Coca Cola 2010 Annual Report Download - page 56

in the line item equity income (loss) — net in our consolidated statements of income. However, as a result of this
transaction, beginning October 2, 2010, the Company no longer records equity income or loss related to CCE; and
therefore, we expect this transaction to negatively impact equity income in future periods. Refer to the heading ‘‘Equity
Income (Loss) — Net,’’ below.
Divestiture of Norwegian and Swedish Bottling Operations
The divestiture of our Norwegian and Swedish bottling operations had no impact on our consolidated unit case volume
and consolidated concentrate sales volume, for the same reasons discussed above in relation to our acquisition of CCE’s
North American business. The divestiture of these bottling operations reduced unit case volume for the Bottling
Investments operating segment. In addition, the divestiture reduced net operating revenues and net income for our
consolidated operating results and the Bottling Investments operating segment. However, since we divested a finished
goods business, it had a positive impact on our gross profit margins and operating margins. Furthermore, the impact
these divestitures had on the Company’s net operating revenues was partially offset by the concentrate revenues that
were recognized on sales to these bottling operations. These concentrate sales had previously been eliminated because
they were intercompany transactions. The net impact to net operating revenues was included as a structural change in
our analysis of changes to net operating revenues. Refer to the heading ‘‘Net Operating Revenues,’’ below.
This divestiture resulted in a gain of $597 million, which was classified in the line item other income (loss) — net in
our consolidated statement of income.
Impact of New Accounting Guidance
Beginning January 1, 2010, we deconsolidated certain entities as a result of the Company’s adoption of new accounting
guidance issued by the FASB. These entities are primarily bottling operations and have been accounted for under the
equity method of accounting since they were deconsolidated. Refer to the heading ‘‘Critical Accounting Policies and
Estimates — Principles of Consolidation,’’ above. The entities that have been deconsolidated as a result of this change
in accounting guidance accounted for approximately 3 percent of the Company’s consolidated net operating revenues
and less than 1 percent of net income attributable to shareowners of The Coca-Cola Company in 2009. Refer to the
heading ‘‘Critical Accounting Policies and Estimates — Principles of Consolidation,’’ above. These entities accounted
for approximately 4 percent of the Company’s equity income in 2010. Refer to the heading ‘‘Equity Income (Loss) —
Net,’’ below. The impact that the deconsolidation of these entities had on net operating revenues was included as a
structural change. Refer to the heading ‘‘Net Operating Revenues,’’ below.
Beverage Volume
We measure the volume of Company beverage products sold in two ways: (1) unit cases of finished products and
(2) concentrate sales. As used in this report, ‘‘unit case’’ means a unit of measurement equal to 192 U.S. fluid ounces
of finished beverage (24 eight-ounce servings); and ‘‘unit case volume’’ means the number of unit cases (or unit case
equivalents) of Company beverage products directly or indirectly sold by the Company and its bottling partners to
customers. Unit case volume primarily consists of beverage products bearing Company trademarks. Also included in
unit case volume are certain products licensed to, or distributed by, our Company, and brands owned by Coca-Cola
system bottlers for which our Company provides marketing support and from the sale of which we derive economic
benefit. In addition, unit case volume includes sales by joint ventures in which the Company has an equity interest. We
believe unit case volume is one of the measures of the underlying strength of the Coca-Cola system because it measures
trends at the consumer level. The unit case volume numbers used in this report are derived based on estimates received
by the Company from its bottling partners and distributors. Concentrate sales volume represents the amount of
concentrates and syrups (in all cases expressed in equivalent unit cases) sold by, or used in finished beverages sold by,
the Company to its bottling partners or other customers. Unit case volume and concentrate sales volume growth rates
are not necessarily equal during any given period. Factors such as seasonality, bottlers’ inventory practices, supply point
changes, timing of price increases, new product introductions and changes in product mix can impact unit case volume
and concentrate sales volume and can create differences between unit case volume and concentrate sales volume growth
rates. In addition to the items mentioned above, the impact of unit case volume from certain joint ventures, in which
the Company has an equity interest, but to which the Company does not sell concentrates or syrups, may give rise to
differences between unit case volume and concentrate sales volume growth rates.
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