Coca Cola 2010 Annual Report Download - page 72

and liabilities are partially offset by the impact of our economic hedging program for certain exposures on our
consolidated balance sheets. Refer to Note 5 of Notes to Consolidated Financial Statements.
In 2010, other income (loss) — net was income of $5,185 million, primarily related to a $4,978 million gain related to
the remeasurement of our equity investment in CCE to fair value upon the close of our acquisition of CCE’s North
American business and a $597 million gain related to the sale of all of our ownership interests in our Norwegian and
Swedish bottling operations to New CCE. Refer to the heading ‘‘Structural Changes, Acquired Brands and New License
Agreements,’’ above, and Note 2 of Notes to Consolidated Financial Statements. These gains were partially offset by a
$265 million charge related to preexisting relationships with CCE and foreign currency exchange losses of $148 million.
The charge related to preexisting relationships was primarily due to the write-off of our investment in infrastructure
programs with CCE. The foreign currency exchange losses were primarily due to a charge of approximately $103 million
related to the remeasurement of our Venezuelan subsidiary’s net assets. Refer to the heading ‘‘Liquidity, Capital
Resources and Financial Position — Foreign Exchange.’’ In addition to the items mentioned above, other income
(loss) — net also included a $23 million gain on the sale of 50 percent of our investment in Le˜ ao Junior and
$48 million of charges related to other-than-temporary impairments and a donation of preferred shares in one of our
equity investees. Refer to Note 17 of Notes to Consolidated Financial Statements.
In 2009, other income (loss) — net was income of $40 million, primarily related to a realized gain of approximately
$44 million on the sale of equity securities classified as available-for-sale, $40 million from the sale of other investments
and $18 million of dividend income from cost method investments. Refer to Note 17 of Notes to Consolidated Financial
Statements for additional information related to the gain on the sale of available-for-sale securities. These gains were
partially offset by approximately $34 million in net foreign currency exchange losses and an other-than-temporary
impairment charge of approximately $27 million on a cost method investment. Refer to the heading ‘‘Critical
Accounting Policies and Estimates — Investments in Equity and Debt Securities,’’ and Note 16 of Notes to
Consolidated Financial Statements.
In 2008, other income (loss) — net was income of $39 million. The Company recognized gains on divestitures of
approximately $119 million, primarily related to the sale of Remil to Coca-Cola FEMSA and the sale of a portion of
the Company’s investment in Coca-Cola Pakistan to Coca-Cola Icecek A.S. (‘‘Coca-Cola Icecek’’). Refer to Note 17 of
Notes to Consolidated Financial Statements. Other income (loss) — net also included approximately $24 million in net
foreign currency exchange gains in 2008. The gains on divestitures and net foreign currency exchange were partially
offset by other-than-temporary impairment charges of approximately $81 million on available-for-sale securities. Refer
to the heading ‘‘Critical Accounting Policies and Estimates — Investments in Equity and Debt Securities,’’ and Note 17
of Notes to Consolidated Financial Statements. Other income (loss) — net also included approximately $46 million of
realized and unrealized losses on trading securities.
Income Taxes
Our effective tax rate reflects tax benefits derived from significant operations outside the United States, which are
generally taxed at rates lower than the U.S. statutory rate of 35 percent. A change in the mix of pretax income from
these various tax jurisdictions can have a significant impact on the Company’s periodic effective tax rate.
Our effective tax rate of approximately 16.7 percent for the year ended December 31, 2010, included the following:
• an approximate 27 percent combined effective tax rate on the Company’s productivity, integration and
restructuring initiatives, charitable donations, transaction costs incurred in connection with our acquisition of
CCE’s North American business and the sale of our Norwegian and Swedish bottling operations to New CCE
and other charges related to bottling activities in Eurasia (refer to Note 17 of Notes to Consolidated Financial
Statements);
• a tax benefit of $34 million related to the remeasurement of our equity investment in CCE to fair value upon
our acquisition of CCE’s North American business. The tax benefit reflects the impact of reversing deferred tax
liabilities associated with our equity investment in CCE prior to the acquisition (refer to Note 2 of Notes to
Consolidated Financial Statements);
• an approximate 37 percent effective tax rate on charges related to preexisting relationships with CCE (refer to
Note 2 of Notes to Consolidated Financial Statements);
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