Coca Cola 2005 Annual Report Download - page 98

Download and view the complete annual report

Please find page 98 of the 2005 Coca Cola annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 142

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: COMMITMENTS AND CONTINGENCIES (Continued)
to address any issues raised. The Company is unable to predict at this time with any reasonable degree of
certainty what action, if any, the Commission will take with respect to these issues.
At the time we acquire or divest our interest in an entity, we sometimes agree to indemnify the seller or
buyer for specific contingent liabilities. Management believes that any liability to the Company that may arise as
a result of any such indemnification agreements will not have a material adverse effect on the financial condition
of the Company taken as a whole.
The Company is involved in various tax matters. We establish reserves at the time that we determine it is
probable we will be liable to pay additional taxes related to certain matters and the amounts of such possible
additional taxes are reasonably estimable. We adjust these reserves, including any impact on the related interest
and penalties, in light of changing facts and circumstances, such as the progress of a tax audit. A number of years
may elapse before a particular matter, for which we may have established a reserve, is audited and finally
resolved or when a tax assessment is raised. The number of years with open tax audits varies depending on the
tax jurisdiction. While it is often difficult to predict the final outcome or the timing of resolution of any
particular tax matter, we record a reserve when we determine the likelihood of loss is probable and the amount
of loss is reasonably estimable. Such liabilities are recorded in the line item accrued income taxes in the
Company’s consolidated balance sheets. Favorable resolution of tax matters that had been previously reserved
would be recognized as a reduction to our income tax expense, when known.
The Company is also involved in various tax matters where we have determined that the probability of an
unfavorable outcome is reasonably possible. Management believes that any liability to the Company that may
arise as a result of currently pending tax matters will not have a material adverse effect on the financial condition
of the Company taken as a whole.
NOTE 13: NET CHANGE IN OPERATING ASSETS AND LIABILITIES
Net cash provided by (used in) operating activities attributable to the net change in operating assets and
liabilities is composed of the following (in millions):
Year Ended December 31, 2005 2004 2003
(Increase) decrease in trade accounts receivable $ (79) $(5)$80
(Increase) decrease in inventories (79) (57) 111
Decrease (increase) in prepaid expenses and other assets 244 (397) (276)
Increase (decrease) in accounts payable and accrued expenses 280 45 (164)
Increase (decrease) in accrued taxes 145 (194) 53
(Decrease) increase in other liabilities (81) (9) 28
$ 430 $ (617) $ (168)
NOTE 14: STOCK COMPENSATION PLANS
Effective January 1, 2002, our Company adopted the preferable fair value recognition provisions of SFAS
No. 123. In accordance with the provisions of SFAS No. 123, $324 million, $345 million and $422 million were
recorded for total stock-based compensation expense in 2005, 2004 and 2003, respectively. The $324 million and
$345 million recorded in 2005 and 2004, respectively, were recorded in selling, general and administrative
expenses. Of the $422 million recorded in 2003, $407 million was recorded in selling, general and administrative
expenses, and $15 million was recorded in other operating charges. Refer to Note 18.
96