Coca Cola 2008 Annual Report Download - page 132

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17: INCOME TAXES (Continued)
As of December 31, 2008 and 2007, we had approximately $454 million and $610 million, respectively, of
net deferred tax liabilities located in countries outside the United States.
As of December 31, 2008, we had approximately $2,496 million of loss carryforwards available to reduce
future taxable income. Loss carryforwards of approximately $230 million must be utilized within the next five
years, $21 million must be utilized within the next 10 years, and the remainder can be utilized over a period
greater than 10 years.
An analysis of our deferred tax asset valuation allowances is as follows (in millions):
Year Ended December 31, 2008 2007 2006
Balance, beginning of year $ 611 $ 678 $ 786
Additions 99 201 50
Deductions (141) (268) (158)
Balance, end of year $ 569 $ 611 $ 678
The Company’s deferred tax asset valuation allowances are primarily the result of uncertainties regarding
the future realization of recorded tax benefits on tax loss carryforwards from operations in various jurisdictions.
In 2008, the Company recognized a decrease in its valuation allowances of $42 million, primarily related to the
utilization of capital loss carryforwards used to offset taxable gains on the sale of our investment in Remil. In
addition, the Company also recognized a decrease to the valuation allowance as a result of asset write-offs,
pension adjustments and the impact of foreign currency fluctuations in 2008.
In 2007, the Company recognized a net decrease in its valuation allowances of $67 million. This decrease
was primarily related to the reversal of valuation allowances on deferred tax assets recorded on the basis
difference in equity investments. The Company also recognized a decrease in certain deferred tax assets and
corresponding valuation allowances related to a change in German tax rates. In 2006, the Company recognized a
net decrease in its valuation allowances of $108 million. This decrease was primarily related to the reversal of
valuation allowances that covered certain deferred tax assets recorded on capital loss carryforwards. A portion
of the capital loss carryforwards was utilized to offset taxable gains on the sale of a portion of the investments in
Coca-Cola Icecek and Coca-Cola FEMSA.
NOTE 18: RESTRUCTURING COSTS
Streamlining Initiatives
During 2007, the Company took steps to streamline and simplify its operations globally. In North America,
the Company reorganized its operations around three main business units: Sparkling Beverages, Still Beverages
and Emerging Brands. In Ireland, the Company announced a plan to close its beverage concentrate
manufacturing and distribution plant in Drogheda, which was closed during the third quarter of 2008. The plant
closure is expected to improve operating productivity and enhance capacity utilization. The costs associated with
this plant closure are included in the Corporate operating segment. Selected other operations also took steps to
streamline their operations to improve overall efficiency and effectiveness.
Employees separated or to be separated from the Company as a result of these streamlining initiatives were
offered severance or early retirement packages, as appropriate, that included both financial and nonfinancial
components. The expenses recorded during the years ended December 31, 2008 and 2007 included costs related
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