Coca Cola 2008 Annual Report Download - page 140

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 20: ACQUISITIONS AND INVESTMENTS (Continued)
December 31, 2008. Brucephil’s financial statements were consolidated effective September 29, 2006 and
included in our Bottling Investments operating segment.
Also in the third quarter of 2006, our Company acquired Apollinaris GmbH (‘‘Apollinaris’’). Apollinaris has
been selling sparkling and still mineral water in Germany since 1862. This transaction was accounted for as a
business combination, and the results of Apollinaris’ operations have been included in the Company’s
consolidated financial statements since July 1, 2006. A portion of Apollinaris’ business is included in the Europe
operating segment, and the balance is included in the Bottling Investments operating segment.
The combined amount paid to complete these third quarter 2006 transactions totaled approximately
$718 million. As a result of these transactions, the Company recorded approximately $707 million of franchise
rights, approximately $74 million of trademarks and approximately $182 million of goodwill. The franchise rights
and trademarks have been assigned an indefinite life.
In January 2006, our Company acquired a 100 percent interest in TJC Holdings (Pty) Ltd. (‘‘TJC’’), a
bottling company in South Africa, from Chef Limited and Tom Cook Trust for cash consideration of
approximately $200 million. Subsequently, the Company renamed TJC as Scarlet. This transaction was
accounted for as a business combination, with the results of Scarlet included in the Company’s consolidated
financial statements since the date of acquisition. In May 2007, Scarlet issued common shares to a Black
Economic Empowerment Entity (‘‘BEEE’’) at a price per share equal to the current carrying value of our
investment in Scarlet, which was subsequently renamed as Shanduka Beverages (Proprietary) Limited
(‘‘Shanduka’’). This issuance reduced the Company’s ownership interest in Shanduka to 30 percent. As a result
of subordinated financial support provided by the Company for the BEEE to complete this transaction, the
Company concluded that we must continue to consolidate Shanduka’s operations under Interpretation
No. 46(R). Shanduka is included in our Bottling Investments operating segment.
Assuming the results of the businesses acquired in 2006 had been included in operations beginning on
January 1, 2006, pro forma financial data would not be required due to immateriality.
NOTE 21: OPERATING SEGMENTS
During 2008, the Company made certain changes to its operating structure to align geographic
responsibility. The European Union operating segment was reconfigured to include the Adriatic and Balkans
business unit and was renamed the Europe operating segment; and the remaining Eurasia operating segment
was combined with the Africa operating segment into the new Eurasia and Africa operating segment. The
changes in operating structure did not impact the other existing geographic operating segments, Bottling
Investments or Corporate. As of December 31, 2008, our organizational structure consisted of the following
operating segments: Eurasia and Africa; Europe; Latin America; North America; Pacific; Bottling Investments;
and Corporate. Prior-period amounts have been reclassified to conform to the new operating structure described
above.
Segment Products and Services
The business of our Company is nonalcoholic beverages. Our operating segments derive a majority of their
revenues from the manufacture and sale of beverage concentrates and syrups and, in some cases, the sale of
finished beverages.
Method of Determining Segment Income or Loss
Management evaluates the performance of our operating segments separately to individually monitor the
different factors affecting financial performance. Our Company manages income taxes and financial costs, such
as interest income and expense, on a global basis within the Corporate operating segment. We evaluate segment
performance based on income or loss before income taxes.
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