Menu Foods Income Fund

Menu Foods Income Fund

July 19, 2005 14:13 ET

Menu Foods Income Fund Announces Preliminary Second Quarter 2005 Results

TORONTO, ONTARIO--(CCNMatthews - July 19, 2005) –

Attention Business/Financial Editors


Menu Foods Income Fund (TSX:MEW.UN) announced today preliminary financial results for the quarter ended June 30, 2005. Based on preliminary financial information for the second quarter, the Fund expects to report sales for the second quarter of approximately $83.7 million, compared to $96.8 million in the second quarter of 2004 ($168.4 million for the six months ended June 30, 2005 compared to $187.3 million for the six months ended June 30, 2004). The Fund also expects that it will report earnings before interest, taxes, depreciation, amortization and non-controlling interest (EBITDA) of approximately $4.9 million for the second quarter, compared to $11.7 million for the same period last year ($13.2 million for the six months ended June 30, 2005 compared to $23.2 million for the six months ended June 30, 2004). The decline in EBITDA is primarily due to increases in cost of goods sold including the effect of increases in input costs and inefficiencies related to the new pouch line equipment commissioned during the second quarter. EBITDA for the quarter was also adversely affected by reduced can sales, including those to the Fund's largest customer, the appreciation in the Canadian dollar relative to the United States dollar as compared to that relationship in the same period of the prior year and the absence of income derived under a take-or-pay contract in the current year that contributed to income in the prior year.

The Fund also announced today its distribution of 9.00 cents per unit for the month of July 2005, payable on or before August 15, 2005 to unitholders of record of July 29, 2005. This rate of distribution is unchanged from the prior month. The Fund's decision to maintain distributions at this level is based on management's expectation that results will improve in the second half of the year and in early 2006 based upon their belief that volumes will recover and that an industry wide price increase will be implemented. Should this outlook change, a revision to future distributions may be necessary.

The Fund emphasizes that these results are unaudited and preliminary. The final financial results for the quarter ended June 30, 2005 are expected to be reported on Friday, August 12, 2005.

Menu is the leading North American private-label/contract manufacturer of wet pet food products sold by supermarket retailers, mass merchandisers, pet specialty retailers and other retail and wholesale outlets. Menu currently produces more than one billion containers per year.

Certain statements in this press release are "forward-looking statements", which reflect management's expectations regarding the Fund and Menu's future growth, results of operations, performance, business prospects and opportunities. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management. Many factors could cause results to differ materially from the results discussed in the forward-looking statements, including risks related to dependence on key suppliers, economic conditions, competition, regulatory change, foreign exchange rates and interest rates, among others. Although the forward-looking statements are based on what management believes to be reasonable assumptions, the Fund and Menu cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this report, and neither the Fund nor Menu assumes any obligation to update or revise them to reflect new events or circumstances.

EBITDA is not a recognized measure under Canadian generally accepted accounting principles (GAAP). Management believes that in addition to net income, EBITDA is a useful supplemental measure of operating performance as it provides investors with an indication of cash available for distribution prior to debt service, capital expenditures and income taxes.

Investors should be cautioned, however, that EBITDA should not be construed as an alternative to net income determined in accordance with GAAP as an indicator of Menu's performance or to cash flows from operating, investing and financing activities as a measure of liquidity and cash flow. Menu's method of calculating EBITDA may differ from other companies and, accordingly, EBITDA may not be comparable to measures used by other companies.

Contact Information

  • Menu Foods GenPar Limited
    Mark Wiens
    Chief Financial Officer
    (905) 826-3870