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MAR 3 1 2006t

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UNITED STATES DISTRICT COURTPutyC'erk

NORTHERN DISTRICT OF GEORGIAATLANTA DIVISION

BELLUR RAMANATH As Custodianfor MADHU RAMANATH - UTMATX, On Behalf of Plaintiff and AllOthers Similarly Situated,

Plaintiff,

vs.

COCA-COLA ENTERPRISES, INC .,LOWRY F. KLINE, JOHN R. ALM,PATRICK J . MANNELLY RICK L .ENGUM E. LISTON BISIH1OP, G .DAVID STAN HOUTEN, JRSUMMERFIELD K. JOHN§TON, JR . ,

Defendants .

Civil Action No.

1 06 CV Q76 15,

JURY TRIAL DEMANDE D

CLASS ACTION COMPLAINT FOR VIOLATIONSOF FEDERAL SECURITIES LAWS

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Plaintiff, individually and on behalf of all other persons similarl y

situated , by plaintiff' s undersigned attorneys , alleges the following based upo n

personal knowledge as to plaintiff and plaintiffs own acts, and upon th e

investigation conducted by and through plaintiff's attorneys, which included ,

among other things, a review of the defendants' press releases, Securities an d

Exchange Commission ("SEC") filings by Coca-Cola Enterprises, Inc . ("CC

Enterprises", "CCE", or the "Company"), media reports about the Company

and other matters of public record . Plaintiff believes that substantial evidentiary

support will exist for the allegations set forth herein after a reasonabl e

opportunity for discovery.

NATURE OF THE CASE

1 . This is a securities class action on behalf of plaintiff and all othe r

persons or entities, except for defendants, who purchased or otherwise acquire d

CC Enterprises securities ("the "Class") during the period October 15, 200 3

through July 28, 2004, inclusive (the "Class Period"), seeking to pursu e

remedies under the Securities Exchange Act of 1934 (the "Exchange Act") .

2 . Defendant CC Enterprises engages in the manufacture,

distribution, sale, and marketing of nonalcoholic beverages primarily under

agreements with The Coca-Cola Company . The company offers its product s

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principally under Coca-Cola Classic, Diet Coke, Sprite, Dasani, Fanta ,

Schweppes , and caffeine-free Diet Coke brand names, as well as under the Dr.

Pepper brand name . In addition, it purchases and distributes waters, juices ,

isotonics and teas . The company sells its products through wholesalers an d

retailers primarily in North America, Great Britain, France, Belgium, the

Netherlands, Luxembourg and Monaco .

3 . During the Class Period, the Company issued numerous false and

misleading public statements regarding the basis for the Company's historic

financial progress, business guidance, including materially false and misleading

forecasts and projections of the growth of revenues and earnings .

4 . These false and misleading forecasts and projections served t o

convince the investment community of robust and continued growth of th e

Company's soft drink sales . In fact, CC Enterp ri ses concealed its longstandin g

and pervasive efforts to stuff its distributor and retail channels with its products .

Unbeknownst to the investment community, these channel-stuffing practice s

were known to the Company and its managers .

5 . As a result, CC Enterprises' revenue recognition practices wer e

flawed and defective . These flawed and defective practices allowed th e

Company to artificially inflate revenues on the basis of channel stuffin g

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activities occurring during the Class Period. These practices violated Generall y

Accepted Accounting Principles ("GAAP"), to the extent that they artificiall y

inflated revenues and earnings within the Company's quarterly and annua l

statements . Moreover, defendants' false and misleading representations an d

certifications regarding corporate compliance matters assured that thei r

financial statements and reports were equally erroneous, false and misleading .

6. During the Class Period, Company insiders, including defendants ,

sold or caused to be sold over $96 .7 million of Company securities . Notably,

defendant Johnston sold well over $84 million worth of his own C C

Enterprises stock . There can be no doubt that defendants, including Johnston ,

undertook insider stock sales while aware or in conscious and reckless disregard

of the Company's wayward business and sales strategies , including stuffing o f

its distribution and retail sales channels.

7 . Then, on July 29, 2004, the Company warned investors that

significant shortfalls against its North American and European sales targets

would adversely impact results, when measured against its previous 2004 sale s

and revenues guidance and forecasts . Although defendants failed to undertak e

corrective disclosure of its flawed and defective revenue recognition practices ,

investors were more than well aware of the highly suspicious nature o f

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defendants' insider trading activities . On the news, the price of CC Enterprise s

stock plunged nearly 17.5%, closing on July 29, 2004 at $20 .63, on record

volume of more than 18 .5 million shares .

8 . During the Class Period, defendants concealed the fact that :

(a) the Company employed flawed and defective accounting

practices and internal controls, compromising the Company's ability t o

prudently evaluate and account for the financial health and progress of th e

business ;

(b) unjustifiable optimism and aggressiveness by management

had driven the Company's erroneous, false and misleading financial statements ;

(c) false and misleading financial statements and guidance

served to conceal the impact of the Company's systemic erroneous , false and

misleading accounting practices on the Company's earnings and income ;

(d) the Company's 2004 financial guidance remaine d

unachievable, based on the Company's channel stuffing practices ; and

(e) the Company's concealment of its channel stuffing practices

would make it difficult for analysts and investors to accurately determine th e

Company's potential for revenues and growth for present and future quarters .

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JURISDICTION AND VENU E

9. Jurisdiction is conferred by §27 of the 1934 Act. The claims

asserted herein arise under §§ 10(b) and 20(a) of the 1934 Act and Rule lOb-5 .

10. Venue is proper in this District pursuant to §27 of the 1934 Act .

The corporate headquarters of CC Enterprises are located in this District .

11 . In connection with the acts and conduct alleged herein, defendants ,

directly and indirectly, used the means and instrumentalities of interstate

commerce , including the United States mails and the facilities of the nationa l

securities exchanges .

PARTIES

12 . Plaintiff, as set forth in the accompanying certification,

incorporated by reference herein, purchased shares of CC Enterprises stock a t

artificially inflated prices during the Class Period as described in the attache d

certification and was damaged thereby.

13 . Defendant CC Enterprises engages in the manufacture ,

distribution, sale, and marketing of nonalcoholic beverages primarily unde r

agreements with The Coca-Cola Company . The company offers its product s

principally under Coca-Cola Classic, Diet Coke, Sprite, Dasani, Fanta ,

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I

Schweppes, and caffeine-free Diet Coke brand names, as well as under the Dr .

Pepper brand name . In addition, it purchases and distributes waters, juices ,

isotonics and teas . The company sells its products through wholesalers an d

retailers primarily in North America, Great Britain, France, Belgium, th e

Netherlands, Luxembourg and Monaco . CC Enterprises is a corporation

organized and existing under the laws of the state of Delaware and maintains it s

corporate and administrative offices, where the Company's day-to-day business

activities are conducted at 2500 Windy Ridge Parkway, Suite 700, Atlanta, G A

30339 .

14. Defendant Lowry F. Kline ("Kline") was Chairman of the Board o f

Directors of CC Enterprises from April 2002 to present . During the Clas s

Period, defendant Kline sold approximately $ 2.6 million worth of his CC

Enterprises stock .

15 . Defendant John R . Alm ("Alm") was elected Chief Executiv e

Officer of CC Enterprises on December 16, 2003 and continues to serve in that

capacity.

16 . Defendant Patrick J . Mannelly ("Mannelly") was Chief Financia l

Officer of CC Enterprises . During the Class Period, defendant Mannelly sold

approximately $4 .7 million worth of his CC Enterprises stock .

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17. Defendant Rick L. Engum ("Engum") was Vice President ,

Controller and Principal Accounting Officer of CC Enterprises .

18 . Defendant E. Liston Bishop, III ("Bishop") was Vice President,

Secretary, and Deputy General Counsel of CC Enterprises during the Class

Period.

19 . Defendant G. David Van Houten, Jr. ("Van Houten") was

Executive Vice President and Chief Operating Officer of CC Enterprises.

During the Class Period, defendant Van Houten sold approximately $4 .2

million worth of his CC Enterprises stock.

20. Collectively, defendants Kline, Alm, Mannelly, Engum, Bisho p

and Van Houten are referred to herein as the "Officer Defendants ."

21 . Defendant Summerfield K. Johnston, Jr. ("Johnston") was a

member of the Board of Directors of CC Enterprises during the Class Period .

During the Class Period, defendant Johnston sold approximately $84 .3 million

worth of his CC Enterprises stock .

22 . The Officer Defendants and defendant Johnston , in their executive

management positions and/or as Directors of the Company, had the power an d

did exercise the same, to cause CC Enterprises to engage in the wrongful act s

and practices complained of herein . As a result, the Officer Defendants and

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defendant Johnston were control persons of CC Enterprises within the meaning

of Section 20(a) of the Securities Exchange Act .

23 . The Officer Defendants and defendant Johnston, because of their

senior positions within the Company, were directly involved in the daily

operations of the Company at the highest level and were in a position to know

confidential and proprietary information regarding the Company' s business,

operations, prospects and financial condition . Collectively, the defendants were

in a position to control the contents of the Company' s quarterly repo rts, press

releases and presentations to securities analysts, money and portfolio manager s

and institutional investors, i.e., the market .

24. Collectively, the defendants were provided with copies of the

Company's reports and press releases alleged herein to be misleading prior to o r

shortly after their issuance and had the ability and opportunity to prevent thei r

issuance or cause them to be corrected . Because of their positions and access to

material non-public information available to them but not to the public, each o f

these defendants were aware or in conscious and reckless disregard of th e

adverse facts specified herein, which had not been disclosed to and were bein g

concealed from the public and that the positive representations which wer e

being made were then materially false and misleading. Collectively, the

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defendants approved, ratified and are liable for the false statements pleaded

herein, as those statements were each "group-published" information, the result

of the collective actions of the Officer Defendants and defendant Johnston .

SCIENTER

25 . In addition to the above-described involvement, each defendan t

had knowledge of CC Enterprises' problems . Each defendant had a duty t o

disseminate truthful and accurate information regarding the Company' s business

prospects and financial condition . Moreover, each defendant had a duty to

correct materially false and misleading statements, to assure fair valuations for

the Company's publicly traded securities .

26. Collectively, the misrepresentations and omissions of the

defendants during the Class Period violated these specific requirements an d

obligations . Moreover, the defendants were motivated to conceal th e

Company's problems. Defendants Mannelly and Engum, having served as

Chief Financial Officer and Principal Accounting Officer, provided fo r

financial reporting and communications with the market . Communications with

the market, including conference calls, as well as internal reports showing C C

Enterprises' forecasted and actual growth were prepared under their direction .

Defendant Alm, having served as Chief Executive Officer, also provided for

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communications with the market, including conference calls, as well as report s

on Company operations, financing and press releases issued by the Company.

Each of the defendants sought to demonstrate that he could lead the Company

successfully and generate the growth expected by the market . Each of the

defendants also owed a duty to the Company and its shareholders not to trad e

on inside information.

FRAUDULENT SCHEME AND COURSE OF BUSINES S

27 . Each defendant is liable for (a) making false statements, or (b )

failing to disclose adverse facts known to him about CC Enterprises .

Defendants' fraudulent scheme and course of business that operated as a frau d

or deceit on purchasers of CC Enterprises publicly traded securities was a

success, as it: (a) deceived the investing public regarding CC Enterprises '

prospects and business ; (b) artificially inflated the prices of CC Enterpri ses'

publicly traded securities ; (c) allowed Company insiders, including defendants ,

to sell as many as 3.6 million of their own shares at inflated prices, for

proceeds of over $96.7 million ; and (d) caused plaintiff and other members of

the Class to purchase CC Enterprises' publicly traded secu rities at inflated

prices .

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DEFENDANTS' PRE-CLASS PERIOD STATEMENT S

28 . On August 11, 2003, defendants filed SEC Form 10-Q for th e

quarter ending June 27, 2003 . Regarding the Company's revenue recognition

practices, the filing stated in part :

We earn revenues from _products when the product is delivered orwhen we collect cash from vending machines . We earn fundingfrom licensors as performance measures are met . We earn servicerevenues for equipment maintenance and production when se rvicesare performed .

29 . The absence of proper inventory controls can serve to conceal an

environment where excess levels of product sold into the channels o f

distribution can, absent strong consumer sales, accumulate in one or more o f

those channels, often referred to as "channel stuffing ." In the absence of

inventory controls to assure that returned products are written down, the failur e

to make adjustments results in erroneous, false and misleading financial results.

Defendants' 10-Q for the quarter ending June 27, 2003, fails to state how it s

revenue recognition practices account for the impact of returned products .

DEFENDANTS ' FALSE AND MISLEADING STATEMENTS

MADE DURING THE CLASS PERIOD

30 . On October 15, 2003, the Company issued a press release entitled,

"COCA-COLA ENTERPRISES INC . REPORTS THIRD -QUARTER 200 3

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RESULTS - Third-quarter 2003 earnings totaled 56 cents per diluted commo n

share, including a favorable tax item totaling 1 cent per share - Total compan y

volume rose 2'/2 percent for the quarter as volume grew '/2 percent in North

America and 10 percent in Europe - The Company has raised its full -year 2003

earnings guidance to a range of $1 .31 to $1 .33, including a facility sale and

favorable tax items totaling 3 cents per share ." The press release' stated in part :

third-quarter 2003 net income applicable to commonshareowners [was] $259 million , or 56 cents per diluted commonshare, including the net benefit of 1 cent per share from tax items .For the first nine months of 2003, net income totaled $ 545 million,or $1 .19 per diluted common share. Year-to-date results include 1cent per diluted common share from the sale of a hot-fillmanufacturing facili ty to The Coca-Cola Company, and netfavorable tax items of 2 cents per diluted common share . Our 2003results compare to third-quarter 2002 net income applicable tocommon shareowners of 190 million, or 42 cents per dilutedcommon share and $414 million or 91 cents per share for the firstnine months of 2002 .

Foreign currency translations cont ributed 2 cents per dilutedcommon share to earnings growth for the third quarter and 7 centsper diluted common share for the first nine months of 2003 .

Third-quarter 2003 operating income grew 19 percent overprior year to $524 million . Operating income for the first ninemonths of 2003 grew to $1 .23 billion , an increase of 11 percentover 2002 results . Operating income results for 2003 reflect strongyear-over-year growth in Europe , meaningful pricing initiatives,and moderating o erating expense trends in No rth America.Operating income for the first nine months includes $8 million

1 This press release was subsequently filed by defendants as SEC Form 8-K on October 17,2003 . The filing can be found on the Securities and Exchange Commission website, at :http:/lwww.sec.gov/Archives/edgar/data/804055/000080405503 00031610000804055-03-000316-index.htm , last accessed on March 12, 2006 .

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attributable to the sale of a hot-fill production facility earlier thisyear.

"Our third-ycarter results reflect our unwaveringcommitment to North American and European pricingimprovement and our ability to successfully manage growth inoperating expenses," said Lowry F. Kline, chairman and chiefexecutive officer. "Based on our strong third quarterperformance, which includes the continued benefits of favorableinterest rates and currency translations, we have now increasedour expectations for reported 2003 earnings per share to a rangeof $1.31 to $1.33. ► r

Consolidated physical case bottle and can volumeincreased 2%z percent on a comparable * basis for the thirdquarter, and 2 percent for the first nine months. North Americanvolume rew I/percent in the third quarter partly due to strongsales of Dasan,, growth in diet brands, including diet VanillaCoke, and lemon-lime category growth from the introduction ofSprite Remi This offset slower sales of flavored drinks, and theextraordinary volume generated by the introduction of VanillaCoke in 2002. In Europe, record-setting hot weather for much ofthe quarter, coupled with the success of new brand introductionsand local marketing programs, resulted in a 10 percent volumeincrease during the third quarter. For the year, urope's volumehas grown more than 7% percent. We estimate approximately 2percent of Europe 's year-to-date growth is attributable to thissummer's heat

"Throughout the year in North America, we've workeddiligently to improve our pricing and will continue these efforts inthe months ahead " said John R. Aim, president and chief operatingofficer. "These efforts are integral to our success, and as we moveinto 2004, we will implement . expanded revenue managementstrategies, which include improving pricing consistency throughoutour territories . "

"Our enhanced revenue management focus will also includeannual price initiatives that cover increases in costs and operatingexpenses and contribute to growth in our profitability," Mr . Almsaid. "This more coordinated approach in the United States andCanada will help ensure that we fully capture the value created byour diverse and evolving brand portFolio, a portfolio that includescore Coca-Cola brands as well as highly successful newer brandssuch as Vanilla Coke, Dasani, and Minute Maid juice drinks ."

"Throw hout our European territories, we continue to createan increasingly stronger soft drink culture through executiona ainst our core brands and new brand initiatives, such as VanillaCoke and diet Vanilla Coke," Mr . Alm said . "Looking beyond theshort-term benefit of Europe's unprecedented weather, per capita

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consumption continues to grow as we steadily improve our brandportfolio to respond to changing consumer tastes ."

Third-quarter 2003 consolidated net pricing per caseincreased 21/2 percent with growth in North America of 1'/2 percentincluding rate increases of 2 percent . Pricing in Europe was up 31/percent or the quarter . Year-to-date consolidated pricing growthof 21/:z percent included North American growth of 2 percent andEuropean growth of 2'h percent. Bottle and can cost of sales percase increased 1 percent in the third qua rter and for the first ninemonths of 2003 . All net pricing and cost of sales per casecomparisons exclude the effects of currency translations .

Full-Year 2003 Outlook

Full-year 2003 earnings per diluted common share are nowexpected in a range of $1 .31 to $1 .33, including favorable itemstotaling 3 cents per share . Full-year 2003 physical case bottle andcan volume growth is expected to total 1 percent to 2 percent . Full-year 2003 North American volume is expected to be approximatelyflat versus prior year , with volume in Europe up approximately 5percent to 6 percent. Operating income is expected to total $1 .46billion to $ 1 .48 billion .

31 . Defendants' statements of October 15, 2003, were false and

misleading. Defendants' disclosures served to conceal the fact that thei r

financial results and forecasts were highly dependent upon their channel

stuffing efforts. As a result, defendants' reported and estimated sales volumes,

revenues, and financial prospects were flawed and defective, and therefore ,

were erroneous, false and misleading . These erroneous, false and misleadin g

financial results and projections served to mislead the investment community,

representing a key cause for inflation in the price of the Company's stock.

32 . On December 17, 2003, the Company issued a press release

entitled "COCA-COLA ENTERPRISES INC . AFFIRMS 2003 FINANCIA L

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TARGETS AND OUTLINES EXPECTATIONS FOR 2004 ." The press release

stated in part :

[CCE] will affirm its outlook for fullyear 2003 results andoutline expectations for volum e and profitperformance in 2004.

Management continues to expect approximately flat volumeperformance in North America for 2003 while achieving rowth inEurope of approximately 5 percent for the full year . Reportedearnings per. diluted common share for the year are expected tototal approximately $ 1 .39, including the net effect of insuranceproceeds and other items . In the fourth quarter , CCE will recognizeapproximately $70 million in net insurance proceeds which will bepartially offset . by incremental expenses related to certainemployee and retiree benefit programs (see table) .

2004 Outlook

In its outlook for 2004case volume growth in Northpercent. Management expectsstrategies to produce bottle anyin North America through aapproximately 21/2 percent.

CCE expects to achieve physicalAmerica of approximately 1 1/2enhanced revenue management

l can net pricin per case growthcombination of rate and mix of

Our European business is expected to remain strong in 2004 .While bottle and can net pricing is expected to grow approximately2 percent, our forecasted volume growth will be approximately 11/2 percent . Although this growth is below long-term trends, thisoutlook primarily reflects our strategic decision to develop a newwater po rt folio with The Coca -Cola Company . This transition willhave a negative impact on volume growth during 2004, but weremain committed to a long-term growth rate of4 percent to 6percent.

CCE expects 2004 net income per diluted common share toincrease to a range of $1 .41 to $1 .44. Our underlying operatingprofit growth rate is expected to reach a high single-digit range in2004, though increased pension expense will result in operatingincome growth of 5 percent to 6 percent from comparable 2003levels. 2003 reported operating profit is expected to

profitapproximately $ 1 .53 b illion. Comparable 2003 operating pro it ofapproximately $ 1 .47 billion excludes an $8 million gain on the saleof a facility to The Coca-Cola Company, a proximately $70million in insurance proceeds and $25 million of expense p rimari ly

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related to the funding of certain employee benefit programs .Management also expects a stron ger return on invested capital witha 30 to 40 basis point gain in 2004 .

"Our company will achieve improved financial results in2003 and we fully intend to build on these results with even betteroperating p erformance in 2004 ," said Lowry F. Kline, chairmanand chf executive officer. "Despite challenging operatingconditions through much of this year, we made si gnificantfinancial progress , generating higher free cash flow, a 40 basispoint improvement in retu rn on invested capital and anapproximate $400 million reduction in net debt balance . ' t

"Two primary factors for our future success, in NorthAmeri ca and Europe, are a clear company focus on revenuemanage~ ment and continued brand and package development," saidJohn R. Alm, president and chief operating officer . "In North

we expect continued strength in our diet soft d rinkbrands , water, and juice d rinks, while package innovations will addvalue to our brands .

"Our business plan in Europe includes several excellentproducts and brand initiatives that , when coupled with plans forsolid , creative advertising, will enable us to continue to build astrong European soft drink culture . "

33 . Defendants' statements of December 17, 2003, were false and

misleading. Once again, defendants' disclosures served to conceal the fact that

their financial results and forecasts were adversely impacted by their channe l

stuffing efforts. Defendants knew or in conscious and reckless disregard that

there was no objective basis for the forecasting of volume growth, in light o f

their channel stuffing activities . As a result, defendants' renewed estimates o f

sales volumes, revenues, and financial prospects were flawed and defective, an d

therefore, were erroneous, false and misleading . These erroneous, false an d

misleading financial results and projections served to mislead the investmen t

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community, representing a key cause for inflation in the price of the Company' s

stock .

34 . On January 29, 2004, the Company issued a press release entitle d

"COCA-COLA ENTERPRISES INC . REPORTS FOURTH-QUARTER AND

FULL-YEAR 2003 RESULTS - Fourth- quarter 2003 earnings per diluted

common share were 28 cents, including the net effect of favorable items

totaling 11 cents per share - 2003 earnings per diluted common share totale d

$1 .46, including net favorable items of 14 cents per share - The Company ha s

raised its full-year 2004 earnings guidance to a range of $1 .42 to $1 .46 ." The

press release stated in part :

[CCE] reported that fourth-quarter 2003 net income applicable tocommon shareowners increased to $128 million , or 28 cents perdiluted common share. Operating income. grew to $346 million inthe fourth quarter, up 38 percent versus prior year results .

Full-year 2003 net income totaled $674 million or $ 1 .46 perdiluted common share . Operating income totaled $ 1,5'77 million in2003 , an increase of 16 percent .

Our reported 2003 results include favorable items consistingof a gain on the sale of a hot -fill manufacturing facility recorded inthe first quarter , insurance proceeds received in the fourth quarter,favorable purchase accounting adjustments , and net favorable taxitems . Adjusting for these items and for favorable tax itemsrecorded in 200 2,, CCE generated the following comparable resultsfor the fourth quarter and full year 2003 :

Comparable fourth -quarter 2003 net income per dilutedcommon share was 17 cents , up 31 percent from comparable pnoryear results . Full-year 2003 net income per share totaled $ 1 .32, anincrease of 28 percent over comparable 2002 results .

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Comparable fourth-quarter 2003 operating income grew 5percent to 5264 million , while full-year 2003 comparable operatingincome increased 9 percent to $1,487 million .

Our 2003 financial performance reflects strong growth inEurope, consistent p ricing initiatives throughout our territories, andfavorable foreign currency translations . Foreign currencytranslations contributed 2 cents per diluted common share toearnings rowth for the fourth quarter and 10 cents per dilutedcommon snare for the full year 2003 .

"By every financial measure , the results of our companycontinue to improve, with strong earnings per share growthincreasing levels of free cash flow , improved retu rns on investedcapital , and reduced net debt levels ," said Lowry F. Klinechairman of the board. "We are achieving this improvedperformance through our strong commitment to value creation,including enhanced brand building activities and a clear , company-wide strategy of revenue management ."

"In 2004 , we will build on these results by reinforcing ourvalue -oriented strategic direction , increasing our operatingefficiencies and further strengthening our solid partnership withThe Coca-Cola Company," Mr. Kline said .

Consolidated physical case bottle and can volume decreased1 percent on a comparable basis for the fourth quarter, andincreased 11/2 percent Tor full year 2003 . North American volumewas down approximately 1 percent in the fou rth quarter, and flatfor the full year. Our full-year 2003 volume results in NorthAmerica were characterized by growth in diet soft drink brands,including diet Vanilla Coke strong sales of Dasani , and lemon-lime category growth from the introduction of Sprite Remix . Thisoffset slower sales of regular soft d rinks and the comparisonsresulting from the introduction of regular and diet Vanilla Coke in2002.

In Europe , volume was down approximately 1'/2 percent inthe fourth quarter as we decreased promotional activity anddeemphasized certain low value brands in our portfolio . For thefull year, European volume increased 51/2 percent reflecting record-setting hot weather during the summer months , the success of localmarketing programs , and new brand introductions, includingVanilla Coke and Diet Coke/Coke light with Lemon .

"Our dedication to revenue management was essential to oursuccess for the year , and we will enhance this strategiccommitment in 2004 ," said John R. Alm, president and chiefexecutive officer . "Strong , popular brands , in the right package,make revenue enhancement possible and sustainable through acombination of rate and mix . It is vital that we continue to buil d

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our brands with even higher levels of demand creation, innovationand marketplace execution."

"We plan continued product and package development,already demonstrated by the introduction of Diet oke with Lime,as well as significant brand building activities in support of ourexisting brands , including the NCAA Final Four and a uniquesummer initiative Mr. Alm said . "We believe these effo rts willdrive growth and increase value in the year ahead , benefitingcustomers and consumers in No rth America and Europe . "

Fourth-quarter 2003 consolidated net pricing per caseincreased 2342 percent. Pricing growth in North America totaled 2percent for the quarter while European pricing was up 31/2percent. Full-year 2003 pricing growth of 2' percent wascomprised qfNorth American growth of 2 percent and Europeangrowth of 2'/2 percent. Bottle and can cost of sales per caseincreased 1 percent for both the fourth quarter and full year. Allnet pricing and cost of sales per case comparisons exclude theeffects of foreign currency translations. Please see the attachedkey operating information schedule for a reconciliation ofreported and comparable operating statistics used in this release .

Full-Year 2004 Outlook

Full-year 2004 earnings per diluted common share are nowexpected in a range of $1 .42 to $1 .46 . 2004 operating profit isexpected to increase 5 percent to 6 percent from comparable 2003operating profit of $1,487 million. 2004 operating incomeexpectations include the impact of a significant increase in pensionexpense, which wi ll negatively impact 2004 growth byapproximately 3 percent . We do not foresee a significant pensionexpense increase in 2005 .

Full-year 2004 physical case bottle and can volume growthis expected to total approximately I Y2 percent in both NorthAmerica and Europe. While expected volume growth in Europeis below our long-term trends, our outlook for 2004 reflects ourstrategic decision to develop a new water portfolio with TheCoca-Cola Company, combined with hurdling the volumegenerated by last summer 's record setting hot weather. Weremain committed to a long-term growth rate of 4 percent to 6percent for our European territories.

35 . Defendants' statements of January 29, 2004, were false and

misleading . Once again , defendants' disclosures served to conceal the fact that

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their financial results and forecasts were adversely impacted by their channe l

stuffing efforts. Defendants knew or in conscious and reckless disregard that

there was no objective basis for the forecasting of volume growth, in light o f

their channel stuffing activities . As a result, defendants' confirmations and

renewed estimates of sales volumes, revenues, and financial prospects wer e

flawed and defective, and therefore, were erroneous, false and misleading .

36. On April 28, 2004, the Company issued a press release entitled

"COCA-COLA ENTERPRISES INC . REPORTS STRONG START TO 2004 -

Solid revenue management performance drove first-quarter 2004 earnings pe r

diluted common share of 22 cents - First-quarter operating income increased 7 1

percent to $304 million - North American volume was up 1/2 percent with net

revenue per case growth of 4 percent - European volume was up 11/2 percent

with 2 percent net revenue per case improvement - CCE increases 2004

earnings guidance to a range of $1 .48 to $1 .52 per diluted common share ,

excluding nonrecurring items." The press release stated in part :

[CCE] reported first-quarter 2004 net income applicable tocommon shareowners of $104 million, or 22 cents per dilutedcommon share. These results compare to net income of $27million, or 6 cents per diluted common share for the same periodlast year . Foreign currency translations contributed approximately1 cent per diluted common share to first-quarter 2004 earnings .

Operating income totaled $304 million for the first quarter,an increase of 71 percent versus prior year results . These result s

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reflect strop net revenue per case growth in North Ame ri ca, andcontinued volume and p ricing growth in Europe .

CCE's first-quarter financial results benefited from anadditional four selling days du ring the quarter which we estimatecontributed 5 cents per diluted common share to first- quarterearn ings . The full year will have one additional selling day, asfourth-quarter 2004 will have three less selling days than fou rth-quarter 2003 .

Consolidated net revenue per case was up 3'/2 percent in thefirst quarter . Net revenue per case in No rth America grew 4percent while results in Europe grew 2 percent for the quarter .North American net revenue per case results were driven by rateincreases and over 1 point of growth coming from favorablepackage mix shifts. Consolidated cost of sales per case increased Ipercent. All net pricing and cost of sales per case comparisonsexclude the effects of currency translations .

"These positive results demonstrate the benefit of our value-based approach to the marketplace," said Lowry F . Kline,chairman of the board . "Dedication to revenue management -achieved through a combination of rate increases , contributionsfrom package mix and volume growth - will be the impetus forstrong financial results for the full year.

"We also continue to benefit on the bottom line from ourwork with The Coca -Cola Company to streamline our system'sbusiness processes . An important example is our work to furtherrefine our procurement operations through the Coca -Cola Bottlers'Sales and -Services Company , with our success demonstrated byour modest cost of goods increases ."

Physical case bottle and can volume increased 1 percent ona comparable basis for the quarter. The strength of our diet "MyCoke portfolio, including diet Coke with Lime, coupled withvery strong Dasani water growth and continued growth inPowerade resulted in first-quarter volume growth of %2 percent inNorth America. In Europe, brand innovation and consistentgrowth of our diet beverage portfolio resulted in a 1 Y2 percentvolume gain for the first quarter.

"Consumers are responding very positively to our completebrand portfolio in part because of our excellent marketin gcampaigns , such as the NCAA Final Four and NASCAR, andbecause of strong , local marketplace execution tailored to ourcustomers' needs, said John R. Alm, president and chief executiveofficer . "Our combination of popular brands , strong marketing andlocal market expertise creates momentum for continued vo'umegrowth and pricing enhancement throughout the year.

-22-

"In Europe , we remain optimistic about our ability toachieve another year of balanced p ricing and volume growththough we recognize the tough compari sons created by the recordheat of last summer ," Mr. Alm said. Addi tional p lanned brand andpackage initiatives , coupled with excellent marketingopportunities , give us confidence in our fu ll year targets of 1'/2percent volume growth and local-currency pricing growth of 2percent ."

Full-Year 2004 Outlook

Based on our strong first-quarter performance and outlookfor the balance of 2004, we now expect full- ear 2004 earningsper diluted common share in a range of $11.48 to $1.52, excludingany nonrecurring items. The range represents an increase o2percent to 15 ercent over comparable 2003 results of $1.32 pershare. Our fullyear financial guidance incorporates higherexpectations for operatin ig growth in North America andEuro e, artially offset by the recognition of lower non-cashfund ngfrom an anticipated change in our Jumpstart agreementwith The Coca-Cola Company ( ' CCC'9.

Under our Jumpstart agreement , we are required to placetargeted amounts of cold drink equipment through 2-008 . Subject tosuccessful completion of our discussions with TCCC, we expect toplace approximately one-half of the equipment originally targetedfor 2004 and 2005 . Accordingly we would recognizeapproximately $35 million less non-casi fundin g in those years ascompared to our o riginal annual guidance of P0 million to $80million .

"We are focused on making cold d rink equipmentplacements that achieve the highest possible retu rns , and provideour customers with the ri ght equipment to grow our immediateconsumption business " said Mr. Alm. "Our lower placementtargets for 2004 and 2605 reflect 10 years of success in increasingequipment penetration throughout our territo ries , and the slowersales environment in recent years that has existed in many colddrink channels . These new targets will allow CCE to continue tocapture .the growth opportunities available in these channels whilefurther improving free cash flow . "

Subject to final approval of the Jumpstart amendment,capital spending is expected to total an proximately $ 1 .1 billion in2004 versus original guidance of 1 .15 billion . This changereflects our expectation for lower cold d rink capital spendingpartially offset by spending for new packaging initiatives tosupport long-term revenue management goals . 2004 free cash flow(defined as cash flow from operations less capital spending) isexpected to total approximately $700 million , up from our originalguidance of approximately $600 million.

-23-

Our full-year financial guidance excludes a non-cash itemexpected later this year that results from our transition to a neweconomic model with TCCC . We are working with TCCC tosimplify our financial relationship and better align the economicinterests of the two companies . We believe the adoption of a neweconomic model will have a long -term positive impact on oursystem's ability to maximize revenue growth and drive valuecreation in the marketplace .

The first step in adoptin g a new economic model will be tonet a significant amount of the annual funding received fromTCCC from the invoice price we pay for concentrate . While theimplementation of this new pricing structure will be cash neutral toboth companies CCE's cost of sales will be approximately $45million higher than expectations when the transition occurs laterthis year. CCE 's net cash derived from operating activities will notbe affected as inventory on hand will be sold without funding andreplaced with lower cost concentrate resulting in a lower workin gcapital investment . Total 2004 funding from TCCC , althoughnetted in concentrate p rices following the transition is notimpacted by this change . We are also continuing to evaluate theeconomic relationship with respect to the mechanism for future

ricin , and expect this evaluation process to continue through004 for possible implementation in 2D05 .

37 . Defendants' statements of April 28, 2004, were false an d

misleading . Once again, defendants' disclosures served to conceal the fact that

their financial results and forecasts were adversely impacted by their channe l

stuffing efforts . Defendants knew or in conscious and reckless disregard that

there was no objective basis for the forecasting of volume growth, in light o f

their channel stuffing activities . As a result, defendants' confirmations and

renewed estimates of sales volumes, revenues, and financial prospects were

flawed and defective, and therefore, were erroneous, false and misleading .

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38 . Moreover, there can be no doubt that the failure to implement

inventory controls necessary to write-down product returns is a violation o f

Generally Accepted Accounting Principles ("GAAP") . This in turn assured that

each and every one of defendants' quarterly and annual financial statement s

was erroneous, false and misleading .

THE TRUTH UNFOLDS

39. On July 28, 2004, defendants shocked investors, as they issued a

press release entitled, "COCA-COLA ENTERPRISES INC. REPORTS

SECOND-QUARTER AND FIRST-HALF 2005 RESULTS - Balanced

revenue growth and successful operating expense initiatives generated stron g

second quarter EPS performance - Volume in North America increased 11/2

percent in the second quarter, with European volume growth of 3 percent - Full-

year 2005 earnings guidance affirmed at high-end of current range." The

shocking press release stated in part :

[CCE] reported second -quarter 2005 net income of $333 million,or 70 cents per diluted share. Net income for the first six monthstotaled $379 million, or 80 cents per diluted share . Results for thesecond quarter include net favorable items totalin g 12 cents pershare , consisting primarily of proceeds from a settlement of highfructose corn syrup (HFCS) litigation and the benefit of stateincome tax rate changes .

Operatin income totaled $ 582 million for the secondquarter, and $2 million for the first six months . Excluding theitems outlined in the table shown on page 10 of this release ,

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comparable operating income increased 8'h percent for the secondquarter.

"Our second quarter performance reflects the combinedbenefits of solid revenue growth d riven by .balanced pricing andvolume results and the success of our ongoing operating expenseinitiatives," said Lowry F. Kline , chairman of the board . "Thetrends demonstrated by this performance , coupled with the fullbenefit of the extensive product innovations implemented in thefirst half of the year, gives us the confidence that our full yearearnings will reach the mid-$1.30s. "

Bottle and can physical case volume increased 2 percent inthe second quarter, and '/ percent for the first six months.Volume in North America was up 1'/2 percent in the second quarterand 1 percent for the first six months . Volume results in -NorthAmerica benefited from the introduction of Coca-Cola Zero, DietCoke Sweetened with 5 lenda ® and strong sales of Dasani andDasani flavored waters . European volume increased 3 p ercent inthe qua rter, but declined 1 percent during thefirst half of 2005.Second quarter European volume results reflect solid volumegrowth in our diet and light po rtfolio and low double-digit growthin noncarbonated beverages .

Net pricing per case increased 2 percent in the secondquarter, with growth of 1'/2 percent for the first six months . North .American net pncin per case growth totaled 2 percent for theguarter and for the first six months , while net pricing per case inEurope increased %z percent for the same pe riods .

Consolidated cost of sales per case increased 3'/z percent forthe second quarter and 3 percent for the first six months . All netpricing and cost of sales per case comparisons exclude the effectsof currency translations . The attached key operating informationschedule provides a reconciliation of the repo rted and comparableoperating statistics used in this release .

"Our second quarter . performance was characterized bystrong marketplace execution , which drove balanced No rthAmerican volume and pricing growth , and the successfulintroduction of two impo rtant new products Diet Coke Sweetenedwith Splenda® and Coca-Cola Zero " said John R . Alm, presidentand chief executive officer. "Though carbonated soft drink trendsremain challenging , we outperformed the category and achievedvolume growth in both the future and immediate consumptionchannels .

"Our new products , which also include Full Throttle, Coca-Cola with Lime , and Dasani flavored waters , have generatedexcellent response among retailers and consumers ," Mr. Alm said ."The strength of these product introductions , coupled with a

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rational industry pricing environment , leaves us encouraged as weenter the second half ofthe year .

"In Europe, we achieved volume growth amid difficultcategory and retail industry trends that limited our ability oachieve planned levels of pricing, " Mr. Alm said. "While thesetrends are likely to continue in the second half of the year, we areoptimistic that our brand innovation efforts and marketplacestrategies will generate continued growth throughout ourEuropean territories. "

North American Business Structure

P CCE expects to recognize expense totaling approximately$75 million to $100 million in 2005, including $8 millionrecognized in the second quarter, primarily related to thereorganization of our North American business. CCE's NorthAmerican operations will now be organized into six United Statesbusiness units with Canada continuing to function as a separateentity. This reorganization will result in fewer layers ofmanagement , facilitate closer interaction with our customers, andgenerate long-term cost savings through improved administrativeand operating efficiency .

"Our new operating structure will be a significant, positivestep that will allow North America to operate more effectively andefficiently, while improving the local focus of our business at thefield level," Mr. Alm said.-"This further enhances our capabilitiesin marketplace execution, revenue growth management , sales andcustomer service, and supply chain management .

Full-Year 2005 Outlook

Earnings per diluted share are expected to reach the mid-$1 .30s, reflecting our second quarter performance and a lowereffective tax rate for the full year . This earnings guidance excludesthe net favorable items outlined in this release, restructurin gcharges , and the tax expense associated with the potentialre nation of cash during the year . Current business trends haveofset weaker currency translation benefits , which now will have aminimal impact on full-year earnings .

Reported full-year results will re flect the ma o ity of theHFCS proceeds recognized in the second quarter . CCE is currentlyevaluating options for possible reinvestment of a portion of thesefunds in the second half of 2005 .

CCE may repatriate $500 million in foreign earnings in 2005based on the American Jobs Creation Act of 20 4 of with a relatedtax cost of approximately $30 million . As part of a broader tax

-27-

analysis, CCE is also evaluating the possibility of repatriating anamount greater than $500 million .

40. During the conference call of July 28, 2004, that followed the pres s

release , defendants were forced to fully account for their shocking performanc e

results and unexpectedly bad business outlook :

John Alm (President, Chief Executive Officer, Director,Coca Cola Enterprises) :

Our results for the second quarter fell below ourexpectations . Earnings per share up 48 cents , excluding expense of5 cents related to our transition to the new North Americanconcentrate rice structure . Our operating income totaled $451million , which was down 6 . 5% on a comparable basis . In thesecond qua rter, North America did achieve a balance of volumeand p ri ce growth, with volume up 1% and net revenue per casegrowth of .5%.

Most of our profit shortfall is the result of ourperformance in Europe. Where weather heavily influencessecond and third quarter volumes. Second quarter volumeshampered by cool, rainy weather, was down 6.5% from verystrong volume levels achieved last year during record summerheat. hough we achieved our planned pricing growth in Europe

2.5%, we were unable to overcome the profit shortfall createdf this sharp decline in volume.

Our operating income growth comparisons to prior yearwere also affected by a settlement of promotion programs in thesecond quarter of '03. As we discussed in our second quarter pressrelease Last year, this adjustment added 24 million to the secondquarter '03 operating results . In addition , higher than plannedhealthcare costs in the second quarter also affected NorthAmerican results ,

As we look at the balance of the year, we are very focusedon soft retail trends we have seen in North America durin Juneand July. In our discussions with retailers, we understand thesetrends are affecting a broad cross section of categories . Thisretail environment combined with trends below plan for regularsoft drinks and persistent cool, rainy weather in Europe gives usa cautious view of the third quarter. We now expect volume andprofit declines in 'both North America and Europe in the quarter.

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We base our ability to reach the lower end of our earningsrange of. $1 .48 to $1 .52 per share on our plans for scheduledpricing improvements in North America this fall, ongoing,efficiency initiatives, and the expected beneficial impact ofmarketplace initiatives underway in Europe . To remain within ourrange of guidance we will need improvement in the negative trendsthat we have - - that have continued in July . While results such asthese are challenging in the near-term, we remain o timistic aboutthe future health of our business for a combination of reasons .

David Van Houten (Chief Operating Officer, ExecutiveVice President and President, North American Group) :

. . As you've seen today from our news release, our secondquarter results were characterized by very different businessoutcomes in our 2 operating . growps. In -North America, weexperienced a positive combination of pricing and volume ~rowt ,however, in Europe we had a 6.5 % decline in volume, primarilydue to weather. This decline is in sharp contrast to the consistentgrowth of pthe past 4 years and resulted in profits below plandespite 2.5% net revenue per case growth .

As we established our goals for the year, we factoredEuropean's strong growth of last year into our plans . However, wecould not predict a cool, rainy summer , nor the full impact of areduction in retailer funded promotional activities in Great Britain .As we enter into the third quarter, we continued to experience softvolume trends in Europe as unfavorable weather has persisted intoJuly.

Given the nature of the European market, it is difficult toquickly implement new widespread marketing initiatives that willaffect third quarter performance . However, we expect growth toreturn in the fourth quarter as we develop promotional pro gramsand plans with our customers and these effo rts are alreadyunderway . As John stated , we firmly believe in our ability to seethe . significant long term growth op portunities in our Europeanmarkets . We have demonstrated our ability to generate consistent,meaningful profit and volume growth in Europe .

** *

Lowry Kline (Coca Cola Enterprises) :

. . . I'd like to emphasize some important aspects of our businesstoday. First, though our second quarter results fell below ourexpectations and our third quarter results likely will be belowprior year, we do expect strong profit growth to return in thefourth quarter. However, even with this late year growth ,

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reaching the low end of EPS guidance will require improvementin the trends that so far have affected our business this summer.

Caroline Levy (UBS, Analyst) :

I was wondering if the trends continue to be as weak as the yhave been in July and maybe you could talk about how weakEurope is versus the U.S . since you were up double digit volumewise in Europe in the third quarter last year, so could your declinesbe that severe? I think they probably have been in July but thechance of that continuin g? And what is your ability as a C'om anyto adjust to a new realit y, if that is the new reality? It thisconsumer weakness pervades , can you - - that may be the wrongword , but what can you pull to manage your earn ings?

John Alm (President, Chief Executive Officer, Director,Coca Cola Enterprises) :

Well Caroline, first of all, you know, the cool rainyweather that we really experienced throughout the secondquarter in Europe has continued, unfortunately, in July andexperiencing, you know, some double digit declines. And a ainthat is, you know, flies right in the face of ou know, significantdouble digit growth versus the same period a year ago. And, youknow , your guess is as good as mine as to what the you know, theweather may bring as we move forward . I do think that there are,you know , promotional mechanics that we could look at acrossEurope that certainly would give the opportunity to optimizewhatever may be out there from a volume-price standpoint. Butkeep in mind these are high share markets for us that we dobusiness in, Great Britain in France in Belgium and, you know,certainly we need to be, you know , cautious in that regard. But,you know, we are looking at various mechanics that can stimulatethe business . And also as we you know , manage throughchallenging volume times in Europe , our team over there has donean outstanding job you know, managing cost and expenses overthere. And you know our outlook for the balance of the year willbe for that to continue . We believe that we can also deliver, youknow , 2.5% to 3% price improvement over there . So we believethe balance of continued good price management , cost controlinitiatives that are in place right now, you know will minimize theimpact of the volume being soft. The good thing is , as we moveinto the fourth quarter, the volume performance is not so muchimpacted by whatever the weather may be. So we ust need to, youknow hope the weather gets better in August and September andthen we'll go from there . With regard to retail softness in NorthAmerica , we you know began to see this in June . We did deliver,you know good volume growth in June . But perhaps it was not asgood as it should have been as a result o some retail softnes s

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that we obviously see continuing in July. And I think that it's tooearly to, ~you know, draw any conclusions around that, you know.As has been reported, we're seeing and hearing about softnessacross a number of categories . But you know, we're alsoi~ m~~pacted by, you know, rainy weather across our heartland.We've seen a little bit of retail margin expansion you know,especially around - - the weeks around July the 4th, which is a littledifferent than what we 've seen in the past . You know, we don'tbelieve that's anything that will be ongoing. And just kind of aslowdown in consumer spending . So it's really been a perfect stormhere the last 3 or 4 weeks. And we certainly have the ability to flexour expenses accordingly and we'll do that. And we believe thatdespite all of this, we'll see good profit growth in the fourthquarter.

Marc Cohen (Goldman Sachs, Analyst) :

David this is basically to build on this whole softness we seeat retail . I guess - - you get much better date a than we'll ever gethere. And I guess what I'm concerned about is building on, youknow, some of these hiccups you talk about in execution. How doyou know that what you 're seeing in your business in July isn'tmarket-share loss either to Pepsi or as importantly to privatelabels in response to just a strategy of getting better pricing?

David Van Houten (Coca-Cola Enterprises Inc. - ChiefOperating .Officer, Executive VP and President, North AmericanGroup) :

ou know, market-share loss, that's a broad term . I thinkthat with' the channels we do business in now, the categories ofbusiness that we are involved in now, you really have to be morespecific when you start talking about market wins and losses.

Marc Cohen (Goldman Sachs, Analyst) :

Okay . So peel it back for us .

David Van Houten (Coca-Cola Enterprises Inc .) :

The information that we're looking at right now through thebetter part of July and our ownership , this is across CE'sownership , in . supermarkets , we have a slight positive swingagainst our primary .competitor . And that is hurdling a positiveswing versus our primary competitor . So if I stop right there, youknow, anything that 's been going on with any of our efforts, any ofour new launches , any of our pricing behavior, it certainly has nottranslated to any share problems with our p rimary competitor. Youknow, yes , private label is up - - oh , and incidentally , that's on an

-31 -

equivalent ounce basis . If you want to look at a dollar share basis,our performance is even a little bit better . Where we are havingsome share difficulty this year is primarily in the C&P channel.How much of-that is a finction of what we're hurdling versuswhat our competitor is hurdling remains to be seen . You know,certainly they re~ getting the benefit of the free cycle of VanillaPepsi and Diet Vanilla Pepsi and the launch of Tropicana juicedunks. And if you look at their downhill hurdles versus ourdownhill hurdles, uh, theirs become more difficult, ours become alittle less difficult . And that's not to say we don't have work to doin that channel and we're oing to work hard . We're doing fine inthe mass merchandiser channel . You know, drug channel isimpacted significantly by Eckerd's activity last year. And we hada disproportionately high share of that business and they are notpromoting with their sale as they were last year. So you know,with regard to private label they re up a little bit . Their price isdown. They're going to be ?aced with the same cost increases weall are going to be faced with . And so I think that you may see, youknow, a little different relationship of going forwardy betweennational brands and private label brands with that in mind . So I'vesaid all this, I guess to bring out the fact that there is not anythinggoing on from the share standpoint that, you know, raises anyconcern on our part . Certainly we have been very clear as to howwe want to participate in the water category . And we're verypleased with the balance of volume growth and the kind of grossprofit dollars that that's generating for us, volume growth and grossprofit dollar growth are running parallel to each other . With regardto Dasani. In fact, we are generating the same dollar-sales growthwith Dasani that Aquafina is with twice the volume growth . So,you know, we like what we see with - - in the isotonic category .And again I'm getting long-winded here, but, you know, we'rejust fine from a share standpoint.

Bryan Spillane (Banc of America Securities, Analyst)

I just want to make sure I've got something clear because Iwas under the impression, I guess earlier in the year that yourexpectations was that mix would be a bigger driver of revenue percase as you move through the year and especially in the fourthquarter. And it sounds to me here like you re going to be seeinganother increase in rates . So I want to make sure that - - hassomething changed ? And if so, what makes you more confidentthat there 's more pricing power than maybe you thought therewas earlier in the year?

John Alm (President, Chief Executive Officer, Director,Coca Cola Enterprises) ;

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David may have more comments on this . But on theguidance, we've said this year that our increases would beprimarily rate based.

. . And longer term goals around revenue management asthe package would take on a greater share of that.

41 . As this announcement signaled a continued inability of the

Company to understand or communicate its volume-driven "revenue

management" issues, financial progress and prospects to the investmen t

community, the price of CC Enterprises stock plunged, from its closing price o f

$25 .03 on July 28, 2004, to close on July 29, 2004 at $20 .63, for a loss of $4 .40

or 17.5%, on heavy volume of over 18.5 million shares .

42. The decline in the price of CC Enterprises' stock on July 29, 2004 ,

at the end of the Class Period, was the direct result of the unraveling of the

nature and extent of defendants' fraud finally being revealed to investors an d

the market . The timing and magnitude of CC Enterprises' stock price decline s

negate any inference that the loss suffered by plaintiff and other Class members

was caused by changed market conditions, macroeconomic or industry factor s

or Company-specific facts unrelated to the defendants' fraudulent conduct .

43 . On July 29, 2004, the day in which CC Enterp rises stock price fel l

almost 17.5%, the sudden and dramatic drop in value was a direct result o f

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defendants' fraud being revealed, the Standard & Poor's 500 securities inde x

was flat. The economic loss, i .e ., damages, suffered by plaintiff and other

members of the Class was a direct result of defendants' fraudulent scheme t o

artificially inflate CC Enterprises' stock price and the subsequent significan t

decline in the value of CC Enterprises' stock when defendants' prio r

misrepresentations and other fraudulent conduct was revealed .

44. During the Class Period, defendants concealed the fact that :

(a) the Company employed flawed and defective accounting

practices and internal controls, compromising the Company's ability t o

prudently evaluate and account for the financial health and progress of th e

business ;

(b) unjustifiable optimism and aggressiveness by management

had driven the Company's erroneous, false and misleading financial statements ;

(c) false and misleading financial statements and guidance

served to conceal the impact of the Company's systemic erroneous, false and

misleading accounting practices on the Company's earnings and income ;

(d) the Company's 2004 financial guidance remained

unachievable, based on the Company's channel stuffing practices ; and

-34-

6

(e) the Company' s concealment of its channel stuffing practices

would make it difficult for analysts and investors to accurately determine th e

Company's potential for revenues and growth for present and future quarters .

DEFENDANTS' CLASS PERIOD INSIDER TRADING

45 . While in possession of materi al , non-public information, the

Officer Defendants and Defendant Johnston sold hundreds of millions of dollar s

worth of inflated CCE stock. Defendants' stock sales were extremely

suspicious as to both their timing and their amount when compared with thei r

historical CC Enterprises trading activity prior to and after the Class Period .

46. During the Class Period, the following defendants sold their shares

in accordance with the following schedule :

Date Insider Shares Avg . Price Proceeds

22-Jul-2004 ALM J. R . 11010 $26.23 $288,792

05-May-2004 ENGUM, R. 7800 $26.62 $207,64006-Jan-2004 12250 $22.15 $271,362

28-Jul-2004 JOHNSTON , 5 . 84400 $24.75 $2,088,52928-Jul-2004 2800 $28 .86 $80,804

28-Jul-2004 58000 $25 .01 $1,450,85 3

22-Jul-2004 145200 $26.23 $3,808,552

16-Jul-2004 67500 $27.25 $1,839,645

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15-Jul-2004 50600 $27 .65 $1,399,02414-Jul-2004 27100 $28 .12 $762,13907-Jul-2004 135500 $27.95 $3,787,55007-Jul-2004 7200 $27.99 $201,52807-Jul-2004 2500 $28.20 $70,50007-Jul-2004 142700 $27.95 $3,989,07 930-Jun-2004 145200 $28 .90 $4,196,68723-Jun-2004 145200 $28 .91 $4,197,31 116-Jun-2004 1100 $28 .34 $31,17 616-Jun-2004 5600 $23 .33 $130,64816-Jun-2004 138500 $28 .20 $3,905,03 509-Jun-2004 128600 $28 .14 $3,619,03 509-Jun-2004 800 $23 .34 $18,67609-Jun-2004 15800 $28.43 $449,18505-May-2004 233200 $26.28 $6,127,35 305-May-2004 231882 $26.42 $6,127,48204-May-2004 169800 $26 .07 $4,426,19404-May-2004 320500 $26 .27 $8,418,89403-May-2004 175700 $26 .28 $4,617,37803-May-2004 493200 $26 .46 $13,048,49403-May-2004 207600 $26.55 $5,511,220

22-Dec-2003 KLINE, L. F. 81500 $21 .66 $1,765,29022-Dec-2003 41000 $21 .66 $888,060

22-Jun-2004 MANNELLY, P . J. 10000 $29.00 $290,00014-Jun-2004 23133 $28 .00 $647,72414-May-2004 10000 $27.00 $270,00013-May-2004 30300 $26.90 $815,07028-Apr-2004 103800 $25 .00 $2,595,00003-Feb-2004 5030 $23 .09 $116,16 1

22-Jun-2004 VAN HOUTEN, G . 31575 $29.00 $915,67522-Jun-2004 31575 $29.00 $915,67 514-Jun-2004 31575 $28 .00 $884,10013-May-2004 31575 $26.80 $846,21 003-May-2004 26400 $26.39 $696,81 2

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Totals 3,624,705 $96 ,716,54 1

FALSE FINANCIAL STATEMENT S

47. In order to overstate its earnings du ring the Class Period, CC

Enterprises violated GAAP and SEC rules by failing to properly : report the

Company's revenues and income, attend to the proper training of its staff an d

implement adequate and reliable internal controls over the Company's financial

reporting .

48 . The financial statements issued du ring the Class Period and th e

statements about them were false and misleading, as such financial informatio n

was not prepared in conformity with GAAP or SEC guidelines . Moreover, the

financial information was not a fair presentation of the Company' s operations

due to the Company's improper accounting in violation of GAAP and SE C

rules .

49. GAAP are those principles recognized by the accountin g

profession as the conventions, rules and procedures necessary to define

accepted accounting practice at a particular time . Regulation S-X (17 C .F.R .

§210 .4-01(a) (1)) states that financial statements filed with the SEC which are

not prepared in compliance with GAAP are presumed to be misleading and

inaccurate. Regulation S-X requires that interim financial statements must also

-37-

comply with GAAP, with the exception that interim financial statements need

not include disclosure which would be duplicative of disclosures accompanyin g

annual financial statements . 17 C.F .R. §210.10-01(a).

50 . Due to these accounting improprieties, the Company presented it s

financial results and statements in a manner which violated GAAP, including

the following fundamental accounting principles :

(a) The principle that interim financial reporting should b e

based upon the same accounting principles and practices used to prepare annua l

financial statements was violated (APB No . 28, ¶10) ;

(b) The principle that financial repo rting should provide

information that is useful to present and potential investors and creditors an d

other users in making rational investment, credit and similar decisions wa s

violated (FASB Statement of Concepts No. 1, ¶34) ;

(c) The principle that financial reporting should provid e

information about the economic resources of an enterprise, the claims to thos e

resources, and effects of transactions, events and circumstances that chang e

resources and claims to those resources was violated (FASB Statement of

Concepts No . 1, ¶40) ;

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(d) The principle that financial reporting should provide

information about how management of an enterprise has discharged it s

stewardship responsibility to owners (stockholders) for the use of enterprise

resources entrusted to it was violated . To the extent that management offer s

securities of the enterprise to the public, it voluntarily accepts wider

responsibilities for accountability to prospective investors and to the public i n

general (FASB Statement of Concepts No . 1, ¶50);

(e) The principle that financial reporting should provide

information about an enterprise's financial performance during a period wa s

violated. Investors and creditors often use information about the past to help in

assessing the prospects of an enterprise . Thus, although investment and credi t

decisions reflect investors' expectations about future enterprise performance,

those expectations are commonly based at least partly on evaluations of pas t

enterprise performance (FASB Statement of Concepts No. 1, ¶42) ;

(f) The principle that financial reporting should be reliable i n

that it represents what it purports to represent was violated . That information

should be reliable as well as relevant is a notion that is central to accountin g

(FASB Statement of Concepts No . 2, ¶158-59) ;

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(g) The principle of completeness, which means that nothing i s

left out of the information that may be necessary to insure that it validly

represents underlying events and conditions was violated (FASB Statement o f

Concepts No. 2, ¶79); and

(h) The principle that conservatism be used as a pruden t

reaction to uncertainty to try to ensure that uncertainties and risks inherent i n

business situations are adequately considered was violated. The best way to

avoid injury to investors is to try to ensure that what is reported represents wha t

it purpo rts to represent (FASB Statement of Concepts No . 2, ¶¶95, 97) .

51 . In addition, FAS48 generally provides that revenue from sale s

transactions can be recognized at time of sale if sales revenue and cost of sales

reported in the income statement is reduced to reflect estimated returns and

expected costs or losses.2 Defendant's failure to implement inventory control s

necessary to write-down product returns absent these essential inventor y

controls is thus a violation of GAAP .

52 . This in turn assured that each and every one of defendants '

quarterly and annual financial statements was erroneous, false and misleading .

2 For an extensive discussion of these accounting rules, see "Summary of Statement No . 48 -Revenue Recognition When Right of Return Exists", athttp://www.fasb .org/st/summary/stsum48 .shtml, last accessed on March 12, 2006 .

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Further, this undisclosed adverse information, concealed by defendants durin g

the Class Period, is the type of information which, because of SEC regulations ,

regulations of the national stock exchanges and customary business practice, i s

expected by investors and securities analysts to be disclosed and is known b y

corporate officials and their legal and financial advisors to be the type of

information which is expected to be and must be disclosed .

APPLICABILITY OF PRESUMPTION OF RELIANCE

FRAUD-ON-THE-MARKET DOCTRINE

53. At all relevant times, the market for CC Enterprises securities was

an efficient market, for the following reasons, among others :

(a) CC Enterprises stock met the requirements for listing, an d

was listed and actively traded on the NYSE, a highly efficient and automated

market ;

(b) As a regulated issuer, CC Enterprises filed periodic public

reports with the SEC; and

(c) CC Enterprises regularly communicated with publi c

investors via established market communication mechanisms, including throug h

regular disseminations of press releases on the national circuits of majo r

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newswire services and through other wide-ranging public disclosures, such a s

communications with the financial press and other similar reporting services .

54. As a result of the foregoing, the market for CC Enterprises

securities promptly digested current information regarding CC Enterprises fro m

all publicly available sources and reflected such information in CC Enterprises'

stock price . Under these circumstances, all persons who purchased or acquired

CC Enterprises securities during the Class Period suffered similar injur y

through their purchase of the aforementioned securities at artificially inflate d

prices and a presumption of reliance applies .

NO SAFE HARBOR

55 . The statutory safe harbor provided for forward-looking statements

under certain circumstances does not apply to any of the allegedly fals e

statements pleaded in this complaint . Many of the specific statements pleaded

herein were not identified as "forward-looking statements" when made . To the

extent there were any forward-looking statements, there were no meaningfu l

cautionary statements identifying important factors that could cause actua l

results to differ materially from those in the purportedly forward-lookin g

statements . Alternatively, to the extent that the statutory safe harbor does appl y

to any forward-looking statements pleaded herein, defendants are liable for

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those false forward-looking statements because at the time each of thos e

forward-looking statements was made, the particular speaker knew that the

particular forward-looking statement was false, and/or the forward-lookin g

statement was authorized and/or approved by an executive officer of CC

Enterp ri ses who knew that those statements were false when made .

CLASS ACTION ALLEGATIONS

56. Plaintiff brings this action as a class action pursuant to Rule 23 o f

the Federal Rules of Civil Procedure on behalf of all persons who purchased CC

Enterprises publicly traded securities (the "Cass") on the open market during

the Class Period. Excluded from the Class are defendants .

57. The members of the Class are so numerous that joinder of al l

members is impracticable . The disposition of their claims in a class action wil l

provide substantial benefits to the parties and the Court . During the Class

Period, CC Enterprises had more than 474 million shares of stock outstanding .

58 . There is a well-defined community of interest in the questions o f

law and fact involved in this case . Questions of law and fact common to th e

members of the Class which predominate over questions which may affec t

individual. Class members include :

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(a) Whether the 1934 Act was violated by defendants ;

(b) Whether defendants omitted and/or misrepresented materia l

facts ;

(c) Whether defendants' statements omitted material facts

necessary to make the statements made, in light of the circumstances unde r

which they were made , not misleading ;

(d) Whether defendants knew or deliberately disregarded that

their statements were false and misleading ;

(e) Whether the prices of CC Enterprises' publicly trade d

securities were artificially inflated ; and

(f) The extent of damage sustained by Class members and th e

appropriate measure of damages .

59. Plaintiffs claims are typical of those of the Class because plaintiff

and the Class sustained damages from defendants' wrongful conduct .

60. Plaintiff will adequately protect the interests of the Class and ha s

retained counsel who are experienced in class action securities litigation .

Plaintiff has no interests which conflict with those of the Class .

61 . A class action is superior to other available methods for the fai r

and efficient adjudication of this controversy .

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1 1 i

COUNT I

For Violation of §10(b) of the 1934 Act and Rule 10b-5Against All Defendants

62. Plaintiff incorporates T¶1-60 by reference .

63 . During the Class Period, defendants disseminated or approved th e

false statements specified above, which they knew or deliberately disregarde d

were misleading in that they contained misrepresentations and failed to disclose

material facts necessary in order to make the statements made, in light of the

circumstances under which they were made, not misleading .

64 . Defendants violated §10(b) of the 1934 Act and Rule 10b-5 in that

they:

(a) Employed devices, schemes, and artifices to defraud ;

(b) Made untrue statements of material facts or omitted to stat e

material facts necessary in order to make the statements made, in light of th e

circumstances under which they were made, not misleading ; or

(c) Engaged in acts, practices, and a course of business tha t

operated as a fraud or deceit upon plaintiff and others similarly situated i n

connection with their purchases of CC Enterprises publicly traded securitie s

during the Class Period .

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65 . Plaintiff and the Class have suffered damages in that, in reliance on

the integrity of the market, they paid artificially inflated prices for C C

Enterprises publicly traded securities . Plaintiff and the Class would not hav e

purchased CC Enterprises publicly traded securities at the prices they paid, or at

all, if they had been aware that the market prices had been artificially and

falsely inflated by defendants' misleading statements.

66 . As a direct and proximate result of these defendants' wrongful

conduct, plaintiff and the other members of the Class suffered damages in

connection with their purchases of CC Enterprises publicly traded securitie s

during the Class Period .

COUNT II

For Violation of §20(a) of the 1934 ActAgainst All Defendants

67 . Plaintiff incorporates ¶¶1-65 by reference .

68 . The Individual Defendants acted as controlling persons of C C

Enterprises within the meaning of §20(a) of the 1934 Act . By reason of their

positions as officers and/or directors of CC Enterprises, and their ownership o f

CC Enterprises stock, the Individual Defendants had the power and authority t o

cause CC Enterprises to engage in the wrongful conduct complained of herein . .

CC Enterprises controlled each of the Individual Defendants and all of it s

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employees . By reason of such conduct, the Individual Defendants and C C

Enterp ri ses are liable pursuant to §20 (a) of the 1934 Act .

PRAYER FOR RELIEF

WHEREFORE, plaintiff prays for judgment as follows :

A. Declaring this action to be a class action properly maintaine d

pursuant to Rule 23 of the Federal Rules of Civil Procedure;

B . Awarding plaintiff and other members of the Class compensatory

damages;

C. Awarding plaintiff and members of the Class pre judgment an d

post judgment interest, as well as reasonable attorneys' fees, expert witness

fees, and other costs and disbursements ;

D . Awarding extraordinary, equitable and/or injunctive relief a s

permitted by law , equity and the federal statutory provisions sued hereunder ,

pursuant to Rules 64 and 65 and any appropriate state law remedies to assur e

that the Class has an effective remedy; and

E. Awarding plaintiff and other members of the Class such othe r

relief as this Court may deem just and proper under the circumstances .

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JURY DEMAND

Plaintiff demands a trial by jury.

Dated: March 31, 2006

artin D. ChitwoodGeorgia Bar No. 124950James M. WilsonGeorgia Bar No. 768445CHITWOOD HARLEY HARNES LLP1230 Peachtree St . NE, Suite 2300Atlanta, GA 30309Ph: 404-873-3900Fax: 404-876-448 6Email : MChitwood(cr~chitwoodlaw .comEmail: Jwilson@chitwoodlaw.com

Liaison Counsel for Plaintiff

David R. ScottErin Green ComiteScott & Scott, LLC108 Norwich Ave.P.O. Box 192Colchester, CT 06415Ph: 860-537-5537Fax: 860-537-443 2Email : drscott(a-~,scott-scott .comEmail: ecomite@scott-scott.com

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