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High Liner Foods reports improved results for fourth quarter fiscal 2006


    - Results reflect continued strength of Canadian business and
    improvements in U.S. operations -

    LUNENBURG, NS, Feb. 21 /CNW/ - High Liner Foods Incorporated (TSX:HLF)
today reported improved financial results for the thirteen week period and
fiscal year ended December 30, 2006. (All amounts are reported in Canadian
dollars.)Financial and operational highlights for the fourth quarter include:
    -   Sales of $65.7 million, an increase of 5.5% when adjusted for the
        effect of the stronger Canadian dollar;
    -   Operating EBITDA(1) of $3.5 million compared to an operating loss of
        $0.4 million for the same period in 2005;
    -   Net income from continuing operations of $1.2 million, or $0.09 per
        share, compared to a net loss of $1.5 million, or $0.16 per share for
        the same period in 2005;
    -   More than a 10% increase in sales of High Liner® brand products in
        the U.S.;
    -   Launch in Canada of High Liner QuickSteam™ seasoning-rubbed
        fillets, featuring innovative microwave steam cooking packaging;
    -   Increased entry into the natural and organic foods market with the
        launch of six all natural, no-additive products to a new U.S.
        customer.

    Financial and operational highlights for the fiscal year include:

    -   Sales of $261.7 million, an increase of 7.5% when adjusted for the
        effect of the stronger Canadian dollar;
    -   Operating EBITDA of $13.6 million compared to $10.0 million in 2005;
    -   Net income from continuing operations of $5.1 million, or $0.38 per
        share, compared to $3.9 million, or $0.26 per share, in 2005;
    -   Launch of 40 new products in 2006."Our financial results for the quarter and the year reflect the continued
strength of our Canadian business, and improvements in our U.S. business,
despite an operating environment of increasing input costs, including
historically high raw seafood costs," said Henry Demone, President and Chief
Executive Officer, High Liner Foods Inc. "Our retail and food service
divisions both contributed to strong results in Canada as we are successfully
delivering innovative value-added seafood products that meet consumers'
evolving preferences. In the U.S., we have a significant opportunity to
leverage the High Liner brand and our success with premium products that we
have achieved in Canada. To this end, in 2006, we initiated a number of
improvements in our U.S. operations, including the appointment of a new U.S.
President, the sale of our pasta business, the launch of a number of
valued-added seafood products, and rebranding our Fisher Boy products under
the High Liner name. While we recognize that there is a lot of work to be done
in this regard, we are encouraged by our progress thus far."Financial Results

    -------------------------------------------------------------------------
    (Amounts in thousands of Canadian $ except per share amounts)
    -------------------------------------------------------------------------
                             Thirteen     Thirteen    Fifty-two    Fifty-two
                          Weeks ended  Weeks ended  Weeks ended  Weeks ended
                             December     December     December     December
                             30, 2006     31, 2005     30, 2006     31, 2005
                                          Restated                  Restated

    -------------------------------------------------------------------------
    Sales                  $   65,657   $   63,006   $  261,725   $  250,203
    -------------------------------------------------------------------------
    Operating EBITDA            3,489         (408)      13,568       10,035
    -------------------------------------------------------------------------
    Net income (loss)
     from continuing
     operations            $    1,241   $   (1,480)  $    5,123   $    3,854
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income (loss)
     from discontinued
     operations; net of
     income tax            $       68   $  (43,064)  $     (793)  $  (44,323)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net income             $    1,309   $  (44,544)  $    4,330   $  (40,469)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Basic earnings per
     Common Share:
      Net income (loss)
       from continuing
       operations          $     0.09   $    (0.16)  $     0.38   $     0.26
    -------------------------------------------------------------------------
      Net income (loss)
       from discontinued
       operations          $     0.01   $    (4.12)  $    (0.08)  $    (4.19)
    -------------------------------------------------------------------------
      Net income           $     0.10   $    (4.28)  $     0.30   $    (3.93)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------Financial Results for the Quarter

    When adjusted for the stronger Canadian dollar, sales for the fourth
quarter of fiscal 2006 increased 5.5%, with the higher Canadian dollar
reducing the value of reported U.S. sales by approximately $0.8 million. Sales
before adjustment for the stronger Canadian dollar increased 4.2% to $65.7
million from $63.0 million for the fourth quarter of fiscal 2005. The increase
was attributable to strong sales in Canadian retail and food service divisions
and higher sales of High Liner® brand products in the U.S.
    Operating EBITDA for the fourth quarter improved to $3.5 million compared
with an operating loss of $0.4 million for the same period in 2005. The
difference is attributable to price increases implemented in 2006, which
offset higher costs of raw seafood, as well as higher marketing costs in the
fourth quarter of 2005 in connection with the launch of products under the
High Liner brand in the U.S. Net income from continuing operations for the
quarter was $1.2 million, or $0.09 per share, compared with a loss of $1.5
million, or $0.16 per share, for the corresponding period of 2005.
    Discontinued operations in 2005 included a non-recurring non-cash pre-tax
charge of $41.2 million related to the write down of goodwill, and
non-recurring costs of $1.3 million before taxes related to the change in
co-packers for Italian Village products.

    Financial Results for Fiscal 2006

    When adjusted for the stronger Canadian dollar, sales for fiscal 2006
increased 7.5% with the higher Canadian dollar reducing the value of reported
U.S. sales by approximately $7.2 million. Sales before adjustment for the
stronger Canadian dollar increased 4.6% to $261.7 million from $250.2 million
for fiscal 2005. The increase is the result of increased selling prices,
stronger retail and food service sales in Canada, as well as higher sales of
High Liner brand products in the U.S.
    Operating EBITDA for the year was $13.6 million compared with $10.0
million for fiscal 2005. The improvement was primarily the result of the
successful implementation of price increases in 2006, which offset higher
seafood costs for the year, as well as the contribution from new product
launches. Net income from continuing operations for the year was $5.1 million,
or $0.38 per share, compared to $3.9 million, or $0.26 per share, in fiscal
2005.

    Operational Highlights for the Fourth Quarter

    Canada

    Canadian retail sales volume for the fourth quarter of fiscal 2006
decreased 1.5%(2) compared to the fourth quarter of fiscal 2005. Price
increases during the year contributed to a 5.7% increase in sales in dollars,
while sales also benefited from new products launched earlier in the year.
Sales of Signature™ products increased 22.1%(2) in the quarter, the result
of strong consumer marketing programs, good support from our customers and new
products launched in early 2006. Sales of raw fillets increased 12.1%(2), due
to continued growth of wild salmon and tilapia fillets. During the quarter we
launched High Liner QuickSteam™ seasoning rubbed fillets, which are premium
quality fillets of salmon and basa with light seasoning.
    Canadian food service sales for the quarter increased 11.4%(2) compared
to the same period the year before, due to higher sales of most species to
most customers, strong contributions from new products, and price increases.

    United States

    U.S. sales volume of High Liner brand products for the quarter increased
2.5%(2), with strong tilapia sales more than offsetting weaker sales of cod,
following price increases implemented on most club store products in the first
quarter. Importantly, a change in the High Liner product mix to include more
premium items, and price increases, led to more than a 10% sales increase in
Canadian dollars. The change in product mix was more significant in the club
store channel, as the Company has had increased success introducing premium
products to this channel.
    Fisher Boy® sales for the quarter increased 0.2%(2), representing the
first period of growth for the brand in over two years. The U.S. business is
focused on the continued execution of its turnaround strategy for the brand.
    Sales volume of private label seafood products in the U.S., which consist
almost entirely of battered and breaded products, decreased 10.4%, in line
with the continued decline in the category.

    Share Repurchase

    As of December 30, 2006, High Liner had purchased 3,000 of its common
shares at an average price of $8.71 per share under its current normal course
issuer bid, which commenced on May 12, 2006 and which expires on May 11, 2007.
The bid permits the Company to purchase up to 510,000 common shares,
representing just under 5.0% of common shares outstanding. For fiscal 2006,
the Company repurchased 8,000 common shares under the current and previous
issuer bids.

    Dividends

    High Liner Foods paid a quarterly dividend on its Common Shares of $0.05
per share on December 15, 2006 to shareholders of record on December 1, 2006.
    In 2006, the Company paid dividends on its Second Preference Shares in
the amount of $1.2 million, compared to $1.0 million in 2005. Dividends
fluctuate in relationship to prime bank rates.
    On February 21, 2007, the Board of Directors approved a quarterly
dividend in the amount of $0.05 per Common Share payable on March 15, 2007 to
shareholders of record on March 1, 2007.
    Subject to cash flow, it is the Company's intention to declare quarterly
dividends on its common shares in fiscal 2007.

    Outlook

    "In 2007, we will continue to leverage our product development expertise,
our brand, and our long history of success in Canada as we move forward with
initiatives to strengthen our U.S. business," said Mr. Demone. "While
expecting continued strength in our Canadian operations, we will move forward
with short and long-term initiatives to improve our U.S. business, including
introducing additional value-added premium seafood products to our established
U.S. customer base, expanding our distribution, and strengthening our brand
presence, particularly by transitioning our Fisher Boy products to our High
Liner brand. While our profitability has benefited from the strengthening
Canadian dollar over the past several years, a potentially weaker Canadian
dollar in 2007 could dampen our profitability during the year. With the
expectation of higher input costs going forward, we will continue to monitor
these costs across our operations and evaluate our potential to implement
price increases as required. Following our success last year in reducing our
inventory levels to more optimized levels, we are well positioned to
appropriately manage working capital going forward. In addition, we are
progressing in a productivity analysis of our operations and expect that this
will identify significant opportunities to improve our operations, as we
endeavor to improve our bottom line."

    Conference Call

    High Liner Foods will host a conference call on Thursday, February 22,
2007 at 10:30 a.m. ET (11:30 a.m. AT) to discuss its fourth quarter fiscal
2006 financial results. To access the conference call by telephone, dial
416-644-3416 or 1-800-732-0232. Please connect approximately ten minutes prior
to the beginning of the call to ensure participation. The conference call will
be archived for replay until Thursday, March 1, 2007 at midnight. To access
the archived conference call, dial 416-640-1917 or 1-877-289-8525 and enter
the reservation number 21216991 followed by the number sign.
    A live audio webcast of the conference call will be available at
www.highlinerfoods.com. Please connect at least 15 minutes prior to the
conference call to ensure adequate time for any software download that may be
required to join the webcast. The webcast will be archived at the above
website for 90 days.

    Financial Statements

    For convenience, this press release includes the Company's Fiscal Fourth
Quarter Balance Sheet, Statement of Income and Statement of Cash Flows.HIGH LINER FOODS INCORPORATED
                         CONSOLIDATED BALANCE SHEETS
                           As at December 30, 2006
             (with comparative figures as at December 31, 2005)
                     (in thousands of Canadian dollars)

                                                   December 30,  December 31,
                                                          2006          2005
                                                                   (Restated)
    -------------------------------------------------------------------------
    ASSETS
      Current:
        Cash                                               240           580
        Accounts receivable                             31,221        28,095
        Income tax receivable                              161            11
        Inventories                                     41,278        52,670
        Prepaid expenses                                 3,495         7,246
        Future income taxes                                295           546
    -------------------------------------------------------------------------
      Total current assets                              76,690        89,148
    -------------------------------------------------------------------------
      Property, plant and equipment                     26,038        26,952
    -------------------------------------------------------------------------
      Other:
        Future income taxes                              3,005         4,642
        Other receivables and sundry investments         1,084         1,179
        Employee future benefits                         6,360         5,332
    -------------------------------------------------------------------------
                                                        10,449        11,153
    -------------------------------------------------------------------------
                                                       113,177       127,253
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    LIABILITIES AND SHAREHOLDERS' EQUITY
      Current:
        Bank loans                                      10,115        24,808
        Accounts payable and accrued liabilities        27,087        29,407
        Income taxes payable                                 0           159
        Current portion of long-term liabilities           560           526
    -------------------------------------------------------------------------
      Total current liabilities                         37,762        54,900
    -------------------------------------------------------------------------
      Long-term liabilities                                477           633
    -------------------------------------------------------------------------
      Employee future benefits                           3,702         3,138
    -------------------------------------------------------------------------
      Shareholders' Equity:
        Preference shares                               20,000        20,000
        Common shares                                   28,106        27,963
        Contributed surplus                                503           494
        Retained earnings                               36,204        35,075
        Foreign currency translation account           (13,577)      (14,950)
    -------------------------------------------------------------------------
                                                        71,236        68,582
    -------------------------------------------------------------------------
                                                       113,177       127,253
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                        HIGH LINER FOODS INCORPORATED
                      CONSOLIDATED STATEMENTS OF INCOME
        For the thirteen and fifty-two weeks ended December 30, 2006
               (with comparative figures for the thirteen and
                  fifty-two weeks ended December 31, 2005)
        (in thousands of Canadian dollars, except per share amounts)


                                 Thirteen Weeks           Fifty-Two Weeks
                               2006         2005         2006         2005
                                         (Restated)                (Restated)
    -------------------------------------------------------------------------
    Sales                      65,657       63,006      261,725      250,203
    Cost of sales              53,212       52,499      212,414      201,966
    -------------------------------------------------------------------------
    Gross profit               12,445       10,507       49,311       48,237
    Selling, general
     and administrative
     expenses                  (9,215)     (10,847)     (36,170)     (38,175)
    Foreign exchange gain         259          (68)         427          (27)
    Depreciation and
     amortization                (774)        (789)      (3,017)      (3,061)
    Other income (expense)
     / non-operating
     transactions                (400)        (137)        (224)         387
    Interest expense
      Short-term                  (45)        (184)        (834)        (352)
      Long-term                   (22)         (14)         (73)         (67)
    -------------------------------------------------------------------------
    Income from continuing
     operations before
     income taxes               2,248       (1,532)       9,420        6,942
    -------------------------------------------------------------------------
    Income taxes
      Current                      25         (248)      (2,482)      (1,042)
      Future                   (1,032)         300       (1,815)      (2,046)
    -------------------------------------------------------------------------
    Total income taxes
     from continuing
     operations                (1,007)          52       (4,297)      (3,088)
    -------------------------------------------------------------------------
    Net income from
     continuing operations      1,241       (1,480)       5,123        3,854
    Net income (loss)
     from discontinued
     operations; net
     of income tax                 68      (43,064)        (793)     (44,323)
    -------------------------------------------------------------------------
    Net income                  1,309      (44,544)       4,330      (40,469)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    PER SHARE INFORMATION
    Earnings per Common
     Share
      Basic from continuing
       operations                0.09        (0.16)        0.38         0.26
      Basic from
       discontinued
       operations                0.01        (4.12)       (0.08)       (4.19)
    -------------------------------------------------------------------------
      Basic                      0.10        (4.28)        0.30        (3.93)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Diluted from
       continuing
       operations                0.09        (0.16)        0.38         0.26
      Diluted from
       discontinued
       operations                0.01        (4.12)       (0.08)       (4.19)
    -------------------------------------------------------------------------
      Diluted                    0.10        (4.28)        0.30        (3.93)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Average shares
     outstanding for
     the period
      Basic                10,319,364   10,460,271   10,306,009   10,566,802
      Diluted              10,385,323   10,460,271   10,370,974   10,566,802
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                        HIGH LINER FOODS INCORPORATED
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
        For the thirteen and fifty-two weeks ended December 30, 2006
               (with comparative figures for the thirteen and
                  fifty-two weeks ended December 31, 2005)
                     (in thousands of Canadian dollars)


                                 Thirteen Weeks           Fifty-Two Weeks
                               2006         2005         2006         2005
                                         (Restated)                (Restated)
    -------------------------------------------------------------------------
    Cash provided by
     (used in) operations:
      Net income (loss)
       from continuing
       operations for
       the period               1,241       (1,480)       5,123        3,854
      Charges (credits)
       to income not
       involving cash
       from operations:
        Depreciation and
         amortization             774          789        3,017        3,061
        Loss (gain) on
         disposal of assets       406           43          259         (315)
        Stock compensation
         expense                   (8)                       33
        Payments of employee
         future benefits
         in excess of expense      59         (727)        (463)      (1,666)
        Future income taxes     1,032         (300)       1,815        2,046
    -------------------------------------------------------------------------
      Cash flow from
       operations before
       changes in non-cash
       working capital          3,504       (1,675)       9,784        6,980
      Net change in non-cash
       working capital
       balances                 1,717       (5,451)      10,719      (14,123)
      Operating activities
       of discontinued
       operations                  71         (694)        (162)      (2,175)
    -------------------------------------------------------------------------
                                5,292       (7,820)      20,341       (9,318)
    -------------------------------------------------------------------------
    Cash provided by (used
     in) financing
     activities:
      Change in current
       bank loans                (736)       7,641      (14,693)      17,487
      Repayment of
       long-term capital
       lease obligations         (104)        (152)        (444)        (473)
      Dividends paid
        Preference               (300)        (266)      (1,174)      (1,036)
        Common                   (515)        (526)      (2,027)      (2,147)
      Repurchase of
       capital stock                -       (2,368)         (73)      (5,545)
      Issue of equity shares        -           65          192        1,025
    -------------------------------------------------------------------------
                               (1,655)       4,394      (18,219)       9,311
    -------------------------------------------------------------------------
    Cash provided by (used
     in) investing
     activities:
      Purchase of property,
       plant and equipment
       (net of investment
       tax credits)            (1,464)      (1,265)      (2,466)      (3,423)
      Net expenditures on
       disposal of assets      (1,028)         180       (1,073)        (517)
      Decrease in other
       receivables             (1,023)         858           73          948
      Investing activities
       of discontinued
       operations                   1        3,587        1,172        2,851
    -------------------------------------------------------------------------
                               (3,514)       3,360       (2,294)        (141)
    -------------------------------------------------------------------------
    Impact of foreign
     exchange translation
     on cash                     (358)         179         (168)         222
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash during the period      (235)         113         (340)          74
    Cash, beginning of period     475          467          580          506
    -------------------------------------------------------------------------
    Cash, end of period           240          580          240          580
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------Financial Notes

    Comparative results for fiscal 2005 have been restated to reflect the
requirement to account for the Company's Italian Foods operations as
discontinued operations following its disposition in July, 2006.
    In 2006 the Company recorded an accounting accrual for salaried vacation
pay. In prior periods, accruals for salaried vacation payable to employees
were not recorded, as in most cases and due to corporate policies, vacation
was taken in time and not paid in cash. However, since accrued vacation pay is
a liability, we have now recorded it in the financial statements. In
accordance with Section 1506 of the CICA Handbook, this change has been made
retroactively by restating the opening balances of assets, liabilities and
equity as of the beginning of fiscal 2005. The change did not affect the
Company's consolidated statements of earnings or cash flows for the 2005 and
2006 fiscal years, and does not impact earnings per share.
    In 2006, the Company converted inter-company debt owed by its U.S.
subsidiary to the Canadian parent to equity. The conversion was made to
simplify the capital structure of the U.S. subsidiary and will remain as a
permanent investment in those operations. The conversion created a capital
loss and a tax recovery of $1.5 million for Canadian tax purposes. The
recovery was recorded in the foreign currency translation account on the
balance sheet as an offset against the losses from prior years that had been
accumulated in this account that relates to the U.S. subsidiary.

    About High Liner Foods Incorporated

    High Liner Foods Incorporated is one of North America's largest
processors and marketers of prepared, value-added frozen seafood. High Liner's
branded products are sold throughout the United States, Canada and Mexico
under the High Liner® and Fisher Boy® labels and available in most grocery
and club stores. The Company also sells its High Liner® food service
products to restaurants and institutions. The Company is also a major supplier
of private label seafood products to North American food retailers and food
service distributors. High Liner Foods is a publicly traded Canadian company,
trading under the symbol HLF on the Toronto Stock Exchange.

    This document contains forward-looking statements, including sales,
earnings, marketing, and profitability comments for 2007 and beyond. These
statements contain words such as "anticipate", "expect", "could", "should",
"may", "plans", "will", or similar expressions that are based on and arise out
of our experience, our perception of trends, current conditions and expected
future developments as well as other factors. The statements are not a
guarantee of future performance. By their nature, forward-looking statements
involve uncertainties and risks that the forecasts and targets will not be
achieved.

    Readers are cautioned not to place undue reliance on forward-looking
statements, as a number of important factors, as discussed herein and in our
other continuous disclosure documents, could cause actual results to differ
materially from those expressed in such forward-looking statements. We include
in publicly available documents filed from time to time with securities
commissions and The Toronto Stock Exchange, a thorough discussion of the risk
factors that can cause anticipated outcomes to differ from actual outcomes. We
disclaim any intention or obligation to update or revise forward-looking
statements.

    For further information about the Company, please visit our Internet site
at www.highlinerfoods.com or send e-mail to investor@highlinerfoodinc.com.--------------------------------
    (1) Earnings before interest, taxes, depreciation and amortization,
        foreign exchange, other income and non-operating transactions as
        disclosed on the consolidated statements of income. EBITDA is not a
        recognized measure under Canadian generally accepted accounting
        principles (GAAP), however, management believes that it is a useful
        performance measure as it approximates cash generated from
        operations, before capital expenditures and changes in working
        capital and excludes unusual items. Operating EBITDA also assists
        comparison among companies as it eliminates the differences in
        earnings due to how a company is financed.

    (2) As measured in volume (pounds)%SEDAR: 00001789E



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