Coca Cola 2004 Annual Report Download - page 84

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 4: GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS (Continued)
Middle East operating segment and were included in other operating charges in our consolidated statement of
income. The charge was primarily related to franchise rights at CCEAG. The CCEAG impairment was the result
of our revised outlook for the German market that 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 for our products in the discount retail channel. The deposit laws in Germany have led to discount
chains creating proprietary packages that can only be returned to their own stores. These proprietary packages
are continuing to gain market share and customer acceptance.
At the end of 2004, the German government passed an amendment to the mandatory deposit legislation
that will require retailers, including discount chains, to accept returns of each type of non-refillable beverage
containers which they sell, regardless of where the beverage container type was purchased. In addition, the
mandatory deposit requirement was expanded to other beverage categories. The amendment allows for a
transition period to enable manufacturers and retailers to establish a national take-back system for non-refillable
containers. The transition period is expected to last at least until mid-2006.
We determined the amount of the 2004 impairment charges by comparing the fair value of the intangible
assets to the current carrying value. Fair values were derived using discounted cash flow analyses with a number
of scenarios that were weighted based on the probability of different outcomes. Because the fair value was less
than the carrying value of the assets, we recorded an impairment charge to reduce the carrying value of the
assets to fair value. These impairment charges were recorded in the line item other operating charges in the
consolidated statement of income for 2004.
In 2003, acquisitions of intangible assets totaled approximately $142 million. Of this amount, approximately
$88 million related to the Company’s acquisition of certain intangible assets with indefinite lives, primarily
trademarks and brands in various parts of the world. None of these trademarks and brands was considered
individually significant. Additionally, the Company acquired certain brands and related contractual rights from
Panamco valued at $54 million in the Latin America operating segment with an estimated useful life of 10 years.
NOTE 5: ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following (in millions):
December 31, 2004 2003
Trade accounts payable and other accrued expenses $ 2,238 $ 2,014
Accrued marketing 1,194 1,046
Accrued compensation 389 311
Sales, payroll and other taxes 222 225
Container deposits 199 256
Accrued streamlining costs (refer to Note 17) 41 206
$ 4,283 $ 4,058
NOTE 6: SHORT-TERM BORROWINGS AND CREDIT ARRANGEMENTS
Loans and notes payable consist primarily of commercial paper issued in the United States. At
December 31, 2004 and 2003, we had approximately $4,235 million and $2,234 million, respectively, outstanding
in commercial paper borrowings. Our weighted-average interest rates for commercial paper outstanding were
approximately 2.2 percent and 1.1 percent per year at December 31, 2004 and 2003, respectively. In addition, we
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