Coca Cola 2004 Annual Report Download - page 93

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Coca-Cola Company and Subsidiaries
NOTE 10: HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
The following table presents the fair values, carrying values and maturities of the Company’s foreign
currency derivative instruments outstanding (in millions):
Carrying
Values Fair
December 31, Assets Values Maturity
2004
Forward contracts $ 27 $ 27 2005
Options and collars 12 12 2005
$39 $39
Carrying
Values
Assets Fair
December 31, (Liabilities) Values Maturity
2003
Forward contracts $ (25) $ (25) 2004
Options and collars 3 3 2004
$ (22) $ (22)
The Company estimates the fair value of its foreign currency derivatives based on quoted market prices or
pricing models using current market rates. This amount is primarily reflected in prepaid expenses and other
assets in our consolidated balance sheets.
NOTE 11: COMMITMENTS AND CONTINGENCIES
On December 31, 2004 we were contingently liable for guarantees of indebtedness owed by third parties in
the amount of $257 million. These guarantees are related to third-party customers, bottlers and vendors and
have arisen through the normal course of business. These guarantees have various terms, and none of these
guarantees is individually significant. The amount represents the maximum potential future payments that we
could be required to make under the guarantees; however, we do not consider it probable that we will be
required to satisfy these guarantees.
Additionally, in December 2003, we granted a $250 million standby line of credit to Coca-Cola FEMSA with
normal market terms. As of December 31, 2004 and 2003, no amounts have been drawn against this line of
credit. This standby letter of credit expires in December 2006.
We believe our exposure to concentrations of credit risk is limited due to the diverse geographic areas
covered by our operations.
The Company is also involved in various legal proceedings. We establish reserves for specific legal
proceedings when we determine that the likelihood of an unfavorable outcome is probable. Management has
also identified certain other legal matters where we believe an unfavorable outcome is reasonably possible for
which no estimate of possible losses can be made. Management believes that any liability to the Company that
may arise as a result of currently pending legal proceedings, including those discussed below, will not have a
material adverse effect on the financial condition of the Company taken as a whole.
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