Coca Cola 2008 Annual Report Download - page 134

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18: RESTRUCTURING COSTS (Continued)
Productivity Initiatives
During 2008, the Company announced a transformation effort centered on productivity initiatives that will
provide additional flexibility to invest for growth. The initiatives are expected to impact a number of areas, and
include aggressively managing operating expenses supported by lean techniques; redesigning key processes to
drive standardization and effectiveness; better leveraging our size and scale; and driving savings in indirect costs
through the implementation of a ‘‘procure-to-pay’’ program.
The Company has incurred total pretax expenses of approximately $55 million related to these productivity
initiatives since they commenced in the first quarter of 2008, which were recorded in the line item other
operating charges in our consolidated statement of income and impacted the Corporate operating segment.
Other direct costs included both internal and external costs associated with the development, communication,
administration and implementation of these initiatives. The Company currently expects the total cost of these
initiatives to be approximately $500 million and anticipates recognizing the remainder of the costs by the end of
2011.
The following table summarizes the balance of accrued expenses related to productivity initiatives and the
changes in the accrued amounts for the applicable periods (in millions):
Accrued
Costs Noncash Balance
Incurred and December 31,
in 2008 Payments Exchange 2008
Severance pay and benefits $ 15 $ (1) $ — $ 14
Outside services—legal, outplacement, consulting 35 (32) — 3
Other direct costs 5(5)— —
Total $ 55 $ (38) $ — $ 17
NOTE 19: SIGNIFICANT OPERATING AND NONOPERATING ITEMS
In 2008, we recorded our proportionate share of approximately $7.6 billion pretax ($4.9 billion after-tax) of
charges recorded by CCE due to impairments of its North American franchise rights. The Company’s
proportionate share of these charges was approximately $1.6 billion. In addition to these charges, our Company
also recorded charges of approximately $30 million, primarily related to our proportionate share of restructuring
costs recorded by CCE. Our Company’s proportionate share of CCE’s asset impairment charges and
restructuring costs were recorded to equity income (loss)—net in our consolidated statement of income and
impacted the Bottling Investments operating segment. Refer to Note 3.
In addition to our proportionate share of charges recorded by CCE discussed above, the Company
recognized a net charge of approximately $30 million to equity income (loss)—net in our consolidated statement
of income in 2008, primarily related to our proportionate share of restructuring charges recorded by our equity
method investees. None of these items was individually significant. These charges impacted the Europe, North
America and Bottling Investments operating segments. Refer to Note 3.
During 2008, the Company incurred other operating charges of approximately $350 million, which consisted
of approximately $194 million related to restructuring charges, $63 million due to contract termination fees,
$55 million attributable to productivity initiatives and $38 million as a result of asset impairments. Refer to
Note 18 for additional information related to the restructuring charges and productivity initiatives. The contract
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