Coca Cola 2015 Annual Report Download - page 18

"safe harbor" threshold that may be established, is naturally occurring, is the result of necessary cooking or is subject to another applicable exception. One or
more substances that are currently on the Proposition 65 lists, or that may be added to the lists in the future, can be detected in certain Company products at
low levels that are safe. With respect to substances that have not yet been listed under Proposition 65, the Company takes the position that listing is not
scientifically justified. With respect to substances that are already listed, the Company takes the position that the presence of each such substance in
Company products is subject to an applicable exemption from the warning requirement. The state of California and other parties, however, have in the past
taken a contrary position and may do so in the future. If we were required to add Proposition 65 warnings on the labels of 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.
If we are unable to protect our information systems against service interruption, misappropriation of data or breaches of security, our operations could be
disrupted and our reputation may be damaged.
We rely on networks and information systems and other technology ("information systems"), including the Internet and third-party hosted services, to support
a variety of business processes and activities, including procurement and supply chain, manufacturing, distribution, invoicing and collection of payments,
mergers and acquisitions and research and development. We use information systems to process financial information and results of operations for internal
reporting purposes and to comply with regulatory financial reporting and legal and tax requirements. In addition, we depend on information systems for
digital marketing activities and electronic communications among our locations around the world and between Company personnel and our bottlers and
other customers, suppliers and consumers. Because information systems are critical to many of the Company's operating activities, our business may be
impacted by system shutdowns, service disruptions or security breaches. These incidents may be caused by failures during routine operations such as system
upgrades or user errors, as well as network or hardware failures, malicious or disruptive software, unintentional or malicious actions of employees or
contractors, cyberattacks by common hackers, criminal groups or nation-state organizations or social-activist (hacktivist) organizations, geopolitical events,
natural disasters, failures or impairments of telecommunications networks, or other catastrophic events. In addition, such incidents could result in
unauthorized disclosure of material confidential information. If our information systems suffer severe damage, disruption or shutdown and our business
continuity plans do not effectively resolve the issues in a timely manner, we could experience delays in reporting our financial results, and we may lose
revenue and profits as a result of our inability to timely manufacture, distribute, invoice and collect payments for concentrate or finished products. Misuse,
leakage or falsification of information could result in violations of data privacy laws and regulations, damage to the reputation and credibility of the
Company, loss of opportunities to acquire or divest of businesses or brands and loss of ability to commercialize products developed through research and
development efforts and, therefore, could have a negative impact on net operating revenues. In addition, we may suffer financial and reputational damage
because of lost or misappropriated confidential information belonging to us, our current or former employees, or to our bottling partners, other customers,
suppliers or consumers, and may become subject to legal action and increased regulatory oversight. The Company could also be required to spend significant
financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and information systems.
Like most major corporations, the Company's information systems are a target of attacks. Although the incidents that we have experienced to date have not
had a material effect on our business, financial condition or results of operations, there can be no assurance that such incidents will not have a material
adverse effect on us in the future. In order to address risks to our information systems, we continue to make investments in personnel, technologies, cyber
insurance and training of Company personnel. The Company maintains an information risk management program which is supervised by information
technology management and reviewed by a cross-functional committee. As part of this program, reports that include analysis of emerging risks as well as the
Company's plans and strategies to address them are regularly prepared and presented to senior management and the Audit Committee of the Board of
Directors.
Unfavorable general economic conditions in the United States could negatively impact our financial performance.
In 2015, our net operating revenues in the United States were $20.4 billion, or 46 percent, of our total net operating revenues. Unfavorable general economic
conditions, such as a recession or economic slowdown, in the United States could negatively affect the affordability of, and consumer demand for, our
beverages in our flagship market. 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 could reduce our profitability and could negatively affect our overall financial performance.
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