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[marketmaven]

KO- Channel stuffing in Japan leads to long overstated results

Citing people familiar with the situation, the Wall Street Journal said the Securities and Exchange Commission and the U.S. Attorney's Office are investigating whether Coca-Cola engaged in "channel stuffing" with Japan's Takasago International Corp. in order to artificially boost profit forecast and sales. Channel stuffing increases short-term sales or fiscal sales by offering extra incentives to distributors to buy or import materials in excess of inventory demand. Coca-Cola's (KO: news, chart, profile) Japan representatives declined to comment on the report. Earlier this year, the paper reported that U.S. authorities launched a wide-ranging probe into Coke last summer after a former company auditor made allegations of fraud. Coke sales in Japan account for one-fifth, or about $1 billion, of its entire operating income per year.