FORM 10-Q

certain of our equity method investees. In addition, the Company recorded a charge of $ 3 million due 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 resulted in the joint venture focusing its geographic
scope primarily 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.
Other Income (Loss) — Net
During the three months ended March 29, 2013, the Company recorded a charge of $140 million in the line item other income (loss) — net due to the
Venezuelan government announcing a currency devaluation. As a result of this devaluation, the Company remeasured the net assets related to its operations in
Venezuela. Refer to Note 15 for the impact this charge had on our operating segments.
During the three months ended March 30, 2012, the Company did not record any significant unusual or infrequent items in the line item other income (loss)
— net.
NOTE 11: 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 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 March 29, 2013, the Company has incurred total pretax expenses of $ 372 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 March 29, 2013 (in millions):
Accrued
Balance
December 31,
2012
Costs
Incurred
Three Months
Ended
March 29,
2013 Payments
Noncash
and
Exchange
Accrued
Balance
March 29,
2013
Severance pay and benefits $ 12 $ 45 $ (7) $ — $ 50
Outside services 6 23 (26) — 3
Other direct costs 8 34 (32) — 10
Total $ 26 $ 102 $ (65) $ — $ 63
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 $20 million related to this initiative during the three months ended March 29, 2013, and has incurred total pretax expenses of $ 460 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 $ 102 million and $96 million accrued related to these integration costs as of March 29, 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 March 29, 2013, the Company has not finalized any additional plans.
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