Coca Cola 2011 Annual Report Download - page 65

Year Ended December 31, 2010, versus Year Ended December 31, 2009
In 2010, equity income was $1,025 million, compared to equity income of $781 million in 2009, an increase of $244 million, or
31 percent. The increase was primarily due to our proportionate share of increased net income from certain of our equity method
investees; the favorable impact of foreign currency exchange fluctuations; a decrease in the Company’s proportionate share of
asset impairments and restructuring charges recorded by equity method investees; and the impact of the Company’s adoption of
new accounting guidance issued by the FASB. The impact of these items was partially offset by the impact of our acquisition and
consolidation of CCE’s North American business. As a result of this transaction, the Company stopped recording equity income
related to CCE beginning October 2, 2010. Refer to the heading ‘‘Structural Changes, Acquired Brands and New License
Agreements’’ above.
The Company’s adoption of new accounting guidance issued by the FASB resulted in the deconsolidation of certain entities. On
January 1, 2010, the Company began to account for these entities under the equity method of accounting. Refer to the heading
‘‘Structural Changes, Acquired Brands and New License Agreements’’ above. The entities that have been deconsolidated
accounted for approximately 4 percent of the Company’s equity income in 2010.
Other Income (Loss) — Net
Other income (loss) — net includes, among other things, the impact of foreign currency exchange gains and losses; dividend
income; rental income; gains and losses related to the disposal of property, plant and equipment; realized and unrealized gains
and losses on trading securities; realized gains and losses on available-for-sale securities; other-than-temporary impairments of
available-for-sale securities; and the accretion of expense related to certain acquisitions. The foreign currency exchange gains and
losses are primarily the result of the remeasurement of monetary assets and liabilities from certain currencies into functional
currencies. The effects of the remeasurement of these assets 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 2011, other income (loss) — net was income of $529 million, primarily related to a net gain of $417 million the Company
recognized as a result of the merger of Arca and Contal; a net gain of $122 million the Company recognized as a result of an
equity method investee issuing additional shares of its own stock at per share amounts greater than the carrying value of the
Company’s per share investment, partially offset by charges associated with certain of the Company’s equity method investments in
Japan; and a gain of $102 million related to the sale of our investment in Embonor. Other income (loss) — net also included
$10 million of realized and unrealized gains on trading securities. The net favorable impact of the previous items was partially
offset by foreign currency exchange losses of $73 million; charges of $41 million due to the impairment of an investment in an
entity accounted for under the equity method of accounting; $17 million due to other-than-temporary declines in the fair value of
certain of the Company’s available-for-sale securities; and $5 million related to the finalization of working capital adjustments
associated with the sale of our Norwegian and Swedish Bottling operations to New CCE during the fourth quarter of 2010. Refer
to Note 17 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 due 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 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 $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’’ below. 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 $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 $34 million in net foreign currency
exchange losses and an other-than-temporary impairment charge of $27 million on a cost method investment. Refer to the heading
‘‘Critical Accounting Policies and Estimates — Investments in Equity and Debt Securities’’ above and Note 16 of Notes to
Consolidated Financial Statements.
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