Coca Cola 2004 Annual Report Download - page 47

2003, our Company recorded a noncash charge of $102 million primarily related to our proportionate share of
these matters. This charge is included in the line item equity income—net.
Other Income (Loss)—Net
Other income (loss)—net amounted to a net loss of $82 million for 2004 compared to a net loss of
$138 million for 2003, a difference of $56 million. Approximately $37 million of this difference is related to a
reduction in foreign exchange losses. This line item in 2004 primarily consisted of foreign exchange losses of
approximately $39 million and the accretion of $58 million for the discounted value of our liability to purchase
CCEAG shares (refer to Note 18), partially offset by the minority shareowners’ proportional share of losses on
certain consolidated subsidiaries.
Other income (loss)—net amounted to a net loss of $138 million for 2003 compared to a net loss of
$353 million for 2002, a difference of $215 million. The significant portion of this difference related to a
$157 million charge primarily related to the write-down of certain investments in Latin America in 2002, and no
such charge applied to 2003. This line item in 2003 primarily consisted of foreign exchange losses of $76 million
and accretion of $51 million for the discounted value of our liability to purchase CCEAG shares.
Gains on Issuances of Stock by Equity Method Investees
When one of our equity method investees issues additional shares to third parties, our percentage
ownership interest in the investee decreases. In the event the issuance price per share is higher or lower 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.
In 2004, our Company recorded approximately $24 million of noncash pretax gains due to the issuances of
stock by CCE. The issuances primarily related to the exercise of CCE stock options by CCE employees at
amounts greater than the book value per share of our investment in CCE. These issuances of stock reduced our
ownership interest in the total outstanding shares of CCE common stock by approximately 1 percent.
In 2003, our Company recorded approximately $8 million of noncash pretax gains on issuances of stock by
equity method 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. These issuances of stock reduced our
ownership interest in the total outstanding shares of CCE common stock by less than 1 percent.
No gains on issuances of stock by equity method investees were recorded to our consolidated statements of
income during 2002. Refer to Note 3.
Income Taxes
Our effective tax rate reflects tax benefits derived from significant operations outside the United States,
which are generally taxed at rates lower than the U.S. statutory rate of 35 percent.
Our effective tax rate of approximately 22.1 percent for the year ended December 31, 2004 included
the following:
• an income tax benefit of approximately $128 million related to the reversal of previously accrued taxes
resulting from the favorable resolution of various tax matters;
• an income tax benefit on ‘‘Other Operating Charges’’ discussed above at a rate of approximately
36 percent;
• an income tax expense on ‘‘Issuances of Stock by Equity Investee’’ discussed above at a rate of
approximately 39 percent;
45