Significant Operating and Nonoperating Items
|3 Months Ended|
Mar. 30, 2012
|Significant Operating and Nonoperating Items|
|Significant Operating and Nonoperating Items||
Significant Operating and Nonoperating Items
Other Operating Items
In December 2011, the Company detected that orange juice being imported from Brazil contained residues of carbendazim, a fungicide that is not registered in the United States for use on citrus products. As a result, we began purchasing additional supplies of Florida orange juice at a higher cost than Brazilian orange juice and incurred charges of $5 million in the line item cost of goods sold in our condensed consolidated statement of income during the three months ended March 30, 2012.
On March 11, 2011, a major earthquake struck off the coast of Japan, resulting in a tsunami that devastated the northern and eastern regions of the country. As a result of these events, the Company made a donation to a charitable organization to establish the Coca-Cola Japan Reconstruction Fund, which will help rebuild schools and community facilities across the impacted areas of the country.
The Company recorded total charges of $79 million related to these events during the three months ended April 1, 2011. These charges were recorded in various line items in our condensed consolidated statement of income, including $28 million in deductions from revenue, $4 million in cost of goods sold and $47 million in other operating charges. Refer to Note 15 for the impact these charges had on our operating segments.
The charges of $28 million recorded in deductions from revenue were primarily related to funds we provided our local bottling partners to enable them to continue producing and distributing our beverage products in the affected regions. This support not only helped restore our business operations in the impacted areas, but it also assisted our bottling partners in meeting the evolving customer and consumer needs as the recovery and rebuilding efforts advanced. The charges of $4 million recorded in cost of goods sold were primarily related to Company-owned inventory that was destroyed or lost. The charges of $47 million recorded in other operating charges primarily related to the donation discussed above and included an impairment charge of $2 million on certain Company-owned fixed assets. These fixed assets primarily consisted of Company-owned vending equipment and coolers that were damaged or lost as a result of these events. Refer to Note 14 for the fair value disclosures related to the inventory and fixed asset charges described above.
Other Operating Charges
During the three months ended March 30, 2012, the Company incurred other operating charges of $99 million. These charges consisted of $64 million associated with the Company's productivity and reinvestment program; $20 million due to changes in the Company's ready-to-drink tea strategy as a result of our current U.S. license agreement with Nestlé S.A. ("Nestlé") terminating at the end of 2012; $15 million related to the Company's other restructuring and integration initiatives, including the integration of 18 German bottling and distribution operations acquired during 2007; and $1 million due to costs associated with the Company detecting carbendazim in orange juice imported from Brazil for distribution in the United States. These charges were partially offset by a $1 million reversal associated with the refinement of previously recorded accruals related to the Company's 2008–2011 productivity initiatives. Refer to Note 15 for the impact these charges had on our operating segments.
During the three months ended April 1, 2011, the Company incurred other operating charges of $209 million, which consisted of $162 million associated with the Company's ongoing productivity, integration and restructuring initiatives, as well as $47 million related to the events in Japan described above. Refer to Note 11 for additional information on our productivity, integration and restructuring initiatives. Refer to Note 15 for the impact these charges had on our operating segments.
Other Nonoperating Items
Equity Income (Loss) — Net
During the three months ended March 30, 2012, the Company recorded a net gain of $44 million in equity income (loss) — net. This net gain primarily represents the Company's proportionate share of a transaction gain recorded by an equity method investee, partially offset by our proportionate share of restructuring charges recorded by certain of our equity method investees. In addition, the Company recorded a charge of $3 million related to changes in the structure of Beverage Partners Worldwide ("BPW"), our 50/50 joint venture with Nestlé in the ready-to-drink tea category. These changes in structure resulted in the joint venture focusing its geographic scope on Europe and Canada. The Company accounts for our investment in BPW under the equity method of accounting. Refer to Note 15 for the impact these charges had on our operating segments.
During the three months ended April 1, 2011, the Company recorded charges of $4 million in equity income (loss) — net. These charges primarily represent the Company's proportionate share of restructuring charges recorded by an equity method investee and impacted the Bottling Investments operating segment.
Other Income (Loss) — Net
The Company did not record any significant unusual or infrequent items in other income (loss) — net during the three months ended March 30, 2012.
During the three months ended April 1, 2011, the Company recognized a gain of $102 million related to the sale of our investment in Embonor. The gain on this transaction was recorded in other income (loss) — net and impacted the Corporate operating segment. Refer to Note 2.
The entire disclosure for any additional information related to the determination or classification of material events or transactions (that would not reasonably be expected to recur in the foreseeable future) that possesses a high degree of abnormality and are incidentally related to, the ordinary and typical activities of the entity.
Reference 1: http://www.xbrl.org/2003/role/presentationRef