Milling & Baking News - August 30, 2005 - (Page 1)

Theinewsweeklyiofigrain-basedifoods I.B.C. ratifies long-term agreements with two New York City unions KANSAS CITY - Interstate Bakeries Corp. last week said it has reached agreement with two of its local collective bargaining units affiliated with the International Brotherhood of Teamsters (I.B.T.) to modify and extend the existing collective bargaining agreements that govern their employment with I.B.C. through July 31, 2010. These agreements have been ratified by the members of the two local unions. Documents memorializing these agreements either have been or are expected to be executed in the near future and are subject to bankruptcy court approval. Members of Bakery Drivers Union Local 550 and Bakery Drivers and Salesmen Local 701 (collectively approximately 500 employees) are employed in the New York City metropolitan area. "Negotiation and ratification of these ex- BREAD industry perspective tensions are important steps in our restructuring efforts," said Tony Alvarez II, chief executive officer of I.B.C. and co-founder and co-chief executive of Alvarez & Marsal, the global corporate advisory and turnaround management services firm. "This is just the beginning of a very long process. With approximately 500 contracts subject to negotiation, there is significant uncertainty ahead." He noted that adding a long-term, stable relationship with its union work force along the lines of those reached with Locals 550 and 701 is a key component of I.B.C.'s restructuring efforts. Mr. Alvarez said I.B.C. is attempting to negotiate long-term extensions with the remaining I.B.T. local bargaining units within the Northeast Profit Center (P.C.). Should the efforts to extend collective Continued on Page 12 BREAD industry perspective Baking companies retooling businesses, product lines Cheered by a range of successful initiatives, executives of several commercial baking companies are upbeat toward prospects for the bread industry. Optimism has been spurred by improving profitability, better demand and new product initiatives that have garnered extraordinary excitement within the industry and beyond. Still, "smooth sailing" would hardly be an apt descriptor for the baking industry in 2005. Supermarket sales of bread in the 52 weeks ended July 17 totaled 3,278,558,000 units, down 3.1% from the same period in 2003-04, according to data from Information Resources, Inc. While the results do not includes sales in Wal-Mart or other supercenters and mass merchandisers, the data indicate that the overall bread market has not been growing and may be contracting further. Volume trends were particularly poor for the nation's three Continued on Page 27 inside AUGUST 30, 2005 / LATE NEWS LONDON - Diageo P.L.C., the largest shareholder in General Mills, Inc., has agreed to sell approximately $1.3 billion of the Minneapolis-based company's shares to Lehman Brothers Holdings Inc. Under the agreement, Diageo has the option to sell all of its remaining 25 million shares of common stock of General Mills to Lehman Brothers for $51.56 per share from Nov. 4 to Nov. 10. The move follows Diageo's decision last year to sell 49.9 million General Mills' shares and falls in line with the London-based company's larger Continued on Page 10 Diageo to sell General Mills shares U.S. flour output down in second quarter and first half of 2005 WASHINGTON - Flour production by U.S. mills in the second quarter of 2005 decreased 0.3% from the same 2004 quarter, according to the Bureau of the Census of the U.S. Department of Commerce. Output in the quarter totaled 96,439,000 cwts, down 334,000 from 96,773,000 cwts in April-June 2004. The output in April-June was the smallest for the second quarter since 2002, when it was 96,276,000. Production of flour by U.S. mills in the first six months of 2005 decreased 0.6% from the same period of 2004. The North American Millers' Association provides funding to the Census Bureau in support of the compilation Continued on Page 42 THIS WEEK Equity group acquiring Awrey Bakeries 14 Ingredient Abenante opts for early retirement 18 Strong sales and earnings at Flowers Week 25 47

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Milling & Baking News - August 30, 2005