Coca Cola 2008 Annual Report Download - page 19

Recent developments indicate that the United States economy is in recession and that the global economy is
experiencing a slowdown. If current adverse economic conditions were to continue or to worsen, our results of
operations could suffer.
Unfavorable economic and political conditions in international markets could hurt our business.
We derive a significant portion of our net operating revenues from sales of our products in international
markets. In 2008, our operations outside of the United States accounted for approximately 75 percent of our net
operating revenues. Unfavorable economic and political conditions in certain of our international markets,
including civil unrest and governmental changes, could undermine consumer confidence and reduce the
consumers’ purchasing power, thereby reducing demand for our products. In addition, product boycotts
resulting from political activism could reduce demand for our products, while restrictions on our ability to
transfer earnings or capital across borders which may be imposed or expanded as a result of political and
economic instability could impact our profitability. Without limiting the generality of the preceding sentence, the
current unstable economic and political conditions and civil unrest and political activism in the Middle East,
India or the Philippines, the unstable situation in Iraq, or the continuation or escalation of terrorist activities
could adversely impact our international business.
Changes in commercial and market practices within the European Economic Area may affect the sales of our products.
We and our bottlers are subject to an Undertaking, rendered legally binding in June 2005 by a decision of
the European Commission, pursuant to which we committed to make certain changes in our commercial and
market practices in the European Economic Area Member States. The Undertaking potentially applies in 27
countries and in all channels of distribution where certain of our sparkling beverages account for over 40 percent
of national sales and twice the nearest competitor’s share. The commitments we and our bottlers made in the
Undertaking relate broadly to exclusivity, percentage-based purchasing commitments, transparency, target
rebates, tying, assortment or range commitments, and agreements concerning products of other suppliers. The
Undertaking also applies to shelf space commitments in agreements with take-home customers and to financing
and availability agreements in the on-premise channel. In addition, the Undertaking includes commitments that
are applicable to commercial arrangements concerning the installation and use of technical equipment (such as
coolers, fountain equipment and vending machines). Adjustments to our business model in the European
Economic Area Member States as a result of these commitments or of future interpretations of European
Union competition laws and regulations could adversely affect our sales in the European Economic Area
markets.
Litigation or legal proceedings could expose us to significant liabilities and damage our reputation.
We are party to various litigation claims and legal proceedings. We evaluate these litigation claims and legal
proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of
potential losses. Based on these assessments and estimates, we establish reserves and/or disclose the relevant
litigation claims or legal proceedings, as appropriate. These assessments and estimates are based on the
information available to management at the time and involve a significant amount of management judgment. We
caution you that actual outcomes or losses may differ materially from those envisioned by our current
assessments and estimates. In addition, we have bottling and other business operations in emerging or
developing markets with high-risk legal compliance environments. Our policies and procedures require strict
compliance by our associates and agents with all United States and local laws and regulations applicable to our
business operations, including those prohibiting improper payments to government officials. Nonetheless, we
cannot assure you that our policies, procedures and related training programs will always ensure full compliance
by our associates and agents with all applicable legal requirements. Improper conduct by our associates or agents
could damage our reputation in the United States and internationally or lead to litigation or legal proceedings
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