Coca Cola 2011 Annual Report Download - page 60

productivity initiatives since they commenced during the first quarter of 2008. Refer to Note 18 of Notes to Consolidated
Financial Statements for additional information related to the Company’s ongoing productivity initiatives.
In February 2012, the Company announced a new four-year productivity and reinvestment program. This program will further
enable our efforts to strengthen our brands and reinvest our resources to drive long-term profitable growth. The first component
of this program is a new global productivity initiative that will target annualized savings of $350 million to $400 million. This
initiative will be focused around four primary areas: global supply chain optimization; global marketing and innovation
effectiveness; operating expense leverage and operational excellence; and data and IT systems standardization. The Company is in
the initial stages of defining the costs associated with this initiative.
The second component of our new productivity and reinvestment program involves beginning a new integration initiative in North
America related to our acquisition of CCE’s North American business. The Company has identified incremental synergies in
North America, primarily in the area of our North American product supply, which will better enable us to service our customers
and consumers. We believe these efforts will create annualized savings of $200 million to $250 million and will result in costs of
approximately $300 million.
As a combined productivity and reinvestment program, the Company anticipates generating annualized savings of $550 million to
$650 million which will be phased in over the next four years starting in 2012. We expect to begin fully realizing the annual benefit
of these savings in 2015, the final year of the program. The savings generated by this program will be reinvested in brand-building
initiatives, and in the short term will also mitigate potential incremental commodity costs.
In 2010, the Company incurred other operating charges of $819 million, which consisted of $478 million associated with the
Company’s productivity, integration and restructuring initiatives; $250 million related to charitable contributions; $81 million due
to transaction costs incurred in connection with our acquisition of CCE’s North American business and the sale of our Norwegian
and Swedish bottling operations to New CCE; and $10 million of charges related to bottling activities in Eurasia. The Company’s
integration activities include costs associated with the integration of CCE’s North American business, as well as the integration of
18 German bottling and distribution operations acquired in 2007. The charitable contributions were primarily attributable to a
cash donation to The Coca-Cola Foundation. Refer to Note 18 of Notes to Consolidated Financial Statements for additional
information on our productivity, integration and restructuring initiatives. Refer to Note 2 of Notes to Consolidated Financial
Statements for additional information related to the transaction costs.
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
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 was not considered held-for-sale, primarily due to the fact that it was not probable a sale would
be completed within one year.
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