Coca Cola 2010 Annual Report Download - page 21

and to potential legal challenge. If we were required to add warning labels under Proposition 65 on one or more of our
beverage products produced for sale in California, the resulting consumer reaction to the warnings and possible adverse
publicity could negatively affect our sales both in California and in other markets.
Unfavorable general economic conditions in the United States or in other major markets could negatively impact our financial
performance.
Unfavorable general economic conditions, such as a recession or economic slowdown in the United States or in one or
more of our other major markets, could negatively affect the affordability of, and consumer demand for, some of our
beverages. Under difficult economic conditions, consumers may seek to reduce discretionary spending by forgoing
purchases of our products or by shifting away from our beverages to lower-priced products offered by other companies,
including private label brands. Softer consumer demand for our beverages in the United States or in other major
markets could reduce the Coca-Cola system’s profitability and could negatively affect our financial performance.
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
2010, our operations outside the United States accounted for approximately $24.5 billion 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 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 sentences, the unfavorable business environment in Venezuela, the current unstable
economic and political conditions and civil unrest and political activism in the Middle East, India, Pakistan or the
Philippines, the civil unrest and potential instability in Egypt and other countries in North Africa; the unstable situation
in Iraq or the continuation or escalation of terrorist activities could adversely impact our international business.
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 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 that could result in civil or criminal penalties, including substantial monetary fines, as well as disgorgement
of profits.
Adverse weather conditions could reduce the demand for our products.
The sales of our products are influenced to some extent by weather conditions in the markets in which we operate.
Unusually cold or rainy weather during the summer months may have a temporary effect on the demand for our
products and contribute to lower sales, which could have an adverse effect on our results of operations for such periods.
If we are unable to maintain our brand image and corporate reputation, our business may suffer.
Our success depends on our ability to maintain brand image for our existing products and effectively build up brand
image for new products and brand extensions. We cannot assure you, however, that additional expenditures and our
continuing commitment to advertising and marketing will have the desired impact on our products’ brand image and on
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