Lino Saputo - Chairman Louis-Philippe Carrière - EVP, Finance and Administration Lino Saputo Jr. - President and CEO

Irene Nattel- RBC Capital Markets Jim Durran - National Bank Financial Michael Van Aelst - TD Newcrest Peter Sklar - BMO Capital Markets Mark Petrie - CIBC

Good day ladies and gentlemen, thank you for standing for standby and welcome to the Saputo first quarter financial results conference call. During the presentation, all participants will be in a listen-only mode, after which we will conduct a question-and-answer session. (Operator Instructions) As a reminder this conference is being recorded Tuesday, August 3, 2010. I would now like to turn the conference over to Lino Saputo. Please go ahead.

Thank you, Jennifer.

Good afternoon everyone and thank you for joining us today. A press release detailing our fiscal 2011 first quarter earnings results was issued earlier today and is also available as we speak on our website at www.saputo.com. This call is being recorded and will be posted on our website for future reference. I would like to underline that our Internet listeners, as well as journalists are on a listen-only mode. Members of the media are invited to ask their questions by phone at the end of this call. Before we proceed, I remind you that certain information that will be discussed during this call may constitute forward-looking information within the meaning of securities laws. Caution should be used in the interpretation of such information since management has made certain assumptions, including, among others, assumptions regarding projected revenues and expenses, and references to objectives and strategies that are subject to a number of risks and uncertainties which could cause actual results to differ materially from those presented in such forward-looking information. For more information on these risks and uncertainties, you should refer to our most recent Annual Report that is available on SEDAR. Any forward-looking information discussed during this call is based on management's current reasonable estimates and expectations, and we do not undertake to update this information, except as required by law. The speakers today are Mr. Louis-Philippe Carrière, Executive Vice President, Finance and Administration and Mr. Lino Saputo, Jr., President and Chief Executive Officer. After a brief presentation, we will conclude the call with your questions. Louis-Philippe will now start the conference, followed by Lino Jr. Louis-Philippe Carrière: Thank you, [Karen] and good afternoon. I would like to present our results for the first quarter of fiscal 2011. Net earnings for the quarter ended June 30, 2010, totaled $111.4 million, an increase of $26.6 million or 31.4% compared to the same quarter last fiscal year. EBITDA for the quarter totaled $190.8 million, a $32.3 million or 20.4% increase compared to the same period last fiscal year. EBITDA for our Canada, Europe and Argentina Dairy Products sector increased by $9.1 million, totaling $121.6 million for the quarter. The Canadian diary products division positively contributed EBITDA by continued operational efficiencies in addition to the decrease in cost of ingredients and packaging. Additionally, the division benefited from a favorable diary ingredients market conditions as compared to the same quarter last fiscal year. EBITDA of the diary product division Europe remain relative stable while the Argentinean division contributed positively, mainly due to a better product mix as well as a favorable selling prices in the international and domestic market. EBITDA for our USA Diary Product sector increased from $41.3 million in the first quarter of fiscal 2010 to $65 million this quarter. The increased average block market compared to the same period last year create a positive effect on the absorption of our fixed cost. A more favorable dairy ingredients market also increased EBITDA. During the quarter, the average block market per pound of cheese increased steadily, generating a positive effect on the realization of inventories, whereas the opposite occurred in the same quarter of fiscal 2010. However, our relationship between the average block market per pound of cheese and the cost of milk as raw material was less favorable in the quarter in comparison to the same period last fiscal year. The inclusion of the activities of F&A Dairy California acquired on July 20, 2009 in the US. Higher sales volume, an initiative undertaken in the prior and current fiscal years regarding improved operational efficiencies as well as lower ingredient costs offset increase promotional and transportation costs incurred in the quarter in comparison to the same quarter last fiscal year, increasing EBITDA by approximately $17 million, while the appreciation of the Canadian dollar rode rolled approximately $9 million in EBITDA. EBITDA for the Grocery Products sector amounted to $4.2 million, a $0.4 million decrease compared to the same quarter last fiscal year. Consolidated revenue was total $1,436 million, a decrease of 0.7% compared to the $1,446 million for the same quarter of last fiscal year. Strengthening of the Canadian dollar compared to the US dollar and the Argentinean pesos decreased our revenues, which was partially offset by the higher average block market per pound of cheese. a more favorable dairy ingredients market and the addition of the activities of any dairy acquisition. Finally, slightly the lower sales volumes in the CEA Dairy Products sector were partially offset by volume increase in the USA Dairy Products sector. Cash generated by operating activities amounted to $147.3 million, a 24.2% increase compared to the $118.6 million for the same quarter last fiscal year. During this quarter, the company decreased its bank loan by $27.2 million and issued shares for a cash consideration of $5.9 million as part of the stock option plan. The Board of Directors reviewed the dividend policy and increased the quarterly dividend from $0.145 per share to $0.16 per share, representing a 10.2% increase. The quarterly dividend will be payable on September 17 in 2010 to common shareholders off record on September 6. Lino Jr. will now proceed with the presentation of our outlook. Lino Saputo Jr.: Thank you, LP and good afternoon to you all. Our hard work during the first quarter of fiscal 2011 allows us to be optimistic for the upcoming quarters. Even though we've experienced a slight decrease in revenues, we've increased our EBITDA and our net earnings as compared to the same quarter last fiscal year. Not withstanding, we maintain our focus on improving operational efficiencies, supporting our leading brands while pursuing our commitments to sustainable growth. In Canada, we will continue to invest in projects, strengthening our presence in the growing specialty cheese category. On March 30, 2010 we announced plans to relocate our Brampton, Ontario milk and cream production to other facilities. This initiative will be executed throughout the current fiscal year. We will also consolidate logistics in the greater Toronto area within our new distribution center. These measures should also be completed by this coming fall. In Europe, we are coping with a challenging environment in regards to obtaining milk supply, as price is competitive with the selling price of cheese. Our objective remains to work towards increasing volumes or improving manufacturing efficiencies. In Argentina, we continue to seek volume growth in the domestic market and ongoing challenges reside with the increasing cost of milk as raw material in relation to selling prices in the export market. We nonetheless continue to focus on additional improvements in our operating results. In the US, capital expenditures in our Midwestern facilities acquired in fiscal 2009 are close to completion. This should increase our capacity, reduce operational costs, as well as further improve the handling of our diary ingredients within the US platform. Capital expenditures at our California facility acquired in fiscal 2010 as part of the F&A acquisition are also progressing as planned, and should be completed during the following quarters. Finally, in the Bakery division, we will continue to review certain aspects of our operations, such as lower volume SKUs, the standardization of packaging and ingredients, and initiate further plant automation. Additionally, we've expanded our product offering with new product lines geared towards the frozen category. On a separate note, I'd like to inform you Mr. Pierre Leroux, Executive Vice President, Human Resources and Corporate Affairs has advised me he will be retiring as of April 1, 2011. Pierre has been with us for over 20 years and has played a key role in the growth of our company, and more importantly in the transmission of our values and our culture throughout our evolution. There is a succession plan in place and his successor will be determined in the coming months. Our efforts led us to positive results throughout the first quarter of fiscal 2011. Our objective is to build on this momentum and to surpass ourselves for the upcoming quarters. We will strive to evolve through innovation by staying receptive to new technologies. And lastly, we will maintain our proven sound approach to business allowing us stability to continue our pace as a strong, resilient company. On that note, I thank you for your time and we will now proceed to answer your questions.

(Operator Instructions) Our first question comes from the line of Irene Nattel from RBC Capital Management. Please proceed with your question. Irene Nattel- RBC Capital Markets: You continue to make fabulous strides in terms of the productivity of your US operation and yet there is still more to come. Wondering the degree to which we continue, can continue, if underlying prices stay the same and I mean here obviously spreads and whey prices. How much more do you think there is in terms of upside on margin? Lino Saputo Jr.: That's a good question and we ask ourselves that on an ongoing basis, one of the things that is fundamental to our culture and our character is that we try to look for new opportunities to find ways to increase the quality of our products at the same time, lowering our costs. And our US management team on an ongoing basis has come up with new ideas and new initiatives that allow us to further reduce expenses while allowing increasing our level of quality. So, I'm optimistic that this trend can continue going forward Irene. Irene Nattel- RBC Capital Markets: That's fabulous and also I noticed that you said that volumes were actually up a little bit in the US whereas in prior quarters they've been a little bit more challenged. Can you give us some more color around which segments of the market you are seeing at? Lino Saputo Jr.: Food service looks like it's starting to come back to life a little bit albeit the volume growth has been not dramatically improved over previous quarters. One of the optimistic things I'm looking at coming into the next quarter is the back-to-school period which typically is a high volume quarter for us. Irene Nattel- RBC Capital Markets: That's great. And then on the same theme of volume, clearly we've been hearing in Europe and Argentina, and admittedly they are small parts of the business, but it's several quarters now that we've been hearing about the fact that Europe is challenging because of the milk pricing, Argentina want to increase volume. How do you get those going a little bit? Lino Saputo Jr.: Well we've been trying on an ongoing basis over the course of last three quarters or so to acquire more milk in Europe both in Germany and in the UK and in some regions it has been more challenging, not so much because the supply isn't there but the supply isn't there at the prices that we need to have them in order to be able to manufacture products and sell them profitably. And so we choose to maybe produce less volume but maintain our margins. Until such time that changes, that will continue to be our strategy, so a little bit more difficult in Europe than it might in Argentina. Argentina has shown some pretty good growth not only in the industry but also within our milk intake. One of the very positive things that we've seen over the course of the last couple of quarters in Argentina is that the domestic market has really picked up and we are seeing some real nice growth in that volume there.

Our next question comes from the line of Jim Durran from National Bank Financial, Toronto, Ontario. Please proceed with your question. Jim Durran - National Bank Financial: Good afternoon. I just want to go back to the U.S. margins obviously because they are rather spectacular and get a sense from you as to how sustainable you think that rate is over the next 12 months? And maybe you could just sort of paint some color around it as the puts and takes you see over the next 12-month period? Lino Saputo Jr.: If I look into the next couple of quarters, as long as the block price itself does not have a dramatic tail off, I think that the margins are pretty sustainable. At a block, a price of a $1.60 or in that range there, are believed to be able to absorb overhead costs through that block price, is much better than a lower block price. So that has had a positive impact on us. Of course, some of the initiatives that we began through the acquisitions of Land O'Lakes, Alto and F&A are coming to fruition now and have benefited our overall US operation. And of course, if you look at it this year versus last year, year-over-year, there's been a block market appreciation, so we have had a appreciation of our inventories. That being said, I'm quite comfortable with the dollar value generation of EBITDA in the US, and I think that that is sustainable going forward. Jim Durran - National Bank Financial: Okay. I keep looking at the excess cheese inventories in the United States and they're very high, they've been the highest they have been in over two years. And yet, as you were point out, food service demand is not really picking up massively. Retail demand appears to be somewhat weak in contrast and export demand, well it has been strong. It looks like Oceania inventory is going to pick up and so I'd assume the export demand for US export is going to weaken. Why is that the high level of cheese inventories is not affecting the cheese price in any significant way? Lino Saputo Jr.: It's not an exclusive situation that we are in now. I mean historically the US has had inventories up and they have had inventories down. As you all indicated, I've looked at some export numbers from the US and they are greater now than it were in the previous quarters. I think that has something to do with it. If you look at the call numbers that have come in, they are showing some decline in milk production, the headcount in cows. And if I look at the seasonality, the season coming up, which is the back-to-school season, typically is a higher demand season for dairy products. So, I think all of those things combined are helping the US block price stay where it is. Jim Durran - National Bank: Okay. And then last question, just on the dairy situation. Can you just tell us why you are exercising that put option to dairy and what your intentions are with respect to the gain you are going to make on that asset? Lino Saputo Jr.: Well, with respect to dairy, we have 21% ownership of that company and we don't affectively control the day to day operations, although we do have a Board representation. For us it's not a core business and it's not a strategic business so there is no real necessity for us today to be there anymore. What would we do with the funds, well, hopefully we will put it in a pool of cash flow that we have and our first intention is to make other acquisitions in areas of businesses that are core for us. That would be our first use of cash. Jim Durran - National Bank: You led to this, so I will just take it on acquisitions. Can you give me some ideas to what the environment looks like right now and is there any sort of change in what regions would be a priority too? Lino Saputo Jr.: While the simplest ones again I have pointed the US. It's simple because we do have an infrastructure that exists in the US. Our management team is very experienced although they are very young, very experienced in terms of being able to integrate the businesses into their current platform. So that would be almost the simplest type of acquisition that we would be able to look at. Now again, those acquisitions have to be available, and have to be priced right. And so we will continue to be disciplined. As I've mentioned in previous conference calls we normally have two to three to four dossiers on our table that we are looking at any given time, not exclusive to the US, but I would say the majority of them would be within the US diary industry. Other platforms that make sense for us, again, we are looking at Latin America and we are looking at Oceania as possibilities for expansion for us.

Our next question comes from the line of Michael Van Aelst from TD Newcrest in Montreal, Quebec. Please proceed with your question. Michael Van Aelst - TD Newcrest: Hi, good afternoon. On the volumes, can you talk a bit more about Canada, Europe, Argentina, and particularly Canada I guess with respect to how you think you can get volumes moving there if at all? I know it's very difficult in a mature market, but is there any way, is your efforts in the premium or the high end cheese is, specially cheese, is that enough to drive the total volume growth or is that just offsetting declines elsewhere? Lino Saputo Jr.: Well, there aren't a whole lot of declines. If you think about the commodity type products, the white milk and commodity cheeses, not a huge decline but you are right in saying that there isn't a huge growth in those categories of product. And so again we focus on the value-added type of categories like the value-added flavor of milks, the single serve milks, as well as the fine cheese division which we have gained incredible reputation over the course of last couple of years, especially with the World Cheese Award that we won this past year. So, those would be the areas of growth for us. Canada, again as you know, is a very stable market for us and helps us generate some very stable EBITDA, and that probably as good as we think that the Canadian operation is going to get. Well we see the growth coming for us; we'll definitely come from platforms outside of Canada. Michael Van Aelst - TD Newcrest: So if you look at Europe and Argentina and then you talk about, you talk a bit about the challenges in getting more milk in Europe and that you're seeing some upside to the milk availability in Argentina. How soon can we see a return to growth in both Europe and Argentina? And when talk about Europe, I believe the pricing environment is getting a little bit more favorable for the farmers so it seems like there might be an increase in milk supply at some point in the not too distant future. Lino Saputo Jr.: Yes, I think out of those two platforms, Argentina will be the growth story and that milk price in Argentina really is encouraging dairy farmers to produce more milk. That is very attractive for them at this stage; we do have the infrastructure that will allow us to take on more milk. So, of the tow platforms between Argentina and Europe, I would say that Argentina will be the growth platform for us. In Europe, our assets are currently under-utilized, meaning that we are not at full capacity. We are looking at the spot market to pick up milk so that we can produce product within the year with 27 and that is a little bit more challenging. If the market becomes more favorable for dairy farmer that means that the milk price is high. We will buy that milk to the degree that we can process is and the cheeses that we can sell at the prices that we are processing it for. So that, that platform still becomes and still is a challenge for us. Michael Van Aelst - TD Newcrest: Okay. The capacity increases that you are putting in the US should come on stream I guess in the coming months. What is the particular product category that you are going to see increase capacity and is this coming on to supply/demand that you already have at this moment, or is this a business that you will to have try and drum up once the capacity is available. Lino Saputo Jr.: If you recall when our Hinesburg plant went down with the five years ago, we needed to transfer that production over to other facilities and those are the facilities that benefited would be Midwestern like (inaudible). So part of that growth in production capacity will be filled from other plant shifting volume over. Some of that will have to be filled by new business that we would have to go out, and those are the types of things that we are looking at. Again, we can be very aggressive on the market but we choose to not grow organically, if that growth does not drive profitability for us. So we will be extremely strategic about how we fill up those plants. Michael Van Aelst - TD Newcrest: Yes, but when you are shifting the volumes from one plant to another is it just for distribution benefits, production efficiencies or it doesn't sound like there is a volume increase coming along with the capacity increase at least in the short term? Lino Saputo Jr.: And you are right about that and sometimes just to make some volume that we've lost from other facilities that we've closed down. Michael Van Aelst - TD Newcrest: And then finally on the cash flow position, obviously you are generating very good cash flows and modest CapEx requirements over the next little while, do you plan on steeping up and using your normal course issuer bid or is that something that will only come if you don't find acquisition? Louis-Philippe Carrière: It's a mix as we always had. As well I indicated, we increased the dividend, that's the first thing. Secondly, as Lino was mentioning, even in reference to dairy when we were going to cash our investment, is essentially to direct that for acquisition purpose and we have the normal course in place on which we can use it as we want. But certainly and terms of priority, it's in the range that I just mentioned.

Our next question comes from the line of Peter Sklar from BMO Capital Markets in Toronto, Ontario. Please proceed with your question. Peter Sklar - BMO Capital Markets: Good afternoon, first a question for Louis Philippe. I noticed that your depreciation number seems to be bouncing around from quarter-to-quarter and I'm just wondering the $26 million that we saw in the first quarter, is that representative of what we're going to see going forward through the quarters of this year? Louis-Philippe Carrière: I would say partially. Certainly if you compared to last year, there was the exchange that is affecting this quarter, I would say positively compared to last year for about $1.6 million out of the $2.4 million difference. Certainly there is some small decrease in the Bakery from quarter-to-quarter and also some decrease in the US also from last year, if you compare, on which I would see a part of the exchange, the trend that you're seeing in the first quarter should remain for the balance of the year. Peter Sklar - BMO Capital Markets: And Lino just one trend in the US, I was going to if you could comment on. We notice that over the last two, three months industry cheese production in the US is growing at a rate well in excess of the growth in milk supply, and I'm just wondering if you had any commentary as to why the milk is flowing to the cheese and that causes you concern in terms of the cheese price. Lino Saputo Jr.: You got to look at where the cheese itself is growing. The CME block we will take into consideration. The 40 pound blocks that are being produced doesn't mean that all of the cheese are growing or declining in function of the CME block. So when you look at those numbers you got to be careful about what categories of products are being produced and what categories of products are in the short supply. Peter Sklar - BMO Capital Markets: Okay. And I am just wondering if you could comment coming back to Canada, on the Neilson Dairy where you are in terms of the synergies and rationalizations that you anticipate achieving. I suspect you are not all the way there. Lino Saputo Jr.: You are right about that. The most of the initiative that the plant level had been executed so from a manufacturing standpoint I think we are probably as efficient as I believe we will be for this year. Where the greater opportunities lie for us is in the consolidation of our distribution network in the GTA. We have through the acquisition inherited two or three distribution centers in addition to the current one that we had through our sales branch. And we are consolidating four locations into one which will be executed in the fall of this year. So I think that from manufacturing standpoint, Neilson acquisitions has given us the efficiency that we expected, second step of those efficiencies will be on logistics. Peter Sklar - BMO Capital Markets: So the Toronto area where has rationalization you have announced, is that for cheese distribution or fluid milk? Lino Saputo Jr.: That would be for both. We are consolidating cheese and fluid milk operations in to one mega center. Peter Sklar - BMO Capital Markets: And where is that facility? Lino Saputo Jr.: That would be in the city of Vaughn.

Thank you. (Operator Instructions) Our next question comes from the line of Mark Petrie from CIBC World Markets in Toronto, Ontario. Please proceed with your question. Mark Petrie - CIBC: Whey appears to be pretty stable around the $0.35 mark, do you see that level as sustainable and what are you seeing in terms of demand changes or substitution either out of or backed away? Lino Saputo Jr.: I think the Whey numbers are where they should be. I don't think they are too low for purchasers and I don't think they are too high for buyers. So I think that the $0.35 to $0.40 range is the real range for Whey powder. And I see that holding pretty tight over the course of this fiscal year. The WPC markets remain strong and as there are more demand for diary proteins as [spawned] by either fluid products or powdered products, I think that number will remain strong. Where we are seeing some push backs from demand would be more on the lacto side, which is the smaller valued product that we would manufacture. So I think on the byproduct side things could remain strong for the balance of this fiscal year. Mark Petrie - CIBC: I know you touched on this earlier, but wondering if you could just come back a bit to the dynamics around cheese pricing, specifically in the food service channel. And how those dynamics have changed, if at all sort of over the last two or three years? And is it just a matter of pricing off-the-block cheese price, or are there other factors that we should be considering? I know in the quarter you talked about having higher promotional costs. Lino Saputo Jr.: In the US specifically and I'm sure that's what you are referring to, everything is priced off of the block outside of retail. So any cheese item that we would sell, whether it would be a specialty fine cheese or it would be a commodity cheese will be priced off the block. So that is the dynamic, what we are finding it, the price really is not the issue at this stage with respect to traffic at the food service level that has really to do with the economic conditions and the comfort level of consumers eating out versus eating at home. Mark Petrie - CIBC: And then in the retail channel I wonder if u could just sort of talk a bit about that a bit more? Lino Saputo Jr.: Our retailers, we have got very strong brands as a retail level, I have mentioned this before, on the string cheese category and in the blue cheese category and then some other specialty products. For instance, we have a Lacy Swiss called Lorian and we have a set of cheese as well which are doing extremely well for us. And the more the traffic there is at the grocery store level, the more we sell to the retail channel and that's one of the beautiful things about our platform is that we are able to sell to three different and very respective channels our food service ingredient and retail and irrespective of where the traffic is we have got products in those categories. Mark Petrie - CIBC: So the higher promotional costs that you said is just a matter of sort of playing in some of the price competitiveness that's going on in US food retail then? Lino Saputo Jr.: Yes, some of that is planned because we have chosen already a portion of our promotions for instance again back to school. And then some of it had to do with the act defending our position, we have got the number one string cheese category in the US, we would like to hold that position so sometimes we have got to be competitive with our promotions.

Thank you, Mr. Saputo. I am showing no further questions from the phone line at this time. Lino Saputo Jr.: All right, thank you very much.

Thank you everyone for taking part in this conference call. We hope you will join us for the presentation of our fiscal 2010, second quarter results in November. Thanks and have a nice day.

Thank you ladies and gentlemen. That does conclude the conference call for today. We thank you all for your participation and we ask that you please disconnect your line. Thank you very much and have a good day.