KO » Topics » The global credit crisis may adversely affect our liquidity and financial performance.

These excerpts taken from the KO 10-K filed Feb 26, 2009.

The global credit crisis may adversely affect our liquidity and financial performance.

        The global credit markets have experienced unprecedented disruptions in recent months. If the current credit crisis were to worsen, we may be unable to access credit markets on favorable terms, which could increase our cost of borrowing. In addition, the current credit crisis may make it more difficult for our bottling partners to access financing on terms comparable to those obtained historically, which would affect the Coca-Cola system's profitability as well as our share of the income of bottling partners in which we have equity method investments. The current global credit market conditions and their actual or perceived effects on our and our major bottling partners' results of operations and financial condition, along with the deteriorating economic environment brought about by the financial crisis, may increase the likelihood that the major independent credit agencies will downgrade our credit ratings, which could have a negative effect on our borrowing costs. The significant decline in the equity markets and in the valuation of other assets precipitated by the credit crisis and financial system instability has affected the value of our pension plan assets. The lower pension plan asset base will negatively affect our return on plan assets and thus increase our pension expense. In addition, if the current adverse market conditions continue for a prolonged period of time or deteriorate further, it could have an additional negative impact on our future pension benefit expense. As a result of the decline in the fair value of our pension plans assets and a decrease in the discount rate used to calculate pension benefit obligations, we have made and will consider making additional contributions to our U.S. and international pension plans in 2009. In addition, the instability of major financial institutions caused by the credit crisis could increase the counterparty risk associated with our existing derivative financial instruments and may increase the cost of, or may impair our ability to secure credit-worthy counterparties for, future derivative transactions. The decrease in availability of consumer credit resulting from the financial crisis, as well as general unfavorable economic conditions, may also cause consumers to reduce their discretionary spending, which would reduce the demand for our beverages and negatively affect our net revenues and the Coca-Cola system's profitability.

The global credit crisis may adversely affect our liquidity and financial performance.



        The global credit markets have experienced unprecedented disruptions in recent months. If the current credit crisis were to worsen, we
may be unable to access credit markets on favorable terms, which could increase our cost of borrowing. In addition, the current credit crisis may make it more difficult for our bottling partners to
access financing on terms comparable to those obtained historically, which would affect the Coca-Cola system's profitability as well as our share of the income of bottling partners in
which we have equity method investments. The current global credit market
conditions and their actual or perceived effects on our and our major bottling partners' results of operations and financial condition, along with the deteriorating economic environment brought about
by the financial crisis, may increase the likelihood that the major independent credit agencies will downgrade our credit ratings, which could have a negative effect on our borrowing costs. The
significant decline in the equity markets and in the valuation of other assets precipitated by the credit crisis and financial system instability has affected the value of our pension plan assets. The
lower pension plan asset base will negatively affect our return on plan assets and thus increase our pension expense. In addition, if the current adverse market conditions continue for a prolonged
period of time or deteriorate further, it could have an additional negative impact on our future pension benefit expense. As a result of the decline in the fair value of our pension plans assets and a
decrease in the discount rate used to calculate pension benefit obligations, we have made and will consider making additional contributions to our U.S. and international pension plans in 2009. In
addition, the instability of major financial institutions caused by the credit crisis could increase the counterparty risk associated with our existing derivative financial instruments and may
increase the cost of, or may impair our ability to secure credit-worthy counterparties for, future derivative transactions. The decrease in availability of consumer credit resulting from the financial
crisis, as well as general unfavorable economic conditions, may also cause consumers to reduce their discretionary spending, which would reduce the demand for our beverages and negatively affect our
net revenues and the Coca-Cola system's profitability.



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 26, 2009
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