Coca Cola 2007 Annual Report Download - page 73

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THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Our Company holds interests in certain entities, primarily bottlers, that are considered variable interest entities.
These variable interests relate to profit guarantees or subordinated financial support for these entities. Our Company’s
investment, plus any loans and guarantees, related to these variable interest entities totaled approximately $647 million
and $429 million at December 31, 2007 and 2006, respectively, representing our maximum exposures to loss. Any
creditors of the variable interest entities do not have recourse against the general credit of the Company as a result of
including these variable interest entities in our consolidated financial statements.
Use of Estimates and Assumptions
The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities
in our consolidated financial statements and accompanying notes. Although these estimates are based on our
knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from
estimates and assumptions.
Risks and Uncertainties
Factors that could adversely impact the Company’s operations or financial results include, but are not limited to,
the following: obesity concerns; water scarcity and quality; changes in the nonalcoholic beverages business
environment; increased competition; inability to expand operations in developing and emerging markets; fluctuations in
foreign currency exchange; interest rate increases; inability to maintain good relationships with our bottling partners; a
deterioration in our bottling partners’ financial condition; strikes or work stoppages (including at key manufacturing
locations); increased cost of energy; increased cost, disruption of supply or shortage of raw and packaging materials;
changes in laws and regulations relating to our business, including those regarding beverage containers and packaging;
additional labeling or warning requirements; unfavorable economic and political conditions in the United States and
international markets; changes in commercial and market practices within the European Economic Area; litigation or
legal proceedings; adverse weather conditions; an inability to maintain brand image and product issues such as product
recalls; changes in the legal and regulatory environment in various countries in which we operate; changes in
accounting and taxation standards, including an increase in tax rates; an inability to achieve our overall long-term
goals; an inability to protect our information systems; future impairment charges; an inability to successfully manage
our Company-owned bottling operations; and global or regional catastrophic events.
Our Company monitors our operations with a view to minimizing the impact to our overall business that could arise as
a result of the risks and uncertainties inherent in our business.
Revenue Recognition
Our Company recognizes revenue when persuasive evidence of an arrangement exists, delivery of products has
occurred, the sales price charged is fixed or determinable, and collectibility is reasonably assured. For our Company,
this generally means that we recognize revenue when title to our products is transferred to our bottling partners,
resellers or other customers. In particular, title usually transfers upon shipment to or receipt at our customers’ locations,
as determined by the specific sales terms of the transactions. Our sales terms do not allow for a right of return except
for matters related to any manufacturing defects on our part.
In addition, our customers can earn certain incentives, which are included in deductions from revenue, a
component of net operating revenues in the consolidated statements of income. These incentives include, but are not
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