Mail Stop 3-8
May 16, 2005
By Facsimile and U.S. Mail
Mr. Gary P. Fayard
Executive Vice President and Chief Financial Officer
The Coca-Cola Company
One Coca-Cola Plaza
Atlanta, Georgia 30313
RE: The Coca-Cola Company
Form 10-K for the fiscal year ended December 31,
2004
Filed March 4, 2005
Dear Mr. Fayard:
We have reviewed your filing and have the following comments.
Where indicated, we think you should revise your documents in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2004
General
1. Where a comment below requests additional disclosures or other
revisions to be made, please include these disclosures and
revisions
in your future filings.
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations, page 24
Application of Critical Accounting Policies, page 31
2. We note that you recognized an impairment charge of $374
million
related to CCEAG`s franchise rights in the third quarter of 2004
due
to volume declines resulting from a deposit law enacted by the
German
government on January 1, 2003. However, it appears that you have
not
recognized or expect to recognize an impairment loss related to
CCEAG`s goodwill and tangible assets. Please help us understand
your
consideration of these circumstances in evaluating the timing of
an
impairment test and the need for recognition of impairment charges
related to CCEAG`s goodwill and tangible assets.
Reconciliation of Non-GAAP Financial Measures, page 55
3. Please disclose, in more detail, why you believe that
presentation
of non-GAAP financial measures provides useful information to
investors regarding your financial condition and results of
operations. Please also detail the manner in which you use non-
GAAP
financial measures. Your disclosures should be specific to the
non-
GAAP financial measure used, the nature of your business and
industry, and the manner in which you assess the non-GAAP
financial
measures and apply them to management decisions. See Item 10(e)
of
Regulation S-K.
Item 8. Financial Statements and Supplementary Data, page 60
Note 1. Organization and Summary of Significant Accounting
Policies,
page 66
Variable Interest Entities, page 66
4. It appears that you have concluded that Coca-Cola FEMSA is not
a
variable interest entity. Please help us understand the following
with respect to your application of FIN 46R to Coca-Cola FEMSA:
* Please identify for us your variable interests in Coca-Cola
FEMSA.
In this regard, please discuss your evaluation of whether your
equity
interests, your $250 million letter of credit, your bottling
agreements, and your marketing and infrastructure support
represent
variable interests in Coca-Cola FEMSA. From Coca-Cola FEMSA`s
Form
20-F, we note that under your bottling agreements, you set prices
as
a percentage of the average sales price that Coca-Cola FEMSA
charges
to retailers, which suggests that these agreements somewhat absorb
Coca-Cola FEMSA`s variability and may represent variable
interests.
Please advise.
* Please explain your consideration of paragraph 5 of FIN 46R in
determining that Coca-Cola FEMSA is not a variable interest
entity.
In this regard, please also explain:
o Your evaluation of whether the terms of your bottling agreements
and marketing and infrastructure programs indirectly protect
investors from expected losses or guarantee a return, pursuant to
paragraph 5(b)(2) of FIN 46R.
o Your evaluation of whether your obligations to absorb expected
losses and/or receive expected residual returns by way of your
variable interests are disproportional to your voting rights,
pursuant to paragraph 5(c) of FIN 46R.
Revenue Recognition, page 68
5. Your disclosures on page 5 indicate that you provided $3.6
billion
to bottlers, resellers, vendors and customers of your products for
participation in sales promotion programs in 2004. You also state
that you provide promotional and marketing services, repair
services,
and dispensing equipment to fountain and bottle / can retailers.
Please tell us, citing relevant accounting literature, and
disclose
how you account for and classify the funds, services, and
equipment
you provide. In this regard, please explain your consideration of
EITF 01-9.
Other Assets, page 69
6. We note that you invest in infrastructure programs with your
bottlers, make advance payments to fund future marketing
activities,
and make advance payments to certain customers for distribution
rights. For each of these three types of programs:
* Please tell us and disclose where you classify the amortization
of
these other assets. We understand from your disclosures in note 2
that you classify a portion of the amortization expense related to
your infrastructure programs in net operating revenues. Please
clarify whether you classify amortization for all programs in net
operating revenues.
* Please tell us and disclose, similar to your disclosures of the
amount of amortization expense for infrastructure programs, the
amount of amortization expense related to the other two types of
programs.
* Please explain and disclose the period over which you amortize
these assets and how you determine the applicable period.
* Please tell us and disclose in more detail how you determine
whether these assets are recoverable.
* Please explain your basis for capitalizing costs associated with
each of these three programs. In addition, please tell us whether
any of the costs relate to advertising, as defined by paragraphs
..22
- - .24 of SoP 93-7; start-up activities, as discussed in paragraph
..05
of SoP 98-5; or internally developed intangible assets, as
discussed
in paragraph 10 of SFAS No. 142. If so, please tell us your
consideration of those statements.
Property, Plant and Equipment, page 69
7. We note your property, plant and equipment represents
approximately 32% of your total assets. Please disclose the
useful
lives of your property, plant and equipment by component. In a
separate note, please disclose in tabular form as of each balance
sheet date a breakout of the components included in the property,
plant and equipment line item, including the related amounts.
Further, given the materiality of your property, plant and
equipment
and the judgment involved in estimating useful lives, please tell
us
why you do not believe this area to represent a critical
accounting
policy.
Note 18. Acquisitions and Investments, page 110
8. We understand that you have recognized a liability equal to the
present value of the total amount likely to be paid to CCEAG
shareholders related to the put or put / call agreements. Please
tell us whether the agreements meet the definition of a
derivative,
based on paragraphs 6 to 9 of SFAS No. 133. If so, please tell us
your consideration of paragraphs 17 and 18 of SFAS No. 133 in
accounting for these agreements.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please provide us with a supplemental response letter that keys
your
responses to our comments and provide any requested supplemental
information. Detailed cover letters greatly facilitate our
review.
Please file your cover letter on EDGAR. Please understand that we
may have additional comments after reviewing your responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in their filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement has access to all information you provide to the staff
of
the Division of Corporation Finance in our review of your filing
or
in response to our comments on your filing.
If you have any questions regarding these comments, please
direct them to Nili Shah at (202) 942-2923. Any other questions
regarding disclosure issues may be directed to me at (202) 551-
3716.
Sincerely,
Will Choi
Accounting Branch Chief
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Mr. Gary P. Fayard
Executive Vice President and Chief Financial Officer
The Coca-Cola Company
May 16, 2005
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