Coca Cola 2005 Annual Report Download - page 61

demographics and assumptions, and investment return on plan assets. Because the accrued liability does not
represent expected liquidity needs, we did not include this amount in the contractual obligations table.
We fund our U.S. qualified pension plans in accordance with Employee Retirement Income Security Act of
1974 regulations for the minimum annual required contribution and in accordance with Internal Revenue
Service regulations for the maximum annual allowable tax deduction. The minimum required contribution for
our primary qualified U.S. pension plan for the 2006 plan year is $0 and is anticipated to remain $0 for at least
the next several years due to contributions made to the plan between 2001 and 2005. Therefore, we did not
include any amounts as a contractual obligation in the above table. We do, however, anticipate contributing up
to the maximum deductible amount to the primary U.S. qualified pension plan in 2006, which is estimated to be
approximately $60 million. Furthermore, we expect to contribute up to $9 million to the U.S. postretirement
health care benefit plan during 2006. We generally expect to fund all future contributions with cash flows from
operating activities.
Our international pension plans are funded in accordance with local laws and income tax regulations. We
do not expect contributions to these plans to be material in 2006 or thereafter. Therefore, no amounts have been
included in the table above.
As of December 31, 2005, the projected benefit obligation of the U.S. qualified pension plans was
$1,626 million, and the fair value of plan assets was $1,881 million. As of December 31, 2005, the projected
benefit obligation of all pension plans other than the U.S. qualified pension plans was $1,415 million, and the
fair value of all other pension plan assets was $756 million. The majority of this underfunding is attributable to
an international pension plan for certain non-U.S. employees that is unfunded due to tax law restrictions, as well
as our unfunded U.S. nonqualified pension plans. These U.S. nonqualified pension plans provide, for certain
associates, benefits that are not permitted to be funded through a qualified plan because of limits imposed by
the Internal Revenue Code of 1986. Disclosure of amounts in the above table regarding expected benefit
payments for our unfunded pension plans and our other postretirement benefit plans cannot be properly
reflected for 2011 and thereafter due to the ongoing nature of the obligations of these plans. However, in order
to inform the reader about expected benefit payments for these unfunded plans over the next several years, we
anticipate annual benefit payments to be in the range of approximately $50 million to $60 million in 2006 and
remain at or near this annual level for the next several years.
Deferred income tax liabilities as of December 31, 2005, were $511 million. Refer to Note 16 of Notes to
Consolidated Financial Statements. This amount is not included in the total contractual obligations table
because we believe this presentation would not be meaningful. Deferred income tax liabilities are calculated
based on temporary differences between the tax basis of assets and liabilities and their book basis, which will
result in taxable amounts in future years when the book basis is settled. The results of these calculations do not
have a direct connection with the amount of cash taxes to be paid in any future periods. As a result, scheduling
deferred income tax liabilities as payments due by period could be misleading, because this scheduling would not
relate to liquidity needs.
Minority interests of $151 million as of December 31, 2005, for consolidated entities in which we do not
have a 100 percent ownership interest were recorded in the consolidated balance sheet line item other liabilities.
Such minority interests are not liabilities requiring the use of cash or other resources; therefore, this amount is
excluded from the contractual obligations table.
Foreign Exchange
Our international operations are subject to opportunities and risks relating to foreign currency fluctuations.
We closely monitor our operations in each country and seek to adopt appropriate strategies that are responsive
to fluctuations in foreign currency exchange rates.
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