Coca Cola 2007 Annual Report Download - page 97

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: HEDGING TRANSACTIONS AND DERIVATIVE FINANCIAL INSTRUMENTS (Continued)
The following table summarizes activity in AOCI related to derivatives designated as cash flow hedges held by the
Company during the applicable periods (in millions):
Before-Tax
Amount Income
Tax After-Tax
Amount
2007
Accumulated derivative net gains (losses) as of January 1, 2007 $ (16) $ 6 $ (10)
Net changes in fair value of derivatives (158) 61 (97)
Net reclassification from AOCI into earnings 62 (24) 38
Accumulated derivative net gains (losses) as of December 31, 2007 $ (112) $ 43 $ (69)
Before-Tax
Amount Income
Tax After-Tax
Amount
2006
Accumulated derivative net gains (losses) as of January 1, 2006 $ 35 $ (14) $ 21
Net changes in fair value of derivatives (38) 15 (23)
Net reclassification from AOCI into earnings (13) 5 (8)
Accumulated derivative net gains (losses) as of December 31, 2006 $ (16) $ 6 $ (10)
Before-Tax
Amount Income
Tax After-Tax
Amount
2005
Accumulated derivative net gains (losses) as of January 1, 2005 $ (56) $ 22 $ (34)
Net changes in fair value of derivatives 135 (53) 82
Net reclassification from AOCI into earnings (44) 17 (27)
Accumulated derivative net gains (losses) as of December 31, 2005 $ 35 $ (14) $ 21
The Company did not discontinue any cash flow hedge relationships during the years ended December 31, 2007,
2006 and 2005.
NOTE 13: COMMITMENTS AND CONTINGENCIES
As of December 31, 2007, we were contingently liable for guarantees of indebtedness owed by third parties in the
amount of approximately $267 million. These guarantees primarily are related to third-party customers, bottlers and
vendors and have arisen through the normal course of business. These guarantees have various terms, and none of these
guarantees was individually significant. The amount represents the maximum potential future payments that we could
be required to make under the guarantees; however, we do not consider it probable that we will be required to satisfy
these guarantees.
We believe our exposure to concentrations of credit risk is limited due to the diverse geographic areas covered by
our operations.
The Company is involved in various legal proceedings. We establish reserves for specific legal proceedings when
we determine that the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably
estimated. Management has also identified certain other legal matters where we believe an unfavorable outcome is
reasonably possible and/or for which no estimate of possible losses can be made. Management believes that any
liability to the Company that may arise as a result of currently pending legal proceedings, including those discussed
below, will not have a material adverse effect on the financial condition of the Company taken as a whole.
95