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The following is Dale Wettlaufer's (TMF Ralegh) response to a Coke employee's e-mail question, "Do you think everytime Coke has a major announcement to make, a shareholder meeting should be held?"

No, we don't think you should call a shareholder meeting. We think you should put out a press release for wide distribution. For instance, putting out good news on the Cadbury-Schweppes deal via a widely-distributed press release and then putting out a very narrowly-distributed press release for the bad news on the earnings warning was wrong. It's inconsistent and inconsiderate to share owners. And I accentuate the term "share owners" since Roberto Goizueta made a point of using the term.

Regarding selectively disclosing information, you are not conveying information to the public by going exclusively through analysts. You are communicating information to the customers of the firms employing those analysts and ignoring the millions of accounts at discount brokerages. Are you familiar with the game "telephone?" In this game, you tell someone something and then they communicate that to someone else, and so on. By the fourth iteration, the story is usually wrong in some way. By communicating only with analysts, who then communicate with a reporter, who then puts the story through an editor, you're playing telephone with information on Coca-Cola. Your owners deserve better than that.

We would ask that a replay or transcript of the conference call be supplied to owners of the company so they can hear the same thing you're telling the analysts. I'm sure you don't just read them the press release and then don't accept questions. The elaboration on questions that are asked is very informative and goes beyond what can be put in a press release. We would also ask that the same presentation materials that are supplied to analysts be supplied to Coca-Cola owners. With communications technologies becoming cheaper by the day, it's no excuse to say that since you cannot reach every shareholder you will only deal with a select group of people.

We don't hate analysts. We are analysts. We communicate with companies all the time and have been told by a number of them that we understand their businesses better than many of the analysts that cover them. I've heard from a number of companies that I deal with that most of the analysts that cover them don't understand Economic Value Added and certain balance sheet dynamics. These are two things that Tom and I focus on and I know Roberto Goizueta focused on EVA, as well. The thing we find ridiculous about many sell-siders is their propensity to change ratings on companies. It's uneconomic for investors to churn their portfolios often and it also indicates that many analysts do not have a good grasp on the intrinsic values of the companies they cover. Otherwise, why would their ratings change so often? How many times has Warren Buffett sold Berkshire's position in Coca-Cola since becoming involved in the company? An business-minded owner of a company doesn't buy and sell that company over and over again.

To summarize, I think a world-class company like Coca-Cola should take a world-class position on dealing with owners of the company. By selectively disclosing information, Coke puts itself at risk of running afoul of federal securities legislation. More importantly, Coca-Cola ignores a vital part of its ownership base. It's illogical to disallow access to rational owners of the company in favor of people who might not even represent owners of the company or who might even represent entities that are short Coca-Cola. In terms of financial theory, Coca-Cola also increases its cost of capital by allowing an information inefficiency to persist. Coca-Cola is not disseminating information to the public by allowing exclusive access to analysts. It is actively supplying information and access to representatives of certain brokerage firms and actively denying information and access to owners of the company who do not happen to deal with those brokerages. The number of accounts in the latter category number is now in the millions.

If you would like us to help you improve your communications with individual investors, we would be happy to do so. And this isn't a business proposition. We're not looking for any kind of compensation for doing so. We would be happy to participate in helping Coca-Cola set a world-class standard for investor relations.

Best regards,
Dale Wettlaufer
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