Coca Cola 2013 Annual Report Download - page 90

Assets and Liabilities Held for Sale
On December 13, 2012, the Company and Coca-Cola FEMSA executed a share purchase agreement for the sale of a majority
ownership interest in our Philippine bottling operations. As of December 31, 2012, our Philippine bottling operations met the
criteria to be classified as held for sale, and we were required to record their assets and liabilities at the lower of carrying value or
fair value less any costs to sell based on the agreed-upon purchase price. Accordingly, we recorded a total loss of $107 million,
primarily during the fourth quarter of 2012, in the line item other income (loss) — net in our consolidated statement of income.
This transaction was completed on January 25, 2013. The Company now accounts for our remaining 49 percent ownership interest
in the Philippine bottling operations under the equity method of accounting. As a result of this transaction, we remeasured our
remaining investment in the Philippine bottling operations to fair value taking into consideration the sale price of the majority
ownership interest. Coca-Cola FEMSA has an option to purchase our remaining ownership interest in the Philippine bottling
operations at any time during the seven years following closing based on the initial purchase price plus a defined return.
Coca-Cola FEMSA also has an option exercisable during the sixth year after closing to sell its ownership interest back to the
Company at a price not to exceed the initial purchase price.
On December 17, 2012, the Company entered into an agreement with several parties to combine our Brazilian bottling operations
with an independent bottler in Brazil in a transaction involving a disposition of shares for cash and an exchange of shares for a
44 percent minority ownership interest in the newly combined entity, which was recorded at fair value. As of December 31, 2012,
our Brazilian bottling operations met the criteria to be classified as held for sale, but we were not required to record their assets
and liabilities at fair value less any costs to sell because their fair value exceeded our carrying value. This transaction was
completed on July 3, 2013, and resulted in the deconsolidation of our Brazilian bottling operations. The Company recognized a
gain of $615 million as a result of this transaction. The owners of the majority interest have the option to acquire up to
24 percent of the new entity’s outstanding shares from us at any time for a period of six years beginning December 31, 2013,
based on an agreed-upon formula.
The following table presents information related to the major classes of assets and liabilities of the Company’s Philippine and
Brazilian bottling operations, both of which are included in our Bottling Investments operating segment, as of December 31, 2012
(in millions):
Total Bottling
Philippine Bottling Brazilian Bottling Operations
Operations Operations Held for Sale
Cash, cash equivalents and short-term investments $ 133 $ 45 $ 178
Trade accounts receivable, less allowances 108 88 196
Inventories 187 85 272
Prepaid expenses and other assets 223 174 397
Other assets 7 128 135
Property, plant and equipment — net 841 419 1,260
Bottlers’ franchise rights with indefinite lives 341 130 471
Goodwill 148 22 170
Other intangible assets —11
Allowance for reduction of assets held for sale (107) — (107)
Total assets $ 1,881 $ 1,092 $ 2,973
Accounts payable and accrued expenses $ 241 $ 157 $ 398
Loans and notes payable — 6 6
Current maturities of long-term debt — 28 28
Accrued income taxes (4) 4 —
Long-term debt — 147 147
Other liabilities 20 75 95
Deferred income taxes 102 20 122
Total liabilities $ 359 $ 437 $ 796
We determined that our Philippine and Brazilian bottling operations did not meet the criteria to be classified as discontinued
operations, primarily due to the continued significant involvement we will have in these operations following each transaction.
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