Fitch Revises Coca-Cola's Outlook to Negative On Energy Brands Buy; Affirms 'A+' IDR.

CHICAGO -- Fitch Ratings has affirmed The Coca-Cola Company's (NYSE:KO) debt ratings following the company's May 25 announcement that it had reached an agreement to acquire Energy Brands, Inc., known as Glaceau, for $4.1 billion in cash. Fitch has also revised KO's Rating Outlook to Negative. Approximately $6.4 billion of KO's debt is impacted by this rating action. KO's ratings are listed below.

The Coca Cola Company

--Issuer Default Rating (IDR) 'A+';

--Senior unsecured debt 'A+';

--Credit facility 'A+';

--Commercial paper 'F1'.

The acquisition of Glaceau provides KO with a strong portfolio and a growth platform in enhanced waters, one of the fastest growing sub categories of the non alcoholic liquid refreshment beverage industry. Glaceau's main products include vitaminwater and smartwater, which represented 85% and 14% of the company's 2006 volume respectively. Other products include fruitwater and a recently launched energy drink under the vitaminenergy brand. KO is likely to benefit from greater geographic distribution and channel expansion. Glaceau will have access to Coca Cola North America's supply chain and marketing expertise. Near-term execution risk should be mitigated due to Glaceau operating as a separate business unit of Coca Cola NA. KO anticipates that the acquisition will be modestly dilutive on an earning per share basis in 2007 and accretive in 2008. The acquisition is subject to regulatory approval.

Fitch's Outlook revision to Negative is a result of materially weaker system-wide credit measures resulting from the acquisition, which will be 100% debt-financed, and the risk of additional debt-financed acquisitions. Positive revision of KO's Rating Outlook is predicated upon management executing share repurchases and future acquisitions in a conservative manner. KO has indicated that it will reduce its range of planned share repurchases to $1.75 billion to $2 billion from $2.5 billion to $3 billion.

On a proforma basis, leverage for the system, as measured by total debt divided by operating earnings before interest taxes depreciation and amortization (EBITDA), will be above 2.0 times (x) and EBITDA-to-interest below 8.0x. KO's stand alone credit metrics for the latest twelve months (LTM) ended March 31, 2007 were as follows; total-debt-to-EBITDA 1.2x and EBITDA-to-gross interest of 32.0x. Free cash flow, defined as cash flow from operations less capital expenditures and dividends, for the same period was $1.4 billion. KO's cash balance of approximately $3.8 billion at March 31, 2007 provides excess liquidity, however a substantial portion of the company's cash is maintained offshore.

KO's ratings continue to reflect the company's substantial and highly geographically diversified cash flow generation, its strong global franchise and Fitch's view that KO and its significant bottlers are mutually dependant upon one another. The ratings also reflect KO's leading market share in the non-alcoholic liquid beverage refreshment category, global marketing and distribution capability, diverse portfolio of beverage products and solid operating performance. These positive elements are weighed against the maturity and price sensitivity of carbonated soft drinks (CSD), particularly in the United States and developed economies, the financial support KO provides to many of its bottlers and the significantly weaker credit measures for the system than KO on its own.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.