The Earthgrains Company (NYSE: EGR) announced today that it has reached tentative agreement for open contracts with the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union.

Ratification of the agreement would end a strike that began Aug. 26 at the company's Fort Payne, Ala., bakery and impacted 26 other plants. Picket lines at all Earthgrains bakeries will be suspended immediately after ratification by the Fort Payne employees who are scheduled to vote Friday afternoon.

"We're very pleased that we have reached an agreement to get our employees back to work," Earthgrains Chairman and CEO Barry H. Beracha said. "This agreement will benefit employees and meets Earthgrains' objectives to remain competitive in the marketplace. It's time to put our team back together to focus on serving customers, satisfying consumers, and further improving the best baking company in the business."

The three-year contract proposal includes an average annual wage-and-benefit increase of 3.9 percent, including an added paid holiday and increased pension.

The Fort Payne contract will serve as the Southeast region pattern agreement and will be used to negotiate open contracts for bakeries in Atlanta and Memphis, Chattanooga, and Nashville, Tenn. A separate contract agreement was reached for the Mobile, Ala., bakery, which will also be voted on Friday afternoon.

Earthgrains will use existing pattern agreements to negotiate contracts in Louisville and Owensboro, Ky.; Chicago; Des Moines, Iowa; and Wichita, Kan.

While negotiations are under way in these locations, all picket lines will be removed after the ratification of the Southeast region pattern by the Fort Payne employees.

"The wage-and-benefit package that is being offered to the Fort Payne employees is in line with other recent settlements in the food industry," said John W. Iselin, Jr., Earthgrains' president of Worldwide Bakery Products. "We focused on local employee issues during negotiations. One issue that we did not feel was appropriate to grant was the International Union's demands that the company aid the union in organizing the company's 10 nonunion bakeries. We believe that it is strictly up to the employees to decide whether they want to be represented in collective bargaining. We respect the rights of our employees to choose what is in their best interests, and we will continue to provide them with balanced information so that they can make an informed decision."

Earthgrains continued to serve all markets during the strike and continued to operate 24 of the 27 bakeries.

"Our goal was to maintain our relationships with retail and food service customers while negotiating appropriate contract issues at the bargaining table," Iselin said. "With ratification of the agreement, we will quickly restore full service levels to customers and consumers. Our ability to operate our business during this work stoppage will play a critical role in returning to normal operations and in proceeding with our improvement plans as scheduled, including the integration of Metz Baking Co."

Strike Background

The work stoppage included nine primary strikes, 17 sympathy picket lines, and one secondary strike. Employees forfeited more than $6 million in wages, including more than $1.6 million in Fort Payne and more than $1 million in California where sympathy pickets lines were initiated at four bakeries.

Primary strikes were conducted at Fort Payne and Mobile, Ala.; Memphis, Chattanooga, and Nashville, Tenn.; Atlanta; Louisville, Ky.; Chicago; and Des Moines, Iowa.

Sympathy picket lines were established at bakeries in Meridian, Miss.; Owensboro, Ky.; Dallas and Paris, Texas; Oakland, Stockton, Sacramento and Fresno, Calif.; Milwaukee; Oklahoma City; Denver and Grand Junction, Colo.; Wichita, Kan.; Dubuque, Iowa; Rockford, Ill.; Springfield, Mo.; and La Crosse, Wisc.

A secondary strike was conducted at Earthgrains' refrigerated-dough plant in Forest Park, Ga., which operates as part of a separate division and has a current contract.

About Earthgrains

Earthgrains is the second-largest packaged bread and baked goods producer in the United States with 64 bakeries in the South, Southeast, Midwest, Upper Midwest, Southwest and West. The company also operates two plants that make canned refrigerated dough, toaster pastries and other products.

More information on the company may be found on Earthgrains' corporate web site at www.earthgrains.com.