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Quaker Restructuring May Cost Jobs

September 20, 1999

CHICAGO (AP) _ The Quaker Oats Co. announced a restructuring today that could result in the loss of as much as 10 percent of its work force, or 1,200 jobs, over the next three years.

The maker of oatmeal and Gatorade said the aim is to lower operating costs by removing inefficient assets and reconfiguring the company’s food and beverage warehouse and delivery systems, among other moves.

It envisions savings from the restructuring of $40 million to $45 million in 2001, rising to $60 million to $70 million starting in 2002.

``In the last few years, Quaker has become a more efficient manufacturer as evidenced by steady increases in its gross profit and operating margins,″ said Robert S. Morrison, chairman, president and chief executive. ``While we have improved our supply chain capabilities and costs, we are convinced that we can accomplish even more.″

Quaker Oats stock was little changed on the news in early trading today, falling 12.5 cents to $63.125 a share on the New York Stock Exchange.

Analysts said the news was no big surprise in an industry scrambling to be more cost-efficient. Morrison has consistently stated the company’s desire to cut costs.

``Every big food company has gone through this process in the past couple of years, so why not jump on board?″ said Patrick Schumann of Edward Jones in St. Louis.

``The food industry has been extremely weak in the last couple of years and they’re taking steps to be more efficient,″ he said. ``Unfortunately that usually results in fewer jobs.″

As part of the restructuring, Quaker said its food and Gatorade warehousing would be integrated, assets in the company’s U.S. and Canadian food operations may be reduced by close to 10 percent, or about $50 million, and U.S. beverage manufacturing would be expanded.

The company expects to take a series of restructuring and other charges over the next three years totaling between $225 million and $250 million before taxes.

Quaker Oats, headquartered in Chicago, is an international marketer of foods and beverages whose major brands include Gatorade, Quaker cereals, Rice-A-Roni and Aunt Jemima syrup.

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