Media Centre
2002/05/01

Maple Leaf Reports 2002 First Quarter Financial Results

TORONTO, ONTARIO--

Operating Earnings Up 25%; Earnings Per Share Up 27%

Maple Leaf Foods Inc. (TSE:MFI) today reported its financial results for the first quarter ended March 31, 2002.

"The Company achieved another quarter of solid earnings growth, with good progress across all our operating groups in spite of industry wide margin pressure in both the pork and poultry sectors," said Michael H. McCain, President and Chief Executive Officer. "We are particularly pleased by the growth of our Bakery Products Group, including the significant contribution of Multi Marques."

Sales for the first quarter increased 16% to over $1.2 billion from less than $1.1 billion for the same period last year, while earnings from operations of $41.7 million increased from $30.8 million last year ($33.4 million before goodwill amortization). As explained in Note 1 to the financial statements, in accordance with a recent change in generally accepted accounting principles, the Company no longer amortizes its goodwill. Excluding goodwill amortization from last year's results, operating earnings for the first quarter increased by 25% compared to the prior year. The increase was driven by very strong results in the Bakery Products Group, and strong protein value chain results in both the Meat Products Group and the Agribusiness Group. Net earnings for the first quarter of $16.9 million ($0.14 per share) increased from $9.7 million ($0.09 per share) in 2001 ($12.0 million or $0.11 per share before goodwill amortization). Excluding goodwill amortization from last year's results, earnings per share for the quarter increased 27% quarter-over-quarter.

Other income for the first quarter of $1.6 million compared to $3.5 million for the same period last year, reflecting lower earnings from real estate operations. Interest expense for the quarter of $13.4 million decreased from $16.3 million for the prior year due to lower borrowing levels and lower interest rates.

The Company's cash flow from operating activities for the first quarter was a use of funds of $7.4 million compared to a use of funds of $34.0 million last year. The improved cash flow performance in 2002 was driven primarily by stronger earnings and a smaller first quarter investment in working capital.

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 Product Group sales for the first quarter increased 7% to $737 million from $689 million last year, while earnings from operations of $12.5 million compared to $10.4 million for the same period last year ($11.5 million before goodwill amortization). Excluding goodwill amortization from last year's results, operating earnings increased by 8% quarter over quarter.

Maple Leaf Pork continued to achieve operational improvements, and recorded improved results over last year in spite of industry wide margin pressure. During the first quarter, Maple Leaf Medallion(TM) Naturally fresh pork was launched, Canada's first 100% vegetable grain fed pork, produced from hogs that are fed exclusively the Company's proprietary NutriMedallion(TM) feed. Maple Leaf Consumer Foods and Maple Leaf Foods International both had very strong quarters, recording substantial increases in profitability. In the poultry industry, commodity poultry margins continued to be challenged by depressed industry-wide poultry prices. While Maple Leaf Poultry was impacted by these industry conditions, it has benefited significantly from the development of its value-added branded poultry products, which has reduced the Company's exposure to commodity price fluctuations.

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

Agribusiness Group sales for the first quarter of $221 million increased by 9% from $202 million last year, while operating earnings of $17.3 million increased from $14.2 million for the same period last year ($14.6 million before goodwill amortization). Excluding goodwill amortization from last year's result, operating earnings increased 19% quarter-over-quarter. Shur-Gain and Landmark Feeds animal nutrition operations and Elite Swine, the Company's swine production business, all continued to record strong results. Rothsay, the Company's by-products recycling operations, also had improved financial performance compared to last year, when its results were adversely affected by high-energy prices.

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

Bakery Product Group sales for the first quarter of $265 million increased 62% from $164 million for the same period last year. The increase was principally due to the inclusion of sales from Multi-Marques Inc. ("Multi-Marques"), of Quebec and the New York Bagel Company of the United Kingdom, both of which were purchased in the fourth quarter of 2001. Excluding the effect of these acquisitions, sales for the quarter increased by 7%.

Earnings from operations for the first quarter of $12.0 million increased from $6.2 million for the same period last year ($7.3 million before goodwill amortization). Excluding goodwill amortization from last year's results, operating earnings increased 64% quarter-over-quarter. The increase was attributable to the contribution from Multi-Marques and the New York Bagel Company, operational improvements at Canada Bread Company, Limited ("Canada Bread"), as well as growth in par-baked bread sales and profitability at Maple Leaf Bakery in the United States.

Subsequent to the end of the first quarter on April 11, 2002, the remaining 40% of the shares of Ben's Limited bakery of Atlantic Canada, not owned by Multi-Marques were acquired.

The Company declared a dividend of $0.04 per share payable on June 28, 2002 to shareholders of record on June 14, 2002.

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 more than 14,000 people at its operations across Canada, and in the United States, Europe and Asia. Maple Leaf Foods Inc. reported sales of $4.8 billion in 2001.

A conference call will be held at 3:00 p.m. (Toronto time) on May 1, 2002 to review Maple Leaf Foods' financial results for the first quarter ended March 31, 2002. The call will be hosted by Michael H. McCain, President & Chief Executive Officer; Tom P. Muir, Chief Financial Officer and Michael H. Vels, Executive Vice-President, Finance.

To participate in the call, please dial in to 1-888-617-9296. For those unable to participate playback will be made available an hour after the event at 1-800-558-5253 passcode #20519224.

A live webcast of the Annual Meeting will be available commencing at 11:00 a.m. at www.mapleleaf.com/live. A replay of the webcast will be available shortly after the AGM and will remain available for 90 days.


Maple Leaf Foods Inc. 
Consolidated Statements of Earnings 
-----------------------------------------------------------------------
In thousands of Canadian dollars,                 Quarter ended 
except per share amounts                             March 31, 
(Unaudited)                                    2002           2001  
-----------------------------------------------------------------------

Sales                                   $ 1,223,178    $ 1,054,901 

Earnings from operations                     41,707         30,834  
Other income (note 4)                         1,594          3,522  
                                        --------------------------
Earnings before interest and taxes           43,301         34,356  
Interest expense                             13,356         16,333 
                                        --------------------------
Earnings before income taxes                 29,945         18,023  
Income taxes                                 10,840          7,137 
                                        --------------------------
Earnings before minority interest            19,105         10,886  
Minority interest                             2,215          1,167 
                                        --------------------------
Net earnings for the period             $    16,890    $     9,719 
                                        --------------------------
                                        --------------------------

Earnings per share 
 (basic and fully diluted)              $      0.14    $      0.09  
Dividends per share declared                   0.04           0.04   
Weighted average number of shares
 (millions)                                   112.1           95.0    


The accompanying notes to the consolidated financial statements
are an integral part of this statement. 
 
Maple Leaf Foods Inc.                                            
Consolidated Balance Sheets                                            
                                            
                                                                     
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In thousands of Canadian                                     As at 
dollars                               As at March 31,    December 31,
                                    2002           2001          2001
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                             (Unaudited)    (Unaudited)              
ASSETS                                                             
  Current assets:                                                    
  Cash                           $52,263        $47,422       $52,611
  Accounts receivable (note 3)   211,170        248,488       248,064
  Inventories                    253,992        235,167       231,918
  Prepaid expenses and
   other assets                   14,643         18,488        14,725
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                                 532,068        549,565       547,318
Investments in associated
 companies                        57,652         85,371        58,303
Property and equipment           789,079        704,118       795,932
Other long-term assets           163,060        172,153       161,961
Future tax asset                  14,963         15,942        14,602
Goodwill                         402,597        326,199       402,636
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                              $1,959,419     $1,853,348    $1,980,752
---------------------------------------------------------------------
---------------------------------------------------------------------
                                                                     
                                                                     
LIABILITIES AND
 SHAREHOLDERS' EQUITY                                                
  Current liabilities:                                               
  Bank indebtedness           $        -        $30,574    $        -
  Accounts payable and
   accrued charges               435,028        389,089       488,226
  Income and other taxes
   payable                        23,694         14,992        34,573
  Current portion of
   long-term debt                 21,122         13,261        23,556
---------------------------------------------------------------------
                                 479,844        447,916       546,355
Long-term debt                   657,715        823,239       627,890
Future tax liability              53,188         43,408        51,417
Other long-term
 liabilities                       7,311          5,928         7,315
Minority interest                 88,428         79,246        88,059
Shareholders' equity             672,933        453,611       659,716
---------------------------------------------------------------------
                              $1,959,419     $1,853,348    $1,980,752
---------------------------------------------------------------------
---------------------------------------------------------------------
                                                                     
The accompanying notes to the consolidated financial statements are
an integral part of this statement.                  


Maple Leaf Foods Inc.                                  
Consolidated Statements of Cash Flows                                
                                  
                                                                     
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In thousands of Canadian dollars              Quarter ended March 31, 
(Unaudited)                                     2002             2001
---------------------------------------------------------------------
CASH PROVIDED BY (USED IN):                                          
                                                                     
Operating activities                                                 
  Net earnings for the period                $16,890           $9,719
  Add (deduct) items not affecting
   cash:                                                               
    Depreciation                              24,129           19,928
    Amortization                                   -            2,654
    Minority interest                          2,215            1,167
    Future income taxes                        2,413             (44)
    Undistributed earnings of
     associated companies                      (568)            9,432
    Loss (gain) on sale of property and
     equipment                                  (77)               87
    Other                                    (5,152)            7,816
  Change in other long-term
   receivables                                 2,883              257
  Change in non-cash operating
   working capital                          (50,177)         (85,059)
---------------------------------------------------------------------
                                             (7,444)         (34,043)
---------------------------------------------------------------------
Financing activities                                                 
  Dividends paid                             (4,492)          (3,804)
  Dividends paid to minority interest        (1,481)            (516)
  Increase in long-term debt                  27,391          106,247
  Convertible debenture interest paid        (1,370)          (1,370)
  Increase in share capital                    2,935              479
  Shares repurchased for cancellation              -          (1,218)
  Other                                        (959)              296
---------------------------------------------------------------------
                                              22,024          100,114
---------------------------------------------------------------------
Investing activities                                                 
  Additions to property and equipment       (18,570)          (7,005)
  Proceeds from sale of property and
   equipment                                   2,423               79
  Purchase of net assets of
   businesses                                      -         (42,836)
  Change in other investments, net             1,219              338
---------------------------------------------------------------------
                                            (14,928)         (49,424)
---------------------------------------------------------------------
                                                                     
Increase (decrease) in cash and
 cash equivalents                              (348)           16,647
Cash and cash equivalents,
 beginning of period                          52,611              201
---------------------------------------------------------------------
Cash and cash equivalents, end of
 period                                       52,263           16,848
---------------------------------------------------------------------
                                                                     
The accompanying notes to the consolidated financial statements
are an integral part of this statement.                    


Maple Leaf Foods Inc.	
Consolidated Statements of Retained Earnings / Deficit

-----------------------------------------------------------------------
In thousands of Canadian dollars            Quarter ended March 31,
(Unaudited)                                     2002          2001 
-----------------------------------------------------------------------
Retained earnings (deficit), 
 beginning of period
 as previously reported                     $  3,310    $  (32,889)
Adjustment to reflect change
 in accounting for 
 foreign currency translation (note 1[c])   $ (1,493) 
-----------------------------------------------------------------------
As restated                                 $  1,817    $  (32,889)
Net earnings for the period                   16,890         9,719 
Dividends declared 
 ($0.04 per share; 2001 - $0.04 per share)    (4,492)       (3,804)
Premium on repurchase of share capital             -          (654)
Convertible debenture charge                  (1,135)       (1,131)
-----------------------------------------------------------------------
Retained earnings (deficit), end of period  $ 13,080    $  (28,759)
-----------------------------------------------------------------------
-----------------------------------------------------------------------

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


Maple Leaf Foods Inc.                                  
Segmented Financial Information                                  
                                  
                                                                     
---------------------------------------------------------------------
                                                    Pro-forma for the
                                         Quarter ended  quarter ended
In thousands of Canadian dollars,            March 31,      March 31,
(Unaudited)                               2002       2001     2001(i)
---------------------------------------------------------------------
                                                                     
Sales                                                                
 Meat Products Group                  $737,354   $689,402    $689,402
 Agribusiness Group                    220,677    201,886     201,886
 Bakery Products Group                 265,147    163,613     163,613
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                                    $1,223,178 $1,054,901  $1,054,901
---------------------------------------------------------------------
---------------------------------------------------------------------
Earnings from operations                                            
 Meat Products Group                   $12,455    $10,396     $11,501
 Agribusiness Group                     17,299     14,190      14,590
 Bakery Products Group                  11,953      6,248       7,274
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                                       $41,707    $30,834     $33,365
---------------------------------------------------------------------
---------------------------------------------------------------------
Capital expenditures                                                
 Meat Products Group                    $4,604     $1,476      $1,476
 Agribusiness Group                      7,434      2,537       2,537
 Bakery Products Group                   6,532      2,992       2,992
---------------------------------------------------------------------
                                       $18,570     $7,005      $7,005
---------------------------------------------------------------------
---------------------------------------------------------------------
Depreciation and amortization                                       
 Meat Products Group                   $10,062    $10,041      $8,936
 Agribusiness Group                      4,005      4,523       4,123
 Bakery Products Group                  10,062      8,018       6,992
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                                       $24,129    $22,582     $20,051
---------------------------------------------------------------------
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---------------------------------------------------------------------
---------------------------------------------------------------------
                                                                     
                                               As at          As at
In thousands of Canadian dollars,            March 31,      December,
                                          2002       2001        2001
---------------------------------------------------------------------
                                   (Unaudited) (Unaudited)            
Total assets                                                         
 Meat Products Group                  $703,964   $729,242    $724,137
 Agribusiness Group                    467,599    450,515     457,862
 Bakery Products Group                 620,838    462,815     627,017
 Non-allocated assets                  167,018    210,776     171,736
---------------------------------------------------------------------
                                    $1,959,419 $1,853,348  $1,980,752
---------------------------------------------------------------------
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(i) Effective January 1, 2002, in accordance with recent changes in
    generally accepted accounting principles, the Company no longer
    amortizes goodwill. The pro-forma effect of this change, as
    if goodwill had not been amortized in 2001, is presented above.  
                                                                     
The accompanying notes to the consolidated financial statements
are an integral part of this statement.                              

/T/

Maple Leaf Foods Inc. Notes to Consolidated Financial Statements 
(Quarters Ended March 31, 2002 and March 31, 2001) (Tabular 
amounts in thousands of Canadian Dollars except for per share 
amounts) 



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, 2001.  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, 
2001 except for the following: 

(a)  Business Combinations, Goodwill and Other Intangible Assets 

In September 2001, the Canadian Institute of Chartered Accountants
(CICA) issued Handbook Sections 1581 "Business Combinations" and 
3062 "Goodwill and Other Intangible Assets". The new standards 
require the purchase method of accounting for business 
combinations and require that goodwill no longer be amortized but 
instead be tested for impairment at least annually. The standards 
require that specified intangible assets be recognized and 
reported apart from goodwill. The Company has adopted these new 
standards as of January 1, 2002 and has discontinued amortization 
of all existing goodwill. Effective July 1, 2001, goodwill arising
on business combinations completed after June 30, 2001 was not 
amortized. 

In connection with the Section 3062 transitional goodwill 
impairment evaluation, the Company is required to assess whether 
goodwill is impaired as of January 1, 2002. The Company has up to 
six months to determine the fair value of its reporting units and 
compare that to the reporting units' carrying amounts.  To the 
extent a reporting units' carrying amount exceeds its fair value, 
the Company must perform a second step to measure the amount of 
impairment in a manner similar to a purchase price allocation. 
This second step is to be completed no later than December 31, 
2002. Any transitional impairment will be recognized as an effect 
of a change in accounting principle and will be charged to opening
retained earnings as of January 1, 2002. The Company has not yet 
determined the impact of this transitional goodwill impairment 
assessment on its financial statements. 

Effective January 1, 2002, the Company had unamortized goodwill of
$402.6 million which is no longer being amortized. This change in 
accounting policy is not applied retroactively and the amounts 
presented for prior periods have not been restated for this 
change.  To enable consistent comparison to prior periods, the 
following selected pro-forma financial information is provided for
2001, assuming no goodwill amortization for 2001: 


/T/

-----------------------------------------------------------------------
                                             Quarter Ended March 31,
-----------------------------------------------------------------------
                                             2002               2001
Earnings from operations as reported    $  41,707          $  30,834
Add back goodwill amortization                                 2,531
                                        ---------          ---------
Pro-forma earnings from operations      $  41,707          $  33,365
                                        ---------          ---------
                                        ---------          ---------

Pro-forma net earnings for the period   $  16,890          $  12,014
                                        ---------          ---------
                                        ---------          ---------
Earnings per share as reported
 (basic and diluted)                        $0.14              $0.09
                                            -----              -----
                                            -----              -----
Pro-forma earnings per share
 (basic and diluted)                        $0.14              $0.11
                                            -----              -----
                                            -----              -----
-----------------------------------------------------------------------

/T/                                                  

(b) Stock-based compensation and other stock-based payments 

Effective January 1, 2002, the Company adopted the new CICA 
Handbook Section 3870, which requires that a fair value based 
method of accounting be applied to certain types of stock option 
awards. The new standard requires that for stock option awards 
such as those awarded by the Company, the effect on reported net 
earnings be disclosed on a pro-forma basis in the notes to the 
financial statements as if the Company had accounted for these 
stock option awards under the fair value method. 

During the first quarter of 2002, the Company awarded 89,000 stock
options to employees (135,000 in the first quarter of 2001). The 
estimated fair value of options issued during the quarter was $0.4
million ($0.4 million for options issued in the first quarter of 
2001). For the purposes of pro-forma disclosure, this estimated 
fair value is amortized to income over the vesting period of the 
related options. For the three months ended March 31, 2002 and 
March 31, 2001, the amortization of these stock option awards 
would have had no material impact on net earnings. 

(c) Foreign Currency Translation  

A revision to section 1650 of the CICA Handbook eliminated 
deferral and amortization of foreign currency translation 
differences resulting from the translation of long-term monetary 
assets and liabilities denominated in foreign currencies. All such
translation differences are now charged directly to income. The 
Company adopted the revision retroactively, effective January 1, 
2002, without restating the financial statements of any prior 
period. Application of the recommendation would not have 
materially affected net earnings reported in 2001. In total, the 
adoption of the standard results in a cumulative reduction to 
retained earnings at January 1, 2002 of $1.5 million. 

(d) Comparative figures 

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

2. Acquisitions 

On October 12, 2001 Canada Bread Company Limited, ("Canada 
Bread"), a 68% owned subsidiary of the Company, acquired the 
remaining 75% interest in Multi-Marques Inc., to now hold 100%. 
The Company has not yet completed the determination of fair values
of the individual assets and liabilities acquired or its 
restructuring and integration plans for the operations acquired. 
Accordingly, the allocation of the purchase cost to the assets and
liabilities acquired is preliminary and will change as 
restructuring plans are finalized. No restructuring costs have 
been accrued in the preliminary purchase accounting included in 
these financial statements, or accrued with respect to any 
restructuring of existing Canada Bread operations that may result 
from integration plans, when finalized. 

Subsequent to the end of the first quarter on April 11, 2002, 
Canada Bread acquired the remaining 40% interest in Ben's Limited,
a bakery business in Atlantic Canada, to now hold 100%. 

3. Accounts Receivable 

Under revolving securitization programs, the Company has sold, 
with limited recourse, certain of its trade accounts receivable to
financial institutions. The Company retains servicing 
responsibilities and assumes limited recourse obligations for 
delinquent receivables. At March 31, 2002, trade accounts 
receivable amounting to $175.3 million (March 31, 2001 - $112.5 
million) had been sold under these programs. 

4. Other Income 


/T/

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                                         Quarter Ended March 31,
-----------------------------------------------------------------------
                                         2002               2001
Earnings from associated companies    $   162            $   255
Dividends received                         14                 --
Gain on sale of investments, net          954                 --
Gain on real estate operations            318              2,813
Gain (loss) on sale of property
 & equipment                               77               (87)
Other                                      69                541
                                        -----              -----
                                      $ 1,594            $ 3,522
                                      -------            -------
                                      -------            -------
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/T/



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