Coca Cola 2008 Annual Report Download - page 81

THE COCA-COLA COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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. Furthermore, when testing assets for impairment in future
periods, if management uses different assumptions or if different conditions occur, impairment charges may
result.
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; the global credit crisis; 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, disruption of
supply or shortage of energy; increased cost, disruption of supply or shortage of ingredients or 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 our brand image and corporate reputation; 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; climate
change; 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 limited to, cash discounts, funds for promotional and marketing activities, volume-based incentive
programs and support for infrastructure programs (refer to the heading ‘‘Other Assets’’). The aggregate
deductions from revenue recorded by the Company in relation to these programs, including amortization
expense on infrastructure initiatives, was approximately $4.4 billion, $4.1 billion and $3.8 billion for the years
79