Coca Cola 2010 Annual Report Download - page 67

The Company’s integration initiatives include costs related to the integration of 18 German bottling and distribution
operations acquired in 2007. The Company began these integration initiatives in 2008 and has incurred total pretax
expenses of approximately $225 million since they commenced. The expenses recorded in connection with these
integration activities have been primarily due to involuntary terminations. The Company is currently reviewing other
integration and restructuring opportunities within the German bottling and distribution operations, which if
implemented will result in additional charges in future periods. However, as of December 31, 2010, the Company had
not finalized any additional plans. Refer to Note 18 of Notes to Consolidated Financial Statements for additional
information related to this integration initiative.
The Company has recognized costs of approximately $352 million related to our ongoing productivity initiatives since
they commenced in the first quarter of 2008. The Company is targeting $500 million in annualized savings from
productivity initiatives by the end of 2011 to provide additional flexibility to invest for growth. The savings are expected
to be generated in 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. In realizing these
savings, the Company expects to incur total costs of approximately $500 million by the end of 2011. The Company
believes we are on track to achieve our $500 million target in annualized savings by the end of 2011. Refer to Note 18
of Notes to Consolidated Financial Statements for additional information related to the Company’s ongoing productivity
initiatives.
In 2009, the Company incurred other operating charges of $313 million, which consisted of $273 million related to the
Company’s productivity, integration and restructuring initiatives and $40 million due to asset impairments. Refer to
Note 18 of Notes to Consolidated Financial Statements for additional information on our productivity, integration and
restructuring initiatives. The impairment charges were related to a $23 million impairment of an intangible asset and a
$17 million impairment of a building. The impairment of the intangible asset was due to a change in the expected
useful life of the asset, which was previously determined to have an indefinite life. The $17 million impairment was due
to a change in disposal strategy related to a building that is no longer occupied. The Company had originally intended
to sell the building along with the related land. However, we have determined that the maximum potential sales
proceeds would likely be realized through the sale of vacant land. As a result, the building was removed. The land is
not considered held-for-sale, primarily due to the fact that it is not probable a sale would be completed within one year.
In 2008, the Company incurred other operating charges of $350 million, which consisted of $249 million due to
productivity and restructuring initiatives, $63 million related to contract termination fees and $38 million due to asset
impairments. Refer to Note 18 of Notes to Consolidated Financial Statements for additional information on our
productivity and restructuring initiatives. The contract termination fees were primarily the result of penalties incurred by
the Company to terminate existing supply and co-packer agreements. The asset impairment charges were primarily due
to the write-down of manufacturing lines that produced product packaging materials.
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