Coca Cola 2005 Annual Report Download - page 86

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: GOODWILL, TRADEMARKS AND OTHER INTANGIBLE ASSETS (Continued)
Information about estimated amortization expense for intangible assets subject to amortization for the five
years succeeding December 31, 2005, is as follows (in millions):
Amortization
Expense
2006 $ 16
2007 15
2008 14
2009 14
2010 13
Goodwill by operating segment was as follows (in millions):
December 31, 2005 2004
North America $ 141 $ 140
Africa ——
East, South Asia and Pacific Rim 26 26
European Union 772 816
Latin America 85 92
North Asia, Eurasia and Middle East 23 23
$ 1,047 $ 1,097
In 2005, our Company recorded an impairment charge related to trademarks for beverages sold in the
Philippines of approximately $84 million. The Philippines is a component of our East, South Asia and Pacific
Rim operating segment. The carrying value of our trademarks in the Philippines, prior to the recording of the
impairment charges in 2005, was approximately $268 million. The impairment was the result of our revised
outlook of the Philippines, which has been unfavorably impacted by declines in volume and income before
income taxes resulting from the continued lack of an affordable package offering and the continued limited
availability of these trademark beverages in the marketplace. We determined the amount of this impairment
charge by comparing the fair value of the intangible assets to the carrying value. Fair values were derived using
discounted cash flow analyses with a number of scenarios that were weighted based on the probability of
different outcomes. Because the fair value was less than the carrying value of the assets, we recorded an
impairment charge to reduce the carrying value of the assets to fair value. This impairment charge was recorded
in the line item other operating charges in the consolidated statement of income.
In 2004, acquisition of intangible assets totaled approximately $89 million. This amount is primarily related
to the Company’s acquisition of trademarks with indefinite lives in the Latin America operating segment.
In 2004, our Company recorded impairment charges related to intangible assets of approximately
$374 million. The decrease in bottlers’ franchise rights in 2004 was primarily due to this impairment charge,
offset by an increase due to translation adjustment. These impairment charges primarily were in the European
Union operating segment and were included in other operating charges in our consolidated statement of
income. The charges were primarily related to franchise rights at Coca-Cola Erfrischungsgetraenke AG
(‘‘CCEAG’’). The impairment was the result of our revised outlook for the German market, which has been
unfavorably impacted by volume declines resulting from market shifts related to the deposit law on nonrefillable
beverage packages and the corresponding lack of availability for our products in the discount retail channel. The
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