MRRM Inc. - Directors' report and management discussion and analysis of the financial condition and results of operations - Interim 2008.Q1 - May 31, 2007

    The following discussion and analysis should be read in conjunction with
    the preceding year's Annual Report. 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.

    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 or for
    documents goto Information is also available on the
    Corporate website at

    MONTREAL, June 21 /CNW Telbec/ -

    Consolidated  Earnings

    Revenues for this period compared to this period (last year) were
$12,725,000 ($11,979,000), an increase of $746,000. As shown in the segmented
information, revenue from operating activities amounted to $12,667,000
($11,886,000) being 99.5% (99.2%) of total revenues. Income from corporate
totaled $58,000 ($93,000).
    Operating Revenues increased by $781,000 (6.6%) compared to last year.
    Revenue from Corporate decreased by $35,000. During this quarter, as
disclosed in the Notes to the Consolidated Financial Statements (Notes), the
Company adopted section 3855 of the CICA Handbook, Financial Instruments -
Revenue Recognition. This new standard requires that the marketable securities
be recorded at fair value. Included in Revenue is a new item, Change in fair
value of investments held-for-trading, which records this adjustment for the
current period. The decrease in Corporate revenue is the net effect of a fair
value increase of $13,000 partially offsetting reductions in realized capital
gains and dividend income in this period compared to last year.
    Costs and expenses for this period (last year) were $12,928,000
($12,126,000), an increase of $802,000 (6.6%).
    Costs related to operating activities, before exchange and interest,
increased by $775,000 (6.4%). An increase in cost of sales negatively impacted
margins compared to this quarter last year but improved slightly when compared
to the last fiscal quarter. Overall selling and administrative expenses
decreased compared to last year.
    The impact of a fluctuating Canadian dollar combined with a major swing
in the company's position of US dollars resulted in a loss of $22,000 for the
period compared to a gain last year of $25,000. As disclosed in the Notes, the
net exposure at quarter-end last year was a negative position of $3,437,000US
at a rate of 1.0970; at last fiscal year-end the net position was negative
$1,148,000US at 1.1713; at this quarter-end the net position was positive
$1,050,000 US at 1.0715. The above US numbers include equivalent for euro and
pounds stirling which amount to less than 5% of the totals. No exchange
futures were outstanding at quarter-end. Interest expensed on bank
indebtedness and the reducing term loan amounted to $47,000. Interest of
$48,000 pertaining to the Time-Wise project was capitalized in this quarter.
Total interest accrued and paid amounted to $95,000, an increase of $20,000
compared to last year.
    The Loss before income taxes for this period (last year) was $203,000
($147,000) increasing by $56,000. The Loss from operating activities was
$220,000 ($187,000), an increase of $33,000 while corporate produced earnings
of $17,000 ($40,000).
    Operating results are discussed later on in this report.
    Income taxes for the period were recoveries of $72,000 ($83,000). The
effective tax rate for the period was 35.5% compared to 56.2% last year. For
this period, the difference between the statutory rate of 33.0% and the
effective rate was primarily due to the non-taxable portion of capital gains
including the change during the quarter in fair value of the held-for-trading
investments. Last year, the difference between the statutory rate of 32.1% and
the effective rate was primarily due to higher dividends revenue which is
qualified as tax-free income.
    Net Earnings (loss) for the period were ($131,000) (-$64,000) or ($0.05)
(-$0.03) per share.
    Dividends paid during the period amounted to $127,000 ($127,000). The
regular per share dividend on common shares of the Company was $0.05 ($0.05)
per share. 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.

    Results for
    the eight
    most      May 31, Feb 28, Nov 30, Aug 31, May 31, Feb 28, Nov 30, Aug 31,
    recent      2007    2007    2006    2006    2006    2006    2005    2005
    fiscal     (2008.  (2007.  (2007.  (2007.  (2007.  (2006.  (2006.  (2006.
    quarters      Q1)     Q4)     Q3)     Q2)     Q1)     Q4)     Q3)     Q2)
               ------ ------- ------- ------- ------- ------- ------- -------
    (Expressed     $       $       $       $       $       $       $       $
    in thousands,
    except for
    amounts per
    share -
    Revenues  12,725  13,313  13,456  11,708  11,979  11,446  11,328  10,567
     (loss)     (131)    701     179     277     (64)    402     263     320

     per share (0.05)   0.28    0.07    0.11   (0.03)   0.15    0.11    0.12

     share      0.05    0.20    0.05    0.05    0.05    0.20    0.05    0.05

    Consolidated Cash Flows, Liquidity and Balance Sheets

    Cash used in operating activities before changes in non-cash items was
$131,000 for the period, an increase of $67,000 compared to $64,000 last year.
Non-cash operating items used $1,528,000 of funds for the period compared to
$732,000 of funds generated last year. The usage of funds was mainly due to a
reduction in payables relating to payments due on capital and inventory
purchases outstanding at last year-end.
    In investing activities, the Company added $324,000 of net property, plant
and equipment of which $249,000 was used for the investment in the new value
added Time-Wise rice line, for a total investment since inception of
$3,556,000 against an approved budget of $3.6M. This total includes
capitalized interest as the project is expected to be available for full
production in the second quarter of 2008. The balance of the additions went
primarily to improve the mill and plant capacity.
    For financing activities, bank indebtedness increased by $2,293,000
substantially to cover operating activities. The first payments were made on
the long-term reducing debt amounting to $153,000 and a regular dividend was
disbursed of $127,000.
    Working capital amounted to $1,119,000 at quarter-end, a decrease of
$592,000 compared to the $1,711,000 at last fiscal year-end. The change was
attributable to the investing and financing activities.

    Available credit facilities

    The credit facilities available and reported at last year-end remain
unchanged. The facilities are comprised of a revolving line of credit for
$4,750,000 CDN (or its US equivalent)which bears interest at either the
Canadian prime and/or U.S. base rates and optionally the Company may take
advantage of Bankers Acceptances, and a 5 year reducing term facility
initially borrowed at fiscal year-end 2007 for $3,500,000 at a rate fixed 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 $772,000 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 $1,019,000 (-14.8%) while overall volumes of rice
and components decreased by 9.1%.
    Marketable securities were, effective this quarter, recorded at fair value
in accordance with the new Financial Instruments - Revenue Recognition
standard discussed above. The adjustment for the unrealized gain amounted to
$1,161,000 of which $1,149,000 pertained to the balance at last fiscal
    Bank indebtedness was $3,691,000 compared to $1,398,000 at last year-end.
The increase of $2,293,000 was as follows: operations at ($1,659,000),
marketable securities at ($30,000), capital assets at ($324,000), long-term
debt payments ($153,000) and dividends at ($127,000).
    Payables decreased by $1,857,000, mainly due to decreased inventories and
increased payments on agency accounts.
    Pension Benefit Cost increased by imputed interest as funding of the SERP
was completed at last fiscal year-end.
    Bank loan debt is being repaid in accordance with the arrangements of the
five year Reducing Term facility agreement as described under credit
    Future income taxes were increased by $142,000 including a charge of
$184,000 for the fair value adjustment.
    Shareholders' equity increased by $707,000 to $16,599,000 from $15,892,000
being $6.54 ($6.27) per share.
    Capital stock remained unchanged at $539,000 and represents 2,535,000
issued common shares.
    Retained earnings were adjusted in accordance with the required accounting
for the marketable securities at fair value. The opening balance was increased
by $965,000 being the unrealized gain at last fiscal year-end of $1,149,000
less the applicable future income taxes of $184,000.
    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 $797,000 (7.0%) for the period
compared to this quarter last year while overall rice volumes were basically
flat. Costs and expenses increased by $798,000 (6.9%) and earnings before
interest and exchange increased by $27,000 compared to this period last year.
The loss for the quarter before income taxes was flat compared to last year.
The increase in sales and costs were mainly attributable to increases in the
price of bulk rice compared to 2007-Q1. As indicated in the last Annual
Report, the cost of rice has been tracking at ten year highs during the past
few quarters with little likelihood that this is to soon change. Recent
selling price increases in our branded and private label items will help to
improve this situation and increases are being planned for the canned rice
products. The canned rice products have not been increased for many years and
the pending price increases are intended to ensure these products continue to
be considered as very good value by our loyal consumers. The investment in the
new Time-Wise rice line is beginning to show results. Early indications are
encouraging and while the Company anticipates this value added product line
will be a good contributor to margins it is still somewhat premature to expect
significant returns in this year. The line should be entering full production
status during the next quarter.
    As a reminder, highlights of the new value added product 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 will target
different market segments than our Dainty canned rice.
    In Robert Reford, revenue decreased by $16,000 (3.7%) for the period
compared to this quarter last year. The decrease for the quarter results
primarily from an overall reduction in container and bulk activity. The
industry has experienced a significant downturn in imports to the Great Lakes;
a major area of uncertainty is the steel industry in both the USA and Canada
and this, along with a decrease in other commodities, has resulted in
significant decreases in ships transiting the seaway.
    The loss for this quarter compared to last year increased by $32,000 to
$82,000 as a result of the reduction in revenues. During the past several
months a detailed study has taken place within the Operations department to
determine what can be done to improve operational efficiencies by
standardizing agency document processing with the aid of software enhancements
to our systems as well as to fully integrate the various related functions. As
a result of this work significant development has been done in-house on the
agency accounting phase of the project which is soon to be released and a
contract has recently been given to Innovation Maritime, a non-profit
corporation recognized by the Quebec ministry of education as a college
teaching center, to produce the documentation and scheduling phases of this
effort. The cost will be approximately $120,000 and is to be amortized over
four years. The release of these phases is scheduled for next March.
    Since interest and exchange is accounted for on a consolidated basis,
exchange and earned interest attributed to ship agency services are allocated
against agency revenue and interest is netted under costs and expenses.

    In Corporate Investments, portfolio income is summarized as follows:

                                                       2008             2007
                                                       ----             ----

    Dividend income                                 $20,000          $39,000

    Interest income                                 $13,000          $12,000

    Capital gains                                   $12,000          $42,000

    Unrealized gains at Fair Value                  $13,000                -
                                                   ---------        ---------

    Totals:                                         $58,000          $93,000
                                                   ---------        ---------
                                                   ---------        ---------


    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 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.


    While the Company is anticipating continued growth in food processing and
selling and ship agency services, actual growth attained in 2008 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 the
U.S. at appropriate prices (iii) the ability within the marketplace to obtain
price increases in a timely manner to cover increased costs, and (iv) general
economic conditions in Canada, the U.S. and the rest of the world.
    Indications are that the Time-Wise products will provide additional
growth, that the current rice market 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 have experienced a very slow start in the first half of
this year and it is likely that any recovery will not recapture current lost
volumes. Overall the current expectation is for the company to achieve
satisfactory levels of profitability in the rice processing division however
it is less likely that the agency division will match last year's level of

    Risks and Uncertainties


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

    In Recognition

    This is a repeat of the tribute paid to our retiring CEO in the last
Annual Report and we feel it is worthy of repetition.
    Mr. Robert Blanchard, our CEO, will be retiring on June 30th, 2007 after
16 years of service to the Company. Mr. Blanchard joined Dainty Foods as plant
manager in Windsor in 1991, he then became Vice President and moved to Dainty
Foods' executive office in Montreal in 1996. He took on the responsibility as
President of Dainty Foods in 1998 and in 2002 he ably assumed the role of CEO
for MRRM Inc. as well. Mr. Blanchard's strong knowledge of the grain industry
certainly eased his entry to the intricacies of the rice world but his tenure
has not been without its challenges internally and externally. We wish to
thank and express our great appreciation to Mr. Blanchard for all that he has
done during his tenure with Dainty Foods and MRRM. His achievements have been
numerous but those that stand out exceptionally have been his ability and
success at buying Dainty Foods rice needs for the last decade, numerous
equipment and building upgrades to the manufacturing facility in Windsor which
will bode well for the future, the addition of flour milling and the new
Time-Wise process for quick cooking rice, refocusing MRRM to its core
businesses and the ensuing savings through the attrition and synergies that
came with this strategy - lastly but perhaps most importantly Mr. Blanchard's
legacy to the Company is the people that he has mentored in the organisation.
Mr. Blanchard has been a wonderful teacher, a communicator and a thinker and
he has instilled his wisdom and grounded values in anyone willing to listen.
For this he earned the respect of all who have been fortunate enough to work
with him. We thank you Mr. Blanchard for guiding so diligently during your
tenure and wish you many happy and healthy years of retirement.
    We are very pleased to announce that Mr. Terry Henderson, President of
Dainty Foods, will take on the responsibility as MRRM's next CEO at the
Meeting of the Board of Directors following the upcoming Annual General
Meeting. A search is presently being conducted for a replacement for our next
CFO as Mr. Wayland is anticipating retirement within the next year.
    We are extremely proud to report that on February 23, 2007 MRRM Inc.
celebrated its 125th anniversary of continuous operation under its own name
and that of its predecessor corporation, Mount Royal Rice Milling and
Manufacturing Company, and Mount Royal Rice Mills Limited. We are very
grateful and wish to say a special thank you to all those directly associated
with the Company presently and in the past as well as our loyal customers and
suppliers who have made the achievement of 125 years of survival and success a
reality. While MRRM has obviously not had any control over any of the external
forces surrounding it over the past 125 years it seems to have been fortunate
at keeping and attracting its most important asset, its staff. The employees
are largely responsible for the Company having survived so long, a business
does not breathe without its staff, and as we welcome a new CEO aboard we feel
confident we shall be celebrating many more anniversaries in the years to

    The Board of Directors has decided to forego the declaration of the
regular quarterly dividend in order to support the cash requirement resulting
from the Time-Wise investment.

    On behalf of the Board

    (signed)                             (signed)

    Nikola M. Reford                     Robert L. Blanchard
    Chairman                             President & Chief Executive Officer

    Dated at Montreal (Westmount), Quebec, June 21, 2007.

    MRRM  Inc.

    (unaudited)     For the THREE Months Ending       For the Quarter Ending
                    ---------------------------       ----------------------
                             May 31,     May 31,          May 31,     May 31,
                             ------      ------           ------      ------
                               2007        2006             2007        2006
                               ----        ----             ----        ----
                               '000        '000             '000        '000

      Sales                  12,667      11,886           12,667      11,886
      Interest and
       income                    33          51               33          51
      Change in fair
       value of
       investments held
       for trading               13           0               13           0
      Gain on disposal
       of marketable
       securities                12          42               12          42
                           ---------   ---------        ---------   ---------

                             12,725      11,979           12,725      11,979
                           ---------   ---------        ---------   ---------

    Costs and expenses
      Cost of sales,
       selling and
       administrative        12,617      11,850           12,617      11,850
      Amortization              242         234              242         234
      Exchange loss
      (gain)                     22         (25)              22         (25)
       expense (a)               47          67               47          67
                           ---------   ---------        ---------   ---------

                             12,928      12,126           12,928      12,126
                           ---------   ---------        ---------   ---------

    Earnings (Loss)
     before income
     taxes                     (203)       (147)            (203)       (147)

    Income taxes
      Current                   (27)        (33)             (27)        (33)
      Future                    (45)        (50)             (45)        (50)
                           ---------   ---------        ---------   ---------

                                (72)        (83)             (72)        (83)
                           ---------   ---------        ---------   ---------

    Net earnings (loss)        (131)        (64)           ($131)       ($64)
                                                        ---------   ---------
                                                        ---------   ---------

      Retained earnings,
       beginning of year     15,353      15,147
      Adjustment to fair
       value for
       investments held
       for trading              965
                           ---------   ---------

                             16,187      15,083

      Dividends                 127         127             $127        $127
                           ---------   ---------        ---------   ---------
                                                        ---------   ---------

    Retained earnings,
     end of period          $16,060     $14,956

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

    Basic earnings
     (loss) per share        ($0.05)     ($0.03)          ($0.05)     ($0.03)
                             -------     -------          -------     -------
                             -------     -------          -------     -------

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

    MRRM  Inc.

    (unaudited)     For the THREE Months Ending       For the Quarter Ending
                    ---------------------------       ----------------------
                             May 31,     May 31,          May 31,     May 31,
                             ------      ------           ------      ------
                               2007        2006             2007        2006
                               ----        ----             ----        ----
                               '000        '000             '000        '000

    Net earnings (loss)        (131)        (64)            (131)        (64)
    Non-cash items
      Change in fair
       value of
       investments held
       for trading              (13)          0              (13)          0
      (Gain) on disposal
       of marketable
       securities               (12)        (42)             (12)        (42)
      Amortization              242         234              242         234
      Pension benefit cost        9          67                9          67
      Future income taxes       (44)        (50)             (44)        (50)
                                ----        ----             ----        ----
        Adjusted for earnings
         items                   51         145               51         145
      Change in receivables    (772)        341             (772)        341
      Change in inventories   1,019         502            1,019         502
      Change in income
       taxes receivable           0         (37)               0         (37)
      Change in prepaids        (52)         39              (52)         39
      Change in payables     (1,857)       (307)          (1,857)       (307)
      Change in income
       taxes payable            (48)        (15)             (48)        (15)
                           ---------   ---------        ---------   ---------

    Cash flows from
     activities (a)          (1,659)        668           (1,659)        668
                           ---------   ---------        ---------   ---------

    Marketable securities      (661)       (558)            (661)       (558)
    Disposal of marketable
     securities                 631         517              631         517
    Property, plant and
     equipment                 (324)     (2,298)            (324)     (2,298)
                           ---------   ---------        ---------   ---------

    Cash flows from
     investing activities      (354)     (2,339)            (354)     (2,339)
                           ---------   ---------        ---------   ---------

    Bank indebtedness         2,293       1,798            2,293       1,798
    Long-term debt             (153)          0             (153)          0
    Dividends                  (127)       (127)            (127)       (127)
                           ---------   ---------        ---------   ---------
    Cash flows from
     financing activities     2,013       1,671            2,013       1,671
                           ---------   ---------        ---------   ---------

    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       $0.05       $0.05            $0.05       $0.05
                             -------     -------          -------     -------
                             -------     -------          -------     -------

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

    MRRM Inc.
    (Formerly: Mount Royal Rice Mills Limited)

    (unaudited)                                       As at            As at
                                                     May 31      February 28
                                                     ------      -----------
                                                       2007             2007
                                                       ----             ----
                                                       '000             '000

      Receivables                                     5,133            4,361
      Inventories                                     5,863            6,882
      Tax credits receivable                            952              952
      Prepaids                                          272              220
      Future income taxes                                17               17
                                                   ---------        ---------
                                                     12,237           12,432

    Marketable securities, at fair value
     (note 3)                                         5,064            3,862

    Property, plant and equipment, net               16,011           15,929
                                                   ---------        ---------

                                                    $33,312          $32,223

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

      Bank indebtedness                               3,691            1,398
      Payables                                        6,656            8,513
      Income taxes                                      141              189
      Current portion of long-term debt                 630              621
                                                   ---------        ---------
                                                     11,118           10,721

    Accrued benefit liability                           777              772
    Long-term debt, reducing term loan
     maturing in 2012                                 2,717            2,879
    Future income taxes                               2,101            1,959
                                                   ---------        ---------

                                                     16,713           16,331


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

    Retained earnings                                16,060           15,353
                                                   ---------        ---------
                                                     16,599           15,892
                                                   ---------        ---------

                                                    $33,312          $32,223

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


    MRRM  Inc.



    1- Accounting Policies and Supplementary Information

    The unaudited interim consolidated financial statements were prepared by
the Company in accordance with Canadian generally accepted accounting
    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 28, 2007, except for the accounting for changes in the value of
the marketable securities as explained hereunder. 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
    As referenced in the Notes to Consolidated Financial Statements for the
last fiscal year, effective with the beginning of the 1st quarter of the
current year, the Company adopted Section 3855 of the CICA Handbook, Financial
Instruments - Recognition and Measurement. Under this new standard, all
financial assets must be classified as held for trading, held-to-maturity,
loans and receivables or available for sale. All financial liabilities are
classified as held for trading or other financial liabilities.
    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 application of the new accounting policy resulted in an increase to
the investment asset of $1,161,000, an increase to the Future income tax
liability of $186,000 and an increase to beginning Retained Earnings of
$965,000 (being the unrealized gain at last fiscal year-end of $1,149,000 less
applicable future income taxes of $184,000). In the current quarter, Revenue
includes $13,000 representing the change in fair value which has been included
in the future income tax calculation.
    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 favorable by $17,900. The position at February 28,
2007 was unfavorable by $29,600. These amounts are before income taxes and
have not been recorded in the financial statements.
    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.
    Foreign exchange exposure: At May 31, 2007, net US$1,050,000; at May 31,
2006, net US($3,437,000) and at February 28, 2007, net US($1,148,000). The
above US numbers include equivalent for euro and pounds stirling which amount
to less than 5% of the totals. No exchange futures were outstanding at the end
of the quarter.

                    For the THREE Months Ending       For the Quarter Ending
                    ---------------------------       ----------------------
                             May 31,     May 31,          May 31,     May 31,
                             ------      ------           ------      ------
                               2007        2006             2007        2006
                               ----        ----             ----        ----
                               '000        '000             '000        '000

    2- Information
        included in the
        Statement Of
      Income taxes paid
       (received)               $18         $17              $18         $17
                                ---         ---              ---         ---
                                ---         ---              ---         ---

      Interest on long-term
       debt                     $50                          $50
      Interest on bank
       indebtedness and
       other                    $45         $67              $45         $67
                                ---         ---              ---         ---
      Total Interest paid       $95         $67              $95         $67
      Less, interest
       capitalized              $48                          $48
                                ---                          ---
      Interest expensed         $47         $67              $47         $67
                                ---         ---              ---         ---
                                ---         ---              ---         ---

    3- Income Taxes
      Combined basic
       federal and
       provincial income
       tax rate                33.0%       32.1%
      Non-taxable portion
       of capital gains         2.1%       14.7%
      Tax-free income (net)     4.6%       26.3%
      Other                    -4.2%      -16.9%
                               -----      ------
                               35.5%       56.2%
                               -----      ------
                               -----      ------

    4- Segmented Information
        Food processing
         and selling         12,247      11,450           12,247      11,450
        Ship agency
         services               420         436              420         436
                                ---         ---              ---         ---
        Operating            12,667      11,886           12,667      11,886
        Corporate                58          93               58          93
                                 --          --               --          --
                            $12,725     $11,979          $12,725     $11,979
                            -------     -------          -------     -------
                            -------     -------          -------     -------

        Food processing
         and selling           (138)       (137)            (138)       (137)
        Ship agency
         services               (82)        (50)             (82)        (50)
                                ----        ----             ----        ----
        Operating              (220)       (187)            (220)       (187)
        Corporate                17          40               17          40
                                 --          --               --          --
      Earnings before
       income taxes           ($203)      ($147)           ($203)      ($147)
      Income Taxes              (72)        (83)             (72)        (83)
                                ----        ----             ----        ----
      Net Earnings (Loss)     ($131)       ($64)           ($131)       ($64)
                              ------       -----           ------       -----
                              ------       -----           ------       -----

        Food processing
         and selling         27,564      24,580           27,564      24,580
        Ship agency
         services               688       1,230              688       1,230
                                ---       -----              ---       -----
        Operating            28,252      25,810           28,252      25,810
        Corporate             5,060       3,788            5,060       3,788
                              -----       -----            -----       -----
                            $33,312     $29,598          $33,312     $29,598
                            -------     -------          -------     -------
                            -------     -------          -------     -------

      Capital expenditures
        Food processing
         and selling            323       2,293              323       2,293
        Ship agency
         services                 1           5                1           5
                                  -           -                -           -
        Operating               324       2,298              324       2,298
                               $324      $2,298             $324      $2,298
                            -------     -------          -------     -------
                            -------     -------          -------     -------

        Food processing
         and selling            233         224              233         224
        Ship agency
         services                 9          10                9          10
                                  -          --                -          --
                               $242        $234             $242        $234
                               ----        ----             ----        ----
                               ----        ----             ----        ----


For further information:

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

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