Coca Cola 2004 Annual Report Download - page 110

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 16: SIGNIFICANT OPERATING AND NONOPERATING ITEMS (Continued)
In the second quarter of 2004, our Company’s equity income benefited by approximately $37 million for our
proportionate share of a favorable tax settlement related to Coca-Cola FEMSA.
In the third quarter of 2004, we recorded impairment charges of approximately $392 million, which were
primarily related to the impairment of franchise rights at CCEAG. The CCEAG impairment was the result of
our revised outlook for the German market, which has been unfavorably impacted by volume declines resulting
from market shifts related to the deposit law on nonreturnable beverage packages and the corresponding lack of
availability of our products in the discount retail channel. Refer to Note 4.
In the fourth quarter of 2004, our Company received a $75 million insurance settlement related to the class-
action lawsuit that was settled in 2000. Also in the fourth quarter of 2004, the Company donated $75 million to
the Coca-Cola Foundation.
In the first quarter of 2003, the Company reached a settlement with certain defendants in a vitamin antitrust
litigation matter. In that litigation, the Company alleged that certain vitamin manufacturers participated in a
global conspiracy to fix the price of some vitamins, including vitamins used in the manufacture of some of the
Company’s products. During the first quarter of 2003, the Company received a settlement relating to this
litigation of approximately $52 million on a pretax basis, or $0.01 per share on an after-tax basis. The amount
was recorded as a reduction to cost of goods sold.
Refer to Note 2 for disclosure regarding the merger of Coca-Cola FEMSA and Panamco in 2003 and the
recording of a $102 million noncash pretax charge to the consolidated statement of income line item equity
income—net.
In the third quarter of 2002, our Company recorded a noncash pretax charge of approximately $33 million
related to our share of impairment and restructuring charges taken by certain equity method investees in Latin
America. This charge was recorded in the consolidated statement of income line item equity income—net.
Our Company had direct and indirect ownership interests totaling approximately 18 percent in Cervejarias
Kaiser S.A. (‘‘Kaiser S.A.’’). In March 2002, Kaiser S.A. sold its investment in Cervejarias Kaiser Brazil, Ltda to
Molson Inc. (‘‘Molson’’) for cash of approximately $485 million and shares of Molson valued at approximately
$150 million. Our Company’s pretax share of the gain related to this sale was approximately $43 million, of
which approximately $21 million was recorded in the consolidated statement of income line item equity
income—net, and approximately $22 million was recorded in the consolidated statement of income line item
other income (loss)—net.
In the first quarter of 2002, our Company recorded a noncash pretax charge of approximately $157 million
(recorded in the consolidated statement of income line item other income (loss)—net), primarily related to the
write-down of certain investments in Latin America. This write-down reduced the carrying value of these
investments in Latin America to fair value. The charge was primarily the result of the economic developments in
Argentina during the first quarter of 2002, including the devaluation of the Argentine peso and the severity of
the unfavorable economic outlook.
NOTE 17: STREAMLINING COSTS
During 2003, the Company took steps to streamline and simplify its operations, primarily in North America
and Germany. In North America, the Company integrated the operations of three formerly separate North
American business units—Coca-Cola North America, The Minute Maid Company and Coca-Cola Fountain. In
Germany, CCEAG took steps to improve its efficiency in sales, distribution and manufacturing, and our German
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