MRRM Inc. - Directors' report and management discussion and analysis of the financial condition and results of operations - Interim 2009.Q1 - May 31, 2008



    The following discussion and analysis should be read in conjunction with
    the preceding year's Annual Report. The Company's interim quarterly
    statements for fiscal year 2009 are for the quarter ended as indicated
    above. Included in these documents may be forward-looking statements
    with respect to the Company. These forward-looking statements by their
    nature necessarily involve risks and uncertainties that could cause
    actual results to differ materially from those contemplated by such
    statements. The Company considers the assumptions on which these
    forward-looking statements are based to be reasonable at the time they
    were prepared but cautions the reader that these assumptions regarding
    future events, many of which are beyond the control of the Company, may
    ultimately prove to be incorrect

    The unaudited interim consolidated financial statements were prepared by
    the Company in accordance with Canadian generally accepted accounting
    principles and have not been reviewed by the Company's auditors. Certain
    comparative figures have been reclassified to conform with the
    presentation adopted in the financial statements.

    Additional documents and information are available at the System for
    Electronic Document Analysis and Retrieval (SEDAR) and can be assessed
    through the internet: For MRRM's profile go to www.sedar.com or for
    documents go to www.sedar.com Information is also available on the
    Corporate website at www.MRRM.ca.


    MONTREAL, June 19 /CNW Telbec/ -

    Consolidated Earnings And Comprehensive Income and Retained Earnings
    ---------------------------------------------------------------------

    Revenues for this period (last year) were $13,499,000 ($12,767,000)
increasing by $732,000 (5.7%). As shown in the segmented information, sales
and income from operating activities amounted to $13,366,000 ($12,709,000)
being 99.0% (99.5%) of total revenues. Income from corporate totaled $133,000
($58,000). Operating Revenues increased by $657,000 (5.2%) compared to last
year. Revenue from Corporate increased by $75,000 mainly attributable to
higher unrealized fair value of investments held for trading.
    Costs and expenses for this period (last year) were $13,359,000
($12,970,000), an increase of $389,000 (3.0%). Costs related to operating
activities, before exchange and interest, increased by $405,000 (3.1%).
Expenses related to corporate increased by $8,000. Cost of sales continue to
increase in relation to sales and overall margins continue to improve slightly
when compared to this quarter last year. The increase in amortization is
primarily related to the Time-Wise project.

    Operating results are discussed later on in this report.

    The impact of the fluctuating Canadian dollar resulted in a currency
exchange gain of $51,000 for the period compared to a loss this period last
year of $22,000. As disclosed in the Notes, the net exposures were as follows:
at May 31, 2008, US$3,880,000 & at May 31, 2007, US$1,050,000; at February 29,
2008, US$1,438,000 & February 28, 2007, US($1,148,000); at November 30, 2007,
US($440,000) & November 30, 2006, US($5,616,000); at August 31, 2007,
US$439,000; & August 31, 2006, US($1,546,000). The above US dollars include
the equivalents for euros and pounds sterling which are not material.
    During this quarter, the Company has entered into foreign exchange
futures maturing this fiscal year which cover a significant portion of its USF
requirements. The Company uses the fair value accounting method for such
instruments. Under this method any unrealized gains or losses caused by
fluctuation to the market value are to be recorded in income for the period.
As these fluctuations on an interim basis represent a temporary gain or loss
and will not impact the financial results of the fiscal year, these gains or
losses have not been recorded on the interim financial statements.
    Interest expensed on bank indebtedness and the reducing term loan
amounted to $95,000 compared to $47,000 this period last year for an increase
of $48,000. Interest of $48,000 pertaining to the Time-Wise project was
capitalized in the first quarter last year. Total interest accrued and paid
amounted to $95,000 and remained flat compared to this period last year.
Interest related to the long-term debt was $42,000 compared to $50,000 this
period last year.
    The Earnings (loss) before income taxes for this period were $140,000
compared to -$203,000 last year, an increase of $343,000. Earnings from
operating activities were $56,000 (-$220,000), an increase of $276,000.
Earnings from corporate were $84,000 compared to $17,000, an increase of
$67,000.
    Income taxes for the period were $26,000 (-$72,000). The effective tax
rates for this period of 18.3% compared to 35.5% last year are presented in
the Notes to the financial statements.
    Net Earnings (loss) for the period were $114,000 (-$131,000) or
$0.04 (-$0.05) per share.
    Dividends paid during the period last year amounted to $127,000. As
indicated in the MD&A for the first quarter, the declaration of the quarterly
dividend has been suspended in order to support the cash requirements
resulting from the Time-Wise investment. The declaration and payment of
dividends is at the discretion of the Board of Directors.

    Summary of Quarterly Results

    The following financial summary is derived from the company's financial
statements for each of the eight most recently completed fiscal quarters.

    
    -------------------------------------------------------------------------
    Summary
    of
    Quarterly
    Financial
    Results
    for the
    eight     May 31, Feb 29, Nov 30, Aug 31, May 31, Feb 28, Nov 30, Aug 31,
    most        2008    2008    2007    2007    2007    2007    2006    2006
    recent     (2009.  (2008.  (2008.  (2008.  (2008.  (2007.  (2007.  (2007.
    fiscal        Q1)     Q4)     Q3)     Q2)     Q1)     Q4)     Q3)     Q2)
    quarters  ------- ------- ------- ------- ------- ------- ------- -------
    -------------------------------------------------------------------------
    (Expressed     $       $       $       $       $       $       $      $
    in
    thousands,
    except for
    amounts per
    share -
    unaudited)
    -------------------------------------------------------------------------
    Revenues  13,499  10,625  12,548  12,810  12,767  13,289  13,553  11,786
    -------------------------------------------------------------------------
    Net
     Earnings
     (loss)      114    (134)    214     121    (131)    701     179     277
    -------------------------------------------------------------------------
    Earnings
     (loss)
     per share  0.04   (0.05)   0.08    0.05   (0.05)   0.28    0.07    0.11
    -------------------------------------------------------------------------
    Dividends
     per share  0.00    0.00    0.00    0.00    0.05    0.20    0.05    0.05
    -------------------------------------------------------------------------


    Consolidated Cash Flows, Liquidity and Balance Sheets
    -----------------------------------------------------

    Cash generated by operating activities, net earnings before changes for
non-cash items was $114,000 for the period compared to a usage of $131,000
last year. Non-cash operating items generated $300,000 for the period compared
to usage of $1,518,000 for this period last year. The increase in payables was
a significant contributor.
    In investing activities, the Company added $114,000 of net property, plant
and equipment compared to $330,000 for this period last year; last year, this
amount included $249,000 for the investment in the new value added Time-Wise
rice line which became available for production in June 2007.
    In financing activities, bank indebtedness decreased by $333,000 due to
$398,000 of funds generated from operations and $97,000 from investing
activities to cover the long-term debt. Payments in the amount of $162,000
were made on the long-term reducing debt compared to $153,000 for this period
last year.
    Working capital amounted to $954,000 at the end of this period, an
increase of $203,000 compared to the $751,000 at last fiscal year-end. This
change was attributable to a net increase in current assets of $96,000 and a
net decrease in current liabilities of $107,000.

    Available credit facilities

    The credit facilities available and reported at last year-end remain
substantially unchanged. The facilities are comprised of a revolving line of
credit for $4,750,000 CDN (or its US equivalent) and a 5 year reducing term
facility initially borrowed at fiscal year-end 2007 for $3,500,000. The
revolving line of credit bears interest at either the Canadian prime and/or
U.S. base rates and optionally the Company may take advantage of Bankers
Acceptances. The reducing term facility is at a combined fixed rate for
interest and fees of 5.83% for the term of the loan. The financial covenants
and arrangements relating to these facilities are detailed in the Notes to the
audited consolidated financial statements filed for last year-end. These
covenants are being respected and have been met.
    Receivables increased by $859,000 compared to last fiscal year-end. The
regular account balances are substantially current, there are no anticipated
serious collection issues and any potential write-offs have been provided for
in the accounts.
    Inventories decreased by $716,000 (9.6%) while overall volumes of rice
decreased by 15.0%.
    Marketable securities, effective the first quarter last year, are recorded
at fair value in accordance with the Financial Instruments - Revenue
Recognition standard. The change in fair value for this period was an increase
of $108,000 compared to $25,000 for the same period last year. The investment
mix has been generally maintained through these market fluctuations.
    Property, plant and equipment decreased by $184,000 this balance being a
net of $114,000 of additions less $298,000 of amortization.
    Bank indebtedness was $2,965,000 compared to $3,298,000 at last year-end.
The decrease of $333,000 is explained under financing activities.
    Payables increased by $192,000, mainly arising from increases in amounts
due related to the agency business.
    Long-term debt is being repaid in accordance with the arrangements of the
five year reducing term facility agreement as described under credit
facilities.
    Future income taxes, net liability, decreased by $17,000 including an
increase of $17,000 due to the fair value pertaining to the unrealized gain at
May 31, 2008.
    Shareholders' equity increased by $114,000 to $16,914,000 from $16,800,000
and represents $6.67 ($6.63) per share.
    Capital stock remained unchanged at $539,000 and represents
2,535,000 issued common shares.
    The MRRM Inc. shares have a very limited distribution and are infrequently
traded on the TSX-Venture Exchange under the symbol MRR.
                                                  www.TSX-Venture Exchange
                                                  ------------------------

    Discussion of Results:
    ----------------------

    In Dainty Foods, net sales increased by $611,000 (5.0%) for the period
compared to this quarter last year while overall rice sales volumes increased
by 3.2% for the period. Costs and expenses increased by $389,000 (3.1%) and
earnings before income taxes increased by $222,000 compared to this quarter
last year.
    The increase in sales and costs for the period were mainly attributable to
increased sales of flour and bagged rice compared to last year. As indicated
in the last Annual Report and MD&A, the cost of rice had been tracking at an
all time high leading into this fiscal year with little likelihood that this
will change in the near future. There are indicators that new crop prices will
soften somewhat but still remain extremely high compared to last year. Recent
selling price increases on our branded and private label items as well as
price increases that were introduced in the second half of last fiscal year
will have a positive impact on margins.
    Although operating production, selling and administrative expenses
increased slightly for the period, earnings before income taxes increased by
$222,000. The investment in the new Time-Wise rice line continues to produce
encouraging results. The Company anticipates this value added product line
will be a good contributor to margins. The Canadian retailers have listed a
number of Dainty "Stock Keeping Units of Measure" (SKUs) as well as a number
of selected private label items in the second half of last fiscal year.
    As previously indicated, highlights of the Time-Wise product line are:
cooks like pasta, decreases the preparation time of traditional parboiled rice
from 20 minutes to 10 minutes and whole grain brown parboiled rice from
45 minutes to 15 minutes and does not contain additives. The new product line
is intended to target different market segments than our Dainty canned rice.
    The company continues to pursue new value-added retail type products some
of which will be outsourced until volumes and economies develop to a point
where in-house production is viable. This outsourcing will minimize capital
investment while enhancing Dainty Foods' offerings in the retail marketplace
for both branded and private label items. New selling relationships are also
being developed that are intended to add strength to our retail sales efforts.
    In Robert Reford, revenue increased by $46,000 (10.0%) for the period
compared to this quarter last year. This was mainly due to reduced sub-agency
fees.
    Earnings before income taxes for the period increased by $54,000 for the
period compared to this quarter last year.
    This division is in the process of finalizing a joint revenue sharing
agreement with Norton Lilly International, Inc. to be effective July 1, 2008
to handle vessel and port operations coast to coast in Canada as well as at
U.S. Great Lake ports.
    The two companies each have over a century of history and experience
servicing vessels. Norton Lilly was founded in 1841 in the United States and
is a major provider of shipping/logistics and marine services in the USA,
Canada, Panama, and the Caribbean. Together, the companies handle all types of
vessels from gas and chemical carriers to dry bulk and container ships.
    Reford and Norton Lilly are industry leaders in regions served and by
working together in Canada we plan to realize operating synergies and
increased sales and marketing exposure and be able to offer our customers the
best quality and array of services possible in the agency business.

    In Corporate Investments, portfolio income is summarized as follows:

                                                     2009           2008
                                                     ----           ----

    Dividend and interest income                  $25,000        $33,000
    Capital gains                                      $0        $12,000
    Unrealized change in Fair Value              $108,000        $13,000
                                                ---------       --------
    Totals:                                      $133,000        $58,000
                                                ---------       --------
                                                ---------       --------

    Certification

    The Company's management, under the direction and supervision of the Chief
Executive Officer and Chief Financial Officer, continually evaluates the
effectiveness of the Company's disclosure controls and procedures and has
concluded that such disclosure controls and procedures are effective.
    The Company's management is also responsible for establishing and
maintaining internal controls over financial reporting. These controls were
designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with Canadian GAAP.
    There have been no changes in the Company's internal controls over
financial reporting during this quarter that have materially affected, or are
reasonably likely to materially affect, its internal control over financial
reporting.

    Outlook

    Indications are that the Time-Wise products will provide additional growth
and although rice prices are at record highs, the current market still
provides an environment to secure rice at competitive prices and economic
conditions are likely to support growth in the food processing and selling
operations. The markets that the ship agency services operate in experienced a
good start in this quarter and additonal improvement is anticipated moving
forward.
    While the Company is anticipating continued growth in food processing and
selling, and while it will be maintaining a strong position within the ship
agency services business, growth in fiscal 2009 will be impacted by several
factors including (i) the demand for our new Time-Wise value added products
(ii) the ability of the Company to secure rice from U.S. rice mills at
competitive prices (iii) the ability within the marketplace to obtain price
increases in a timely manner to cover increased costs, and (iv) general
economic conditions.

    Risks and Uncertainties

    Overview

    Management of risk includes properly identifying, communicating and
controlling the risks which may cause a serious impact to the business.
Management is confident that the Company employs effective procedures to
address all material risks.
    The following items were discussed in the MD&A in the last Annual Report
and remain principally unchanged. Please refer to these documents for this
information.

        Ability to Achieve Revenue Results
        Ability to Address Cost and Expense Concerns
        Economic Conditions
        Environment

    For further information regarding financial risk management, please refer
to the Notes to the interim financial statements.

    In Recognition

    Mr. David Wayland, our CFO, will be retiring from the company on June
30th, 2008 after close to 32 years of service. Mr. Wayland joined the company
in August 1976 as secretary-treasurer at the head-office, then located in
Lachine, QC. Mr. Wayland has confidently used his financial acumen and
excellent business sense to diligently guide the Company as its chief
financial officer, not only in matters of finance but in many other areas, and
specifically information technology, over these 32 years. Mr. Wayland has also
been an integral part of the Company's strategic planning over the years and
we thank him for his wisdom, his farsighted and thorough approach to the
myriad of situations which have arisen in all aspects of the operating
businesses which have been under the MRRM Inc. fold. The 32 years of service
have of course seen a number of senior management changes and Mr. Wayland has
been a valuable team mate to those he has worked with and served. Mr. Wayland
has also served the Board of Directors for all these many years in the
capacity of Secretary-Treasurer and the Board, especially the Chairman, wish
to thank him for all his efforts in that capacity. Mr. Wayland will maintain
his position as Secretary of the Board. We thank Mr. Wayland for all his
contributions to MRRM Inc. and wish David and his family many healthy and
happy years ahead.
    We are pleased to report that Mr. Louis (Lou) Younan joined the Company in
September 2007 and has been working closely with Mr. Wayland as he prepares to
take over the CFO & Treasurer positions of the Company. Mr. Younan is located
in the Windsor office and has been working in the food industry for over
twenty-two years, acting as CFO of a major food processor for nine years.
    The Company also wishes to make special mention of five hourly employees
at the plant in Windsor who each celebrated 40 years of employment with Les
Aliments Dainty Foods during the last year: Victor (Vic) Champoux, Emilien
Bellefleur, Vincenzo (Vince) Formicola, Robert (Bob) Meloche and Louis Martin.
These men all began work at the plant when it was a new facility and have been
part of the evolution of improvements over these many years. We wish to thank
them for their long and dedicated service to the Company.
    Now in our 127th year we continue to thrive as we face new challenges. We
thank our employees for a job well done and everyone directly associated with
the Company presently and in the past. We are grateful to our loyal customers
and suppliers who make a significant contribution to our success.

    On behalf of the Board

    Nikola M. Reford                     Terry Henderson
    Chairman                             President & Chief Executive Officer

    Dated at Montreal (Westmount), Quebec, June 19, 2008.


    MRRM  Inc.
    CONSOLIDATED EARNINGS
    And COMPREHENSIVE INCOME
    -------------------------------------------------------------------------
    ------------------------------------------------------------------------
    (unaudited)          For the THREE Months Ending  For the Quarter Ending
                         ---------------------------  -----------------------
                                  May 31,     May 31,     May 31,     May 31,
                                  -------     -------     -------     -------
                                    2008        2007        2008        2007
                                    ----        ----        ----        ----
                                    '000        '000        '000        '000

    Revenues
      Sales                       13,366      12,709      13,366      12,709
      Increase (decrease)
       in fair value of
       investments held
       for trading                   133          58         133          58
                               ----------  ----------  ----------  ----------

                                  13,499      12,767      13,499      12,767
                               ----------  ----------  ----------  ----------

    Costs and expenses
      Cost of sales,
      selling and
      administrative              13,017      12,653      13,017      12,653
      Amortization                   298         248         298         248
      Exchange loss (gain)           (51)         22         (51)         22
      Interest  (a)                   95          47          95          47
                               ----------  ----------  ----------  ----------

                                  13,359      12,970      13,359      12,970
                               ----------  ----------  ----------  ----------

    Earnings (loss)
     before income taxes             140        (203)        140        (203)
                               ----------  ----------  ----------  ----------

    Income taxes (recovery)
      Current                         43         (27)         43         (27)
      Future                         (17)        (45)        (17)        (45)
                               ----------  ----------  ----------  ----------

                                      26         (72)         26         (72)
                               ----------  ----------  ----------  ----------

    Net earnings (loss)             $114       ($131)       $114       ($131)
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Basic earnings per share       $0.04      ($0.05)      $0.04      ($0.05)
                                 -------      -------     -------     -------
                                 -------      -------     -------     -------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (a) Additional information is included in the Notes to Consolidated
        Financial Statements.



    MRRM  Inc.
    CONSOLIDATED RETAINED EARNINGS
    -------------------------------------------------------------------------
    ------------------------------------------------------------------------
    (unaudited)          For the THREE Months Ending  For the Quarter Ending
                         ---------------------------  ----------------------
                                  May 31,     May 31,     May 31,     May 31,
                                  -------     -------     -------     -------
                                    2008        2007        2008        2007
                                    ----        ----        ----        ----
                                    '000        '000        '000        '000


    Balance, beginning of year    16,261      15,353      16,261      15,353
    Adjustment to fair value
     for investments held
     for trading                       0         965           0         965
    Net earnings (loss)              114        (131)        114        (131)
                              ----------  ----------  ----------  ----------

                                  16,375      16,187      16,375      16,187

    Dividends                          0         127           0         127
                              ----------  ----------  ----------  ----------
    Balance, end of period       $16,375     $16,060     $16,375     $16,060
                              ----------  ----------  ----------  ----------
                              ----------  ----------  ----------  ----------

    ------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MRRM Inc.
    CONSOLIDATED CASH FLOWS
    -------------------------------------------------------------------------
    ------------------------------------------------------------------------
    (unaudited)          For the THREE Months Ending  For the Quarter Ending
                         ---------------------------  ----------------------
                                  May 31,     May 31,     May 31,     May 31,
                                  -------     -------     -------     -------
                                    2008        2007        2008        2007
                                    ----        ----        ----        ----
                                    '000        '000        '000        '000

    OPERATING ACTIVITIES
    Net earnings (loss)              114        (131)        114        (131)
    Defined benefit plan payments    (16)         (4)        (16)         (4)
    Non-cash items
      Change in fair value of
       investments held for
       trading                      (108)        (25)       (108)        (25)
      Amortization                   298         248         298         248
      Accrued benefit cost             7           9           7           9
      Future income taxes            (17)        (44)        (17)        (44)
                                     ----        ----        ----        ----
                                     278          53         278          53

      Change in receivables         (859)       (772)       (859)       (772)
      Change in inventories          716       1,019         716       1,019
      Change in prepaids              47         (52)         47         (52)
      Change in payables             192      (1,853)        192      (1,853)
      Change in income taxes
       payable                        24         (48)         24         (48)
                               ----------  ----------  ----------  ----------
    Cash flows from
     operating activities (a)        398      (1,653)        398      (1,653)
                               ----------  ----------  ----------  ----------

    INVESTING ACTIVITIES

    Marketable securities              0        (556)          0        (556)
    Disposals of marketable
     securities                      211         526         211         526
    Property, plant and
     equipment                      (114)       (330)       (114)       (330)
                               ----------  ----------  ----------  ----------
    Cash flows from
     investing activities             97        (360)         97        (360)
                               ----------  ----------  ----------  ----------

    FINANCING ACTIVITIES
    Bank indebtedness               (333)      2,293        (333)      2,293
    Long-term debt                  (162)       (153)       (162)       (153)
    Dividends                          0        (127)          0        (127)
                               ----------  ----------  ----------  ----------
    Cash flows from
     financing activities           (495)      2,013        (495)      2,013
                               ----------  ----------  ----------  ----------

    Net change in cash                 0           0           0           0

    Cash, beginning of period          0           0           0           0
                               ----------  ----------  ----------  ----------

    Cash end of period                $0          $0          $0          $0
                               ----------  ----------  ----------  ----------
                               ----------  ----------  ----------  ----------

    Dividends per share            $0.00       $0.05       $0.00       $0.05
                                   -----       -----       -----       -----
                                   -----       -----       -----       -----

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (a) Additional information is included in the Notes to Consolidated
        Financial Statements.


    MRRM Inc.
    (Formerly: Mount Royal Rice Mills Limited)
    CONSOLIDATED  BALANCE  SHEETS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)                                            As at       As at
                                                             May    February
                                                             ----   ---------
                                                              31,         29,
                                                             ----        ----
                                                            2008        2008
                                                            -----       -----
                                                            '000        '000
    ASSETS

    Current
      Receivables                                          5,054       4,195
      Inventories                                          6,755       7,471
      Tax credits receivable                                 895         895
      Prepaids                                               125         172
      Future income taxes                                     15          15
                                                      ----------  ----------
                                                          12,844      12,748

    Marketable securities, at fair value (note 1)          4,778       4,881

    Property, plant and equipment, net                    15,636      15,820
                                                      ----------  ----------

                                                         $33,258     $33,449
                                                      ----------  ----------
                                                      ----------  ----------

    LIABILITIES
    Current
      Bank indebtedness                                    2,965       3,298
      Payables                                             8,136       7,944
      Income taxes                                            52          28
      Current portion of long-term liabilities               737         727
                                                      ----------  ----------
                                                          11,890      11,997

    Accrued long-term benefit liability                      637         646
    Long-term debt, reducing term loan
     maturing in 2012                                      2,050       2,222
    Future income taxes                                    1,767       1,784
                                                      ----------  ----------

                                                          16,344      16,649
                                                      ----------  ----------

    SHAREHOLDERS' EQUITY

    Capital stock
      Common shares, without nominal or par value
       authorized in an unlimited number
      Issued      2,535,000 shares                           539         539

    Retained earnings                                     16,375      16,261
                                                      ----------  ----------
                                                          16,914      16,800
                                                      ----------  ----------

                                                         $33,258     $33,449
                                                      ----------  ----------
                                                      ----------  ----------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    MRRM  Inc.
    NOTES To CONSOLIDATED  FINANCIAL  STATEMENTS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (unaudited)

    1- Accounting Policies, Financial Risk management and Supplementary
       Information

        The unaudited interim consolidated financial statements were prepared
        by the Company in accordance with Canadian generally accepted
        accounting principles and have not been reviewed by the Company's
        auditors.

        The accounting policies and procedures used in preparing these
        unaudited interim consolidated financial statements are the same as
        those used in preparing the audited annual consolidated financial
        statements for the year ended February 29, 2008. These unaudited
        interim statements should be read along with the audited annual
        statements and notes included in the Company's last Annual Report.
        Certain comparative figures have been reclassified to conform with
        the presentation adopted at last fiscal year-end.

        Inventory valuation follows the accounting policy disclosed in the
        annual audited financial statements with the exception of the
        treatment of temporary inventory costing fluctuations which are not
        taken into income as they are temporary in nature. Fluctuations, if
        any, in inventory costing resulting from temporary production cost
        variances will be absorbed in income by fiscal year end.

        Fair value

        Receivables, bank indebtedness and payables are financial instruments
        whose fair values approximate their carrying values due to their
        short-term maturity. The portfolio of marketable securities has been
        designated as a financial asset held for trading. These investments
        are recorded at fair value based on the current bid price at the
        balance sheet date with fair value changes recorded and disclosed in
        the Statement of Earnings. The Company uses an interest rate swap
        arrangement through its bankers to effectively fix the variable rate
        pertaining to the Reducing term loan which matures in February 2012.
        This arrangement has fixed the interest rate at 5.83% to maturity.
        Were the Company to settle this swap agreement at the reporting date,
        the estimated fair value based on quotes received from the Company's
        lender would be unfavorable by $58,200 compared to a favorable
        position of $17,900 for the same period last year. This value was
        unfavorable by $62,200 at last fiscal year-end. These amounts are
        before income taxes and have not been recorded in the financial
        statements.

        Credit risk

        The Company performs ongoing credit reviews of all its customers and
        establishes an allowance for doubtful accounts receivable when
        accounts are determined to be noncollectable.

        Interest rate risk

        Receivables and payables are non-interest bearing. Bank indebtedness
        bears interest at either the Canadian prime and/or U.S. base rates
        and optionally the Company may take advantage of Bankers Acceptances.
        The interest rate risk relating to the reducing term loan is as
        described under Fair value above. For this quarter, a 0.5%
        hypothetical increase in the prime rate on bank indebtedness would
        increase interest expense by approximately $5,000. A 0.5% decrease in
        the prime rate would have had a reverse effect.

        Liquidity risk

        The Company is subject to debt covenants related to the revolving
        line of credit and to the reducing long-term loan. These covenants
        are being respected and have been met. The Company believes that
        future cash flows from operations and availability under existing
        credit facilities from banking institutions will be sufficient to
        meet its obligations. Under senior management's supervision, the
        Company manages its liquidities according to financial forecast and
        expected cash flows.

        Currency risk

        The Company is exposed to foreign currency risks due to its imports
        of bulk rice from the USA and overseas. These risks are partially
        offset by sales in U.S. funds and by the purchase of forward exchange
        futures. During this quarter, the Company has entered into foreign
        exchange futures maturing this fiscal year which cover a significant
        portion of its USD requirements. The Company uses the fair value
        accounting method for such instruments. Under this method any
        unrealized gains or losses caused by fluctuation to the market value
        are to be recorded in income for the period. As these fluctuations on
        an interim basis represent a temporary gain or loss and will not
        impact the financial results of the fiscal year, these gains or
        losses have not been recorded on the interim financial statements.

        Foreign exchange exposure: At May 31, 2008, net US$3,880,000; at
        May 31, 2007, net US$1,050,000; at February 29, 2008, net
        US$1,438,000; at February 28, 2007, net US($1,148,000); at
        November 30, 2007, net US($440,000); at November 30, 2006, net
        US($5,616,000); at August 31, 2007, net US$439,000; at August 31,
        2006, net US($1,546,000). The above US numbers include equivalent for
        euro and pounds stirling which are not material.


                         For the THREE Months Ending  For the Quarter Ending
                         ---------------------------  ----------------------
                                  May 31,     May 31,     May 31,     May 31,
                                  -------     -------     -------     -------
                                    2008        2007        2008        2007
                                    ----        ----        ----        ----
                                    '000        '000        '000        '000

    2-  Information
         included in the
         Statement Of
         Earnings
        Income taxes paid
         (received)                 ($19)       ($20)       ($19)       ($20)
                                    -----       -----       -----       -----
        Interest on
         long-term debt              $42         $50         $42         $50
        Interest on bank
         indebtedness and other      $53         $45         $53         $45
                                    -----       -----       -----       -----
        Total Interest paid          $95         $95         $95         $95
        Less, interest capitalized    $0         $48          $0         $48
                                    -----       -----       -----       -----
        Interest expensed            $95         $47         $95         $47
                                    -----       -----       -----       -----
                                    -----       -----       -----       -----

    3-  Increase (decrease)
         in fair value of
         investments held
         for trading
        Interest and
         dividend income             $25         $33          25          33
        Net change in fair
         value of investments
         held for trading           $108         $25         108          25
                                    -----       -----       -----       -----
                                    $133         $58        $133         $58
                                    -----       -----       -----       -----
                                    -----       -----       -----       -----

    4-  Income Taxes                                                        %
                                                                          ---
        Combined basic federal and
         provincial income tax rate  $46        -$67        32.6%       33.0%
        Non-taxable portion of
         capital (gains) losses       $0         -$4         0.0%        2.1%
        Tax-free income (net)        -$9         -$9        -6.6%        4.6%
        Other                       -$11          $8        -7.7%       -4.2%
                                    -----       -----       -----       -----
                                     $26        -$72        18.3%       35.5%
                                    -----       -----       -----       -----
                                    -----       -----       -----       -----

    5-  Segmented Information
        Revenue

          Food processing and
           selling                12,858      12,247      12,858      12,247
          Ship agency services       508         462         508         462
                                    -----       -----       -----       -----
          Operating               13,366      12,709      13,366      12,709
          Corporate                  133          58         133          58
                                    -----       -----       -----       -----
                                 $13,499     $12,767     $13,499     $12,767
                                 --------    --------    --------    --------
                                 --------    --------    --------    --------
        Earnings
          Food processing
           and selling                84        (138)         84        (138)
          Ship agency services       (28)        (82)        (28)        (82)
                                    -----       -----       -----       -----
          Operating                   56        (220)         56        (220)
          Corporate                   84          17          84          17
                                    -----       -----       -----       -----
        Earnings (loss) before
         income taxes                140        (203)        140        (203)
        Income Taxes                  26         (72)         26         (72)
                                    -----       -----       -----       -----

        Net Earnings (loss)         $114       ($131)       $114       ($131)
                                    -----       -----       -----       -----
                                    -----       -----       -----       -----
        Assets
          Food processing
           and selling            28,022      27,564      28,022      27,564
          Ship agency services       464         688         464         688
                                    -----       -----       -----       -----
          Operating               28,486      28,252      28,486      28,252
          Corporate                4,772       5,060       4,772       5,060
                                 --------    --------    --------    --------
                                 $33,258     $33,312     $33,258     $33,312
                                 --------    --------    --------    --------
                                 --------    --------    --------    --------

        Capital expenditures
          Food processing
           and selling               114         329         114         329
          Ship agency services         0           1           0           1
                                    -----       -----       -----       -----
          Operating                  114         330         114         330
          Corporate                    0           0           0           0
                                    -----       -----       -----       -----
                                    $114        $330        $114        $330
                                    -----       -----       -----       -----
                                    -----       -----       -----       -----

        Amortization
          Food processing
           and selling               285         239         285         239
          Ship agency services        13           9          13           9
                                    -----       -----       -----       -----
                                    $298        $248        $298        $248
                                    -----       -----       -----       -----
                                    -----       -----       -----       -----

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: D.M. Wayland, Secretary-treasurer & CFO, MRRM 
Inc., (514) 908-7777, Fax: (514) 906-0220, mr@mrrm.ca

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MRRM Inc.

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