Coca Cola 2008 Annual Report Download - page 43

Other Assets
Our Company invests in infrastructure programs with our bottlers that are directed at strengthening our
bottling system and increasing unit case volume. Additionally, our Company advances payments to certain
customers to fund future marketing activities intended to generate profitable volume and expenses such
payments over the periods benefited. Advance payments are also made to certain customers for distribution
rights. Payments under these programs are generally capitalized and reported as other assets in our consolidated
balance sheets. As of December 31, 2008, the carrying value of these assets was approximately $1,733 million, or
4 percent of our total assets. When facts and circumstances indicate that the carrying value of these assets may
not be recoverable, management assesses the recoverability of the carrying value by preparing estimates of sales
volume and the resulting gross profit and cash flows. These estimated future cash flows are consistent with those
we use in our internal planning. If the sum of the expected future cash flows (undiscounted and without interest
charges) is less than the carrying amount, we recognize an impairment loss. The impairment loss recognized is
the amount by which the carrying amount exceeds the fair value.
Property, Plant and Equipment
As of December 31, 2008, the carrying value of our property, plant and equipment, net of depreciation, was
approximately $8,326 million, or 21 percent of our total assets. Certain events or changes in circumstances may
indicate that the recoverability of the carrying amount of property, plant and equipment should be assessed,
including, among others, a significant decrease in market value, a significant change in the business climate in a
particular market, or a current period operating or cash flow loss combined with historical losses or projected
future losses. When such events or changes in circumstances are present, we estimate the future cash flows
expected to result from the use of the asset and its eventual disposition. These estimated future cash flows are
consistent with those we use in our internal planning. If the sum of the expected future cash flows (undiscounted
and without interest charges) is less than the carrying amount, we recognize an impairment loss. The impairment
loss recognized is the amount by which the carrying amount exceeds the fair value. We use a variety of
methodologies to determine the fair value of property, plant and equipment, including appraisals and discounted
cash flow models, which are consistent with the assumptions we believe hypothetical marketplace participants
would use.
In 2007, our Company recorded a charge of approximately $99 million in equity income (loss)—net. This
charge was primarily related to our proportionate share of asset impairments recorded by Coca-Cola Bottlers
Philippines, Inc. (‘‘CCBPI’’) due to excess and obsolete bottles and cases. These charges impacted the Bottling
Investments operating segment. Refer to the heading ‘‘Operations Review—Equity Income (Loss)—Net,’’ and
Note 3 and Note 19 of Notes to Consolidated Financial Statements.
Goodwill, Trademarks and Other Intangible Assets
SFAS No. 142, ‘‘Goodwill and Other Intangible Assets,’’ classifies intangible assets into three categories:
(1) intangible assets with definite lives subject to amortization; (2) intangible assets with indefinite lives not
subject to amortization; and (3) goodwill. For intangible assets with definite lives, tests for impairment must be
performed if conditions exist that indicate the carrying value may not be recoverable. For intangible assets with
indefinite lives and goodwill, tests for impairment must be performed at least annually or more frequently if
events or circumstances indicate that assets might be impaired. Our equity method investees also perform such
tests for impairment of intangible assets and/or goodwill. If an impairment charge was recorded by one of our
equity method investees, the Company would record its proportionate share of such charge. However, the actual
amount we record with respect to our proportionate share of such charges may be impacted by items such as
basis differences, deferred taxes and deferred gains.
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