Coca Cola 2011 Annual Report Download - page 112

The carrying value of the Company’s long-term debt included fair value adjustments related to the debt assumed from CCE of
$733 million and $994 million as of December 31, 2011 and 2010, respectively. These fair value adjustments will be amortized over
a weighted-average period of approximately 16 years, which is equal to the weighted-average maturity of the assumed debt to
which these fair value adjustments relate. The amortization of these fair value adjustments will be a reduction of interest expense
in future periods, which will typically result in our interest expense being less than the actual interest paid to service the debt.
Total interest paid was $573 million, $422 million and $346 million in 2011, 2010 and 2009, respectively.
Maturities of long-term debt for the five years succeeding December 31, 2011, are as follows (in millions):
Maturities of
Long-Term Debt
2012 $ 2,041
2013 1,515
2014 1,690
2015 1,462
2016 1,707
NOTE 11: COMMITMENTS AND CONTINGENCIES
Guarantees
As of December 31, 2011, we were contingently liable for guarantees of indebtedness owed by third parties of $654 million, of
which $321 million was related to VIEs. Refer to Note 1 for additional information related to the Company’s maximum exposure
to loss due to our involvement with VIEs. Our guarantees are primarily related to third-party customers, bottlers, vendors and
container manufacturing operations and have arisen through the normal course of business. These guarantees have various terms,
and none of these guarantees was individually significant. The amount represents the maximum potential future payments that we
could be required to make under the guarantees; however, we do not consider it probable that we will be required to satisfy these
guarantees.
We believe our exposure to concentrations of credit risk is limited due to the diverse geographic areas covered by our operations.
Legal Contingencies
The Company is involved in various legal proceedings. We establish reserves for specific legal proceedings when we determine that
the likelihood of an unfavorable outcome is probable and the amount of loss can be reasonably estimated. Management has also
identified certain other legal matters where we believe an unfavorable outcome is reasonably possible and/or for which no
estimate of possible losses can be made. Management believes that the total liabilities to the Company that may arise as a result
of currently pending legal proceedings will not have a material adverse effect on the Company taken as a whole.
During the period from 1970 to 1981, our Company owned Aqua-Chem, Inc., now known as Cleaver-Brooks, Inc. (‘‘Aqua-Chem’’).
During that time, the Company purchased over $400 million of insurance coverage, which also insures Aqua-Chem for some of its prior
and future costs for certain product liability and other claims. A division of Aqua-Chem manufactured certain boilers that contained
gaskets that Aqua-Chem purchased from outside suppliers. Several years after our Company sold this entity, Aqua-Chem received its first
lawsuit relating to asbestos, a component of some of the gaskets. Aqua-Chem was first named as a defendant in asbestos lawsuits in or
around 1985 and currently has approximately 40,000 active claims pending against it. In September 2002, Aqua-Chem notified our
Company that it believed we were obligated for certain costs and expenses associated with its asbestos litigations. Aqua-Chem demanded
that our Company reimburse it for approximately $10 million for out-of-pocket litigation-related expenses. Aqua-Chem also demanded
that the Company acknowledge a continuing obligation to Aqua-Chem for any future liabilities and expenses that are excluded from
coverage under the applicable insurance or for which there is no insurance. Our Company disputes Aqua-Chem’s claims, and we believe
we have no obligation to Aqua-Chem for any of its past, present or future liabilities, costs or expenses. Furthermore, we believe we have
substantial legal and factual defenses to Aqua-Chem’s claims. The parties entered into litigation in Georgia to resolve this dispute,
which was stayed by agreement of the parties pending the outcome of litigation filed in Wisconsin by certain insurers of
Aqua-Chem. In that case, five plaintiff insurance companies filed a declaratory judgment action against Aqua-Chem, the Company
and 16 defendant insurance companies seeking a determination of the parties’ rights and liabilities under policies issued by the
insurers and reimbursement for amounts paid by plaintiffs in excess of their obligations. During the course of the Wisconsin
insurance coverage litigation, Aqua-Chem and the Company reached settlements with several of the insurers, including plaintiffs,
who have or will pay funds into an escrow account for payment of costs arising from the asbestos claims against Aqua-Chem. On
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