020505 Maple Leaf Reports Q1 2002 Results

Toronto - Maple Leaf Foods Inc. 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 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 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.

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