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July 28, 2004

Silhouette Brands to Dreyer's...Lifeway buys Ilya's Farms...Schreiber buys Level Valley...Parmalat bankers embroiled...Milk Money Report...Dairy Financials...U.S. Foodservice indictments...Domino's Pizza rises... Odds-and-Ends...Stock Market Ticker...More news at www.idfa.org.

DAIRY BUSINESS BRIEFS

Frozen novelty company Silhouette Brands Inc. was sold to Oakland, Calif.-based Dreyer's Grand Ice Cream Holdings Inc. for $70 million in a deal completed Monday. New York City-based Silhouette announced in February that it sought a buyer; the company markets lowfat and low-carb ice cream snacks under the Skinny Cow and Skinny Carb brands. (Company report, Associated Press)

Green Bay, Wis.-based Schreiber Foods has acquired Level Valley Creamery, West Bend, Wis. Terms of the deal were not disclosed, but processing facilities in Nashville, Tenn., and West Bend are included. Level Valley is a private label producer of cream cheese, sweetened condensed milk, butter, anhydrous milkfat, and milk powders. The executive team at Level Valley, including Al Costigan, president and CEO, will remain on board. (Company report)

Philadelphia-area gourmet cream cheese company Ilya's Farms is the new unit of Morton Grove, Ill.-based Lifeway Foods Inc. in a $575,600 cash deal finalized this week. The deal includes Ilya's Farms' recipes and brand name, $64,000 in tangible assets, and the two-year lease of the company's 5,000-sq.-ft. production facility. Lifeway plans an immediate extension of Ilya's Farms' gourmet cream cheeses in the Chicago market under the Lifeway brand. (Company report)

The true state of finances at Italian dairy conglomerate Parmalat Finanziaria was known by some of its main banks for more than a decade, according to a new report by Milan prosecutors. About $17.2 billion in bond sales, private placements and loans were made to Parmalat by the banks; documentation in the report included e-mails between Parmalat officials and various bankers. (The New York Times)...Wallington, N.J.-based Farmland Dairies LLC plans to sell its 80 percent ownership of Milk Products of Alabama LLC to National Dairy Holdings LP for $19.7 million subject to bankruptcy court approval, and higher and better bids in the Parmalat USA Chapter 11 bankruptcy case, reports Chadbourne & Parke, which represents the Creditors Committee in the bankruptcy case. A Sept. 16 hearing for sale approval is scheduled.

Milk Money: The U.S. Department of Agriculture will cut the minimum price processors pay for milk by the equivalent of 29 cents-per-gallon in August. The drop, announced Friday, comes after a 20 cent-per-gallon cut in July, which followed record milk prices this spring. (Chattanooga Times Free Press, Tennessee)...Meanwhile, the New York State "threshold" price of fluid milk will decrease Aug. 1 to $3.31 per gallon from $3.89 per gallon. In June, the threshold price hit a record $4.43 per gallon. (Newsday, New York)

DAIRY FINANCIALS

Land O'Lakes reports sales of $2 billion for its second quarter of 2004, up from $1.4 billion in sales for the same quarter a year ago. Net earnings for the Arden Hills, Minn.-based cooperative totaled $16.7 million, down from $44.6 million in the comparable quarter due to various one-time factors. The LOL Dairy Foods unit chalked up second quarter sales of $1.0 billion with an $18.7 million pre-tax loss for the quarter, compared to $0.7 billion in sales and a $0.1 million pre-tax loss for the second quarter of 2003. In mid- to late-August, the cooperative plans to restate earnings of $26 million reported over the last seven years. As previously reported in D-Brief, earnings reports were overstated as a result of milk purchase estimate accounting errors at LOL's Carlisle, Pa., production facility. (Associated Press, company report)

Toronto-based frozen dessert company CoolBrands International Inc. earnings grew 113.5 percent to US$14.3 million (CAN$19.1 million) in its third fiscal quarter ending May 31 vs. earnings of US$6.8 million (CAN$9 million) in the same quarter last year. Meanwhile, CoolBrands' sales jumped 128.5 percent to US$140.5 million (CAN$187.2 million) in the third fiscal quarter of 2004 from US$61.5 million (CAN$81.9 million) in the third fiscal quarter of 2003. (The Toronto Star)

CUSTOMER CLIPS

Four former execs at U.S. Foodservice Inc. were indicted Tuesday for inflating earnings by more than $800 million. The Securities and Exchange Commission additionally filed a civil complaint against the group for overstating $700 million of income and for pressuring suppliers of the Maryland unit of Royal Ahold to conceal fraud. Michael Resnick (former CFO) and Mark Kaiser (former marketing manager), were charged with fraud, conspiracy and misleading regulators with financial statements that inflated the income of the company. Both Timothy J. Lee (former vice president of purchasing) and William F. Carter (former vice president) pleaded guilty to similar charges. Lee and a former U.S. Foodservice supplier, Peter O. Marion, were additionally charged with insider trading from late 1999 to early 2000 in connection with the sale of the company to Ahold. (The Wall Street Journal, The Washington Post, The New York Times)

Second quarter income from operations increased for pizza purveyor Domino's Pizza Inc., Ann Arbor, Mich., despite an 81 percent jump in cheese costs. Operations sales increased $0.2 million from the second quarter of 2003 to $39.3 million in the second quarter of 2004. Domestic store units' same store retail sales increased 2.1 percent, while global retail sales increased 7.1 percent. Total revenues - including retail sales at corporate units, franchise unit royalties and distribution unit sales (boosted by cheese prices) - increased 9.8 percent from $295.2 million in the second quarter of 2003 to $324.2 in the second quarter of 2004. As of the end of the quarter, 7,530 Domino's Pizza stores were in operation worldwide, a net increase of 239 stores compared to the second quarter of 2003 and a net increase of 103 stores since the end of 2003. (Associated Press, company report)

IDFA NEWS

Nominations Now Being Accepted for the Innovative Farmer of the Year
Nominations are now being accepted for the title of the Innovative Dairy Farmer of the Year, an annual award co-sponsored by the International Dairy Foods Association (IDFA) and Dairy Today magazine. The award is given to an active U.S. dairy farm that, through their adoption of management practices and production technologies, has improved economic efficiency and milk quality, and has demonstrated innovative approaches to milk marketing. Nominees will be judged on current cost-effective methods and their positioning for future growth and success. The winner of this year's award will be honored at the 2005 Dairy Forum, January 9-12, at the Disney Yacht & Beach Club in Orlando, Fla. The deadline for nominations is Friday, September 24, 2004.
     There is no fee to submit a nomination. For the complete award criteria and a nomination form, click here. (.pdf) Questions can be directed to Tanika Manning at IDFA, 202/220-3557, tmanning@idfa.org.

ODDS-AND-ENDS

In honor of Tillamook County Creamery Association's 95th anniversary, July 30 will be "Tillamook Cheese Day" in the state of Oregon as decreed by Governor Ted Kulongoski. A community celebration will be hosted in downtown Portland by the Tillamook, Ore.-based cheese concern. (Company report)...Yogurt is on the Whole Foods Market short list of school lunch box meal options in the Austin, Texas-based natural food retail chain's Cool School Fuel program. The campaign is designed to add various healthful foods to the school day. (Company report)...A portion of a smoked marijuana cigarette was reportedly discovered in a McDonald's Fruit 'n Yogurt Parfait last week by a 16-year-old dining at a San Benito, Texas, unit of the chain. The teen and her family stopped at the McDonald's on their way home from a weeklong vacation; the teen waited in line to return the product and declined a replacement. Police took the used marijuana cigarette as evidence; the restaurant is conducting an internal investigation. (Associated Press)

STOCK MARKET TICKER

As of 7/27/04, market close.

Company/Symbol		Last Trade		Change over Previous Close		Change over Last Week's D-brief
ConAgra Foods/CAG Dean Foods/DF Dreyer's/DRYR General Mills/GIS Groupe Danone/DA Hershey Foods/HSY Ingles Markets/IMKTA Kraft Foods/KFT Kroger/KR Ruddick Corp./RDK Safeway/SWY Saputo/SAP.TO SuperValu/SVU Unilever PLC/UL Weis Markets/WMK Wimm Bill Dann/WBD Winn-Dixie/WIN		26.44 36.45 79.28 45.50 16.50 45.75 10.85 30.60 15.95 20.62 21.20 31.75 29.09 37.34 32.31 13.23 06.40		-0.21 +0.19 +0.01 -0.30 +0.06 +0.65 -0.09 +0.08 -0.06 +0.45 -0.67 +0.10 -0.18 +0.26 -0.02 -0.02 +0.05		-0.87 -0.77 -0.12 -1.44 -0.58 -0.72 -0.14 -1.20 -0.95 -0.78 -1.64 -0.35 +0.23 -0.54 -0.90 -0.83 -0.50
Source: Yahoo! Finance

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ABOUT D-BRIEF

D-brief is written by Dairy Field magazine, a Stagnito Communications Inc. publication, www.dairyfield.com. It is provided for the benefit of the industry by the International Dairy Foods Association (IDFA), www.idfa.org.

D-brief is sponsored by Polytainers, Curwood and TIC Gums. Polytainers is a leader in the design, production and printing of thinwall rigid plastic containers for the dairy and food industries. Learn more about this sponsor at www.polytainersinc.com. Curwood develops and manufactures high-performance, high-barrier, polymer-based packaging materials. For more information about Curwood products, visit www.curwood.com. TIC Gums is America's oldest supplier of hydrocolloids to food, pharmaceutical, cosmetic and industrial companies worldwide. To learn more about this sponsor, visit www.ticgums.com.

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