Coca-Cola Co agreed to undertake internal reforms to settle a long-running accounting probe related to the soft drink giant's dealings with Japanese bottlers, the US Securities and Exchange Commission said on Monday. Under the agreement, Coca-Cola, the world's largest beverage company, will also accept a cease-and-desist order, but will pay no fines, the SEC said. The SEC said the probe centred on Coca-Cola between 1997 and 1999 asking bottlers in Japan to make additional purchases of cola concentrate in order to boost Coke's revenues, enabling the Atlanta-based company to meet profit targets.
"Coca-Cola misled investors by failing to disclose end of period practices that impacted the company's likely future operating results," said Richard Wessel, head of the SEC's Atlanta office, in a statement.
Coca-Cola agreed to conduct an internal review of how its financial statements are prepared and report back to the SEC.
In practices known as "gallon pushing," Coca-Cola generated income in Japan that "was the difference between Coca-Cola meeting or missing analysts' consensus or modified consensus earnings estimates for eight out of 12 quarters from 1997 through 1999," the SEC said,
Coca-Cola's Japanese unit, at or near the ends of financial reporting periods, offered extended credit terms to induce bottlers to buy concentrate that they otherwise would not have purchased until the next period, the SEC said.
The SEC said Coca-Cola made "false and misleading statements" in filings with the agency in 1997 through 1999 and in 2000 related to a concentrate inventory reduction push.
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