EXHIBIT 99.2
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES ACT OF 1933
Release No. 8569 / April 18, 2005
SECURITIES EXCHANGE ACT OF 1934
Release No. 51565 / April 18, 2005
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 2232 / April 18, 2005
ADMINISTRATIVE PROCEEDING
File No. 3-11902
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ORDER INSTITUTING CEASE-
In the Matter of AND-DESIST PROCEEDINGS,
MAKING FINDINGS AND
The Coca-Cola Company, IMPOSING A CEASE-AND-
DESIST ORDER PURSUANT TO
Respondent. SECTION 8A OF THE
SECURITIES ACT OF 1933 AND
SECTION 21C OF THE
SECURITIES EXCHANGE ACT
OF 1934
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I.
The Securities and Exchange Commission ("Commission") deems it
appropriate that cease-and-desist proceedings be, and hereby are, instituted
pursuant to Section 8A of the Securities Act of 1933 ("Securities Act") and
Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") as to The
Coca-Cola Company ("Coca-Cola" or "Respondent").
II.
In anticipation of the institution of these proceedings, Respondent has
submitted an Offer of Settlement (the "Offer") which the Commission has
determined to accept. Solely for the purpose of these proceedings and any other
proceedings brought by or on behalf of the Commission, or to which the
Commission is a party, and without admitting or denying the findings herein,
except as to the Commission's jurisdiction over it and the subject matter of
these proceedings, Respondent consents to the entry of this Order Instituting
Cease-and-Desist Proceedings, Making Findings and Imposing a Cease-and-Desist
Order Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of
the Securities Exchange Act of 1934 ("Order"), as set forth below.
III.
On the basis of this Order and Respondent's Offer, the Commission finds
that:{1}
RESPONDENT
1. Coca-Cola is a Delaware corporation headquartered in Atlanta, Georgia.
Coca-Cola's common stock is registered with the Commission under Section 12(b)
of the Exchange Act and trades on the New York Stock Exchange under the symbol
KO. Coca-Cola is the largest manufacturer, distributor and marketer of
nonalcoholic beverage concentrates and syrups in the world. Coca-Cola's reported
net operating revenues for the past ten years have ranged between $16 billion
and $22 billion.
2. Coca-Cola offered and sold securities in registered offerings during 1997,
1999 and 2000. Specifically, Coca-Cola conducted securities offering pursuant to
employee benefit plans and S-8 Registration Statements filed with the Commission
in May 1997, May 1999 and April 2000, which incorporated by reference certain
Forms 10-K, 10-Q and 8-K filed by Coca-Cola during this period.
RELEVANT ENTITY
3. The Coca-Cola (Japan) Company, Ltd. ("CCJC") is a Japanese corporation and
wholly-owned subsidiary of Coca-Cola. CCJC is engaged in marketing, manufacture
and distribution of Coca-Cola beverage concentrate in Japan. Historically, CCJC
is one of Coca-Cola's two or three greatest sources of net operating revenue
and, on a per gallon of concentrate sold basis, CCJC is the most profitable
operating division of Coca-Cola throughout the world.
COCA-COLA HAD AN ESTABLISHED HISTORY
OF MEETING OR EXCEEDING EARNINGS EXPECTATIONS
4. From 1990 through 1996, Coca-Cola consistently met or exceeded earnings
expectations while achieving a compound annual earnings per share growth rate of
18.3 percent -- more than twice the average growth rate of the S&P 500.
Coca-Cola's superior earnings performance resulted in its common stock trading
at a price to earnings multiple ("P/E Ratio") of 38.1 by the end of 1996, as
compared to the S&P 500's P/E Ratio of 20.8.
5. In the mid-1990s, Coca-Cola began experiencing increased competition and more
difficult economic environments. Nevertheless, Coca-Cola publicly maintained
between 1996 and 1999 that it expected its earnings per share to continue to
grow between 15 percent and 20 percent annually.
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{1} The findings herein are made pursuant to Coca-Cola's Offer of Settlement and
are not binding on any other person or entity in this or any other proceeding.
2
COCA-COLA "GALLON PUSHED" IN JAPAN TO MEET
BUSINESS PLAN TARGETS AND EARNINGS EXPECTATIONS
6. At or near the end of each reporting period between 1997 and 1999, Coca-Cola,
through its officers and employees implemented a "channel stuffing" practice in
Japan known as "gallon pushing." In connection with this practice, CCJC asked
bottlers in Japan to make additional purchases of concentrate for the purpose of
generating revenue to meet both annual business plan and earnings targets. The
income generated by gallon pushing in Japan was the difference between Coca-Cola
meeting or missing analysts' consensus or modified consensus earnings estimates
for 8 out of 12 quarters from 1997 through 1999.
7. To accomplish gallon pushing's purpose, at or near the end of reporting
periods CCJC offered extended credit terms to bottlers, as described below, to
induce them to purchase quantities of concentrate the bottlers otherwise would
not have purchased until a following period. The quantities of concentrate CCJC
sold to its bottlers in connection with a gallon push were in excess of the
bottlers' forecasted demand; the bottlers nevertheless purchased the concentrate
to preserve their relationships with Coca-Cola.
8. Concentrate sales by CCJC to its bottlers typically track and correspond to
anticipated and actual bottler sales of finished products to retailers.
Increases in the inventory level of concentrate held by bottlers often
anticipate increases in sales of finished products. As a result of gallon
pushing, however, concentrate inventory levels at CCJC's bottlers increased more
than 60 percent from the start of 1997 through the close of 1999. During this
same time, bottler sales of finished products to retailers only increased
approximately 11 percent.
9. Coca-Cola estimated its bottlers' inventory levels, forecasted purchasing
demand, and was aware that quarter-end gallon pushing likely could not continue
at existing levels and likely would cause a corresponding reduction in sales in
a future period. At no point between 1997 and 1999, however, did Coca-Cola
publicly disclose to shareholders the existence of gallon pushing, the impact of
gallon pushing on its current income, or the likely impact of gallon pushing on
its future income.
COCA-COLA GALLON PUSHED
ITS MOST PROFITABLE PRODUCTS
10. In connection with gallon pushes, bottlers primarily purchased only two
products: Georgia Coffee, a canned flavored coffee beverage, and branded
Coca-Cola ("Coke"). Georgia Coffee and Coke were typically two of the highest
sales volume products for CCJC to its bottlers. Additionally, of Coca-Cola's
major products, Georgia Coffee and Coke were two of the highest profit-margin
per gallon products CCJC could include in a gallon push. From Coca-Cola and
CCJC's perspective, therefore, in order to generate sales sufficient to meet the
additional income targets, it was most efficient to push the bottlers to
purchase additional gallons of Georgia Coffee and Coke.
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11. For CCJC's bottlers, however, sales of Georgia Coffee and Coke to retailers
were actually declining from 1997 through 1999. Hence, Coca-Cola, through CCJC,
was inducing its bottlers to purchase quantities of concentrate that were in
excess of forecasted sales demand for the current quarter.
12. Gallon pushing for the purpose of meeting earnings expectations occurred at
no Coca-Cola operating division other than CCJC. As CCJC was Coca-Cola's single
most profitable division throughout the world on a per gallon of concentrate
sold basis, it was by far the most efficient location from which to push
additional inventory for the purpose of managing earnings.
CCJC IMPLEMENTED GALLON PUSHING
THROUGH THE USE OF EXTENDED CREDIT TERMS
13. To encourage bottlers to purchase additional concentrate, CCJC extended more
favorable credit terms than usual to bottlers, typically increasing payment
terms from eight to twenty-eight or thirty days. No rights of return on gallons
sold pursuant to gallon pushing were offered to bottlers, and no concentrate
sold pursuant to gallon pushing was returned to CCJC or Coca-Cola. All
concentrate sold pursuant to gallon pushing was paid for by the bottlers.
14. CCJC's extension of credit terms required the express approval of certain of
Coca-Cola's officers and employees in Atlanta. In order to obtain approval for
credit extensions, CCJC's finance department was required to submit formal
Requests for Authorization which identified both the approximate amount of
gallons of concentrate to be sold with the extended credit terms and the
approximate amount of revenue to be generated by the additional sales.
15. After receiving approved Requests for Authorization back from Atlanta,
CCJC's finance department then contacted its bottlers' finance departments,
offering the more favorable credit terms and requesting that the bottlers
purchase specific quantities of concentrate above the amounts that the bottlers
already had planned to purchase to meet forecasted demand for the period. In
contrast to sales made in connection with a gallon push, routine concentrate
sales involved CCJC's sales and marketing departments corresponding with the
bottlers' purchasing departments.
COCA-COLA'S RECURRING USE OF GALLON PUSHING TO
MEET ITS BUSINESS PLAN TARGETS AND EARNINGS ESTIMATES
16. Gallon pushing shifted concentrate purchases that bottlers would have made
in a future period into the then current period. As a result, the previous
period's gallon push caused bottlers to start the next quarter with more
inventory than they anticipated needing to meet forecasted demand and caused
CCJC to start the future period with a sales "deficit." In order to avoid
selling less concentrate in the future period as a result of the previous
period's gallon push, and having to lower income targets, Coca-Cola instead
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would engage in another gallon push, again shifting future sales and income to
the present period.
17. CCJC's gallon pushing practice was incorporated into its annual business
plans -- not simply for the purpose of increasing sales and meeting Coca-Cola's
future earnings targets, but also to prevent a decrease in concentrate sales and
corresponding decrease in earnings in the present period. Gallon pushing
therefore became a recurrent component of CCJC's annual business plan as
Coca-Cola refused to allow CCJC to suffer the sales and income declines
resulting from a prior gallon push.
18. The chart below shows the estimated volume of gallons pushed and revenue
generated thereby for each quarter from 1997 through 1999. In order to meet
annual business plan targets and consolidated earnings estimates CCJC
continually had to push more and more gallons of concentrate on the bottlers. At
the end of the fourth quarter of 1999, nearly one out of every two gallons of
concentrate held in inventory by CCJC's bottlers had been sold in connection
with a gallon push.
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Reporting Bottlers Ending Gallons Pushed Revenue Generated
Period Inventory (in gallons) from Gallon Push
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Q1 1997 15,571,000 3,317,000 $46,201,000
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Q2 1997 18,408,000 4,380,000 $64,850,000
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Q3 1997 17,569,000 3,012,000 $62,949,000
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Q4 1997 20,016,000 8,090,000 $131,541,000
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Q1 1998 15,180,000 1,000,000 $17,061,000
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Q2 1998 20,363,000 7,117,000 $98,253,000
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Q3 1998 17,526,000 5,171,000 $79,807,000
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Q4 1998 21,800,000 9,659,000 $181,331,000
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Q1 1999 17,053,000 4,180,000 $67,644,000
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Q2 1999 23,544,000 8,181,000 $126,131,000
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Q3 1999 18,833,000 7,105,000 $128,519,000
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Q4 1999 22,017,000 10,116,000 $208,900,000
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GALLON PUSHING INCREASED BOTTLER INVENTORY
LEVELS BEYOND WHAT WAS NECESSARY TO MEET
FORECASTED DEMAND FOR THE PERIOD
19. For year end 1996 through year end 1999, bottler sales of finished products
to retailers in Japan increased approximately 11 percent in the aggregate
amount. As sales of finished products by bottlers drive the sale of concentrate
by CCJC, inventory levels at CCJC's bottlers should have increased approximately
by a corresponding amount during this same time period. Gallon pushing, however,
caused bottler inventory levels to increase 62 percent during this time period
- -- a rate approximately six times greater than the increase in bottler sales to
retailers. Hence, gallon pushing resulted in Japanese bottlers carrying
significantly higher levels of inventory than was necessary to meet forecasted
demand in the current quarter.
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20. The concentrate inventory versus sales of finished products disparity was
even greater with respect to Georgia Coffee and Coke. Given that sales by
bottlers to retailers of Georgia Coffee and Coke were in fact declining between
1997 and 1999, inventory levels of Georgia Coffee and Coke should have declined
as well. Yet, it was gallon pushed sales of Georgia Coffee and Coke concentrate
alone that were causing the bottlers' overall inventory levels to rise six times
faster than their overall sales of finished products to retailers.
COCA-COLA'S GALLON PUSHING PUT FUTURE INCOME AT RISK
21. CCJC forecasted and tracked its actual results against its annual business
plan throughout the year in monthly "rolling estimates." In addition to
containing balance sheet and income statement information, CCJC's rolling
estimates included concentrate sales to bottlers, bottlers' sales to retailers,
and estimated bottlers' inventory levels.
22. CCJC's rolling estimates also included summary sections explaining any
substantial variances within the rolling estimate as compared to the preexisting
annual business plan. These variance summaries typically indicated that in the
first and second month of reporting periods between 1997 and 1999, gallon sales
of concentrate and the corresponding income generated by these concentrate sales
were lower than expected as a result of gallon pushing in the prior period. The
rolling estimates further illustrated that gallon pushing during the third and
final month of a reporting period was necessary for CCJC to return to the sales
and income targets contained within its annual business plan.
23. The monthly rolling estimate analyses submitted by CCJC illustrate that
gallon pushing during one reporting period negatively impacted the concentrate
sales and income that would be generated in the following reporting period.
24. CCJC also generated internal bottler inventory reports and bottler sales
reports, typically broken down into "major brand" categories. The bottler
inventory reports indicated that bottlers were carrying inventory levels of
Georgia Coffee and Coke that, even considering their higher sales volume as
compared to other products, were in excess of all other products. The bottler
sales reports further indicated that although Georgia Coffee and Coke were two
of the highest volume products for bottlers, overall bottler sales of Georgia
Coffee and Coke were in fact decreasing compared to prior periods.
25. Moreover, since gallon pushing was designed to address earnings shortfalls
rather than actual forecasted demand for the current quarter, gallon pushing
increased bottler inventories of Georgia Coffee and Coke beyond what bottlers
required to satisfy demand for the period.
26. During 1999, bottler inventory levels had increased to the point that gallon
pushing could no longer be implemented at desired levels. In May 1999, a request
from Coca-Cola was made to CCJC for a specific amount of income to be generated
to assist Coca-Cola in eliminating a consolidated earnings shortfall for the
second quarter. CCJC declined the request because CCJC had already incorporated
and planned a gallon push as part of
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meeting its annual business plan and thought that it was impractical for
bottlers to purchase even more concentrate to address Coca-Cola's anticipated
earnings shortfall.
27. During the fourth quarter of 1999, CCJC conducted its largest gallon push --
generating revenue in excess of $208 million. This fourth quarter 1999 gallon
push contributed roughly $0.02 to Coca-Cola's consolidated earnings and, absent
one time items, enabled Coca-Cola to meet its modified earnings expectations.
While in the process of implementing this gallon push, employees of CCJC's
finance department contacted officers and employees of Coca-Cola and informed
them that gallon pushing had reached its maximum limit and was not sustainable
at existing levels. Coca-Cola's future inability to gallon push at existing
levels necessitated that gallon pushing either significantly decrease in scope
or cease entirely -- either of which would result in a substantial decrease in
revenue and income flowing to Coca-Cola from CCJC.
28. At no time between 1997 and 1999 did Coca-Cola disclose any information from
which investors could determine the existence of gallon pushing, the impact of
such gallon pushing on current income, or the likely impact of gallon pushing on
future income.
COCA-COLA ISSUED A FORM 8-K
CONTAINING FALSE AND MISLEADING STATEMENTS
29. On January 26, 2000, Coca-Cola filed a Form 8-K with the Commission which
disclosed, among other things, a worldwide concentrate inventory reduction
planned to occur during the first half of the year 2000. The inventory reduction
was to be accomplished by Coca-Cola's operating divisions, specifically
including CCJC, ceasing to sell concentrate to bottlers until bottlers naturally
reduced their inventory to purported "optimum" levels. The impact on Coca-Cola's
earnings for the first and second quarter of 2000 was estimated to be between
$0.11 and $0.13 per share.
30. In describing the inventory reduction, Coca-Cola stated that: (a)
"[t]hroughout the past several months, [Coca-Cola had] worked with bottlers
around the world to determine the optimum level of bottler inventory;" (b) the
management of Coca-Cola and its bottlers, specifically including bottlers in
Japan, had jointly determined "that opportunities exist to reduce concentrate
inventory carried by bottlers;" and (c) certain bottlers throughout the world,
specifically including those in Japan, had "indicated that they intend to reduce
their inventory levels during the first half of the year 2000."
31. These statements are false and misleading as a review of inventory levels in
the context of determining an optimum level for bottlers had not occurred
throughout the past several months. Such a review did not take place until, at
the earliest, January 2000 -- immediately after the fourth quarter 1999 gallon
push had occurred and CCJC finance employees had informed Coca-Cola that gallon
pushing could not continue at existing levels. Moreover, Coca-Cola did not
identify a single bottler that, prior to the Form 8-K being filed, was aware of
any planned inventory reduction.
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32. The Form 8-K further is misleading in that, despite its language describing
the inventory reduction as a joint proactive efficiency measure between
Coca-Cola and its bottlers, the inventory reduction was in fact solely a
Coca-Cola initiative. In addition, the Form 8-K did not disclose that of the
estimated $0.11 to $0.13 impact to earnings for the Company as a whole, more
than $0.05 would be attributable to an anticipated reduction of sales for Japan.
CCJC's portion of the estimated gross profit impact was more than five times
greater than that of any other operating division in the world.
COCA-COLA'S VIOLATIONS OF SECTIONS
17(A)(2) AND 17(A)(3) OF THE SECURITIES ACT
33. Sections 17(a)(2) and 17(a)(3) of the Securities Act prohibit making untrue
statements of fact and misleading omissions of facts in the offer or a sale of a
security. Section 17(a)(2) specifically proscribes obtaining "money or property
by means of any untrue statement of a material fact or any omission to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading." Section 17(a)(3)
specifically proscribes engaging "in any transaction, practice, or course of
business which operates or would operate as a fraud or deceit upon the
purchaser." To constitute a violation of Sections 17(a)(2) and 17(a)(3), the
alleged untrue statements or omitted facts must be material. Information is
deemed material upon a showing of a substantial likelihood that the
misrepresented or omitted facts would have assumed significance in the
investment deliberations of a reasonable investor. Basic, Inc. v. Levinson, 485
U.S. 224 (1988). Establishing violations of Sections 17(a)(2) and 17(a)(3) does
not require a showing of scienter; negligence is sufficient. Aaron v. SEC, 446
U.S. 680 (1980); SEC v. Hughes Capital Corp., 124 F.3d 449, 453-54 (3d Cir.
1997).
34. As set forth above, Coca-Cola's Forms 10-K and 10-Q for the reporting
periods between 1997 and 1999, certain of which were incorporated by reference
in Coca-Cola's S-8 Registration Statements filed with the Commission, were
misleading in that they failed to disclose within Management's Discussion and
Analysis of Financial Condition and Results of Operations ("MD&A"), or anywhere
else within such filings, the existence of gallon pushing, the impact on
Coca-Cola's current income of gallon pushing, and the likely impact of gallon
pushing on its future income. In addition to the substantial likelihood that in
making a decision regarding an investment in Coca-Cola, a reasonable investor,
or potential investor, would have wanted to know of the existence and purpose of
gallon pushing as an end of period sales practice, gallon pushing was further
material in that in 8 out of 12 reporting periods from 1997 to 1999 and 6 out of
8 reporting periods from 1998 to 1999, it provided the income necessary for
Coca-Cola to meet its modified earnings expectations.
35. The investing public and analysts following Coca-Cola could not discern this
information from the public disclosures made by the Company. Based on the
conduct described above, Coca-Cola violated Sections 17(a)(2) and 17(a)(3) of
the Securities Act with respect to its Forms 10-K and 10-Q filed with the
Commission between 1997 and 1999 and incorporated by reference into its S-8
Registration Statements filed with the Commission between 1997 and 2000.
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36. As set forth above, Coca-Cola's January 26, 2000, Form 8-K filed with the
Commission contained false statements concerning the existence of a several
month long optimum inventory study conducted as a joint effort between Coca-Cola
and its bottlers. Additionally, the Form 8-K was misleading by omission as it
failed to disclose the impact of past gallon pushing practices in Japan in the
context of the planned inventory reduction. There is a substantial likelihood
that the false statements surrounding the inventory reduction and misleading
omissions regarding gallon pushing within the Form 8-K would have assumed
significance in the investment deliberations of a reasonable investor. Based on
the conduct described above, Coca-Cola violated Sections 17(a)(2) and 17(a)(3)
of the Securities Act with respect to its January 26, 2000 Form 8-K filed with
the Commission and incorporated by reference into its S-8 Registration
Statements filed between 1997 and 2000.
COCA-COLA'S REPORTING VIOLATIONS: SECTION 13(a) OF THE
EXCHANGE ACT AND RULES 12b-20, 13a-1, 13a-11, AND 13a-13 THEREUNDER
37. Section 13(a) of the Exchange Act requires issuers such as Coca-Cola to file
periodic reports with the Commission containing such information as the
Commission prescribes by rule. Exchange Act Rules 13a-1, 13a-11, and 13a-13
require, respectively, issuers to file Forms 10-K, 8-K, and 10-Q. Under Exchange
Act Rule 12b-20, the reports must contain, in addition to disclosures expressly
required by statute and rules, such other information as is necessary to ensure
that the statements made are not, under the circumstances, materially
misleading. The obligation to file reports includes the requirement that the
reports be true and correct. United States v. Bilzerian, 926 F.2d 1285, 1298 (2d
Cir. 1991). The reporting provisions are violated if false and misleading
reports are filed. SEC v. Falstaff Brewing Corp., 629 F.2d 62, 67 (D.C. Cir.
1980). Scienter is not an element of a Section 13(a) violation. SEC v. Savoy
Indus., Inc., 587 F.2d 1149, 1167 (D.C. Cir. 1978).
38. As set forth above, Coca-Cola's Forms 10-K and 10-Q for the reporting
periods between 1997 and 1999 were materially misleading because they failed to
disclose the existence of gallon pushing, the impact of gallon pushing on
current earnings, and the likely impact of gallon pushing on future earnings.
39. Additionally, Regulation S-K Item 303 requires registrants to disclose in
the MD&A sections of required periodic filings "any known trends or
uncertainties that have had or that the registrant reasonably expects will have
a material . . . unfavorable impact on net sales or revenues or income from
continuing operations." The failure to comply with Regulation S-K constitutes a
violation under Section 13(a) of the Exchange Act.
40. Contrary to the requirements to Regulation S-K, Coca-Cola failed to disclose
the material impact of gallon pushing on current and future income within its
required MD&A sections.
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41. As set forth above, Coca-Cola's Form 8-K filed with the Commission on
January 26, 2000 was materially false and misleading.
42. Based on the conduct described above, Coca-Cola violated Section 13(a) of
the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.
REMEDIAL EFFORTS
43. In determining to accept the Offer, the Commission considered the following
remedial efforts that the Respondent initiated prior to and during the
Commission staff's investigation:
a. Coca-Cola has established an Ethics & Compliance Office to
administer its Code of Business Conduct and ensure, among other things,
that the Respondent conducts its business in compliance with the Code
of Business Conduct and with various laws;
b. Coca-Cola has established a Disclosure Committee to assist its Chief
Executive Officer and Chief Financial Officer in fulfilling their
responsibility for oversight of the accuracy and timeliness of the
disclosures made by Coca-Cola;
c. Coca-Cola now requires that its divisions certify quarterly that
they have not changed or extended payment terms for any bottler or
customer and have not granted any special or unusual credit terms or
incentives to any bottler or customer, unless they received approval
for such terms; and
d. Coca-Cola's Audit Committee employs independent counsel experienced
in securities laws disclosure issues and will continue to employ such
experienced legal counsel chosen by the Audit Committee. Such counsel
shall advise the Audit Committee as to implementation of the
undertakings in this Order.
UNDERTAKINGS
44. Respondent has undertaken to:
a. Permanently maintain the aforementioned remedial efforts or the
functional equivalents thereof, except as may be approved by the
Commission;
b. Require the Audit Committee, within 90 days of the date of this
Order, to review with management of Respondent the process by which the
MD&A sections of periodic reports filed by Respondent with the
Commission are prepared and material information about the business and
prospects, including but not limited to, trend information and known
events and uncertainties that may have a material impact on liquidity
or future financial performance, is identified for discussion in the
MD&A sections of such reports, and to approve a set of criteria to be
used by the Disclosure Committee and management to reasonably assure
that appropriate
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items are identified and discussed. The Audit Committee will meet
periodically, at least annually, with the Chair of the Disclosure
Committee to review such criteria, and will review and discuss with
the Chief Financial Officer the proposed MD&A section of each periodic
report to be filed with the Commission;
c. Require the Disclosure Committee to: (i) use the aforementioned
criteria to identify items that might need to be disclosed within the
MD&A section of Respondent's periodic reports filed with the
Commission; and (ii) use the aforementioned criteria to evaluate those
items and recommend whether, and to what extent, disclosure is
appropriate with respect to each item. The Chair of the Disclosure
Committee will also report to the Audit Committee, on a quarterly
basis, any recommended departures from the aforementioned criteria and
the rationale supporting each such recommendation;
d. Adhere to the guidance articulated in SEC Staff Accounting Bulletin
No. 101 on disclosures that are required with respect to the
recognition of revenue;
e. Maintain for ten (10) years documentation sufficient to show for
every of its Forms 8-K filed with the Commission, the preparers of each
Form 8-K and those persons who reviewed and approved each Form 8-K; and
f. Provide a written report, within 120 days of the date of this Order,
to the Commission staff that details the Respondent's implementation of
the undertakings articulated herein.
45. In determining whether to accept the Offer, the Commission has considered
the remedial acts promptly undertaken by Respondent and cooperation afforded the
Commission staff.
IV.
In view of the foregoing, the Commission deems it appropriate to impose
the sanctions specified in Respondent Coca-Cola's Offer.
ACCORDINGLY, IT IS HEREBY ORDERED:
Pursuant to Section 8A of the Securities Act and Section 21C of the
Exchange Act, Coca-Cola cease and desist from committing or causing any
violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the
Securities Act and Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1,
13a-11, and 13a-13 thereunder.
By the Commission.
Jonathan G. Katz
Secretary
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1 The findings herein are made pursuant to Coca-Cola's Offer of Settlement and
are not binding on any other person or entity in this or any other proceeding.