Coca Cola 2011 Annual Report Download - page 139

Integration Initiatives
Integration of CCE’s North American Business
In 2010, we acquired CCE’s North American business and began an integration initiative to develop, design and implement our
future operating framework. 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 incurred total pretax expenses of $358 million and $135 million during 2011 and 2010, respectively, related to this
initiative. Other direct costs were primarily related to internal and external costs associated with the development, design and
implementation of our future operating framework. Other direct costs also included, among other items, contract termination fees
and relocation costs and were recorded in the line item other operating charges. Refer to Note 19 for the impact these charges
had on our operating segments. In 2011, we completed this program.
The following table summarizes the balance of accrued expenses related to these integration 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
2010
Costs incurred $ 45 $ 42 $ 48 $ 135
Payments (1) (33) (34) (68)
Noncash and exchange 4 — (2) 2
Accrued balance as of December 31 $ 48 $ 9 $ 12 $ 69
2011
Costs incurred $ 40 $ 91 $ 227 $ 358
Payments (40) (89) (210) (339)
Noncash and exchange ——33
Accrued balance as of December 31 $ 48 $ 11 $ 32 $ 91
1Primarily relate to expenses in connection with legal, outplacement and consulting activities.
Integration of Our German Bottling and Distribution Operations
In 2008, the Company began an integration initiative related to the 18 German bottling and distribution operations acquired in
2007. The Company incurred $67 million, $94 million and $110 million of expenses related to this initiative in 2011, 2010 and
2009, respectively. The Company has incurred total pretax expenses of $292 million related to this initiative since it commenced,
which were recorded in the line item other operating charges and impacted the Bottling Investments operating segment. The
expenses recorded in connection with these integration activities have been primarily due to involuntary terminations. The
Company had $30 million and $34 million accrued related to these integration costs as of December 31, 2011 and 2010,
respectively.
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, 2011, the
Company has not finalized any additional plans.
Restructuring Initiatives
The Company incurred charges of $52 million, $59 million and $51 million related to other restructuring initiatives during 2011,
2010 and 2009, respectively. These other restructuring initiatives were outside the scope of the productivity, integration and
streamlining initiatives discussed above and were related to individually insignificant activities throughout many of our business
units. 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.
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