Coca Cola 2003 Annual Report Download - page 61

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The following table illustrates the effect on net income and earnings per share as if the fair value method
had been applied to all outstanding and unvested awards in each period (in millions, except per share amounts):
Year Ended December 31, 2003 2002 2001
Net income, as reported $ 4,347 $ 3,050 $ 3,969
Add: Stock-based compensation expense included in reported net
income, net of related tax effects 308 267 29
Deduct: Total stock-based compensation expense determined
under fair value method for all awards, net of related tax
effects (308) (267) (231)
Pro forma net income $ 4,347 $ 3,050 $ 3,767
Earnings per share:
Basic—as reported $ 1.77 $ 1.23 $ 1.60
Basic—pro forma $ 1.77 $ 1.23 $ 1.51
Diluted—as reported $ 1.77 $ 1.23 $ 1.60
Diluted—pro forma $ 1.77 $ 1.23 $ 1.51
Issuances of Stock by Equity Investees
When one of our equity investees issues additional shares to third parties, our percentage ownership interest in
the investee decreases. In the event the issuance price per share is more or less than our average carrying amount
per share, we recognize a noncash gain or loss on the issuance. This noncash gain or loss, net of any deferred taxes, is
generally recognized in our net income in the period the change of ownership interest occurs.
If gains have been previously recognized on issuances of an equity investee’s stock and shares of the equity
investee are subsequently repurchased by the equity investee, gain recognition does not occur on issuances
subsequent to the date of a repurchase until shares have been issued in an amount equivalent to the number of
repurchased shares. This type of transaction is reflected as an equity transaction, and the net effect is reflected in
our balance sheets. Refer to Note 3.
Net Income Per Share
We compute basic net income per share by dividing net income by the weighted-average number of shares
outstanding. Diluted net income per share includes the dilutive effect of stock-based compensation awards, if any.
Cash Equivalents
We classify marketable securities that are highly liquid and have maturities of three months or less at the
date of purchase as cash equivalents.
Trade Accounts Receivable
We record trade accounts receivable at net realizable value. This value includes an appropriate allowance
for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and
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