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Restructuring at Coca-Cola Enterprises Could Mean Layoffs in Atlanta Area

July 29, 2005

Jul. 29–Coca-Cola Enterprises is restructuring its North American division, which could mean layoffs of up to 1 percent of its 60,000 employees in the region.

Atlanta-based CCE, the world’s largest soft drink bottler, also announced Tuesday that second-quarter profits were up 21 percent, excluding one-time items, thanks in part to cost controls.

At a time when it is difficult to grow soft drink sales in North America and CCE’s European markets, the company is looking for ways to increase efficiency. The streamlined structure means there will be four layers of management, instead of five.

The structure in North America is designed to make the company “flatter and much more responsive to our customers, both nationally and locally,” said company Chairman Lowry Kline during a conference call with analysts.

CCE, which manufactures and distributes Coca-Cola products, reported $333 million in profits for the quarter, or 70 cents per share. Results included one-time favorable items, including a legal settlement and benefits from tax rule changes. Excluding those items, the company had profits of 58 cents a share, still 8 cents above Wall Street expectations and 10 cents above last year’s second quarter.

“The improved expense controls are a significant positive development for the company,” said Robert van Brugge, an analyst at Sanford Bernstein.

Revenue was $5.1 billion for the quarter, up 6 percent from the same quarter last year.

Growth in volume, or the number of cases sold, was 2 percent — 1.5 percent in North America and 3 percent in Europe.

CCE’s stock rose 2.8 percent Thursday, closing at $23.60.

Despite the positive results, the company only slightly increased its outlook for the year, saying it expects profits per share in the mid $1.30s, up from previous estimates of the low-to-mid $1.30s.

Bonnie Herzog, an analyst at Smith Barney, was pleased.

“We stand by our thesis that this company will outperform expectations as we continue to move through the crucial summer selling season,” she wrote in a report.

CCE also announced a handful of executive changes, some related to the restructuring.

John Parker, 54, becomes senior vice president for strategic initiatives in North America. Parker previously was vice president and general manager of the west central region. There he headed up a pilot program that is now the basis for the North America restructuring.

Alex Jackson, 45, becomes vice president of quality. Previously, he was vice president of operations in Canada.

Daniel Markle, 48, becomes vice president of U.S. field sales operations. He previously was vice president and general manager of the east central region.

Cyril Turner, 43, becomes vice president of capital planning and value management.

Previously, he was vice president and general manager of Atlanta Coca-Cola Bottling Co.

Brian Wynne, 40, becomes vice president of human resources in North America. Previously, he was vice president and general manager of the New York division.

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