $ 376,663            $ -  $ 376,663
---------------------------------------------------------------------
---------------------------------------------------------------------

In 2005, the Company purchased market shares in Canada Bread
Company, Limited (66,900 shares in January for $2.7 million in cash
and 158,400 shares in May for $7.8 million comprised of cash of $4.3
million and shares of $3.5 million), thereby increasing its ownership
to 87.5%. These acquisitions resulted in an increase in goodwill of
$6.1 million, a decrease in minority interest of $4.2 million, and an
increase in other net assets of $0.2 million.

In May 2005, the Company purchased the remaining 32% interest in
Cappola Food Inc. for net proceeds of approximately $3.6 million
resulting in additional goodwill of approximately $1.6 million.

8. SHARE CAPITAL

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

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---------------------------------------------------------------------
                                Number of shares     Share capital $
                               --------------------------------------
                                2005        2004      2005      2004
---------------------------------------------------------------------

Balance at January 1,    125,174,627 113,174,213 $ 731,291 $ 565,048
Exercise of options          416,069      27,800     4,723       277
Conversion of
 convertible debentures
 (Note 9)                    763,933           -    12,217         -
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Balance at March 31,     126,354,629 113,202,013   748,231   565,325
Exercise of options          334,755      37,600     3,756       394
Issuance of shares (i)       214,450           -     3,495         -
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Balance at June 30,      126,903,834 113,239,613 $ 755,482 $ 565,719
---------------------------------------------------------------------
---------------------------------------------------------------------

(i) Consists of shares issued to purchase additional shares in
Canada Bread Company, Limited (see Note 7)

9. CONVERTIBLE DEBENTURES

On December 8, 2004, the Company issued a cash redemption notice
for the aggregate principal amount of the convertible debentures
outstanding of $91.3 million for cash at par plus accrued interest
with a redemption date of January 7, 2005. As a result, the Company
no longer had the option to satisfy repayment on redemption with
common shares. Accordingly, as of that date the Company reclassified
$90.0 million of the convertible debentures to current debt, leaving
$7.3 million related to the debenture holders’ conversion option
within shareholders’ equity. For the period from the date of the
reclassification to December 31, 2004, the carrying charges,
including coupon interest, were classified as interest expense.

On January 7, 2005, certain of the debenture holders exercised
their conversion rights and the Company issued 763,933 common shares
for a reduction in the total cash to be paid by the Company upon
redemption of approximately $11.5 million and a proportionate
reduction in the debenture holder’s conversion option within
shareholders’ equity of $0.9 million. Accordingly, the Company paid
cash of $79.8 million to redeem the remaining debentures outstanding,
resulting in a net loss on redemption of $1.1 million in the first
quarter of 2005.

The remaining credit balance on the conversion feature of $6.4
million was recognized upon repayment of the debentures through
contributed surplus as an equity transaction.

10. EARNINGS PER SHARE

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

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---------------------------------------------------------------------
                               Three months ended June 30,
                          2005                        2004
---------------------------------------------------------------------
                      Weighted                    Weighted
                       Average                     Average
                  Net   Shares                Net   Shares
             Earnings     (iii)    EPS   Earnings     (iii)      EPS
           ----------------------------------------------------------
Basic        $ 33,237    126.6  $ 0.26   $ 25,035    113.2    $ 0.22
 Stock
  options(i)        -      3.7   (0.01)         -      0.4        -
 Convertible
  debt(ii)          -        -       -      1,219      6.1        -
---------------------------------------------------------------------
Diluted      $ 33,237    130.3  $ 0.25   $ 26,254    119.7   $ 0.22
---------------------------------------------------------------------
---------------------------------------------------------------------

---------------------------------------------------------------------
                               Six months ended June 30,
                          2005                        2004
---------------------------------------------------------------------
                      Weighted                    Weighted
                       Average                     Average
                  Net   Shares                Net   Shares
             Earnings     (iii)    EPS   Earnings     (iii)      EPS
           ----------------------------------------------------------
Basic        $ 45,985    126.3  $ 0.36   $ 43,150    113.2    $ 0.38
 Stock
  options(i)        -      3.4   (0.01)         -      0.4         -
 Convertible
  debt(ii)          -        -       -      2,435      6.1         -
---------------------------------------------------------------------
Diluted      $ 45,985    129.7  $ 0.35   $ 45,585    119.7    $ 0.38
---------------------------------------------------------------------
---------------------------------------------------------------------

(i) Excludes the effect of approximately 9.5 million options and
restricted stock units to purchase common shares for the three months
ended June 30 (2004: 10.7 million) and 9.8 million options and
restricted stock options to purchase common shares for the six months
ended June 30 (2004: 10.7 million) that are anti-dilutive

(ii) As detailed in Note 9, the convertible debentures were all
converted or repaid on January 7, 2005

(iii) In millions

11. SUPPLEMENTAL CASH FLOW INFORMATION

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---------------------------------------------------------------------
                          Three months ended        Six months ended
                                    June 30,                June 30,
                            2005        2004        2005        2004
---------------------------------------------------------------------
Net interest paid       $ 35,875    $ 26,714    $ 50,766    $ 40,411
Net income taxes paid      8,407       6,164      28,988      21,418
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12. GOODWILL

Commencing January 1, 2002, in accordance with Canadian
accounting standards section 3062, “Goodwill and Other Intangible
Assets”, the Company tests goodwill for possible impairment on an
annual basis and at any other time if an event occurs or
circumstances change that would more likely than not reduce the fair
value of a reporting unit below its carrying amount. During the
second quarter of 2005, the Company completed the goodwill impairment
test for all reporting units. The results of this test have indicated
there is no impairment.

Maple Leaf Foods Inc. (TSX:MFI)

CONTACT: Maple Leaf Foods Inc.
Lynda Kuhn
Vice-President, Public & Investor Relations
(416) 926-2026
www.mapleleaf.com

SOURCE: Maple Leaf Foods Inc.