Premium Brands Inc. (TSE: FFF) announced yesterday its results for the fourth quarter and year-ended December 30, 2000. Sales for the quarter increased by 18% despite a labour dispute at the Company's Vancouver processing plant and the sale of its salad division on August 5, 2000. For the year, the Company's sales increased by $63.7 million to $501.7 million.

High North American hog prices resulted in significant losses in the Company's Fresh Pork Division. These losses, combined with a $10.6 million charge relating to the Vancouver plant labour dispute and the realignment of several plants' production lines, resulted in a net loss for the quarter of $7.3 million or $0.92 per share. For the year, the combination of the Fresh Pork Division's poor results and the $10.6 million charge resulted in a net loss of $5.8 million or $0.74 per share.

On April 17, 2001 the Company completed the sale of its Fresh Pork Division to Olymel S.E.C, a limited partnership, for proceeds of about $90 million. Premium will be recording an after tax gain on the transaction of approximately $23 million or $2.71 per share in the first quarter of 2001. In conjunction with the sale, Premium Brands and Olymel entered into a seven-year supply agreement which guarantees the Company's processed meat operations access to a supply of high quality fresh pork.

On April 11, 2001 the Company announced the signing of a five-year labour agreement with United Food and Commercial Workers Local 1518, which represents the Vancouver plant's unionized employees. The new agreement, in conjunction with a realignment of production at several of the Company's plants, is expected to generate benefits of approximately $3.5 million per year and will play a significant part in making the Vancouver facility a low cost producer of processed meat products.

"With the sale of the Fresh Pork Division and the settlement of the Vancouver plant labour dispute, our company is re-positioned for growth," said Fred Knoedler, President and CEO.

"Looking forward, our focus will be on building our branded consumer products and distribution businesses, both of which have a history of strong growth and expanding margins," stated Mr. Knoedler.

During the quarter, the Company's Distribution Division's sales increased by over 150% to $15.7 million while its gross profit increased to $5.3 million from $2.0 million in 1999. For the year, the Distribution Division's sales were up almost 100% to $47.0 million while its gross profit, as a percentage of sales, expanded to 37.1% from 32.5% in 1999.

The Prepared Foods Division's sales and gross profit for the quarter decreased by 10.3% and 15.3%, respectively, due to the Vancouver plant labour dispute and the sale of the Division's salad business earlier in the year. For the year, these factors resulted in a 1.2% and 6.9% decrease in the Division's sales and gross profit, respectively. Excluding the salad business's results for 1999 and 2000, the Prepared Foods Division would have shown a sales increase of $8.3 million or 4% and a gross profit decrease of 2.5%.

The Company's performance was also impacted by rising selling, general and administration costs that were almost entirely the result of increased overheads associated with the expansion of its proprietary distribution networks.

"The combination of our leading brands and unique proprietary distribution channels will enable us to continue growing at double digit rates and, as our distribution channels achieve critical mass, generate strong sustainable operating margins," said Will Kalutycz, CFO. "Furthermore, we see significant opportunities to create value for shareholders through strategic transactions," added Mr. Kalutycz.

After adjusting for losses associated with the Fresh Pork Division and the Company's new Goodlife Foods home delivery initiative, and normalizing for the effects of the Vancouver labour dispute, Premium Brands' earnings before interest, taxes, depreciation and amortization ("EBITDA") for fiscal 2000 would have been approximately $15 million.

"The benefits associated with the recently resolved Vancouver plant labour dispute combined with the strong growth opportunities of our various business units should enable us to significantly expand our EBITDA in 2001," stated Mr. Kalutycz.

"The sale of the Fresh Pork Division was a significant step in the Corporation's continuing process of reviewing strategic alternatives to create and maximize shareholder value," said Richard Klassen, Chairman of Premium Brands. "Our remaining businesses are now ideally positioned to benefit from current trends in the North American food industry," added Mr. Klassen.

Premium Brands has been engaged in the food processing business since 1917 and has manufacturing facilities in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Washington and Oregon.

       (in thousands of CDN dollars except earnings per share amounts)

                               13 week      12 week      53 week    52 week
                               period       period       period      period
                                ended        ended        ended      ended
                               Dec 30,      Dec 25,      Dec 30,     Dec 25,
                                2000         1999         2000        1999
                             (Unaudited)  (Unaudited)   (Audited)  (Audited)

    Sales by division:
      Prepared Foods Division  $51,471      $57,379     $229,407   $232,217
      Distribution Division     15,667        6,181       46,984     23,683
      Fresh Pork Division       58,617       43,232      225,299    182,100
                               125,755      106,792      501,690    438,000

    Gross profit (loss) by
      Prepared Foods Division  $13,545      $16,001      $52,864    $56,775
      Distribution Division      5,302        2,016       17,425      7,686
      Fresh Pork Division         (22)        2,306      (4,350)      8,586
                                18,825       20,323       65,939     73,047
      Selling, general and
        administrative          20,032       14,908       66,928     56,326
      Depreciation               2,372        1,748       10,177      8,321
      Amortization                 714          283        1,736        874
      Interest                   3,049          939        7,719      3,451
      Equity earnings            (591)           17      (2,076)      (975)
      Gain on sale of assets       225           --      (2,214)         --
      Dilution gain on
        subsidiary's share
        issuance                 (888)          198      (8,795)         --
      Labour dispute and plant
        re-alignment costs      10,617           --       10,617         --
      Plant restructuring           --        6,767           --      6,767
      Non-controlling interest   (883)        (127)        (749)       (35)

    Earnings before income
     taxes                    (15,822)      (4,409)     (17,404)    (1,682)
      Income taxes             (8,488)      (1,540)     (11,609)      (873)

    Net earnings (loss)        (7,334)      (2,869)      (5,795)      (809)

    Net earnings (loss) per
      Basic                     (0.92)       (0.37)       (0.74)     (0.11)
      Fully diluted             (0.92)       (0.37)       (0.74)     (0.11)

                        (in thousands of CDN dollars)

                                                       Dec 30,      Dec 25,
                                                        2000         1999
                                                      (Audited)    (Audited)

    Current assets:
      Cash                                                $237       $1,530
      Accounts receivable                               39,463       41,929
      Inventories                                       27,598       25,002
      Prepaid expenses                                   4,026        2,245
      Deferred income taxes                              8,700           --

                                                        80,024       70,706

    Notes receivable                                     9,481        2,066
    Deferred income taxes                                4,007           --
    Investment in significantly
      influenced companies                              35,944       16,601
    Capital assets                                     123,338       92,040
    Goodwill                                            19,301       16,557
    Other                                                2,012        1,820

                                                      $274,107     $199,790

    Current liabilities:
      Bank indebtedness                                $40,417      $29,798
      Accounts payable                                  33,372       24,739
      Current term-debt                                  9,780        3,143

                                                        83,569       57,680

    Long-term debt                                      88,032       55,353
    Deferred income taxes                                   --          717
                                                       171,601      113,750

    Non-controlling interest                             9,186          330
    Shareholders' equity                                93,320       85,710

                                                      $274,107     $199,790