Coca-Cola volume overstated for three years

Errors in reporting sales of bottled water blamed

August 06, 2004|By BLOOMBERG NEWS

ATLANTA - The Coca-Cola Co. overstated its volume of beverages sold for the past three years because of errors in reporting bottled-water sales in Indonesia, the company said yesterday in a regulatory filing.

Volume was inflated by 2 million to 13 million cases per quarter since 2001's third quarter, the company said in a Securities and Exchange Commission filing. Coke revised growth rates for Asian and global volumes to correct the figures.

Coke revised its worldwide unit case volume increase to 4 percent for the second quarter of last year compared with the previous year. It previously had reported a 5 percent increase.

Coke also said in the filing that its worldwide unit case volume increase was actually 3 percent in the first quarter of last year, instead of the 4 percent increase it previously reported.

In the first quarter of this year, Coke reported that its unit case volume increase was 2 percent compared with a year ago. The number has been revised upward to 3 percent, the filing said.

The filing also noted revisions to volume numbers for Coke's Asia and international divisions for several quarters going back to 2001.

The world's biggest beverage company said a new management team that was appointed July 16 to operate the Indonesia water business, called PT AdeS Alfindo PutraSetia Tbk, discovered the mistakes and alerted Coke. An investigation is continuing, the company said.

Net income and revenue aren't affected, spokesman Ben Deutsch said.

The overstated sales were disclosed after a joint venture formed last month by Coca-Cola and Nestle SA acquired a 65 percent stake in the Indonesian water distributor.

Coca-Cola acquired the AdeS, Vica and Desca water brands in 2000 and began counting sales in its volume estimates, though until recently it didn't control the water distribution business or its seven bottling plants around the country.

Asian sales, measured by volume, have risen 4 percent this year, twice the previously reported rate because last year's sales were overstated, Coca-Cola's filing said.

Last year, the SEC and federal prosecutors began investigating charges from a fired former employee alleging that Coca-Cola inflated sales in Japan by shipping excessive soft-drink syrup to bottlers. The company is cooperating with the investigations, the filing said.

Coca-Cola shares fell 35 cents to close at $43.85 yesterday on the New York Stock Exchange.

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