FORM 10-Q
FORM 10-Q
FORM 10-Q
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As of March 29, 2013, we had $693 million of total unrecognized compensation cost related to nonvested stock-based compensation arrangements granted<br />
under our plans, which we expect to recognize over a weighted-average period of 2.0 years. This expected cost does not include the impact of any future stockbased<br />
compensation awards.<br />
Other Operating Charges<br />
Other operating charges incurred by operating segment were as follows (in millions):<br />
Three Months Ended<br />
March 29,<br />
2013<br />
March 30,<br />
2012<br />
Eurasia & Africa $ 2 $ —<br />
Europe — (1)<br />
Latin America — —<br />
North America 79 82<br />
Pacific 8 —<br />
Bottling Investments 21 15<br />
Corporate 11 3<br />
Total other operating charges $ 121 $ 99<br />
During the three months ended March 29, 2013, the Company incurred other operating charges of $ 121 million. These charges primarily consisted of<br />
$<strong>10</strong>2 million due to the Company's productivity and reinvestment program and $21 million due to the Company's other restructuring and integration<br />
initiatives, including the integration of our German bottling and distribution operations. Refer to Note 11 of Notes to Condensed Consolidated Financial<br />
Statements, and see below for additional information on our productivity and reinvestment program as well as the Company's integration initiative in<br />
Germany. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements for additional information related to the impact these charges had on our<br />
operating segments.<br />
During the three months ended March 30, 2012, the Company incurred other operating charges of $ 99 million. These charges consisted of $64 million<br />
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<br />
our U.S. license agreement with Nestlé terminating at the end of 2012; $15 million due to the Company's other restructuring and integration initiatives; and<br />
$1 million due to costs associated with the Company detecting residues of carbendazim, a fungicide that is not registered in the United States for use on citrus<br />
products, in orange juice imported from Brazil for distribution in the United States. These charges were partially offset by a $1 million reversal due to the<br />
refinement of previously established accruals related to the Company's 2008–2011 productivity initiatives. Refer to Note 11 of Notes to Condensed<br />
Consolidated Financial Statements and below for additional information on our productivity and reinvestment program as well as the Company's integration<br />
initiative in Germany. Refer to Note 15 of Notes to Condensed Consolidated Financial Statements for additional information related to the impact these charges<br />
had on our operating segments.<br />
Productivity and Reinvestment Program<br />
In February 2012, the Company announced a four-year productivity and reinvestment program. This program will further enable our efforts to strengthen our<br />
brands and reinvest our resources to drive long-term profitable growth. The first component of this program is a global productivity initiative that will target<br />
annualized savings of $350 million to $400 million. This initiative is focused on four primary areas: global supply chain optimization; global marketing and<br />
innovation effectiveness; operating expense leverage and operational excellence; and data and information technology systems standardization.<br />
The second component of our productivity and reinvestment program involves a new integration initiative in North America related to our acquisition of CCE's<br />
former North America business. The Company has identified incremental synergies, primarily in the area of our North American product supply operations,<br />
which will better enable us to serve our customers and consumers. We believe these efforts will create annualized savings of $200 million to $250 million.<br />
As a combined productivity and reinvestment program, the Company anticipates generating annualized savings of $550 million to $650 million, which will<br />
be phased in over time. We expect to begin fully realizing the annual benefit of these savings in 2015, the final year of the program. The savings generated by<br />
this program will be reinvested in brand-building initiatives, and in the short term will also mitigate potential incremental commodity costs. The Company has<br />
incurred total costs of $372 million related to our productivity and reinvestment program since the initiative commenced, and we are currently in the process of<br />
defining the total costs we expect to incur related to this initiative. Refer to Note 11 of Notes to Condensed Consolidated Financial Statements for additional<br />
information.<br />
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