Coca Cola 2005 Annual Report Download - page 113

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17: SIGNIFICANT OPERATING AND NONOPERATING ITEMS (Continued)
We recorded impairment charges during 2004 of approximately $374 million, primarily related to the
impairment of franchise rights at CCEAG and approximately $18 million related to other assets. These
impairment charges were recorded in the consolidated statement of income line item other operating charges.
Refer to Note 5.
We recorded additional impairment charges in 2004 of approximately $88 million. These impairments
primarily related to the write-downs of certain manufacturing investments and an intangible asset. As a result of
operating losses, management prepared analyses of cash flows expected to result from the use of the assets and
their eventual disposition. Because the sum of the undiscounted cash flows was less than the carrying value of
such assets, we recorded an impairment charge to reduce the carrying value of the assets to fair value. These
impairment charges were recorded in the consolidated statement of income line item other operating charges.
Also in 2004, our Company received a $75 million insurance settlement related to the class action lawsuit
that was settled in 2000. The Company donated $75 million to The Coca-Cola Foundation in 2004.
In 2003, the Company reached a settlement with certain defendants in a vitamin antitrust litigation matter.
In that litigation, the Company alleged that certain vitamin manufacturers participated in a global conspiracy to
fix the price of some vitamins, including vitamins used in the manufacture of some of the Company’s products.
Also in 2003, the Company received a settlement relating to this litigation of approximately $52 million, which
was recorded as a reduction to cost of goods sold.
Refer to Note 2 for disclosure regarding the merger of Coca-Cola FEMSA and Panamco in 2003 and the
recording of a $102 million noncash pretax charge to the consolidated statement of income line item equity
income—net.
During 2003, we recorded approximately $8 million of noncash pretax gains on the issuances of stock by
equity method investees. Refer to Note 3.
NOTE 18: STREAMLINING COSTS
During 2003, the Company took steps to streamline and simplify its operations, primarily in North America
and Germany. In North America, the Company integrated the operations of three formerly separate North
American business units—Coca-Cola North America, The Minute Maid Company and Coca-Cola Fountain. In
Germany, CCEAG took steps to improve its efficiency in sales, distribution and manufacturing, and our German
Division office also implemented streamlining initiatives. Selected other operations also took steps to streamline
their operations to improve overall efficiency and effectiveness. As disclosed in Note 1, under SFAS No. 146, a
liability is accrued only when certain criteria are met. All of the Company’s streamlining initiatives met the
criteria of SFAS No. 146 as of December 31, 2003, and all related costs were incurred as of December 31, 2003.
Employees separated from the Company as a result of these streamlining initiatives were offered severance
or early retirement packages, as appropriate, which included both financial and nonfinancial components. The
expenses recorded during the year ended December 31, 2003 included costs associated with involuntary
terminations and other direct costs associated with implementing these initiatives. As of December 31, 2003,
approximately 3,700 associates were separated pursuant to these streamlining initiatives. Other direct costs
included the relocation of employees; contract termination costs; costs associated with the development,
communication and administration of these initiatives; and asset write-offs. During 2003, the Company incurred
total pretax expenses related to these streamlining initiatives of approximately $561 million, or $0.15 per share
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