Connors Bros. Income Fund Announces Fourth Quarter and Year End Results



    TORONTO, March 20 /CNW/ - Connors Bros. Income Fund (TSX: CBF.UN) (the
"Fund"), whose subsidiaries market consumer food products under brands such as
Bumble Bee(R), Clover Leaf(R), Brunswick(R), Castleberry's(R) and Sweet
Sue(R), today announced its results for the fourth quarter and year ended
December 31, 2006. (Note: amounts in U.S. dollars unless otherwise noted).

    
    Fourth Quarter Highlights:

    - Revenues increased by $7.8 million, or 3.4% to $239.3 million for the
      fourth quarter of 2006 compared to the same period last year. A 3%
      volume decline was offset by increased pricing.

    - Gross profit increased 12.9% to $41.6 million for the fourth quarter of
      2006 due to the price increases and improved efficiencies in factory
      operations implemented during the year.

    - Net earnings increased 51.8% to $18.0 million, or $0.35 per unit, for
      the fourth quarter of 2006 from $11.9 million, or $0.23 per unit, for
      the fourth quarter of 2005.

    - Adjusted EBITDA for the fourth quarter increased by $3.4 million or
      16.4% to $24.3 million.

    - Adjusted distributable cash generated in the quarter totaled
      C$20.7 million or C$0.40 per unit. The Fund declared and paid
      distributions of C$17.4 million or C$0.34 per unit resulting in a
      fourth quarter adjusted distributable cash payout ratio of 84.0%.

    "Connors posted solid growth in sales and earnings in the fourth quarter
of 2006, capping off a year in which we improved in virtually all areas of our
business. In the fourth quarter, we were able to achieve gains in sales,
increased market share in key categories, and improved gross margins, all of
which contributed to a 16.4% improvement in adjusted EBITDA. By focusing on
our strategic initiatives throughout the year, we were able to deliver a solid
6% growth in full year adjusted EBITDA while funding investments which will
build the foundation for future growth" said Chris Lischewski, president and
chief executive officer of the Fund's operating subsidiaries.
    "I am especially pleased with the discipline we demonstrated in 2006 in
adhering to our strategic initiatives. By focusing on a few important
initiatives, we were able to deliver results consistent with our expectations.
As we move into 2007, we will continue to focus our efforts on key initiatives
around portfolio optimization, organic growth, improving customer
satisfaction, maintaining our low-cost-operator position and improving
organizational efficiencies. The progress made on these initiatives should
drive both current year growth and profitability in the years ahead. As a
result, in 2007, we are anticipating similar growth as we saw in 2006 with
adjusted EBITDA growing about 5% and our adjusted distributable cash payout
ratio dropping to approximately 90%."

    Operational Summary for the Fourth Quarter and Year:

    - Revenue for the fourth quarter of 2006 increased 3.4% to $239.3 million
      from $231.4 million for the comparable period in 2005, an increase of
      $7.8 million. Modest volume decreases in the seafood and meat
      categories compared to the fourth quarter of last year were offset by
      increased pricing. Revenues for the year ended December 31, 2006,
      increased to $938.2 million compared to $881.4 million for the year
      ended December 31, 2005, an increase of $56.8 million or 6.4%.

    - Gross profit for the fourth quarter of 2006 was $41.6 million, an
      increase of 12.9% compared to the fourth quarter of 2005. Gross margin
      for the fourth quarter of 2006 was 17.4%, compared to 15.9% for the
      same period last year. Effective pricing actions and improved factory
      efficiencies were partially offset by increases in raw material costs.
      Virtually all seafood categories reflected strengthened gross margins,
      with a mixture of higher and lower gross margins in the meat and
      poultry categories. Gross profit for 2006 was $151.7 million, an
      increase of $21.0 million or 16.1% from the previous year.

    - Selling, general and administrative expenses for the fourth quarter of
      2006 were $20.4 million, or 8.5% of revenue, as compared to
      $19.8 million, or 8.6% of revenue, for the fourth quarter of 2005. The
      increase was primarily attributable to increased selling, marketing and
      management incentive expenses offset by lower contract professional
      service costs. Selling, general and administrative expenses for the
      year 2006 were $80.6 million or 8.6% of revenue, compared to
      $72.5 million, or 8.2% of revenue, for the year 2005.

    - Adjusted EBITDA for the fourth quarter of 2006 increased 16.4% compared
      with the fourth quarter of 2005 to $24.3 million from $20.8 million.
      Adjusted EBITDA for the year ended 2006, increased 6.2% to
      $86.2 million from $81.2 million for the comparable period in 2005.

    - Net earnings increased 51.8% to $18.0 million, or $0.35 per unit, for
      the fourth quarter of 2006 from $11.9 million, or $0.23 per unit, for
      the fourth quarter of 2005, primarily due to costs recovered from
      restructuring and other transitions costs and decreases in income tax
      provisions. Net earnings for the year 2006 decreased $0.4 million to
      $46.5 million, or $0.91 per unit, from $46.9 million, or $0.95 per
      unit, for the year 2005.

    - Adjusted distributable cash for the fourth quarter improved 1.8% to
      C$20.7 million or C$0.40 per unit resulting in a fourth quarter payout
      ratio of 84.0% compared to adjusted distributable cash of
      C$20.3 million or C$0.39 per unit for the fourth quarter of 2005. For
      the year 2006, the Fund generated adjusted distributable cash of
      C$74.8 million, or C$1.45 per unit and declared distributions of
      $69.5 million for an adjusted annual payout ratio of 92.9%.

    Financial Highlights

    Consolidated debt as of December 31, 2006, was $251.7 million, resulting
in a trailing twelve-month leverage ratio of 2.9x, compliant with the
3.25x maximum leverage ratio covenant required by the Senior Facilities.

    Capital Expenditures

    During the year ended December 31, 2006, the Fund's operating subsidiaries
purchased approximately $15.1 million in property, plant and equipment and
intangible assets. This included $2.1 million to purchase software for the
implementation of a new ERP platform which will be integrated in 2007 and
2008. These purchases were financed from cash from operations, including $6.0
million in proceeds from insurance claims related to damage from Hurricane
Katrina, and short-term debt refinanced with capital leases and long-term
debt.


    Consolidated Financial Performance for Three Months and Year Ended
    December 31, 2006 and December 31, 2005

                          Three Months Ended                      Year Ended
                   ----------------------------------------------------------
                   ----------------------------------------------------------
    (in thousands,
     except
     earnings per    Dec. 31,        Dec. 31,        Dec. 31,        Dec. 31,
     unit)              2006            2005            2006            2005
                   ----------      ----------      ----------      ----------

    Revenue        $ 239,270       $ 231,426       $ 938,225       $ 881,413
    Gross profit      41,590          36,848         151,673         130,627
    Selling,
     general and
     administrative
     expenses         20,400          19,825          80,648          72,520
    Restructuring
     and other
     transition
     costs
     (recovery),
     net                (348)          2,657           1,529           4,916
    Net interest
     expense           4,416           3,339          16,653          11,729
    Gain on
     insurance
     claim                 -          (1,777)            (77)         (1,777)
    Debt issuance
     costs related
     to extinguished
     debt                  -               -           4,321               -
    Other (income)
     expense, net        466          (1,232)           (882)         (7,265)
    Net earnings   $  17,989       $  11,853       $  46,477       $  46,874
    Net earnings
     per unit -
     basic         $    0.35       $   0. 23       $    0.91       $    0.95
    Net earnings
     per unit -
     diluted       $    0.35       $   0. 23       $    0.90       $    0.95


    Statement of Distributable Cash (see Non-GAAP Measures)

                          Three months ended                      Year ended
                   --------------------------  ------------------------------
                   --------------------------  ------------------------------
    (in thousands
     except for
     per unit        Dec. 31,        Dec. 31,        Dec. 31,        Dec. 31,
     data)              2006            2005            2006            2005
                   ----------      ----------      ----------      ----------

    Cash
     provided by
     (used in)
     operating
     activities    $   8,078       $  (9,588)      $  30,179       $  39,390
    Long-term
     incentive
     plan costs         (163)              -          (1,400)              -
    Net gain
     (loss) on
     disposal
     of assets          (108)            254             685           6,986
    Foreign
     currency
     contracts             -               -               -            (331)
    Cost of
     sales
     related to
     inventory
     step-up               -               -               -          (8,268)
    Increase in
     non-cash
     working
     capital          11,751          26,560          34,320          26,962
    Increase
     (decrease)
     in long-term
     assets and
     liabilities
     classified
     as operating        427          (1,153)          4,651          (2,964)
    Interest
     expense
     exclusive
     of debt
     issuance
     cost amorti-
     zation            4,275           3,070          15,923          10,666
    Current
     income
     taxes
     (benefit)           345             911             385           3,426
                   ----------      ----------      ----------      ----------
    EBITDA            24,605          20,054          84,743          75,867
    Adjustments:
    Add: Impact
     of inven-
     tory fair
     value
     step-up               -               -               -           8,268
    Add: Restruc-
     turing and
     other
     charges            (348)          2,657           1,529           4,916
    Add: Pro
     forma
     EBITDA for
     businesses
     acquired
     January
     2005                  -               -               -           1,279
    Add: EBITDA
     on lost
     shrimp
     sales                 -             150               -             150
    Less: (gain)
     loss on
     certain
     asset
     disposals             -            (254)              -          (6,974)
    Less: gain
     on
     insurance
     claim                 -          (1,777)            (77)         (1,777)
    Less: EBITDA
     of divested
     brands                -               -               -            (549)
                   ----------      ----------      ----------      ----------
    Adjusted
     EBITDA           24,257          20,830          86,195          81,180

    Less
     maintenance
     capital
     expenditures     (1,110)           (542)         (2,865)         (3,054)
    Less
     interest
     paid             (4,379)         (2,208)        (14,595)        (10,169)
    Less income
     taxes paid         (587)           (787)         (2,773)         (5,264)
                   ----------      ----------      ----------      ----------
    Adjusted
     distribu-
     table cash       18,181          17,293          65,961          62,693
    Average
     exchange
     rate for
     the period       1.1373          1.1744          1.1341          1.2119
                   ----------      ----------      ----------      ----------
    Adjusted
     distribu-
     table
     cash      Cdn $  20,676   Cdn $  20,309   Cdn $  74,806   Cdn $  75,978
                   ----------      ----------      ----------      ----------
    Cash
     distribu-
     tions
     declared  Cdn $  17,371   Cdn $  18,658   Cdn $  69,484   Cdn $  77,162
                   ----------      ----------      ----------      ----------
    Weighted
     average
     units and
     unit equi-
     valents          51,470          51,470          51,470          51,470
                   ----------      ----------      ----------      ----------
    Adjusted
     distribu-
     table cash
     per unit
     and unit
     equiva-
     lent      Cdn $    0.40   Cdn $    0.39   Cdn $    1.45   Cdn $    1.48
                   ----------      ----------      ----------      ----------
                   ----------      ----------      ----------      ----------
    Adjusted
     distribu-
     table cash
     payout
     ratio              84.0%           85.5%           92.9%           91.5%
    


    Conference Call and Webcast

    The Fund will host a conference call to review its financial results on
Wednesday, March 21, 2007, at 10:30 a.m. Eastern Time (11:30 a.m. Atlantic).
Please call 416-644-3414 or 1-800-733-7560 to access the call. The call will
be web cast live and archived on the Fund's web site. After opening remarks,
there will be a question and answer session for participants.
    A taped rebroadcast will be available to listeners following the call
until March 28, 2007 at midnight. To access the rebroadcast, please dial
416-640-1917 or 1-877-289-8525 and quote passcode 21217494#.

    Non-GAAP Measures

    EBITDA, adjusted EBITDA, distributable cash and adjusted distributable
cash are not recognized measures and do not have standardized meanings under
the Canadian generally accepted accounting principles. Accordingly, these
measures may not be comparable to similar measures presented by other issuers.
Please refer to the Fund's Management's Discussion and Analysis for the year
ended December 31, 2006, which is available at www.sedar.com, for additional
information concerning these measures and a reconciliation of these measures
to net earnings for the periods presented.

    Forward Looking Statements

    The statements contained in this news release that are forward-looking
are based on current expectations, and are subject to a number of
uncertainties and risks, and actual results may differ materially. These
uncertainties and risks include, but are not limited to: availability of
resource, competitive pressures and changes in market activity, risks
associated with U.S. and international sales and foreign exchange, and
regulatory requirements. Further information can be found in the disclosure
documents filed by the Fund with the Canadian securities regulatory
authorities, available at www.sedar.com.

    About Connors Bros. Income Fund

    Connors Bros. Income Fund indirectly owns, through its subsidiaries, a
100% interest in Clover Leaf Seafoods, L.P. and Bumble Bee Foods, LLC.
Together, these two operating companies comprise North America's largest
branded seafood company, offering a full line of canned tuna, salmon, sardine
and specialty seafood products, marketed under leading brands including Clover
Leaf(R), Bumble Bee(R), Brunswick(R), Snow's(R) and Beach Cliff(R), as well as
a full-line of canned chicken and canned meat products in the U.S. under the
Castleberry's(R), and Sweet Sue(R) brand names. For further information,
please visit the Fund's website at www.connors.ca.
    %SEDAR: 00016892E




For further information:

For further information: Kent McNeil, Executive Vice President & Chief
Financial Officer, Connors Bros., Ltd., (858) 715-4076

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CONNORS BROS. INCOME FUND

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