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Coca ColaForeign Exchange Exposure

The international operations are subject to certain opportunities and risks, including currency

fluctuations and governmental actions. The operations in each country seek to adopt

appropriate strategies that are responsive to changing economic and political environments,

and to fluctuations in foreign currencies.

Coca Cola uses 72 functional currencies. Due to global operations, weakness in some of these

currencies might be offset by strength in others. In 2009, 2008 and 2007, the weighted-

average exchange rates for foreign currencies in which the Company conducted operations

(all operating currencies), and for certain individual currencies, strengthened (weakened)

against the U.S. dollar as follows:

Year Ended December 31,2009 2008 2007

All operating currencies(9)% 5% 4%

Brazilian real(8)% 6% 11%

Mexican peso(24) 0 0

Australian dollar(8) 1 10

South African rand(1) (18) (3)

British pound(18) (9) 9

Euro(8) 9 8

Japanese yen9

12 (2)

These percentages do not include the effects of our hedging activities and, therefore, do not

reflect the actual impact of fluctuations in exchange rates on the operating results. A foreign

currency management program is designed to mitigate, over time, a portion of the impact of

exchange rate changes on the net income and earnings per share. Foreign currency exchange

gains and losses are primarily the result of the re measurement of monetary assets and

liabilities from certain currencies into functional currencies. The effects of the remeasurement

of these assets and liabilities are partially offset by the impact of the economic hedging

program for certain exposures on consolidated balance sheets.


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As of December 31, 2009, the company translated the financial statements of our Venezuelan

subsidiary at the official exchange rate that was in effect as of that date; however, subsequent

to December 31, 2009, the Venezuelan government announced currency devaluation, and

Venezuela was determined to be a hyperinflationary economy.


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Risk management

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK

The Company uses derivative financial instruments primarily to reduce our exposure toadverse fluctuations in foreign currency exchange rates and, to a lesser extent, adverse

fluctuations in interest rates and commodity prices and other market risks. They do not enter

into derivative financial instruments for trading purposes. As a matter of policy, all of the

companys derivative positions are used to reduce risk by hedging an underlying economic

exposure. Because of the high correlation between the hedging instrument and the underlying

exposure, fluctuations in the value of the instruments are generally offset by reciprocal

changes in the value of the underlying exposure. Virtually all derivatives are straightforward,

over-the-counter instruments with liquid markets.

Foreign Exchange

We manage most of our foreign currency exposures on a consolidated basis, which allows us

to net certain exposures and take advantage of any natural offsets.

We use derivative financial instruments to further reduce our net exposure to currency

fluctuations.

Our Company enters into forward exchange contracts and purchases currency options

(principally euro and Japanese yen) and collars to hedge certain portions of forecasted cash

flows denominated in foreign currencies. Additionally, we enter into forward exchange

contracts to offset the earnings impact relating to exchange rate fluctuations on certain

monetary assets and liabilities. We also enter into forward exchange contracts as hedges of

net investments in international operations.

Interest Rates

We monitor our mix of fixed-rate and variable-rate debt, as well as our mix of term debt

versus non-term debt. From time to time we enter into interest rate swap agreements to

manage our mix of fixed-rate and variable-rate debt.


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Value-at-Risk

We monitor our exposure to financial market risks using several objective measurement

systems, including value-at-risk models. Our value-at-risk calculations use a historical

simulation model to estimate potential future losses in the fair value of our derivatives and

other financial instruments that could occur as a result of adverse movements in foreign

currency and interest rates. We have not considered the potential impact of favourable in

foreign currency and interest rates on our calculations. We examined historical weekly

returns over the previous 10 years to calculate our value-at-risk. The average value-at-risk

represents the simple average of quarterly amounts over the past year. As a result of our

foreign currency value-at-risk calculations, we estimate with 95 percent confidence that the

fair values of our foreign currency derivatives and other financial instruments have a material

impact on our consolidated financial statements.

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