Coca Cola 2007 Annual Report Download - page 49

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Net Operating Revenues
Net operating revenues increased by $4.8 billion or 20 percent in 2007 versus 2006. Net operating revenues
increased by $984 million or 4 percent in 2006 versus 2005.
The following table indicates, on a percentage basis, the estimated impact of key factors resulting in significant
increases (decreases) in net operating revenues:
Percent Change
Year Ended December 31, 2007 vs. 2006 2006 vs. 2005
Increase in concentrate sales volume 6% 4%
Structural changes 8 (2)
Price and product/geographic mix 2 2
Impact of currency fluctuations versus the U.S. dollar 4 0
Total percentage increase 20% 4%
Refer to the heading “Beverage Volume” for a detailed discussion on concentrate sales volume.
“Structural changes” refers to acquisitions or dispositions of bottling, distribution or canning operations and
consolidation or deconsolidation of bottling and distribution entities for accounting purposes. In 2007, structural
changes increased net operating revenues by 8 percent compared to 2006. These structural changes included the impact
of the acquisition of CCBPI in the first quarter of 2007, the acquisition of the 18 remaining German bottling and
distribution operations in September 2007, the acquisition of CCCIL in the third quarter of 2006, the consolidation of
Brucephil effective September 29, 2006 and the acquisition of several other individually insignificant bottling
operations. Refer to Note 20 of Notes to Consolidated Financial Statements.
Price and product/geographic mix increased net operating revenues by 2 percent in 2007 versus 2006, primarily
due to favorable pricing and product/package mix across the majority of the operating segments.
The favorable impact of currency fluctuations in 2007 compared to 2006 resulted from a weaker U.S. dollar versus
most key currencies, especially a stronger euro, which favorably impacted the European Union and Bottling
Investments, a stronger Brazilian real, which favorably impacted Latin America and Bottling Investments, and a
stronger Australian dollar which favorably impacted Pacific and Bottling Investments. The favorable impact of the
fluctuation in these currencies was partially offset by a weaker Japanese yen and South African rand, which
unfavorably impacted the Pacific, Africa and Bottling Investments. Refer to the heading “Foreign Exchange.”
In 2006, structural changes decreased net operating revenues by 2 percent compared to 2005, primarily due to the
change of the business model in Spain, partially offset by the acquisitions of Bremer in the third quarter of 2005, TJC
in the first quarter of 2006, CCCIL in the third quarter of 2006 and the consolidation of Brucephil under Interpretation
No. 46(R) effective September 29, 2006. Refer to Note 20 of Notes to Consolidated Financial Statements. Effective
January 1, 2006, the Company granted our bottling partners in Spain the rights to manufacture and distribute Company
trademarked products in can packages. Prior to granting these rights to our bottling partners, the Company held the
manufacturing and distribution rights for these can packages in Spain. In connection with granting these rights, the
Company reduced our planned future annual marketing support payments to our bottling partners in Spain. These
changes resulted in a reduction of net operating revenues and cost of goods sold. This change did not materially impact
gross profit for 2006. If the change had occurred as of January 1, 2005, net operating revenues for 2005 would have
been reduced by approximately $779 million.
Price and product/geographic mix increased net operating revenues by 2 percent in 2006 compared to 2005,
primarily due to price increases across the majority of the operating segments and improved pricing and
product/package mix in Bottling Investments partially offset by an unfavorable product mix primarily in Japan.
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