"We believe fiscal 2007 will be a transitional year for the company during which the operational, financial and marketing initiatives we have implemented during our restructuring will begin to impact our results," said Tony Alvarez II, IBC's interim chief executive officer and co-founder and co-chief executive of Alvarez & Marsal, the turnaround firm hired to guide IBC's emergence from bankruptcy.
Moving forward, the company will start focusing its efforts on finding a permanent chief executive officer to take over for Alvarez. Alvarez was hired in September 2004 as interim CEO to lead the company through bankruptcy, and he will remain CEO throughout the search process. It is expected that he will continue to be available to the company in an advisory capacity when a new CEO is named. IBC is reviewing lists of candidates submitted by the Official Committee of Equity Security Holders and Brencourt Advisors LLC, an IBC stockholder. As of press time, the company is reviewing eight candidates for the job.
Since filing for bankruptcy, the company has restructured its operations, focusing on four areas: profit centers, disposing non-core assets, labor agreements, and product innovation and marketing.
IBC has completed its review of 10 profit centers, which resulted in the closure of nine bakeries and about 200 distribution centers. The company also reduced its routes by about 30% to 6,400 and reduced its workforce by 7,000 positions. In addition to bakeries, routes and people, the company disposed of certain non-core assets, resulting in aggregate net proceeds of roughly $93 million.
Perhaps the most difficult, and most important, aspect of the company's restructuring is negotiating long-term extensions with its 420 collective bargaining agreements (CBAs) with union-represented employees. To date, the company has ratified or reached agreements with about 200 CBAs. The company is trying to negotiate similar extensions with the remaining CBAs.
Most important to the company's future, IBC returned as an industry leader in innovation and marketing, launching several new products in the last year. "During this fiscal year, we intend to further address declining sales through existing and additional marketing initiatives, complete negotiations with our remaining union-represented employees, and address the continued cost pressures through price increases," Alvarez said.
For the five weeks ending June 3, the company showed promising results, with a net income of $5.83 million. However, according to statistics from Information Resources Inc., the company's fresh bread brands reported an 11.9% decrease in dollar sales for the 52-week period ending April 23. Unit sales fared just as poorly, decreasing 14.3% for the period.
Meanwhile, IBC received a boon from an unexpected source. "Talladega Nights: The Ballad of Ricky Bobby" provided nearly $4.3 million of free exposure value, said research conducted by Joyce Julius & Associates Inc., a company that measures sponsorship impacts and promotions in the media.
The movie, a NASCAR satire, opened at No. 1 at the box office and stars Will Ferrell. Ferrell's racecar is sponsored by Wonder(r) Bread.
Interstate Bakeries Corp., Kansas City, Mo., did not pay for the placement of its Wonder(r) brand. However, IBC did not preview the script, which was considered a risky move at the time because the company is in bankruptcy protection, analysts say.
Joyce Julius & Associates said the Wonder(r) logo appears clear and in focus during 11 minutes, 32 seconds of the film. Twice two actors also mention the brand, also.
Joyce Julius & Associates calculated the exposure value based on the estimated audience who viewed the film, along with screen time and mentions of the Wonder(r) brand, compared to the cost of reaching the number of people through traditional advertising.
Due to the film's success, IBC has displayed Ferrell in full uniform on the opening page of its Wonder(r) website. IBC is offering site visitors a chance to win prizes, such as a trip for four to a NASCAR race, in its Ready, Set, Talladega! Sweepstakes.