Coca Cola 2005 Annual Report Download - page 84

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: BOTTLING INVESTMENTS (Continued)
Effective October 1, 2003, the Company and all of its bottling partners in Japan created a nationally
integrated supply chain management company to centralize procurement, production and logistics operations
for the entire Coca-Cola system in Japan. As a result of the creation of this supply chain management company
in Japan, a portion of our Company’s business was essentially converted from a finished product business model
to a concentrate business model, thus reducing our net operating revenues and cost of goods sold by the same
amounts. The formation of this entity included the sale of Company inventory and leasing of certain Company
assets to this new entity on October 1, 2003, as well as our recording of a liability for certain contractual
obligations to Japanese bottlers. Such amounts were not material to the Company’s results of operations.
In November 2003, Coca-Cola HBC approved a share capital reduction totaling approximately 473 million
euros and the return of 2 euros per share to all shareowners. In December 2003, our Company received our
share capital return payment from Coca-Cola HBC equivalent to $136 million, and we recorded a reduction to
our investment in Coca-Cola HBC.
If valued at the December 31, 2005 quoted closing prices of shares actively traded on stock markets, the
value of our equity method investments in publicly traded bottlers other than CCE would have exceeded our
carrying value by approximately $2.4 billion.
Net Receivables and Dividends from Equity Method Investees
The total amount of net receivables due from equity method investees, including CCE, was approximately
$644 million and $573 million as of December 31, 2005 and 2004, respectively. The total amount of dividends
received from equity method investees, including CCE, was approximately $234 million, $145 million and
$112 million for the years ended December 31, 2005, 2004 and 2003, respectively.
NOTE 3: ISSUANCES OF STOCK BY EQUITY METHOD INVESTEES
In 2005, our Company recorded approximately $23 million of noncash pretax gains on issuances of stock by
equity method investees. We recorded deferred taxes of approximately $8 million on these gains. These gains
primarily related to an issuance of common stock by Coca-Cola Amatil, which was valued at an amount greater
than the book value per share of our investment in Coca-Cola Amatil. Coca-Cola Amatil issued approximately
34 million shares of common stock with a fair value of $5.78 each in connection with the acquisition of SPC
Ardmona Pty. Ltd., an Australian packaged fruit company. This issuance of common stock reduced our
ownership interest in the total outstanding shares of Coca-Cola Amatil from approximately 34.0 percent to
approximately 32.4 percent.
In 2004, our Company recorded approximately $24 million of noncash pretax gains on issuances of stock by
CCE. The issuances primarily related to the exercise of CCE stock options by CCE employees at amounts
greater than the book value per share of our investment in CCE. We recorded deferred taxes of approximately
$9 million on these gains. These issuances of stock reduced our ownership interest in the total outstanding
shares of CCE from approximately 37.2 percent to approximately 36.0 percent.
In 2003, our Company recorded approximately $8 million of noncash pretax gains on issuances of stock by
equity method investees. These gains primarily related to the issuance by CCE of common stock valued at an
amount greater than the book value per share of our investment in CCE. These transactions reduced our
ownership interest in the total outstanding shares of CCE from approximately 37.3 percent to approximately
37.2 percent.
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