Coca Cola 2008 Annual Report Download - page 111

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13: COMMITMENTS AND CONTINGENCIES (Continued)
The Company has had discussions with the Competition Directorate of the European Commission (the
‘‘European Commission’’) about issues relating to parallel trade within the European Union arising out of
comments received by the European Commission from third parties. The Company has fully cooperated with
the European Commission and has provided information on these issues and the measures taken and to be
taken to address them. The Company is unable to predict at this time with any reasonable degree of certainty
what action, if any, the European Commission will take with respect to these issues.
At the time we acquire or divest our interest in an entity, we sometimes agree to indemnify the seller or
buyer for specific contingent liabilities. Management believes that any liability to the Company that may arise as
a result of any such indemnification agreements will not have a material adverse effect on the financial condition
of the Company taken as a whole.
The Company is involved in various tax matters, with respect to some of which the outcome is uncertain. We
establish reserves to remove some or all of the tax benefit of any of our tax positions at the time we determine
that it becomes uncertain based upon one of the following conditions: (1) the tax position is not ‘‘more likely
than not’’ to be sustained, (2) the tax position is ‘‘more likely than not’’ to be sustained, but for a lesser amount,
or (3) the tax position is ‘‘more likely than not’’ to be sustained, but not in the financial period in which the tax
position was originally taken. For purposes of evaluating whether or not a tax position is uncertain, (1) we
presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant
information, (2) the technical merits of a tax position are derived from authorities such as legislation and
statutes, legislative intent, regulations, rulings and case law and their applicability to the facts and circumstances
of the tax position, and (3) each tax position is evaluated without consideration of the possibility of offset or
aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax
position is audited and finally resolved or when a tax assessment is raised. The number of years subject to tax
assessments varies depending on the tax jurisdiction. The tax benefit that has been previously reserved because
of a failure to meet the ‘‘more likely than not’’ recognition threshold would be recognized in our income tax
expense in the first interim period when the uncertainty disappears under any one of the following conditions:
(1) the tax position is ‘‘more likely than not’’ to be sustained, (2) the tax position, amount, and/or timing is
ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has
expired. Refer to Note 17.
NOTE 14: NET CHANGE IN OPERATING ASSETS AND LIABILITIES
Net cash provided by (used in) operating activities attributable to the net change in operating assets and
liabilities is composed of the following (in millions):
Year Ended December 31, 2008 2007 2006
(Increase) decrease in trade accounts receivable $ 148 $ (406) $ (214)
(Increase) in inventories (165) (258) (150)
(Increase) decrease in prepaid expenses and other assets 63 (244) (152)
Increase (decrease) in accounts payable and accrued expenses (576) 762 173
Increase (decrease) in accrued taxes (121) 185 (68)
(Decrease) in other liabilities (37) (33) (204)
$ (688) $ 6 $ (615)
109