Changes at Interstate

September 12/Business Wire/Kansas City, Mo. -- In a move designed to focus the company more clearly on its customers, drive sustainable results, and lower its cost structure, Interstate Bakeries Corporation (IBC) today announced that, effective immediately, it is realigning its organization in a new cross-functional, matrix structure. Eight business units have been created replacing the 10 profit centers around which the company had been organized since 2004.

"The old IBC organization served us well at one time. But, it also resulted in duplicate work among organizations, too many layers for quick and effective decision-making and unnecessary complexity," said Craig Jung, chief executive officer. "Our new matrix organization will focus IBC more clearly on our customers and on improving product quality, enhancing service-to-sales, and lowering costs. It will result in improved communication, better planning, and an increased focus on results. All of which will help IBC win in the market place."

At the same time, the company announced that it has collapsed its sales management structure, eliminating two layers of sales management and approximately 215 sales management positions, or approximately 5% of its non-union workforce.

The company said that reshaping the organization and streamlining its sales management structure was a key element of its new business plan. "Decisions like this are extremely difficult because of their impact on employees and their families. At the same time, our primary consideration must be the company's long-term survival and financial health.

"The new organization will look vastly different than the previous structure and operate more effectively," Jung said. "Not only will the new organization be built around strong cross-functional business teams reporting to a Business Unit General Manager, but Business Unit Directors of Operations, Finance, and Human Resources will report to a functional executive at headquarters, as well. This matrix creates a shared focus between headquarters and the field on product quality, service-to-sales, our customers, and results."

The company's preliminary estimate of charges to be incurred in connection with the organizational realignment is approximately $4.7 million, including approximately $4.2 million of employee-related cash charges and $.5 million of other cash charges. In addition, the Company intends to spend approximately $.9 million for accrued expenses to effect the realignment.

From the September 24, 2007, Prepared Foods e-Flash