Coca Cola 2013 Annual Report Download - page 131

NOTE 18: PRODUCTIVITY, INTEGRATION AND RESTRUCTURING INITIATIVES
Productivity and Reinvestment
In February 2012, the Company announced a four-year productivity and reinvestment program which will further enable our
efforts to strengthen our brands and reinvest our resources to drive long-term profitable growth. This program will be focused on
the following initiatives: global supply chain optimization; global marketing and innovation effectiveness; operating expense
leverage and operational excellence; data and information technology systems standardization; and further integration of CCE’s
former North America business.
The Company incurred total pretax expenses of $764 million related to this program since the plan commenced. These expenses
were recorded in the line item other operating charges in our consolidated statement of income. Refer to Note 19 for the impact
these charges had on our operating segments. Outside services reported in the table below primarily relate to expenses in
connection with legal, outplacement and consulting activities. Other direct costs reported in the table below include, among other
items, internal and external costs associated with the development, communication, administration and implementation of these
initiatives; accelerated depreciation on certain fixed assets; contract termination fees; and relocation costs.
The following table summarizes the balance of accrued expenses related to these productivity and reinvestment initiatives and the
changes in the accrued amounts since the commencement of the plan (in millions):
Severance Pay Other
and Benefits Outside Services Direct Costs Total
2012
Costs incurred $ 21 $ 61 $ 188 $ 270
Payments (8) (55) (167) (230)
Noncash and exchange (1) — (13) (14)
Accrued balance as of December 31 $ 12 $ 6 $ 8 $ 26
2013
Costs incurred $ 188 $ 59 $ 247 $ 494
Payments (113) (59) (209) (381)
Noncash and exchange 1 — (28) (27)
Accrued balance as of December 31 $ 88 $ 6 $ 18 $ 112
Productivity Initiatives
During 2008, the Company announced a transformation effort centered on productivity initiatives to provide additional flexibility
to invest for growth. The initiatives impacted a number of areas, including 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 2011, we completed this program. The Company reversed charges of $2 million and $10 million, during the years ended
December 31, 2013 and 2012, respectively. The Company incurred expenses of $156 million during the year ended December 31,
2011, and has incurred total pretax expenses of $496 million related to these productivity initiatives since they commenced. These
expenses were recorded in the line item other operating charges in our consolidated statements of income. Refer to Note 19 for
the impact these charges had on our operating segments. The Company had $11 million accrued related to these productivity
initiatives as of December 31, 2012. As of December 31, 2013, the Company did not have any remaining accruals related to these
initiatives.
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