Coca Cola 2005 Annual Report Download - page 111

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16: INCOME TAXES (Continued)
As discussed in Note 1, the Jobs Creation Act was enacted in October 2004. One of the provisions provides
a one-time benefit related to foreign tax credits generated by equity investments in prior years. The Company
recorded an income tax benefit of approximately $50 million as a result of this law change in 2004. The Jobs
Creation Act also included a temporary incentive for U.S. multinationals to repatriate foreign earnings at an
approximate 5.25 percent effective tax rate. During the first quarter of 2005, the Company decided to repatriate
approximately $2.5 billion in previously unremitted foreign earnings. Therefore, the Company recorded a
provision for taxes on such previously unremitted foreign earnings of approximately $152 million in the first
quarter of 2005. Also, during 2005, the United States Internal Revenue Service and the United States
Department of Treasury issued additional guidance related to the Jobs Creation Act. As a result of this
guidance, the Company reduced the accrued taxes previously provided on such unremitted earnings by
$25 million in the second quarter of 2005. Also, during the fourth quarter of 2005, the Company repatriated an
additional $3.6 billion, with an associated tax liability of approximately $188 million. Therefore, the total
previously unremitted earnings that was repatriated during the full year of 2005 was $6.1 billion with an
associated tax liability of approximately $315 million. This liability was recorded in the current year as federal
and state and local tax expenses in the amount of $301 million and $14 million, respectively.
The tax effects of temporary differences and carryforwards that give rise to deferred tax assets and liabilities
consist of the following (in millions):
December 31, 2005 2004
Deferred tax assets:
Property, plant and equipment $60$71
Trademarks and other intangible assets 64 65
Equity method investments (including translation adjustment) 445 530
Other liabilities 200 149
Benefit plans 649 594
Net operating/capital loss carryforwards 750 856
Other 295 257
Gross deferred tax assets 2,463 2,522
Valuation allowances (786) (854)
Total deferred tax assets1,2 $ 1,677 $ 1,668
Deferred tax liabilities:
Property, plant and equipment $ (641) $ (684)
Trademarks and other intangible assets (278) (247)
Equity method investments (including translation adjustment) (674) (612)
Other liabilities (80) (71)
Other (170) (180)
Total deferred tax liabilities3$ (1,843) $ (1,794)
Net deferred tax assets (liabilities) $ (166) $ (126)
1Noncurrent deferred tax assets of $192 million and $251 million were included in the consolidated
balance sheets line item other assets at December 31, 2005 and 2004, respectively.
2Current deferred tax assets of $153 million and $146 million were included in the consolidated
balance sheets line item prepaid expenses and other assets at December 31, 2005 and 2004,
respectively.
3Current deferred tax liabilities of $159 million and $121 million were included in the consolidated
balance sheets line item accounts payable and accrued expenses at December 31, 2005 and 2004,
respectively.
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