Coca Cola 2007 Annual Report Download - page 122

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19: SIGNIFICANT OPERATING AND NONOPERATING ITEMS (Continued)
ultimately entitled to a portion of the proceeds of the settlement. Of the approximately $62 million we distributed to
certain bottlers in North America, approximately $49 million was distributed to CCE. The Company’s remaining share
of the settlement was approximately $47 million, which was recorded as a reduction of cost of goods sold and impacted
the Corporate operating segment.
During 2005, we recorded approximately $23 million of noncash pretax gains on the issuances of stock by equity
method investees. Refer to Note 4.
The Company recorded approximately $50 million of expense in 2005 as a result of a change in our estimated
service period for the acceleration of certain stock-based compensation awards. Refer to Note 15.
Equity income in 2005 was reduced by approximately $33 million for the Bottling Investments operating segment,
primarily related to our proportionate share of the tax liability recorded by CCE resulting from its repatriation of
previously unremitted foreign earnings under the Jobs Creation Act, as well as our proportionate share of restructuring
charges. Those amounts were partially offset by our proportionate share of CCE’s HFCS lawsuit settlement proceeds
and changes in certain of CCE’s state and provincial tax rates. Refer to Note 3.
Our Company recorded impairment charges during 2005 of approximately $84 million related to certain
trademarks for beverages sold in the Philippines and approximately $1 million related to impairment of other assets.
These impairment charges were recorded in the consolidated statement of income line item other operating charges.
NOTE 20: ACQUISITIONS AND INVESTMENTS
During 2007, our Company’s acquisition and investment activity, including the acquisition of trademarks, totaled
approximately $5,653 million.
In the fourth quarter of 2007, the Company and Coca-Cola FEMSA jointly acquired Jugos del Valle, the second
largest producer of packaged juices, nectars and fruit-flavored beverages in Mexico and the largest producer of such
beverages in Brazil. The purchase price was approximately $370 million plus the assumption of approximately $85
million in debt and was split equally between the Company and Coca-Cola FEMSA. As of December 31, 2007, the
Company owned a 50 percent interest in Jugos del Valle. The Company’s investment in Jugos del Valle is accounted
for under the equity method. Equity income—net includes our proportionate share of the results of Jugos del Valle’s
operations beginning November 2007 and is included in the Latin America operating segment.
In order to increase the efficiency of our bottling and distribution operations in the German market, the Company,
through its consolidated German bottling operation CCEAG, acquired 18 German bottling and distribution operations
on September 1, 2007 for a total purchase price of approximately $660 million. Following the acquisition, the
Company owns the franchise rights for all of the German market. The purchase price consisted of approximately
17 percent of the outstanding shares of CCEAG valued at approximately $385 million, approximately $156 million in
cash, guaranteed future cash payments valued at approximately $85 million, and assumed debt of approximately
$34 million. The acquisition agreements also provide the former owners of the 18 German bottling and distribution
operations a put option to sell their respective shares in CCEAG back to the Company on January 2, 2014, with
notification to the Company required by September 30, 2013. In addition, the agreements provide the Company with a
call option to repurchase the issued shares of CCEAG back from the former owners of the 18 German bottling and
distribution operations on January 2, 2014, with notification to the former owners of the 18 German bottlers and
distributors by December 15, 2013. The strike price of the call option is approximately 20 percent higher than the strike
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