Coca Cola 2006 Annual Report Download - page 98

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
being hedged. For the years ended December 31, 2006, 2005 and 2004, we recorded net gain (loss) in foreign
currency translation adjustment of approximately $3 million, $(40) million and $(8) million, respectively.
The following table presents the carrying values, fair values and maturities of the Company’s foreign
currency derivative instruments outstanding as of December 31, 2006 and 2005 (in millions):
Carrying Values Fair Values
Assets/(Liabilities) Assets/(Liabilities) Maturity
2006
Forward contracts $ (21) $ (21) 2007-2008
Options and collars 18 18 2007
$(3) $(3)
Carrying Values Fair Values
Assets Assets Maturity
2005
Forward contracts $ 28 $ 28 2006
Options and collars 11 11 2006
$39 $39
The Company estimates the fair value of its foreign currency derivatives based on quoted market prices or
pricing models using current market rates. These amounts are primarily reflected in prepaid expenses and other
assets in our consolidated balance sheets.
Summary of AOCI
For the years ended December 31, 2006, 2005 and 2004, we recorded a net gain (loss) to AOCI of
approximately $(31) million, $55 million and $6 million, respectively, net of both income taxes and
reclassifications to earnings, primarily related to gains and losses on foreign currency cash flow hedges. These
items will generally offset cash flow gains and losses relating to the underlying exposures being hedged in future
periods. The Company estimates that it will reclassify into earnings during the next 12 months losses of
approximately $11 million from the after-tax amount recorded in AOCI as of December 31, 2006, as the
anticipated cash flows occur.
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