Coca Cola 2007 Annual Report Download - page 40

an investment is less than its carrying value and the decline in value is considered to be other than temporary, a write-
down is recorded. Management’s assessments of fair value represent our best estimates as of the time of the impairment
review and are consistent with the assumptions that we believe hypothetical marketplace participants would use. If
different assessments were made, this could have a material impact on our consolidated financial statements.
The following table presents the difference between calculated fair values, based on quoted closing prices of
publicly traded shares, and our Company’s carrying values for significant investments in publicly traded bottlers
accounted for as equity method investees (in millions):
December 31, 2007 Fair Value Carrying Value Difference
Coca-Cola Enterprises Inc. $ 4,398 $ 1,637 $ 2,761
Coca-Cola Hellenic Bottling Company S.A. 3,647 1,549 2,098
Coca-Cola FEMSA, S.A.B. de C.V. 2,853 996 1,857
Coca-Cola Amatil Limited 1,860 806 1,054
Coca-Cola Icecek A.S. 578 156 422
Grupo Continental, S.A. 369 176 193
Coca-Cola Embonor S.A. 271 208 63
Coca-Cola Bottling Company Consolidated 146 73 73
Embotelladoras Polar S.A. 115 67 48
$ 14,237 $ 5,668 $ 8,569
Other Assets
Our Company invests in infrastructure programs with our bottlers that are directed at strengthening our bottling
system and increasing unit case volume. Additionally, our Company advances payments to certain customers to fund
future marketing activities intended to generate profitable volume and expenses such payments over the periods
benefited. Advance payments are also made to certain customers for distribution rights. Payments under these programs
are generally capitalized and reported as other assets in our consolidated balance sheets. When facts and circumstances
indicate that the carrying value of these assets may not be recoverable, management evaluates the recoverability of the
carrying value of these assets by preparing estimates of sales volume and the resulting gross profit and cash flows. If
the carrying value of these assets is assessed to be recoverable, it is amortized over the periods benefited. If the
carrying value of these assets is considered to be not recoverable, an impairment is recognized, resulting in a write-
down of assets.
Property, Plant and Equipment
Certain events or changes in circumstances may indicate that the recoverability of the carrying amount of
property, plant and equipment should be assessed. Such events or changes may include a significant decrease in market
value, a significant change in the business climate in a particular market, or a current-period operating or cash flow loss
combined with historical losses or projected future losses. If an event occurs or changes in circumstances are present,
we estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of
the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount, we
recognize an impairment loss. The impairment loss recognized is the amount by which the carrying amount exceeds the
fair value. We use a variety of methodologies to determine the fair value of property, plant and equipment, including
appraisals and cash flow analyses, that are consistent with the assumptions we believe hypothetical marketplace
participants would use.
In 2007, our Company recorded a charge of approximately $99 million in the line item equity income—net
resulting from the impact of our proportionate share of asset write-downs primarily related to excess and obsolete
bottles and cases at CCBPI, which impacted Bottling Investments. Refer to the heading “Operations Review—Equity
Income—Net” and Note 3 of Notes to Consolidated Financial Statements.
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