Flowers Foods Suffers Damage From Hurricane Katrina

Thomasville, GA - Flowers Foods officials are assessing the damage caused by Hurricane Katrina. The company's New Orleans bakery remains closed, but bakeries in Baton Rouge and Lafayette are in full operation, as are all other Flowers bakeries. With the loss of production capacity in New Orleans, the company is temporarily re-opening a closed bakery in Houston to assist in serving the Louisiana, Mississippi, and southwest Alabama market. The company serves the central Gulf Coast region daily with fresh breads and rolls through a network of 24 warehouses, 10 of which are unable to operate due to the storm.

"Our heartfelt concern goes out to all individuals who have suffered losses, some of whom are our employees, distributors, and associates," said George E. Deese, president and chief executive officer of Flowers Foods. "With much of New Orleans under water, authorities are allowing only emergency services into the city. Some of our service area along the central Gulf Coast suffered severe damage from the storm and is inaccessible at present. We don't know when we will be able to fully assess the damage to our business through the region or the overall financial impact on Flowers Foods' quarterly or annual results."

The company has insurance coverage for physical property as well as for business interruption. However, at present, the company cannot estimate the scope of damage or the timing of recovering the costs of the property damage and business interruption caused by the storm.

Flowers Baking Company of New Orleans operated one bread line in a building that dates from 1969. Flowers Foods is uncertain of when the bakery and warehouses in the region will re-open because of anticipated water damage and a long delay before utility services are restored. In addition to the damaged warehouses, some independent distributors of the company's product have business interruptions, at least for the immediate future, due to the storm damage and the mandatory evacuation of New Orleans.

"We will continue to serve the market, but we anticipate the cost of doing so will be extremely high. Although much of the marketplace currently is displaced, we are providing service to all areas that are accessible, with product being delivered from our Baton Rouge, Lafayette, and other bakeries," Deese continued.

Deese further explained, "Our reciprocal baking program, composed of Flowers bakeries within the region, already produced much of the products sold in New Orleans and the surrounding area. There will be costs associated with re-opening the closed bakery in Houston as well as extra shipping and handling costs to transport the product to the Louisiana market. However, this temporary solution will allow us to continue service to the territories in Louisiana, Mississippi, and southwest Alabama to which we can gain access."

The company's Miami bakery suffered no damage when Hurricane Katrina crossed South Florida late last week and there was no disruption to the company's ability to serve the market. Other Flowers bakeries in the storm's path also escaped damage and continue in full operation.

SOURCE: Flowers Foods/i>