Coca Cola 2007 Annual Report Download - page 56

equity income for the years ended December 31, 2007 and 2006. Refer to Note 3 of Notes to Consolidated Financial
Statements. The decrease in equity income for 2006 was partially offset by our Company’s proportionate share of
increased net income from certain of the equity method investees and our proportionate share of the net income of the
Multon juice joint venture in Russia.
Other Income (Loss)—Net
Other income (loss)—net was income of $173 million for 2007 compared to income of $195 million for 2006, a
decrease of $22 million. In 2007, other income (loss)—net included a gain of approximately $73 million resulting from
the sale of a portion of the Company’s ownership interest in Coca-Cola Amatil. Our ownership interest in Coca-Cola
Amatil was reduced from approximately 32 percent to 30 percent. In 2007, other income (loss)—net also included a
gain of approximately $70 million resulting from the sale of our equity investment in Vonpar and gains of
approximately $84 million resulting from the sale of real estate in Spain and the United States. Refer to Note 19 of
Notes to Consolidated Financial Statements. Other income (loss)—net also included the impact of foreign currency
exchange gains and losses, accretion expenses related to certain acquisitions and the minority shareowners’
proportionate share of net income of certain consolidated subsidiaries. None of these items was individually significant
in 2007.
Other income (loss)—net was a net income of $195 million for 2006 compared to a net loss of $93 million for
2005, a difference of $288 million. In 2006, other income (loss)—net included a gain of approximately $175 million
resulting from the sale of a portion of our Coca-Cola FEMSA shares to FEMSA and a gain of approximately
$123 million resulting from the sale of a portion of our investment in Coca-Cola Icecek shares in an initial public
offering. Refer to Note 19 of Notes to Consolidated Financial Statements. This line item in 2006 also included
$15 million in foreign currency exchange losses, the accretion of $58 million for the discounted value of our liability to
purchase Coca-Cola Erfrischungsgetraenke AG (“CCEAG”) shares (refer to Note 8 of Notes to Consolidated Financial
Statements) and the minority shareowners’ proportional share of net income of certain consolidated subsidiaries.
Gains on Issuances of Stock by Equity Method Investees
When one of our equity method investees issues additional shares to third parties, our percentage ownership
interest in the investee decreases. In the event the issuance price per share is higher or lower than our average carrying
amount per share, we recognize a noncash gain or loss on the issuance, when appropriate. This noncash gain or loss,
net of any deferred taxes, is recognized in our net income in the period the change of ownership interest occurs.
In 2007 and 2006, our equity method investees did not issue any additional shares to third parties that resulted in
our Company recording any noncash pretax gains or losses.
In 2005, our Company recorded approximately $23 million of noncash pretax gains on the issuances of stock by
equity method investees. The issuances primarily related to Coca-Cola Amatil’s issuance of common stock in
connection with the acquisition of SPC Ardmona Pty. Ltd., an Australian packaged fruit company. These issuances of
common stock reduced our ownership interest in the total outstanding shares of Coca-Cola Amatil from approximately
34 percent to approximately 32 percent.
Income Taxes
Our effective tax rate reflects tax benefits derived from significant operations outside the United States, which are
generally taxed at rates lower than the U.S. statutory rate of 35 percent. A change in the mix of pretax income from
these various tax jurisdictions can have a significant impact on the Company’s periodic effective tax rate.
Our effective tax rate of approximately 24.0 percent for the year ended December 31, 2007, included the
following:
• a tax charge of approximately $96 million related to amounts required to be recorded for changes to our
uncertain tax positions under Interpretation No. 48, including interest and penalties;
• a tax benefit of approximately $19 million related to tax rate changes in Germany;
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