Coca Cola 2006 Annual Report Download - page 85

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: BOTTLING INVESTMENTS (Continued)
2010. In connection with this amendment, CCE agreed to pay the Company approximately $2 million in 2004,
$3 million annually in 2005 through 2008, and $1 million in 2009. In 2005, our Company and CCE agreed to
amend the contract for North America to move to a system of purchase and placement credits, whereby CCE
earns credit toward its annual purchase and placement requirements based upon the type of equipment it
purchases and places. The amended contract also provides that no breach by CCE will occur even if they do not
achieve the required number of purchase and placement credits in any given year, so long as (1) the shortfall
does not exceed 20 percent of the required purchase and placement credits for that year; (2) a compensating
payment is made to our Company by CCE; (3) the shortfall is corrected in the following year; and (4) CCE
meets all specified purchase and placement credit requirements by the end of 2010. The payments we made to
CCE under these programs are recorded in prepaid expenses and other assets and in noncurrent other assets
and amortized as deductions from revenues over the 10-year period following the placement of the equipment.
Our carrying values for these infrastructure programs with CCE were approximately $576 million and
$662 million as of December 31, 2006 and 2005, respectively. The Company has no further commitments under
these programs.
In March 2004, the Company and CCE launched the Dasani water brand in Great Britain. The product was
voluntarily recalled. During 2004, our Company reimbursed CCE $32 million for product recall costs incurred by
CCE.
Effective December 31, 2006, CCE adopted SFAS No. 158. Our proportionate share of the impact of CCE’s
adoption of SFAS No. 158 was an approximate $132 million pretax ($84 million after tax) reduction in both the
carrying value of our investment in CCE and our accumulated other comprehensive income (loss) (‘‘AOCI’’).
Refer to Note 10 and Note 16.
If valued at the December 31, 2006 quoted closing price of CCE shares, the fair value of our investment in
CCE would have exceeded our carrying value by approximately $2.1 billion.
Other Equity Method Investments
Our other equity method investments include our ownership interests in Coca-Cola HBC, Coca-Cola
FEMSA and Coca-Cola Amatil. As of December 31, 2006, we owned approximately 23 percent, 32 percent and
32 percent, respectively, of these companies’ common shares.
Operating results include our proportionate share of income (loss) from our equity method investments. As
of December 31, 2006, our investment in our equity method investees in the aggregate, other than CCE,
exceeded our proportionate share of the net assets of these equity method investees by approximately
$1,375 million. This difference is not amortized.
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