Coca Cola 2006 Annual Report Download - page 34

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations
(‘‘MD&A’’) is intended to help the reader understand The Coca-Cola Company, our operations and our present
business environment. MD&A is provided as a supplement to—and should be read in conjunction with—our
consolidated financial statements and the accompanying notes thereto contained in ‘‘Item 8. Financial
Statements and Supplementary Data’’ of this report. This overview summarizes the MD&A, which includes the
following sections:
•Our Business — a general description of our business and the nonalcoholic beverages segment of the
commercial beverages industry; our objective; our areas of focus; and challenges and risks of our
business.
•Critical Accounting Policies and Estimates — a discussion of accounting policies that require critical
judgments and estimates.
•Operations Review — an analysis of our Company’s consolidated results of operations for the three years
presented in our consolidated financial statements. Except to the extent that differences among our
operating segments are material to an understanding of our business as a whole, we present the
discussion in the MD&A on a consolidated basis.
•Liquidity, Capital Resources and Financial Position — an analysis of cash flows; off–balance sheet
arrangements and aggregate contractual obligations; foreign exchange; an overview of financial position;
and the impact of inflation and changing prices.
Our Business
General
We are the largest manufacturer, distributor and marketer of nonalcoholic beverage concentrates and
syrups in the world. Along with Coca-Cola, which is recognized as the world’s most valuable brand, we market
four of the world’s top five nonalcoholic sparkling brands, including Diet Coke, Fanta and Sprite. Our Company
owns or licenses more than 400 brands, including diet and light beverages, waters, juice and juice drinks, teas,
coffees, and energy and sports drinks. Through the world’s largest beverage distribution system, consumers in
more than 200 countries enjoy the Company’s beverages at a rate exceeding 1.4 billion servings each day. Our
Company generates revenues, income and cash flows by selling beverage concentrates and syrups as well as some
finished beverages. We generally sell these products to bottling and canning operations, fountain wholesalers
and some fountain retailers and, in the case of finished products, to distributors. Our bottlers sell our branded
products to businesses and institutions including retail chains, supermarkets, restaurants, small neighborhood
grocers, sports and entertainment venues, and schools and colleges. We continue to expand our marketing
presence and increase our unit case volume in most developing and emerging markets. Our strong and stable
system helps us to capture growth by manufacturing, distributing and marketing existing, enhanced and new
innovative products to our consumers throughout the world.
We have three types of bottling relationships: bottlers in which our Company has no ownership interest,
bottlers in which our Company has a noncontrolling ownership interest and bottlers in which our Company has a
controlling ownership interest. We authorize our bottling partners to manufacture and package products made
from our concentrates and syrups into branded finished products that they then distribute and sell. In 2006,
bottling partners in which our Company has no ownership interest or a noncontrolling ownership interest
produced and distributed approximately 83 percent of our worldwide unit case volume.
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