KO Topics Equity Method and Cost Method Investments

This excerpt taken from the KO 10-Q filed Oct 23, 2008.

Equity Method and Cost Method Investments

We review our cost method and equity investments in every reporting period to determine whether a significant event or change in circumstances has occurred that may have an adverse effect on the fair value of each investment. When such events or changes occur, we evaluate the fair value compared to our cost basis in the investment. We also perform this evaluation every reporting period for each investment for which our cost basis has exceeded the fair value in the prior period. The fair values of most of our Company’s investments in publicly traded companies are often readily available based on quoted market prices. For investments in nonpublicly traded companies, management’s assessment of fair value is based on valuation methodologies including discounted cash flows, estimates of sales proceeds and appraisals, as appropriate. We consider the assumptions that we believe hypothetical marketplace participants would use in evaluating estimated future cash flows when employing the discounted cash flow or estimates of sales proceeds valuation methodologies. The ability to accurately predict future cash flows, especially in developing and unstable markets, may impact the determination of fair value.

In the event of a decline in fair value of an investment accounted for under the equity method or securities classified as available-for-sale, management is required to determine if the decline in fair value is other than temporary. Management’s assessment as to the nature of a decline in fair value is based on the length of time and the extent to which the market value has been less than our cost basis, the financial condition and near-term prospects of the issuer, and our intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value. If the fair value of an investment is less than our cost basis, and the decline in value is considered to be other than temporary, a write-down is recorded.

The following table presents the difference between calculated fair values, based on quoted closing prices of publicly traded shares, and our Company’s cost basis for significant investments in publicly traded bottlers accounted for as equity method investees (in millions):