Coca Cola 2005 Annual Report Download - page 112

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16: INCOME TAXES (Continued)
On December 31, 2005 and 2004, we had approximately $116 million and $194 million, respectively, of net
deferred tax assets located in countries outside the United States.
On December 31, 2005, we had approximately $3,345 million of loss carryforwards available to reduce
future taxable income. Loss carryforwards of approximately $1,365 million must be utilized within the next five
years; $123 million must be utilized within the next 10 years, and the remainder can be utilized over a period
greater than 10 years.
As of December 31, 2005, 2004 and 2003, the Company had valuation allowances of $786 million,
$854 million and $630 million, respectively, which were primarily related to the realization of recorded tax
benefits on tax loss carryforwards from operations in various jurisdictions. In 2005, the Company recognized a
decrease in its valuation allowances of $68 million. In 2004, the Company recognized an increase in its valuation
allowances of $224 million. In 2003, the Company recognized a decrease in its valuation allowances of
$108 million.
NOTE 17: SIGNIFICANT OPERATING AND NONOPERATING ITEMS
In 2005, our Company received approximately $109 million related to the settlement of a class action
lawsuit concerning price-fixing in the sale of HFCS purchased by the Company during the years 1991 to 1995.
Subsequent to the receipt of this settlement amount, the Company distributed approximately $62 million to
certain bottlers in North America. From 1991 to 1995, the Company purchased HFCS on behalf of these
bottlers. Therefore, these bottlers were ultimately entitled to a portion of the proceeds of the settlement. Of the
approximately $62 million we distributed to certain bottlers in North America, approximately $49 million was
distributed to CCE. The Company’s remaining share of the settlement was approximately $47 million, which was
recorded as a reduction of cost of goods sold and impacted the Corporate operating segment.
During 2005, we recorded approximately $23 million of noncash pretax gains on the issuances of stock by
equity method investees. Refer to Note 3.
The Company recorded approximately $50 million of expense in 2005 as a result of a change in our
estimated service period for the acceleration of certain stock-based compensation awards. Refer to Note 14.
Equity income in 2005 was reduced by approximately $33 million for the Corporate segment, primarily
related to our proportionate share of the tax liability recorded by CCE resulting from its repatriation of
previously unremitted foreign earnings under the Jobs Creation Act, as well as our proportionate share of
restructuring charges. Those amounts were partially offset by our proportionate share of CCE’s HFCS lawsuit
settlement proceeds and changes in certain of CCE’s state and provincial tax rates. Refer to Note 2.
Our Company recorded impairment charges during 2005 of approximately $84 million related to certain
trademarks for beverages sold in the Philippines and approximately $1 million related to impairment of other
assets. These impairment charges were recorded in the consolidated statement of income line item other
operating charges. Refer to Note 5.
During 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 2004, we recorded approximately $24 million of noncash pretax gains on the issuances of stock by CCE.
Refer to Note 3.
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