Mail Stop 0308
June 3, 2005
Mr. Graham Hetherington
Chief Financial Officer
Allied Domecq PLC
The Pavilions, Bridgewater Road
Bedminster Down
Bristol, England BS13 8AR
Re: Allied Domecq PLC
Form 20-F for the year ended August 31, 2004
Filed December 15, 2004
File No. 1-31413
Dear Mr. Hetherington:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document 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
information so we may better understand your disclosure. After
reviewing this information, we may 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 any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We note that you identified the following errors in your
response
to our letter dated March 29, 2005:
* Understatement of UK GAAP shareholders` equity of GBP42 million,
or
8.2% of reported UK GAAP shareholders` equity, as of August 31,
2004,
as discussed in your response to prior comment 27.
* Understatement of US GAAP shareholders` equity of GBP50 million,
as
discussed in your response to prior comment 38 and 44.
* Overstatement of US GAAP net income of GBP17 million, or 6.8% of
US
GAAP net income, as discussed in your response to prior comment
38.
We consider these amounts to be material to your financial
statements. Accordingly, please amend your Form 20-F to correct
these errors. In doing so, please appropriately address the
following:
* An explanatory paragraph in the reissued audit opinion,
* Full compliance with APB 20, paragraphs 36 and 37,
* Full update of all affected portions of the Form 20-F, including
operating and financial review and prospects and selected
financial
data,
* Updated Item 15 disclosures should include the following:
o a discussion of the restatement and the facts and circumstances
surrounding it,
o how the restatement impacted the CEO and CFO`s original
conclusions
regarding the effectiveness of their disclosure controls and
procedures,
o changes to internal controls over financial reporting, and
o anticipated changes to disclosure controls and procedures and/or
internal controls over financial reporting to prevent future
misstatements of a similar nature.
* Updated certifications.
Consolidated Statement of Total Recognized Gains and Losses, page
F-4
2. We note, based on your response to prior comment 15 of our
letter
dated March 29, 2005, that you recognized foreign exchange
transaction gains of GBP193 million on foreign currency denominated
debt, offset by foreign exchange transaction losses of GBP85 million
on
foreign currency denominated net assets. These amounts suggest
that
your foreign currency denominated debt has overhedged your foreign
currency denominated net assets. Please tell us why you did not
recognize foreign exchange transaction gains in your income
statement
to the extent your borrowings exceeded your net assets, in light
of
the second paragraph of your response to prior comment 27, which
states that you recognize any excess exchange differences on
borrowings in income under UK GAAP.
Accounting Policies, page F-8
Turnover, page F-10
3. As requested in prior comment 19, please disclose when you
recognize your slotting fees, as well as your long-term volume-
driven
discounts, payments to achieve preferred product status, buy-down
incentives, cooperative advertising, and customer incentives, in
your
profit and loss account under UK GAAP. If you capitalize these
fees
on your balance sheet, please disclose the amounts capitalized and
the method by which you amortize these amounts to your profit and
loss account. To the extent that the timing of the recognition of
these fees differs under US GAAP, please disclose the nature and
amount of this difference in note 31. Please also supplementally
tell us your basis under US GAAP for determining when you
recognize
these amounts in your profit and loss account.
If you consider all of these fees to be immaterial, please explain
your assessment of the materiality of the amounts you have
capitalized and the amounts you have recognized in income as
compared
to your net income.
Note 20. Financial Instruments, page F-37
4. We have reviewed your response to prior comment 27. Citing
relevant UK GAAP literature, please explain why you now believe
that
you misapplied UK GAAP in accounting for the effect of changes in
exchange rates on your goodwill. We note that you restated your
US
GAAP reconciliation in prior years for this same issue, but that
you
disclosed on page F-53 that this issue has no effect on UK GAAP.
Please also tell us what the effect on your profit and loss
account
would have been if you continued to translate goodwill at
historical
foreign currency exchange rates and recognized in income any
transaction gains and losses on foreign currency denominated debt
to
the extent that the debt exceeds net assets, exclusive of
goodwill.
Note 31. Differences between UK and US Generally Accepted
Accounting
Principles, page F-53
a) Brands, Goodwill and Other Intangible Assets, page F-55
5. We note your response to prior comment 33. In future filings,
please elaborate on the facts and circumstances leading to the
impairment. See paragraph 46.a of SFAS No. 142. In this regard,
please expand your disclosure of the GBP69 million Kuemmerling brand
impairment to include discussion of your loss in market share, as
indicated in your response to prior comment 10.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. Please furnish a cover letter with your
amendment
that keys your responses to our comments and provides any
requested
information. Detailed cover letters greatly facilitate our
review.
Please understand that we may have additional comments after
reviewing your amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment 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 the filing;
* 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.
You may contact Nili Shah at (202) 551-3255 if you have
questions regarding comments on the financial statements and
related
matters. Please contact me at (202) 551-3841 with any other
questions.
Sincerely,
Michael Moran
Accounting Branch Chief
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Mr. Graham Hetherington
Chief Financial Officer
Allied Domecq PLC
June 3, 2005
Page 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-0510
DIVISION OF
CORPORATION FINANCE