Connors Bros. Income Fund Announces Third Quarter Results - Adjusted EBITDA Up 3% on Strong Seafood Performance



    TORONTO, Nov. 13 /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 quarter ended September 29, 2007.
(Note: amounts in U.S. dollars unless otherwise noted).

    
    Third Quarter Summary:

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                                                         Three months ended
                                                        ---------------------
                                                          Sep. 29,   Sep. 30,
           (in millions, except per unit data)               2007       2006
                                                        ----------  ---------

            Revenue                                     $   220.1  $   234.3
            Net earnings                                $    14.3  $    10.3
            Net earnings per unit - basic               $    0.28  $    0.20
            Adjusted EBITDA                             $    24.4  $    23.7
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    - The Fund's net earnings for the quarter were 39% higher than the
      third quarter of 2006 due to lower income taxes and no restructuring
      charges in the current year's third quarter.

    - Revenues decreased by $14.2 million, or 6% due to lower meat and
      poultry product shipments lost as a result of halted shipments
      following a product recall announced earlier this year (the "Recall").
      Strong albacore and ready-to-eat tuna revenues offset some of the lost
      meat and poultry revenues.

    - Market shares for tuna remained strong in both the U.S. and Canada
      behind the Bumble Bee(R) and Clover Leaf(R) brands, respectively,
      reflecting the strength of the Fund's core seafood business.

    - EBITDA, as adjusted to exclude restructuring charges and insurance
      recovery gains that occurred in 2006, increased by 3% to $24.4 million
      from $23.7 million reflecting strong seafood performance offset by
      lost meat and poultry sales.

    - Standardized distributable cash for the twelve months ended
      September 29, 2007 was C$54.6 million or C$1.06 per unit (diluted),
      resulting in a standardized distributable cash payout ratio of 106%,
      with Recall costs and capital expenditures for a new ERP system
      offsetting reduced distributions as a result of the suspension of
      distributions.

    - For the first nine months of 2007, net earnings improved by 13% as
      compared to the first nine months of 2006, with revenues up slightly,
      despite the impact of the Recall, and adjusted EBITDA improving
      by 6.5%.

    - Connors Trustees reiterated the Fund's intent to resume monthly
      distributions in March 2008. The level of distributions is still
      under consideration.

    "Our strong seafood business performance in both the U.S. and Canada more
than offset the impact of lost margins from our meat and poultry business as a
result of the temporary shutdown of our Augusta, Georgia processing facility"
said Chris Lischewski, president and chief executive officer of the Fund's
operating subsidiaries. "We are quickly putting the recall behind us as we
have re-opened the Augusta factory in September, resumed shipments of our meat
and poultry products, and are re-launching many of our chili and beef stew
products under a new label called American Originals(TM). The fact that we
were able to increase our quarterly adjusted EBITDA versus prior year is a
testament to the strength of our core seafood products business and our
ability to handle the complexities of the recall while still maintaining
momentum for the business."
    "We continue to expect solid performance for seafood products, and the
resumption of positive margin contribution from our meat and poultry business.
As a result, we are improving our outlook for full year Adjusted EBITDA from
being flat to up 3% (as reported in the last quarter) to being up about 5% as
compared to 2006."

    Operational and Financial Summary:

    Revenue for the third quarter of 2007 was $220.1 million as compared to
$234.3 million for the third quarter of 2006, a decrease of $14.2 million or
6.1%. Revenue decreased as a result of significantly lower shipments of meat
and poultry products as a result of the Recall. Case-equivalent volumes
decreased by 21.6% as a result of the Recall, and were essentially the same
for both quarters for seafood products. Improved U.S. tuna revenues, led by
strong albacore tuna sales and continued growth of ready-to-eat and pouched
tuna products, offset some of the meat and poultry product revenue lost as a
result of the interruption to the business stemming from the Recall. The
Operating Companies' market shares for tuna and many other seafood products in
both the U.S. and Canada improved as compared to the third quarter of 2006.
    Net earnings increased $4.0 million to $14.3 million, or $0.28 per unit
(basic) for the third quarter of 2007 from $10.3 million, or $0.20 per unit
(basic), for the third quarter of 2006 as a result of the absence of
restructuring charges for the third quarter of 2007 as compared to           
$2.4 million in restructuring charges for the third quarter of 2006 and a
decrease in the income tax provision.

    EBITDA increased by $0.7 million to $24.4 million, or 3.0%, from EBITDA,
as adjusted to exclude restructuring charges and an insurance gain, for the
third quarter of 2006 of $23.7 million. For the first nine months of 2007,
adjusted EBITDA increased to $66.0 million from $61.9 million, up 6.5%, from
the comparable period in 2006.

    Standardized Distributable Cash and Distributable Cash

    In the second quarter of 2007, we began to measure and report on
Standardized distributable cash, a new measure of distributable cash
recommended by the Canadian Institute of Chartered Accountants.
    Standardized distributable cash for the 12 months ended September 29, 2007
was C$54.6 million or C$1.06 per unit (diluted), resulting in a standardized
distributable cash payout ratio of 106.0%, with Recall costs and capital
expenditures for a new ERP system offsetting reduced distributions as a result
of the suspension of distributions announced in August 2007. Distributions in
excess of standardized distributable cash for the twelve months ended
September 29, 2007 were paid from cash flows from operations, as capital
expenditures were financed, in part by new borrowing.
    We have defined "distributable cash" as EBITDA less maintenance capital
expenditures, interest paid and cash taxes. Distributable cash for the third
quarter of 2007 was C$19.8 million, or C$0.38 per unit (diluted), compared to
distributable cash of C$18.4 million, or C$0.36 per unit (diluted) for the
third quarter of 2006, an improvement of 7.6%. The payout ratio for the third
quarter of 2007 was 29.2%, and reflected the suspension of distributions for
August and September, as compared to a payout ratio 94.3% for the third
quarter of 2006.
    Excluding the Recall charges, adjusted distributable cash for the twelve
months ended September 29, 2007 was C$77.4 million or C$1.50 per unit
(diluted), resulting in an adjusted distributable cash payout ratio for the
twelve months ended September 29, 2007 of 74.8%. The payout ratio for the
12 months ended September 29, 2007 reflected the suspension of distributions
for August and September 2007.

    Other Financial Highlights

    As of September 29, 2007, consolidated debt was $263.7 million, resulting
in a twelve-month leverage ratio of 2.9x, which is in compliance with the
Fund's senior debt facilities credit agreement, as amended September 27, 2007.
    During the three and nine months ended September 29, 2007, the Operating
Companies invested $4.4 million and $15.5 million, respectively, in property,
plant, equipment (including a $2.5 million payment for the new ERP platform
which had been accrued at December 31, 2006), and, in the first quarter of
2007 made a $6.1 million investment for a minority position in a tuna
processing business headquartered in Thailand. These investments were financed
primarily from cash from operations and additional borrowing.
    Inventory balances decreased from $304.9 million as of September 30, 2006
to $259.2 million at September 29, 2007, a decrease of $45.7 million as a
result of high albacore inventories in 2006, an initiative to reduce working
capital investment, and valuation allowances related to the Recall.

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                          CONNORS BROS. INCOME FUND
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             EBITDA and Adjusted EBITDA (see Non-GAAP Measures)
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                                                                      Twelve
                         Three months ended    Nine months ended      months
    (in thousands       --------------------  --------------------    ended
     except for          Sep. 29,   Sep. 30,   Sep. 29,   Sep. 30,   Sep. 29,
     per unit data)         2007       2006       2007       2006       2007
                        ---------  ---------  ---------  ---------  ---------
    Net
     earnings (loss)   $  14,296  $  10,278  $  (2,071) $  28,488  $  15,918

    Add interest
     expense, net          4,306      3,966     12,892     12,237     17,308
    Add debt
     issuance costs
     related to
     extinguished debt         -          -          -      4,321          -
    Add (less) income
     taxes (benefit)         382      3,296        604      4,337       (729)
    Depreciation           4,379      2,713     13,120      7,608     15,634
    Trademark intangibles
     impairment charge         -          -      3,500          -      3,500
    Amortization
     of intangibles        1,042      1,069      3,120      3,147      4,139
    Other                      -          -          3          -          5
                        ---------  --------------------  --------------------
      EBITDA              24,405     21,322     31,168     60,138     55,775
    Adjustments:
    Add impact of
     product recall            -          -     34,806          -     34,806
    Add (less)
     restructuring and
     other transition
     costs (recovery)          -      2,444          -      1,877       (348)
    Gain on
     insurance claims          -        (77)         -        (77)         -
                        ---------  ---------  ---------  ---------  ---------
      Adjusted
       EBITDA          $  24,405  $  23,689  $  65,974  $  61,938  $  90,233
                        ---------  ---------  ---------  ---------  ---------
                        ---------  ---------  ---------  ---------  ---------
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                          CONNORS BROS. INCOME FUND
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                       Results of Operations - Quarter
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                                                         Three months ended
                                                        ---------------------
                                                          Sep. 29,   Sep. 30,
    (in thousands, except earnings per unit)                 2007       2006
                                                         ---------  ---------

    Volume - equivalent cases                               6,171      7,870

    Revenue                                             $ 220,076  $ 234,289
    Gross profit                                           39,493     40,365
    Selling, general and administrative
     expenses                                              21,186     20,323
    Restructuring and other transition costs                    -      2,444
    Net interest expense                                    4,306      3,966
    Gain on insurance settlement                                -        (77)
    Other (income) expense, net                              (677)       135
    Net earnings                                        $  14,296  $  10,278
    Net earnings per unit - basic                       $    0.28  $    0.20
    Net earnings per unit - diluted                     $    0.28  $    0.20
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                     Results of Operations - Year-to-Date
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                                               Nine months ended
                                ---------------------------------------------
                                          Sep. 29, 2007
                                ---------------------------------
    (in thousands, except         Excluding     Recall  Including    Sep. 30,
     earnings per unit)              Recall    Charges     Recall       2006
                                ---------------------------------------------
    Volume - equivalent cases        22,503                           23,523

    Revenue                       $ 701,932  $ (13,475) $ 688,457  $ 698,955
    Gross profit                    111,766    (25,292)    86,474    110,083
    Selling, general
     and administrative
     expenses                        66,262          -     66,262     60,248
    Product recall expenses               -     13,014     13,014          -
    Restructuring and
     other transition costs               -          -          -      1,877
    Net interest expense             12,892          -     12,892     12,237
    Debt issuance costs
     related to                           -          -          -      4,321
    extinguished debt
    Gain on insurance settlement          -          -          -        (77)
    Other income, net                (4,227)         -     (4,227)    (1,348)
    Net earnings (loss)           $  32,274  $ (34,345) $  (2,071) $  28,488
    Net earnings (loss)
     per unit - basic             $    0.64  $   (0.68) $   (0.04) $    0.56
    Net earnings (loss)
     per unit - diluted           $    0.63  $   (0.67) $   (0.04) $    0.55
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                          CONNORS BROS. INCOME FUND
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           Standardized Distributable Cash (see Non-GAAP Measures)
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                                                                      Twelve
                         Three months ended     Nine months ended     months
    (in thousands       --------------------  --------------------     ended
     except for          Sep. 29,   Sep. 30,   Sep. 29,   Sep. 30,   Sep. 29,
     per unit data)         2007       2006       2007       2006       2007
                        ---------  ---------  ---------  ---------  ---------
    Cash provided
     by operating
     activities        $   7,796  $   7,029  $  59,646  $  22,101  $  67,726
    Less capital
     expenditures          4,382        655     15,554      4,440     18,722
                        ---------  ---------  ---------  ---------  ---------
      Standardized
       Distributable
       Cash - USD          3,414      6,374     44,092     17,661     49,004
    Average exchange
     rate for
     the period           1.0470     1.1221     1.1070     1.1330      1.115
                        ---------  ---------  ---------  ---------  ---------
      Standardized
       Distributable
       Cash - C$      C$   3,574 C$   7,152 C$  48,810 C$  20,010 C$  54,639
                        ---------  ---------  ---------  ---------  ---------
                        ---------  ---------  ---------  ---------  ---------
    Cash
     distributions
     declared         C$   5,790 C$  17,371 C$  40,532 C$  52,113 C$  57,903

    Standardized
     Distributable
     Cash payout ratio     162.0%     242.9%      83.0%     260.4%    106.0%

    Standardized
     Distributable
     Cash per trust unit

    Weighted average
     units
     outstan-
     ding - basic         50,505     51,068     50,689     51,323     50,758
      Basic           C$    0.07 C$    0.14 C$    0.96 C$    0.39 C$    1.08

    Weighted average
     units
     outstan-
     ding - diluted       51,470     51,470     51,470     51,470     51,470
      Diluted         C$    0.07 C$    0.14 C$    0.95 C$    0.39 C$    1.06
    Cash
     Distributions
     per
     unit - basic     C$    0.11 C$    0.34 C$    0.80 C$    1.02 C$    1.14
    Cash
     Distributions
     per
     unit - diluted   C$    0.11 C$    0.34 C$    0.79 C$    1.01 C$    1.12
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    Note - The Fund has adopted the recommendations of CICA Interpretive
           Release - Standardized Distributable Cash in Income Trusts and
           Other Flow-Through Entities, which defines standardized
           distributable cash.
    

    Conference Call and Webcast

    The Fund will host a conference call to review its financial results on
Wednesday, November 14, 2007, at 8:30 a.m. Eastern Time (9:30 a.m. Atlantic).
Please call 416-644-3419 or 1-800-731-5319 to access the call. The call will
be webcast 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 November 21, 2007, at midnight. To access the rebroadcast, please dial
416-640-1917 or 1-877-289-8525 and quote passcode 21252161#.

    Non-GAAP Measures

    EBITDA, adjusted EBITDA, distributable cash and adjusted distributable
cash are not recognized measures and do not have standardized meanings under
Canadian generally accepted accounting principles. Standardized distributable
cash has been defined by the Canadian Institute of Chartered Accountants,
however it is also a non-GAAP measure. 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 three and nine months
ended September 29, 2007, which is available at www.sedar.com, for additional
information concerning these measures and a reconciliation of these measures
to the relevant GAAP measure 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: final determination
of the costs and expenses related to the Recall, availability of resources
such as fish, meat and other raw materials, 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
American Originals(TM), 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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