Baking & Snack - March 2005 - 12

NEWSFRONT
Krispy Kreme reduces workforce
Krispy Kreme Doughnuts, Inc., Winston-Salem, NC, reduced the
number of employees in its corporate, mix plant, equipment manufacturing and distribution facilities by approximately 25%. The
actions are expected to result in annual pre-tax savings of approximately
$7.4 million and a cash restructuring
charge of approximately $600,000 in
the first fiscal quarter, the company said.
The company also recently divested a
corporate airplane that was subject to an
operating lease. This action should result in annual pre-tax savings
of approximately $3 million but will involve a cash charge of approximately $300,000 in the first fiscal quarter related to the divestiture, company officials said.
As previously disclosed, the lenders under company's credit
facility agreed to defer until March 25 the date on which default
would occur because of the company's failure to deliver financial
statements to the lenders for the quarter ended Oct. 31, 2004. Also,
as previously disclosed, the company is currently unable to borrow

funds under the credit facility, Krispy Kreme officials said.
Krispy Kreme presently is working on a business plan and intends
to conduct discussions with its lending banks regarding amendments
to its credit facility, the officials said.
The company's cash from operations
continues to be impacted adversely by
previously disclosed unfavorable sales
trends and by the substantial costs and
expenses associated with ongoing litigation, regulatory and restructuring matters.
In light of the foregoing, Krispy Kreme said it would need to
obtain, by the end of the waiver period, additional credit to fund
its operations and required capital expenditures, the officials said.
"There can be no assurance that the company will be able to reach
any agreement with the banks or that funding will be available when
and in the amounts needed," the company said in a statement.
"Krispy Kreme is a great brand, and we are working very hard
to help the company rediscover its potential," said Steve Panagos,
Krispy Kreme's president and c.e.o.

Tortilla chips that actually help
lower your cholesterol
Researchers at Brandeis University,
Waltham, MA, have discovered a method
to produce tortilla chips and other fried
snacks that can actually lower
cholesterol, yet it does not affect the taste of the food.
"This could have a
major impact on public
health," said K.C. Hayes,
a biology professor at the
university who has studied the effect of
dietary fats on cholesterol for 35 years. The
research team found that soybean-derived
phytosterols, which are natural sterols that
occur in plants, helped block cholesterol
formation in the body. The phytosterols
lowered LDL, or "bad" cholesterol, when
added to cooking oils used to prepare

snack chips. In a clinical study, 10 subjects
achieved a 15% decrease in LDL and a 10%
decline in total cholesterol after eating 1 oz
servings of phytosterolenriched tortilla chips each
day over four weeks. "If you
have a really high cholesterol,
LDL would likely decline even
more," Mr. Hayes said.
Previously, researchers had failed
to develop a method to add phytosterols to
frying oil, but the research team discovered
that fat-borne phytosterols, after adequate
heating and then cooling, recrystallize in a
form that effectively blocks cholesterol absorption. The university filed patent applications to protect commercial applications
of the research.

Derst Baking wins local award
Derst Baking Co., Savannah, GA, accepted
the Buy Local Business of the Year award
from Buy Local Savannah. The award
honors a member business that experiences
company growth and demonstrates outstanding service in the organization.
Derst Baking exceeded the minimum

14 / BAKING & SNACK / March 2005

requirements. Within the last two years,
the company upgraded a large portion of
its baking equipment to increase quality,
diversity and quantity of its products. The
company distributes nearly 400 different
products to outside markets in Georgia,
South Carolina and Florida.

Parmalat US bakery
unit is sold
Parmalat Bakery & Dairy Inc., Toronto,
ON, announced an agreement in principle
to sell its North American Bakery Group,
which includes the Archway brands,
Mother's brands, regional brands and the
US and Canadian private label cookie businesses, to the private equity firm Catterton
Partners
and
its
operating
partner Insight
Holdings. The
transaction
closed at the
end of January.
"Under this agreement in principle,
the bakery name will eventually change
to the Archway-Mother's Cookie Co.
with Insight Holdings leveraging their
strong industry expertise to provide
the bakery management team with
marketing and operational strategies
targeted at building sales and long-term
profit," said John Stephens, president,
Parmalat Bakery.
Other companies Insight Holdings has
run include Farley's & Sathers Candy Co.,
Famous Amos Cookies, Terra Chips and La
Victoria Salsa.

Baking & Snack - March 2005

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