CORRESP: A correspondence can be sent as a document with another submission type or can be sent as a separate submission.
Published on July 12, 2007
Coca-Cola
Plaza
Atlanta,
Georgia
|
HARRY
L. ANDERSON
|
ADDRESS
REPLY TO
|
|
VICE
PRESIDENT AND CONTROLLER
|
P.O. BOX
1734
|
|
|
ATLANTA,
GA 30301
|
|
|
---------------------------
|
|
|
404-676-7173
FAX:
404-515-1889
|
July
12,
2007
Mr.
Michael Moran
Accounting
Branch Chief
Division
of Corporation Finance
Securities
and Exchange Commission
450
Fifth
Street, N.W.
Washington,
D.C. 20549
Re:
The Coca-Cola Company
Form
10-K for the Fiscal Year Ended
December 31, 2006
Filed
February 21, 2007
File
No. 1-02217
Dear
Mr.
Moran:
Thank
you
for your letter dated June 28, 2007 setting forth comments of the Staff relating
to the periodic report of The Coca-Cola Company (“KO” or the “Company”)
referenced above.
KO’s
responses to the Staff’s comments are set forth below.
To
facilitate the Staff’s review, we have included in this letter the captions and
numbered comments from the Staff’s letter and have provided KO’s responses
immediately following each numbered comment.
Mr.
Michael Moran
July
12,
2007
Page
2
Consolidated
Statements of Income, page 67
|
1.
|
Please
tell us the nature and amounts of items netted against your share
of net
income from equity method investees. In future filings please
provide disclosure of items applied to your proportionate share of
investee net income, either parenthetical or in the notes, to the
extent
it is meaningful to your consolidated financial statements. See
paragraph 20 of APB 18.
|
Response:
The
income statement line item “Equity income – net” includes our proportionate
share of net income earned by certain of our equity method investees net of
our
proportionate share of net losses incurred by other equity method
investees. We do not have any items netted against our share of net
income earned or net loss incurred from equity method investees, either
individually or in the aggregate, included in the line item “Equity income –
net”. In future filings, we plan to clarify our disclosure in Footnote 1,
Basis of Presentation and Consolidation, to state substantially as
follows:
We
use
the equity method to account for our investments for which we have the ability
to exercise significant influence over the operating and financial policies
of
the investee. Consolidated net income includes our Company’s
proportionate share of the net income or loss of these
companies. Such amounts are classified as “Equity income – net” in
our consolidated statements of income.
Note
15: Stock Compensation Plans, page 99
|
2.
|
On
page 101 you disclose incorporating the implied volatility of traded
options on the company's common stock as well as historical behavior
into
your estimate of expected volatility. Please tell us how
critical accounting policies and estimates in MD&A comply with the
disclosure requirements in Question 5 of SAB Topic
14D.1. Specifically, we see an 11% decrease in the expected
volatility over a five year period without an analysis of the sensitivity
of changes in valuation
assumptions.
|
Response:
In
preparing its MD&A, the Company considered SEC Release No. FR-60 and No.
FR-72. The disclosures in our Critical Accounting Policies and
Estimates section of MD&A reflect those policies and estimates that we
believe could have a material impact on our financial statements. The
Company does not consider the policies and estimates related to accounting
for
stock options to be critical in preparing the Company’s financial
statements. The Company’s stock option expense is approximately 4% of
income before income taxes. Furthermore, the number of stock options
awarded by the Company to a
Mr.
Michael Moran
July
12,
2007
Page
3
plan
participant is based on the estimated fair value at the time of grant rather
than a targeted number of stock options. Therefore, any changes in
the valuation assumptions would generally affect the number of stock options
granted but not the associated compensation costs. After considering
these factors, the Company concluded that the estimate of expected volatility
was not a critical accounting estimate that warranted further discussion in
the
MD&A.
In
connection with responding to your comments, the Company acknowledges the
following:
|
·
|
The
Company is responsible for the adequacy and accuracy of the disclosure
in
our 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.
|
Please
direct any comments or questions regarding this letter to me at 404-676-7173
or
via fax at 404-515-1889.
Sincerely,
/s/
Harry
L. Anderson
Harry
L.
Anderson
c:
E. Neville Isdell, Chairman, Board of Directors, and Chief Executive
Officer
Gary
P.
Fayard, Executive Vice President and Chief Financial Officer
Peter
V.
Ueberroth, Chairman of the Audit Committee of the Board of
Directors