Coca Cola 2011 Annual Report Download - page 39

Investments classified as trading securities are not assessed for impairment, since they are carried at fair value with the change in
fair value included in net income. We review our investments in equity and debt securities that are accounted for using the equity
method or cost method or that are classified as available-for-sale or held-to-maturity each reporting period to determine whether
a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment.
When such events or changes occur, we evaluate the fair value compared to our cost basis in the investment. We also perform this
evaluation every reporting period for each investment for which our cost basis has exceeded the fair value in the prior period. The
fair values of most of our Company’s investments in publicly traded companies are often readily available based on quoted market
prices. For investments in nonpublicly traded companies, management’s assessment of fair value is based on valuation
methodologies including discounted cash flows, estimates of sales proceeds and appraisals, as appropriate. We consider the
assumptions that we believe hypothetical marketplace participants would use in evaluating estimated future cash flows when
employing the discounted cash flow or estimates of sales proceeds valuation methodologies. The ability to accurately predict future
cash flows, especially in developing and emerging markets, may impact the determination of fair value.
In the event the fair value of an investment declines below our cost basis, management is required to determine if the decline in
fair value is other than temporary. If management determines the decline is other than temporary, an impairment charge is
recorded. Management’s assessment as to the nature of a decline in fair value is based on, among other things, the length of time
and the extent to which the market value has been less than our cost basis, the financial condition and near-term prospects of the
issuer, and our intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in
market value.
In 2011, the Company recognized impairment charges of $17 million as a result of the other-than-temporary decline in the fair
value of available-for-sale securities. In addition, the Company recognized charges of $41 million during 2011 related to the
impairment of an investment in an entity accounted for under the equity method of accounting. Each of the impairment charges
mentioned above impacted the Corporate operating segment and was recorded in other income (loss) — net. Refer to the heading
‘‘Operations Review — Other Income (Loss) — Net’’ below and Note 16 and Note 17 of Notes to Consolidated Financial
Statements.
In 2010, the Company recognized other-than-temporary impairments of $41 million related to certain available-for-sale securities
and an equity method investment. These impairment charges were recorded in other income (loss) — net and impacted the
Bottling Investments and Corporate operating segments. Refer to Note 16 and Note 17 of Notes to Consolidated Financial
Statements.
In 2009, the Company recorded a charge of $27 million in other income (loss) — net as a result of an other-than-temporary
decline in the fair value of a cost method investment. As of December 31, 2008, the estimated fair value of this investment
approximated the Company’s carrying value in the investment. However, in 2009, the Company was informed by the investee of its
intent to reorganize its capital structure in 2009, which resulted in the Company’s shares in the investee being canceled. As a
result, the Company determined that the decline in fair value of this cost method investment was other than temporary. This
impairment charge impacted the Corporate operating segment. Refer to Note 16 and Note 17 of Notes to Consolidated Financial
Statements.
The following table presents the difference between calculated fair values, based on quoted closing prices of publicly traded
shares, and our Company’s cost basis in publicly traded bottlers accounted for as equity method investments (in millions):
Fair Carrying
December 31, 2011 Value Value Difference
Coca-Cola FEMSA, S.A.B. de C.V. $ 5,532 $ 1,569 $ 3,963
Coca-Cola Amatil Limited 2,551 999 1,552
Coca-Cola Hellenic Bottling Company S.A. 1,506 1,442 64
Coca-Cola Icecek A.S. 622 155 467
Coca-Cola Central Japan 183 186 (3)
Embotelladoras Coca-Cola Polar S.A. 154 86 68
Coca-Cola Bottling Co. Consolidated 145 84 61
Total $ 10,693 $ 4,521 $ 6,172
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