Media Centre
2004/07/22

Maple Leaf Reports 2004 Second Quarter Financial Results

TORONTO, Jul 22, 2004 (BUSINESS WIRE) -- Maple Leaf Foods Inc. (TSX:MFI) today reported its financial results for the second quarter ended June 30, 2004.

"Our strong second quarter results reflect very good performance in both our protein and bakery operations," said Michael McCain, President and Chief Executive Officer, "High consumer demand for meat products, good early results from Schneider Foods, and rising hog prices all contributed to improved margins in our protein value chain operations. Our bakery business increased earnings through effectively offsetting rising input costs and benefited from our leadership in whole grain and premium bread categories. We are very pleased with our progress so far in 2004, as we continue our focus on increasing profitability and integrating the Schneider Foods acquisition."

Sales for the second quarter of $1.7 billion increased from $1.3 billion last year, due primarily to the inclusion of results from Schneider Foods, which was acquired on April 5, 2004. Excluding Schneider Foods, sales increased 6%. Sales for the first six months of 2004 were $2.9 billion compared to $2.5 billion last year.

Net earnings for the second quarter of 2004 were $26.3 million ($0.22 per share) compared to $1.8 million ($0.01 per share) last year. Year-to-date earnings were $45.6 million ($0.38 per share) compared to $7.8 million ($0.05 per share) last year.

Operating Review

Earnings from operations for the quarter increased to $64.7 million from $22.8 million last year, benefiting from strong performance in all major segments of the Company's business and the Schneider Foods contribution. Protein Value Chain operating earnings increased to $43.7 million from $5.0 million last year, while Bakery Group earnings increased to $20.5 million from $13.8 million last year. Year-to-date, earnings from operations before restructuring costs doubled to $112.7 million from $56.0 million last year.

Comparisons of earnings from operations exclude restructuring costs in 2003. Management believes that this is the most appropriate basis on which to evaluate operating results, as restructuring costs are not representative of ongoing operating earnings. Earnings comparisons are also affected by income related to sale of poultry production quota in both years and a gain related to the wind up of a pension plan last year, all of which are more fully explained in previous quarterly reports and the 2003 Annual Financial Statements. The following table reflects earnings from operations by business group before these items, and forms the basis for discussion in this news release

Earnings from operations before restructuring costs

($ millions)                    Second Quarter      Year-to-Date
-----------------------------------------------------------------
Protein Value Chain            2004       2003     2004     2003
                               ----       ----     ----     ----
Meat Products Group            12.6     (10.6)     22.6     (6.3)
Agribusiness Group             31.1      15.6      47.2     25.9
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Total Protein Value Chain      43.7       5.0      69.8     19.6
Bakery Products Group          20.5      13.8      38.3     27.1
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                               64.2      18.8     108.1     46.7
Sale of production quota        0.5       0.5       4.6      1.1
Pension wind-up gain              -       3.5         -      8.2
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                              $64.7     $22.8     $112.7   $56.0
                              -----     -----     ------   -----
                              -----     -----     ------   -----

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 second quarter increased to $1.1 billion from $719 million last year, while year-to-date sales of $1.8 billion compared to $1.4 billion last year. The increase reflects the contribution of Schneider Foods for almost the entire quarter, higher volumes and prices, and the success of new product innovation.

Earnings from operations increased to $12.6 million from an operating loss of $10.6 million in 2003. Although impacted by higher raw material prices, earnings from Schneider Foods contributed strongly to the Meat Products Group, and the transaction was accretive to earnings per share for the quarter. Operating earnings for the first six months were $22.6 million compared to an operating loss of $6.3 million last year.

The increase in operating earnings was due to improved operating performance and favourable protein markets that positively affected the Company's poultry, international and pork operations. Poultry earnings continued their upward momentum in the second quarter, benefiting from high demand and the Company's strong brand positioning in the premium poultry market. Improved operating performance at the further processed operations in Atlantic Canada and in the pork business also increased earnings, despite a small decline in North American pork processor margins. The consumer foods operations benefited from strong sales and the success of new product innovation, although overall profitability was affected by higher raw material costs. Price increases implemented in the second quarter will help to offset this impact going forward. The integration of Schneider Foods is progressing well, with activities this year primarily focused on establishing common systems and processes.

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 were $243.3 million compared to $231.2 million last year, while year-to-date sales were $455.4 million compared to $454.2 million last year. Operating earnings in the second quarter increased 99% to $31.1 million from $15.6 million last year, and year-to-date operating earnings increased to $47.2 million from $25.9 million last year.

Hog prices in the second quarter were 29% higher than last year, which together with strong rendering results drove increased operating earnings in the Agribusiness Group. The Company had effective ownership of approximately 21% of the hogs that it processed at the end of the quarter.

In the second quarter, the Company announced plans to expand biodiesel production at its rendering plant in Montreal, Quebec from four million to 35 million litres annually. The facility will convert tallow and other rendered materials into a high quality, environmentally friendly diesel fuel alternative, and will be commissioned by the spring of 2005.

Bakery Products Group (comprised of Maple Leaf's 84.7% ownership in Canada Bread Company, Ltd., a leading producer of fresh and frozen par-baked bakery products, and fresh pasta and sauces)

Bakery Products Group sales for the second quarter rose to $330.5 million compared to $314.1 million last year, supported by increased sales in both fresh and frozen bakery operations. Year-to-date, sales of $634.5 million compared to $621.6 million last year. Earnings from operations for the second quarter increased 49% to $20.5 million from $13.8 million last year, while earnings for the first six months were $38.3 million compared to $27.1 million last year.

As stated above, the Bakery operations improved operating earnings by $6.7 million quarter-over-quarter. Of this improvement, $2.6 million was due to the impact last year of a strike in the Fresh Bakery operations. Price increases initiated in early 2004 to offset rising input costs have also restored margins to more normalized levels. The performance of the Atlantic Canada bakeries contributed to improved profitability, as new management continued to make excellent progress in resolving operating issues. The U.K. Bakeries operation also increased its profitability in the quarter and expansion is underway at two bakeries to meet future demand.

Sales growth in the frozen par-baked operations was impacted by a work stoppage involving several large U.S retail customers. Business is gradually recovering and the Company expects par-baked sales to return to normal growth rates.

The impact of low carbohydrate diets was mitigated through increased sales of whole grain and premium bread categories and through new product innovation. In the white bread category, Dempster's Stays Fresh continued to increase market share by delivering a value-added benefit to consumers. A new line of reduced carbohydrate and whole grain frozen par-baked products was launched in the second quarter, further positioning the Company to meet a range of consumer needs.

Cash Flow and Financing

Interest expense for the quarter of $21.3 million increased from $16.7 million last year due to increased debt arising from the Schneider Foods acquisition. This effect was partially offset by lower interest rates.

Cash flow from operating activities for the second quarter increased to $25.4 million from $1.9 million last year, reflecting sharply increased earnings. While strong demand for protein products positively affected the Company's earnings, it also increased the cost of raw material and sales values, resulting in higher investments in working capital.

In second half of 2004, management will assess the impact of the acquisition of Schneider Foods on the Company's credit ratios and financial position, taking into account both recent earnings and the Schneider Foods contribution to cash flows, and will put in place new long-term debt and, possibly, equity financing, sufficient to ensure that the Company maintains debt ratios that provide access to investment grade debt financing.

Other Matters

The Company declared a dividend of $0.04 per share payable on September 30, 2004 to shareholders of record on September 10, 2004.

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.

An investor presentation related to the Company's first quarter financial results is available at www.mapleleaf.com and can be found under Investor Relations on the Quarterly Results page. A conference call will be held at 2:30 p.m. (EST) on July 22, 2004 to review Maple Leaf Foods' financial results for the second quarter ended June 30, 2004. To participate in the call, please dial in to 1-416-405-9328 or 800-387-6216. For those unable to participate, playback will be made available an hour after the event at 1-416-695-5800 / 800- 408-3053 (Pass code 33077223#).

A webcast presentation of the second quarter financial results will be available at http://firstcallevents.com/service/aiwz4O4882369qfl2.html at 2:30 p.m. EST and via a link on the Company's website at www.mapleleaf.com http://www.mapleleaf.com. An archived replay of the webcast will be available following the call at each of the above links.

This release contains forward-looking statements and information, which may include statements concerning the company's outlook for the future, as well as other statements of beliefs, future plans and strategies or anticipated events, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, the statements. These risks and uncertainties include availability and prices of livestock, raw materials and supplies, livestock costs, product pricing, the competitive environment and related market conditions, operating efficiencies, access to capital, the cost of compliance with environmental and health standards, adverse results from ongoing litigation and actions of domestic and foreign governments. Maple Leaf assumes no obligation to publicly update or revise these forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein do not materialize. Refer to the Company's annual report, management information circular, annual information form and other filings with the Ontario Securities Commission and Toronto Stock Exchange for further information on risks and uncertainties that could cause actual results to differ materially from forward-looking statements.

Maple Leaf Foods Inc.
Consolidated Balance Sheets

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--------------------------------------------------------------------
In thousands of Canadian dollars             As at             As at
                                           June 30,     December 31,
                                         2004       2003        2003
--------------------------------------------------------------------
                                  (Unaudited)(Unaudited)
ASSETS
Current assets:
 Cash and cash equivalents         $   74,598 $   77,937  $   38,908
 Accounts receivable (Note 2)         333,412    254,410     242,306
 Inventories                          404,886    276,029     259,758
 Future tax asset                       5,856      9,017       4,854
 Prepaid expenses and other assets     18,627     20,903       9,355
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                                      837,379    638,296     555,181
Investments in associated companies    78,650     68,422      58,189
Property and equipment                980,736    770,512     802,332
Other long-term assets                194,270    175,424     171,262
Future tax asset                       31,307     16,866      29,906
Goodwill and other intangible assets  852,026    509,162     531,851
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                                   $2,974,368 $2,178,682  $2,148,721
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable and accrued
  charges                            $ 610,075  $ 481,627  $ 501,997
 Income and other taxes payable         11,977     24,628     12,212
 Current portion of long-term debt      82,146      9,780      4,959
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                                       704,198    516,035    519,168
Long-term debt                       1,222,609    775,791    730,627
Future tax liability                    39,358     44,689     50,397
Other long-term liabilities            147,665     43,839     35,274
Minority interest                       77,249     77,374     70,068
Shareholders' equity                   783,289    720,954    743,187
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                                    $2,974,368 $2,178,682 $2,148,721
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The accompanying notes to the consolidated financial statements are
an integral part of this statement.


Maple Leaf Foods Inc.
Consolidated Statements of Earnings

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In thousands of
 Canadian dollars,
 except per share               Quarter Ended        Six Months Ended
 amounts (Unaudited)                 June 30,                June 30,
                            2004         2003        2004        2003
---------------------------------------------------------------------

Sales                 $1,689,490   $1,264,000  $2,884,221  $2,515,464

Earnings from
 operations before
 restructuring costs      64,686       22,779     112,688      56,027
Restructuring costs            -            -           -     (7,422)
---------------------------------------------------------------------
Earnings from
 operations               64,686       22,779     112,688      48,605
Other income (Note 3)        701          290       1,797         602
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Earnings before interest
 and income taxes         65,387       23,069     114,485      49,207
Interest expense          21,287       16,715      38,013      32,891
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Earnings before
 income taxes             44,100        6,354      76,472      16,316
Income taxes              15,391        2,367      26,689       5,694
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Earnings before minority
 interest                 28,709        3,987      49,783      10,622
Minority interest          2,455        2,188       4,198       2,841
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Net earnings for the
 period                 $ 26,254      $ 1,799    $ 45,585     $ 7,781
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Earnings per share (basic
 and diluted) (Note 4)    $ 0.22       $ 0.01      $ 0.38      $ 0.05
Dividends per share
 declared                   0.04         0.04        0.08        0.08
Weighted average number of
 shares (millions)         113.2        113.0       113.2       113.0

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


Maple Leaf Foods Inc.
Consolidated Statements of Retained Earnings

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In thousands of Canadian dollars,          Six Months Ended June 30,
 except per share amounts (Unaudited)     2004                  2003
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Retained earnings, beginning of
 period                              $  74,982              $ 63,758
Net earnings for the period             45,585                 7,781
Dividends declared ($0.08 per share;
 2003: $0.08 per share)                (9,057)               (9,041)
Convertible debenture charge           (2,435)               (2,422)
Premium on repurchase of share
 capital                                     -                 (899)
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Retained earnings, end of period     $ 109,075              $ 59,177
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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  Six Months Ended
(Unaudited)                               June 30,          June 30,
                                      2004    2003     2004     2003
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CASH PROVIDED BY (USED IN):

Operating activities
 Net earnings for the period      $ 26,254 $ 1,799 $ 45,585  $ 7,781
 Add (deduct) items not affecting
  cash:
  Depreciation                      34,783  24,476   61,087   49,161
  Stock based compensation (Note 7)    840      49    1,465       61
  Minority interest                  2,455   2,188    4,198    2,841
  Future income taxes                5,881     555   11,837    1,374
  Increase in pension asset        (6,471) (6,683) (11,558) (14,233)
  Undistributed earnings of
   associated companies            (1,948)   (440)  (1,505)     (33)
  (Gain) loss on sale of property
   and equipment                     (191)     281  (1,240)      149
  Gain on sale of investments         (20)       -     (20)        -
  Other                              1,332 (5,157)  (1,750)  (6,842)
 Change in other long-term
  receivables                      (5,144)      37  (5,799)       96
 Change in non-cash operating
  working capital                 (32,395)(15,234) (52,882)(105,488)
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                                    25,376   1,871   49,418 (65,133)
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Financing activities
 Dividends paid                    (4,529) (4,516)  (9,057)  (9,041)
 Dividends paid to minority
  interest                           (233)   (407)    (467)  (1,071)
 Increase in long-term debt        413,895  50,410  422,895  125,523
 Decrease in long-term debt          (522)   (835)  (3,557) (10,789)
 Convertible debenture interest
  paid                             (1,369) (1,369)  (2,739)  (2,739)
 Increase in share capital             394     857      671    2,146
 Shares repurchased for
  cancellation                           -   (629)        -  (1,829)
 Other                                 461     464      924      928
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                                   408,097  43,975  408,670  103,128
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Investing activities
 Additions to property and
  equipment                       (41,379)(37,273) (62,494) (57,525)
 Proceeds from sale of property
  and equipment                      5,182      66    8,856      512
 Purchase of net assets of
  businesses (Note 5)            (370,561)(51,000)(370,561) (51,000)
 Change in other investments, net    (231) (1,433)      284  (8,893)
 Other                               2,029   (278)    1,517     (18)
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                                 (404,960)(89,918)(422,398)(116,924)
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Increase (decrease) in cash and
 cash equivalents                   28,513(44,072)   35,690 (78,929)
Cash and cash equivalents,
 beginning of period                46,085 122,009   38,908  156,866
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Cash and cash equivalents, end of
 period                             74,598  77,937   74,598   77,937
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The accompanying notes to the consolidated financial statements
are an integral part of this statement.


Maple Leaf Foods Inc.
Segmented Financial Information

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In thousands of Canadian       Quarter Ended        Six Months Ended
 dollars (Unaudited)              June 30,                June 30,
                             2004       2003         2004       2003
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Sales
 Meat Products Group   $1,115,672 $  718,689   $1,794,305 $1,439,657
 Agribusiness Group       243,317    231,190      455,442    454,185
 Bakery Products Group    330,501    314,121      634,474    621,622
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                       $1,689,490 $1,264,000   $2,884,221 $2,515,464
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Earnings from operations,
 before restructuring
 costs (1)
 Meat Products Group   $   12,602 $  (7,133)   $   22,587 $    1,942
 Agribusiness Group        31,545     16,139       51,820     27,034
 Bakery Products Group     20,539     13,773       38,281     27,051
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                       $   64,686 $   22,779   $  112,688 $   56,027
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Capital expenditures
 Meat Products Group   $   19,216 $   10,899   $   25,917 $   20,518
 Agribusiness Group         7,830     11,857       10,568     16,417
 Bakery Products Group     14,333     14,517       26,009     20,590
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                       $   41,379 $   37,273   $   62,494 $   57,525
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Depreciation
 Meat Products Group   $   18,949 $   10,030   $   29,439 $   20,343
 Agribusiness Group         5,187      4,634       10,254      9,127
 Bakery Products Group     10,647      9,812       21,394     19,691
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                       $   34,783 $   24,476   $   61,087 $   49,161
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In thousands of Canadian                     As at             As at
 dollars                                   June 30,     December 31,
                                 2004          2003             2003
--------------------------------------------------------------------
                          (Unaudited)   (Unaudited)
Total assets
 Meat Products Group       $1,424,480    $  706,193       $  666,489
 Agribusiness Group           585,475       547,039          555,693
 Bakery Products Group        711,166       716,295          716,463
 Non-allocated assets         253,247       209,155          210,076
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                           $2,974,368    $2,178,682       $2,148,721
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The accompanying notes to the consolidated financial statements are an integral part of this statement.

(1) Prior to 2004, the Company included cost of production contracts with hog producers in the Meat Products Group. Management considers it more appropriate to include these impacts in the Agribusiness Group operating results. Therefore, 2003 segmented operating earnings before restructuring costs have been restated to reflect this change in presentation and make them comparable with 2004.

    Maple Leaf Foods Inc.

    Notes to Consolidated Financial Statements

    (For the quarters ended June 30, 2004 and June 30, 2003)

(Tabular amounts in thousands of Canadian dollars except 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, 2003. 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, 2003.

a) Hedging Relationships

As discussed in note 2(m)(i) of the annual consolidated financial statements for the year ended December 31, 2003, the Company is in compliance with CICA Accounting Guideline 13 relating to hedging.

b) Accounting for Asset Retirement Obligations

The application of new accounting standard, Section 3110, "Accounting for Asset Retirement Obligations" as disclosed in note 2(m)(ii) of the annual consolidated financial statements for the year ended December 31, 2003, did not have a material impact on the financial statements of the Company.

c) Comparative Figures

Certain 2003 comparative figures have been reclassified to conform with the financial statement presentation adopted in 2004.

2. 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, 2004, trade accounts receivable amounting to $205.4 million (June 30, 2003: $179.4 million; December 31, 2003: 186.8 million) had been sold under these programs.

3. Other Income

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                                          Quarter          Six months
                                   Ended June 30,      Ended June 30,
---------------------------------------------------------------------
                                   2004      2003       2004     2003
Income from associated
 companies                       $  500    $  122     $  488     $ 40
Gain (loss) on sale of
 property and equipment             191     (281)      1,240    (149)
Rental income                        94        99        196      156
Gain on disposal of investments      20         -         20        -
Gain (loss) on real estate
 operations                       (104)       350      (147)      515
Other                                 -         -          -       40
                                 ------    ------   --------   ------
                                 $  701    $  290   $  1,797   $  602
                                 ------    ------   --------   ------
                                 ------    ------   --------   ------

4. Earnings Per Share

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

---------------------------------------------------------------------
---------------------------------------------------------------------
                                        Quarter            Six months
                                 Ended June 30,        Ended June 30,
---------------------------------------------------------------------
                                 2004      2003       2004       2003
Numerator:
 Net earnings                  26,254     1,799     45,585      7,781
 Convertible
  debenture charge            (1,219)   (1,209)    (2,435)    (2,422)
---------------------------------------------------------------------
Earnings available to
 common shareholders         $ 25,035     $ 590   $ 43,150    $ 5,359
---------------------------------------------------------------------
---------------------------------------------------------------------

Weighted average number of
 shares (millions)             113.2      113.0      113.2      113.0
Earnings per share
 (basic and diluted)           $0.22      $0.01      $0.38      $0.05
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5. Acquisitions

On April 5, 2004 the Company completed the acquisition of Schneider Corporation ("Schneider Foods") for $499 million.

The company has not yet completed the determination of the fair values of the individual assets and liabilities acquired, or its restructuring and integration plans for the operations acquired. As at June 30, 2004, the only significant items that have been assigned preliminary fair values are accrued pension benefit liabilities and accrued post-retirement benefit liabilities. Accordingly, the allocation of the purchase costs to the assets and liabilities acquired is preliminary and will change. The goodwill resulting from the above transaction is included in the total assets of the Meat Products Group.

Details of the net assets acquired are as follows:

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                                                            2004
Net working capital                                     $ 86,512
Investments                                               20,380
Property and equipment                                   179,792
Goodwill                                                 283,986
Other intangibles                                         33,117
Indebtedness - short term                               (41,970)
Long-term debt                                         (101,067)
Future income taxes                                       25,232
Accrued pension benefit liabilities                     (78,200)
Accrued post-retirement benefit liabilities             (35,484)
Minority interest                                        (1,737)
                                                         -------
Total purchase costs                                   $ 370,561
                                                       ---------
                                                       ---------
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The acquisition was funded by a combination of existing unused credit facilities, a new short-term bank facility and the assumption of existing debt of Schneider Foods.

The Company entered into a Credit Agreement with a syndicate of banks on March 1, 2004. The amount of the syndicated facility provides for an amount up to $205 million for the purpose of financing part of the purchase price and any required repayments of existing Schneider indebtedness. The facility has a maturity date of April 5, 2005 and bears interest based on bankers' acceptance rates for Canadian dollar loans and LIBOR for U.S. dollar loans.

In addition to the bank financing, the Company has entered into a Financing Agreement with The Ontario Teachers' Pension Plan Board (OTPPB). This agreement provides the Company with a standby commitment from OTPPB to purchase, at the Company's option, up to $150 million of treasury shares at any time until its expiry on April 15, 2005. Pricing of the shares under this arrangement would be at a 6% discount to the market-trading price of the Company's common shares prior to an issue.

In the latter part of 2004, management will assess the impact of the acquisition on the Company's credit ratios and financial position, taking into account both recent earnings and the Schneider Foods contribution to cash flows, and will put in place new long-term debt and, possibly, equity financing, sufficient to ensure that the Company maintains debt ratios that provide access to investment grade debt financing.

6. Derivatives

In the ordinary course of business, the Company enters into derivative financial instruments to reduce underlying fair value and cash flow risks associated with foreign currency, interest rates and commodity prices. If the Company had not entered into these contracts, operating earnings for the second quarter 2004 would have been higher by $2.9 million (year-to-date $3.2 million) and interest expense for the second quarter 2004 would have been lower by $4.1 million (year-to-date $8.0 million).

The new short-term bank facilities used to finance the Schneider Foods acquisition (see Note 5) bear interest at floating market rates. The Company plans to re-finance these bank facilities with new long term debt and possibly equity financing. During the quarter, the Company entered into a series of interest rate and cross currency swaps to hedge the interest rate on the anticipated new debt issue. The swaps were issued for notional amounts of $50.0 million and US$185.0 million, have terms of seven and ten years and fixed interest rates that range between 5.99% and 6.67%. As at June 30, 2004 these swaps had a market value loss of $2.3 million.

7. Stock-based Compensation

During the second quarter of 2004, the Company granted 127,600 stock options at a weighted average price per share of $11.64 (2003: 62,000 stock options granted at a weighted average price per share of $10.59). The fair value of the options issued in a quarter is determined using the Black-Scholes option pricing model with the following weighted average assumptions:

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                                    Quarter Ended June 30, 2004
---------------------------------------------------------------------

Expected option life                                  4.4 years
Risk-free interest rate                               4.2%
Expected annual volatility                           34.7%
Dividend yield                                        1.35%
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The estimated fair value of the options issued during the second quarter of 2004 was $0.4 million (2003: $0.2 million). This value is amortized to income over the vesting period of the related options.

The stock compensation charge to earnings during the quarter ended June 30, 2004 is $0.8 million. Year to date $1.5 million has been charged to earnings. For the first 6 months of 2003, the impact of stock compensation charges to earnings was not significant.

8. Pensions

As discussed in note 17 of the annual consolidated financial statements for the year ended December 31, 2003, in aggregate, the assets of the company's defined benefit pension plans exceeded liabilities in the amount of $290.9 million. As disclosed in Note 5, the Company acquired a pension liability pursuant to the acquisition of Schneider Foods. After aggregating the financial position of all its defined benefit pension plans, plan assets exceed liabilities by approximately $213 million in aggregate.

During the quarter, the Company included in earnings $1.8 million related to net benefit plan income including post-retirement benefit costs (2003: $4.4 million). For the first 6 months of 2004, the Company recorded $4.7 million in net benefit plan income (2003: $9.9 million).

9. Supplemental Information

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                 Quarter Ended June 30,     Six months Ended June 30,
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                                   2004                          2004
Cash taxes paid                 $ 6,164                      $ 21,418
Cash interest paid               26,714                        40,411

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SOURCE: Maple Leaf Foods Inc.

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