Coca Cola 2010 Annual Report Download - page 150

The following table summarizes the balance of accrued expenses related to productivity initiatives and the changes in
the accrued amounts since the commencement of the plan (in millions):
Severance pay Other
and benefits Outside services1direct costs Total
2008
Costs incurred $ 15 $ 35 $ 5 $ 55
Payments (1) (32) (5) (38)
Noncash and exchange — — — —
Accrued balance as of December 31 $ 14 $ 3 $ — $ 17
2009
Costs incurred $ 41 $ 47 $ 19 $ 107
Payments (37) (41) (12) (90)
Noncash and exchange — — (3) (3)
Accrued balance as of December 31 $ 18 $ 9 $ 4 $ 31
2010
Costs incurred $ 71 $ 58 $ 61 $ 190
Payments (30) (61) (54) (145)
Noncash and exchange ——(2)(2)
Accrued balance as of December 31 $59 $ 6 $ 9 $ 74
1Primarily relates to expenses in connection with legal, outplacement and consulting activities.
Integration Initiatives
Integration of CCE’s North American Business
On October 2, 2010, we acquired CCE’s North American business. In 2010, the Company began an integration initiative
as a result of this acquisition to develop and design our future operating framework. Other direct costs were primarily
related to internal and external costs associated with the development and design of our future operating framework.
These charges were recorded in the line item other operating charges. Refer to Note 19 for the impact these charges
had on our operating segments.
We believe this acquisition will result in an evolved franchise system that will enable us to better serve the unique needs
of the North American market. The creation of a unified operating system will strategically position us to better market
and distribute our nonalcoholic beverage brands in North America. We are reconfiguring our manufacturing, supply
chain and logistics operations to achieve cost reductions over time. Once fully integrated, we expect to generate
operational synergies of at least $350 million per year. We anticipate that these operational synergies will be phased in
over the next four years, and that we will begin to fully realize the annual benefit from these synergies in the fourth
year.
Upon completion of the CCE transaction, we combined the management of the acquired North American business with
the management of our existing foodservice business, Minute Maid and Odwalla juice businesses, North America supply
chain operations and Company-owned bottling operations in Philadelphia, Pennsylvania, into a unified bottling and
customer service organization called Coca-Cola Refreshments, or CCR. In addition, we reshaped our remaining CCNA
operations into an organization that primarily provides franchise leadership and consumer marketing and innovation for
the North American market. As a result of the transaction and related reorganization, our North American businesses
operate as aligned and agile organizations with distinct capabilities, responsibilities and strengths. The Company
currently expects the total cost of these integration initiatives to be approximately $425 million and anticipates
recognizing these charges over the next three years.
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