Coca Cola 2007 Annual Report Download - page 37

Evolving Consumer Preferences. Consumers want more choices. We are impacted by shifting consumer
demographics and needs, on-the-go lifestyles, aging populations in developed markets and consumers who are
empowered with more information than ever. We are committed to generating new avenues for growth through our
core brands with a focus on diet and light products. We are also committed to continuing to expand the variety of
choices we provide to consumers to meet their needs, desires and lifestyle choices.
Increased Competition and Capabilities in the Marketplace. Our Company is facing strong competition from
some well-established global companies and many local participants. We must continue to selectively expand into
other profitable segments of the nonalcoholic beverages segment of the commercial beverages industry and strengthen
our capabilities in marketing and innovation in order to maintain our brand loyalty and market share.
All four of these challenges and risks—obesity and inactive lifestyles, water quality and quantity, evolving
consumer preferences, and increased competition and capabilities in the marketplace—have the potential to have a
material adverse effect on the nonalcoholic beverages segment of the commercial beverages industry and on our
Company; however, we believe our Company is well positioned to appropriately address these challenges and risks.
See also “Item 1A. Risk Factors” in Part I of this report for additional information about risks and uncertainties
facing our Company.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in
the United States, which require management to make estimates, judgments and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. We believe that our most critical accounting
policies and estimates relate to the following:
• Basis of Presentation and Consolidation
• Recoverability of Noncurrent Assets
• Revenue Recognition
• Income Taxes
• Contingencies
Management has discussed the development, selection and disclosure of critical accounting policies and estimates
with the Audit Committee of the Company’s Board of Directors. While our estimates and assumptions are based on our
knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from these
estimates and assumptions. For a discussion of the Company’s significant accounting policies, refer to Note 1 of Notes
to Consolidated Financial Statements.
Basis of Presentation and Consolidation
Our Company consolidates all entities that we control by ownership of a majority voting interest as well as
variable interest entities for which our Company is the primary beneficiary. Our judgment in determining if we are the
primary beneficiary of the variable interest entities includes assessing our Company’s level of involvement in setting
up the entity, determining if the activities of the entity are substantially conducted on behalf of our Company,
determining whether the Company provides more than half of the subordinated financial support to the entity, and
determining if we absorb the majority of the entity’s expected losses or returns.
We use the equity method to account for investments for which we have the ability to exercise significant
influence over operating and financial policies of the investee. Our consolidated net income includes our Company’s
proportionate share of the net income or loss of these companies. Our judgment regarding the level of influence over
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