Coca Cola 2005 Annual Report Download - page 52

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As demonstrated by the tables above, the percentage contribution to operating income and operating
margin by each operating segment fluctuated from year to year. Operating income and operating margin by
operating segment were influenced by a variety of factors and events, primarily the following:
• In 2005, operating income increased approximately 7 percent. Of this amount, 4 percent was due to
favorable foreign currency exchange primarily related to the Brazilian real and the Mexican peso, which
impacted the Latin America operating segment, and the euro, which impacted the European Union
operating segment.
• In 2005, the increase in net operating revenues and gross profit was partially offset by increased spending
on marketing and innovation activities in each operating segment. Refer to the headings ‘‘Net Operating
Revenues’’ and ‘‘Selling, General and Administrative Expenses.’’
• In 2005, as a result of impairment charges totaling approximately $85 million related to the Philippines,
operating margins in the East, South Asia and Pacific Rim operating segment decreased. Refer to the
heading ‘‘Other Operating Charges.’’
• In 2005, operating income in the Corporate operating segment decreased $146 million, primarily due to
increased marketing and innovation expenses, which were partially offset by our receipt of a net
settlement of approximately $47 million related to a class action lawsuit concerning the purchase of high
fructose corn syrup. Refer to the headings ‘‘Gross Profit’’ and ‘‘Selling, General and Administrative
Expenses.’’
• In 2004, operating income was reduced by approximately $18 million for the North America operating
segment; $15 million for the East, South Asia and Pacific Rim operating segment; $368 million for the
European Union operating segment; $6 million for the Latin America operating segment; $9 million for
the North Asia, Eurasia and Middle East operating segment and $64 million for Corporate as a result of
impairment charges. Refer to the heading ‘‘Other Operating Charges.’’
• In 2004, operating income increased approximately 9 percent. Of this amount, 8 percent was due to
favorable foreign currency exchange primarily related to the euro, which impacted the European Union
operating segment, and the Japanese yen, which impacted the North Asia, Eurasia and Middle East
operating segment.
• In 2004, as a result of the creation of a nationally integrated supply chain management company in Japan,
operating margins in the North Asia, Eurasia and Middle East operating segment increased. Generally,
finished product operations produce higher net revenues but lower operating margins compared to
concentrate and syrup operations. Refer to the heading ‘‘Net Operating Revenues.’’
• In 2004, operating income in the Corporate operating segment increased $75 million due to the receipt of
an insurance settlement related to the class action lawsuit which was settled in 2000.
• In 2004, operating income in the Corporate operating segment decreased $75 million due to a donation
to The Coca-Cola Foundation.
• In 2004, as a result of the consolidation of certain bottling operations that are considered variable interest
entities under Interpretation 46(R), operating margins for the Africa; East, South Asia and Pacific Rim;
European Union; and North Asia, Eurasia and Middle East operating segments were reduced. Generally,
bottling operations produce higher net revenues but lower operating margins compared to concentrate
and syrup operations.
• As a result of streamlining charges, 2003 operating income was reduced by approximately $273 million for
the North America operating segment, $12 million for the Africa operating segment, $11 million for the
East, South Asia and Pacific Rim operating segments, $157 million for the European Union operating
segment, $8 million for the Latin America operating segment, $33 million for North Asia, Eurasia and
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