Coca Cola 2007 Annual Report Download - page 125

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20: ACQUISITIONS AND INVESTMENTS (Continued)
The acquisitions of the 18 German bottling and distribution operations, glacéau, CCBPI, Fuze, Leao Junior,
NORSA, our 34 percent investment in Tokyo CCBC and our 50 percent investment in Jugos del Valle in 2007 were
primarily financed through the issuance of commercial paper and long-term debt.
Assuming the results of the businesses acquired in 2007 had been included in operations beginning on January 1,
2006, the estimated pro forma net operating revenues of the Company for the years ended December 31, 2007 and 2006
would have been approximately $29.6 billion and $25.9 billion, respectively. The estimated pro forma net income,
excluding the effect of interest expense as a result of financing the acquisitions, for the years ended December 31, 2007
and 2006 would not have been significantly different than the reported amounts.
During 2006, our Company’s acquisition and investment activity, including the acquisition of trademarks, totaled
approximately $901 million. In the third quarter of 2006, our Company acquired a controlling shareholding interest in
Kerry Beverages Limited (“KBL”). KBL was formed by the Company and the Kerry Group in 1993 and has a majority
ownership in 11 joint ventures that manufacture and distribute Company products across nine provinces in China. KBL
also has a minority interest in the joint venture bottler in Beijing. Subsequent to the acquisition, the Company changed
KBL’s name to Coca-Cola China Industries Limited (“CCCIL”). As a result of the transaction, the Company owns
89.5 percent of the outstanding shares of CCCIL, and we have agreed to purchase the remaining 10.5 percent by the
end of 2008 at the same price per share as the initial purchase price plus interest. We have all voting and economic
rights over the remaining shares. This transaction was accounted for as a business combination, and the results of
CCCIL’s operations have been included in the Company’s consolidated financial statements since August 29, 2006.
CCCIL is included in the Bottling Investments operating segment.
In the third quarter of 2006, our Company signed agreements with J. Bruce Llewellyn and Brucephil, Inc.
(“Brucephil”), the parent company of The Philadelphia Coca-Cola Bottling Company, for the potential purchase of the
remaining shares of Brucephil not currently owned by the Company. The agreements provide for the Company’s
purchase of the shares upon the election of Mr. Llewellyn or the election of the Company. Based on the terms of these
agreements, the Company concluded that it must consolidate Brucephil under Interpretation No. 46(R). Brucephil’s
financial statements were consolidated effective September 29, 2006. Brucephil is included in our Bottling Investments
operating segment.
Also in the third quarter of 2006, our Company acquired Apollinaris GmbH (“Apollinaris”). Apollinaris has been
selling sparkling and still mineral water in Germany since 1862. This transaction was accounted for as a business
combination, and the results of Apollinaris’ operations have been included in the Company’s consolidated financial
statements since July 1, 2006. A portion of Apollinaris’ business is included in the European Union operating segment,
and the balance is included in the Bottling Investments operating segment.
The combined amount paid or to be paid to complete these third quarter 2006 transactions totaled approximately
$707 million. As a result of these transactions, the Company recorded approximately $707 million of franchise rights,
approximately $74 million of trademarks and approximately $182 million of goodwill. The franchise rights and
trademarks have been assigned an indefinite life.
In January 2006, our Company acquired a 100 percent interest in TJC Holdings (Pty) Ltd. (“TJC”), a bottling
company in South Africa, from Chef Limited and Tom Cook Trust for cash consideration of approximately
$200 million. Subsequently, the Company renamed TJC as Scarlet. This transaction was accounted for as a business
combination, with the results of Scarlet included in the Company’s consolidated financial statements since the date of
acquisition. In May 2007, Scarlet issued common shares to a Black Economic Empowerment Entity (“BEEE”) at a
price per share equal to the current carrying value of our investment in Scarlet, which was subsequently renamed as
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