Quarterly report pursuant to Section 13 or 15(d)

Productivity, Integration and Restructuring Initiatives

v2.4.0.8
Productivity, Integration and Restructuring Initiatives
 9 Months Ended
Sep. 27, 2013
Productivity and Reinvestment [Abstract]  
Productivity, Integration and Restructuring Initiatives
PRODUCTIVITY, INTEGRATION AND RESTRUCTURING INITIATIVES
Productivity and Reinvestment
In February 2012, the Company announced a four-year productivity and reinvestment program which is designed to further enable our efforts to strengthen our brands and reinvest our resources to drive long-term profitable growth. This program is 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.
As of September 27, 2013, the Company has incurred total pretax expenses of $582 million related to this program since the plan commenced. These expenses were recorded in the line item other operating charges in our condensed consolidated statements of income. Refer to Note 15 for the impact these charges had on our operating segments. Outside services reported in the tables below primarily relate to expenses in connection with legal, outplacement and consulting activities. Other direct costs reported in the tables 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 as of and for the three months ended September 27, 2013 (in millions):
 
Accrued
Balance
June 28,
2013

Costs
Incurred
Three Months Ended
September 27,
2013

Payments

Noncash
and
Exchange

Accrued
Balance
September 27,
2013

Severance pay and benefits
$
37

$
30

$
(29
)
$
1

$
39

Outside services
3

12

(3
)
—

12

Other direct costs
12

55

(50
)
(1
)
16

Total
$
52

$
97

$
(82
)
$
—

$
67

The following table summarizes the balance of accrued expenses related to these productivity and reinvestment initiatives and the changes in the accrued amounts as of and for the nine months ended September 27, 2013 (in millions):
 
Accrued
Balance
December 31,
2012

Costs
Incurred
Nine Months Ended
September 27,
2013

Payments

Noncash
and
Exchange

Accrued
Balance
September 27,
2013

Severance pay and benefits
$
12

$
109

$
(83
)
$
1

$
39

Outside services
6

49

(43
)
—

12

Other direct costs
8

154

(145
)
(1
)
16

Total
$
26

$
312

$
(271
)
$
—

$
67


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 expenses of $45 million and $85 million related to this initiative during the three and nine months ended September 27, 2013, respectively, and has incurred total pretax expenses of $525 million related to this initiative since it commenced. These charges were recorded in the line item other operating charges in our condensed consolidated statements of income and impacted the Bottling Investments operating segment. The charges recorded in connection with these integration activities have been primarily due to involuntary terminations. The Company had $108 million and $96 million accrued related to these integration costs as of September 27, 2013, and December 31, 2012, 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 September 27, 2013, the Company has not finalized any additional plans.