Coca Cola 2003 Annual Report Download - page 71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 2: BOTTLING INVESTMENTS (Continued)
In November 2001, our Company sold nearly all its ownership interests in various Russian bottling
operations to CCHBC for approximately $170 million in cash and notes receivable, of which $146 million in
notes receivable remained outstanding as of December 31, 2001. Such amount was subsequently collected in
2002. These interests consisted of the Company’s 40 percent ownership interest in a joint venture with CCHBC
that operates bottling territories in Siberia and parts of western Russia, together with our Company’s nearly
100 percent interests in bottling operations with territories covering the remainder of Russia.
If valued at the December 31, 2003 quoted closing prices of shares actively traded on stock markets, the
value of our equity investments in publicly traded bottlers other than CCE exceeded our carrying value by
approximately $1.6 billion.
NOTE 3: ISSUANCES OF STOCK BY EQUITY INVESTEES
In 2003, our Company recorded approximately $8 million of noncash pretax gains on issuances of stock by
equity investees. These gains primarily related to the issuance by CCE of common stock valued at an amount
greater than the book value per share of our investment in CCE. This transaction reduced our ownership
interest in the total outstanding shares of CCE common stock by less than 1 percent.
In July 2001, CCE completed its acquisition of Hondo Incorporated and Herbco Enterprises, Inc.,
collectively known as Herb Coca-Cola. The transaction was valued at approximately $1.4 billion, with
approximately 30 percent of the transaction funded with the issuance of approximately 25 million shares of CCE
common stock and the remaining portion funded through debt and assumed debt. The CCE common stock
issued was valued in an amount greater than the book value per share of our investment in CCE. The shares
issued, combined with other share issuances, exceeded the amount of repurchased shares under CCE’s share
repurchase plan. As a result, the issuance of these shares resulted in a noncash pretax gain for our Company of
approximately $91 million. We provided deferred taxes of approximately $36 million on this gain. This
transaction reduced our ownership interest in CCE from approximately 40 percent to approximately 38 percent.
No gains or losses on issuances of stock by equity investees were recorded during 2002.
NOTE 4: GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS
In accordance with SFAS No. 142, goodwill and indefinite-lived intangible assets are no longer amortized
but are reviewed annually for impairment. Our Company is the owner of some of the world’s most valuable
trademarks. As a result, certain trademarks and franchise rights to bottle and distribute such trademarked
products are expected to generate positive cash flows for as long as the Company owns such trademarks and
franchise rights for a particular territory. Given the Company’s more than 100-year history, certain trademarks
and the franchise rights to bottle and distribute products under our trademarks have been assigned indefinite
lives. Intangible assets that are deemed to have definite lives are amortized over their useful lives. The
amortization provisions of SFAS No. 142 apply to goodwill and intangible assets acquired after June 30, 2001.
With respect to goodwill and intangible assets acquired prior to July 1, 2001, the Company began applying the
new accounting rules effective January 1, 2002.
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