Coca Cola 2008 Annual Report Download - page 79

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
The Coca-Cola Company is predominantly a manufacturer, distributor and marketer of nonalcoholic
beverage concentrates and syrups. We also manufacture, distribute and market finished beverages. In these
notes, the terms ‘‘Company,’’ ‘‘we,’’ ‘‘us’’ or ‘‘our’’ mean The Coca-Cola Company and all subsidiaries included
in the consolidated financial statements. We primarily sell concentrates and syrups, as well as finished beverages,
to bottling and canning operations, distributors, fountain wholesalers and fountain retailers. Our Company owns
or licenses nearly 500 brands, including Coca-Cola, Diet Coke, Fanta and Sprite, and a variety of diet and light
beverages, waters, enhanced waters, juices and juice drinks, teas, coffees, and energy and sports drinks.
Additionally, we have ownership interests in numerous beverage joint ventures, bottling and canning operations.
Significant markets for our products exist in all the world’s geographic regions.
While we primarily manufacture, market and sell concentrates and syrups to our bottling partners, from
time to time we have viewed it as advantageous to acquire a controlling interest in a bottling operation, often on
a temporary basis. Often, though not always, these acquired bottling operations are in underperforming markets
where we believe we can use our resources and expertise to improve performance. Owning such a controlling
interest has allowed us to compensate for limited local resources and has enabled us to help focus the bottler’s
sales and marketing programs and assist in the development of the bottler’s business and information systems
and the establishment of appropriate capital structures. Acquisitions and consolidation of controlled bottling
operations during 2008 and 2007 have resulted in a substantial increase in the number of Company-owned
bottling plants included in our consolidated financial statements and in the number of our associates. In 2008,
net operating revenues generated by Company-owned and consolidated bottling operations (which are included
in the Bottling Investments operating segment) represented approximately 27 percent of our Company’s
consolidated net operating revenues and distributed approximately 11 percent of our worldwide unit case
volume.
Basis of Presentation and Consolidation
Our consolidated financial statements are prepared in accordance with accounting principles generally
accepted in the United States. 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. Refer to the
heading ‘‘Variable Interest Entities,’’ below, for a discussion of variable interest entities.
We use the equity method to account for our investments for which we have the ability to exercise
significant influence over operating and financial policies. Consolidated net income includes our Company’s
proportionate share of the net income or net loss of these companies.
We account for investments in companies that we do not control or account for under the equity method
either at fair value or under the cost method, as applicable. Investments in equity securities are carried at fair
value, if the fair value of the security is readily determinable as defined by and in accordance with Statement of
Financial Accounting Standards (‘‘SFAS’’) No. 115, ‘‘Accounting for Certain Investments in Debt and Equity
Securities.’’ Equity investments carried at fair value are classified as either trading or available-for-sale
securities. Realized and unrealized gains and losses on trading securities and realized gains and losses on
available-for-sale securities are included in net income. Unrealized gains and losses, net of deferred taxes, on
available-for-sale securities are included in our consolidated balance sheets as a component of accumulated
other comprehensive income (loss) (‘‘AOCI’’). Trading securities are reported as marketable securities in our
consolidated balance sheets. Securities classified as available-for-sale are reported as either marketable
securities or other investments in our consolidated balance sheets, depending on the length of time we intend to
77