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Dear Friends

I have tried to put some sanity into the insanity that
is going around in the Media these days concerning
KO. I have been unable to find a satisfactory
analysis of KO's Future Valuations. So I have decided
to try and present one myself. The way to analyze KO
is to use its Unit Case Volume (UCV) as ones guide.
Warren Buffett himself has for years said that KO
earns a penny a serving profit for each serving it
sells, I have attempted to test out that theory and
see if I can come up with someway to estimate KO
Future EPS using (PPS) Profit Per Serving. First let
me present the Numbers!!!!

YEAR    	UCV	SERVINGS NI 	 PPS 	12/31MC	SER/MC	CSO	EPS	PRICE	PE
1988    	8.0	192.7	 $1.05 	 $0.0054 	 $15.83 	 12.17 	2.929	 $0.36 	 $5.41 	15.2
1993    	10.8	258.0	 $2.18 	 $0.0084 	 $57.91 	 4.46 	2.626	 $0.83 	 $22.05 	26.6
1997    	14.9	357.8	 $4.13 	 $0.0115 	 $164.77 	 2.17 	2.515	 $1.64 	 $65.51 	39.9
1998    	15.8	379.2	 $3.53 	 $0.0093 	 $165.19 	 2.30 	2.496	 $1.42 	 $66.18 	46.8
CURRENT(5%)	16.6	398.2	 $3.53 	 $0.0089 	 $152.10 	 2.62 	2.476	 $1.43 	 $60.94 	42.7
2000(6%)	17.6	422.4	 $4.22 	 $0.0100 	 $168.80 	 2.50 	2.456	 $1.72 	 $68.73 	40
2001(7%)	18.8	451.9	 $4.52 	 $0.0100 	 $180.76 	 2.50 	2.436	 $1.86 	 $74.20 	40
2002(7%)	20.12	482.9	 $4.83 	 $0.0100 	 $193.15 	 2.50 	2.416	 $2.00 	 $79.95 	40
2003(7%)	21.52	516.5	 $5.16 	 $0.0100 	 $206.59 	 2.50 	2.396	 $2.16 	 $86.22 	40
2004(7%)	23.03	552.7	 $5.53 	 $0.0100 	 $221.09 	 2.50 	2.376	 $2.33 	 $93.05 	40
2005(7%)	24.64	591.4	 $5.91 	 $0.0100 	 $236.54 	 2.50 	2.356	 $2.51 	 $100.40 	40

UCV = UNIT CASE VOLUME (BILLIONS)
SERVINGS = 24 SERVINGS PER UNIT CASE (BILLIONS)
NI = NET INCOME
PPS = PROFIT PER SERVING
12/31MC = CLOSING MARKET CAP FOR THAT YEAR AND DATE($B)
SER/MC = SERVINGS PER EVERY $1 OF MARKET CAP
CSO = COMMON SHARES OUTSTANDING (DILUTED)(BILLIONS)
EPS = EARNINGS PER SHARE
PRICE = MC/CSO
PE = PRICE TO EARNINGS RATIO 	

For Current year numbers I have assumed a 5% UCV growth
rate for 2000 a 6% UCV growth rate and after that a 7%
UCV growth rate. For the year 2000 and on I have used
Warren Buffetts one penny profit per serving statement
as my value. For CSO I have KO buying back 20 Million
shares each year. For PE I have used 40 for that is 
what I believe that the market is comfortable paying
for KO. The work above is what I believe to be a worse
case scenario for KO over the next 6 years. I forcast
KO earning a minimum of $2.51 per share in 2005 and
having a low price of $100.40 which if one buys at the
closing price of 4/1/99 whould give one a return of 
64.76% or an average per year return of 8.68%.
The following two group of numbers are middle and best
case scenario for KO. For the Middle group I have
assumed that KO will earn 1.1 pennies PPS from
2001-2005 due to Project Infinity and the consolidation
of the Bottling group and through other cost savings
which KO is implementing currently. The best case 
is if Asia and World Markets turn around completely by
2001 and KO turns in 1.2 pennies PPS. 									
CURRENT(5%)	16.6	398.2	 $3.53 	 $0.0089 	 $152.10 	 2.62 	2.476	 $1.43 	 $60.94 	42.7
2000(6%)	17.6	422.4	 $4.22 	 $0.0100 	 $168.80 	 2.50 	2.456	 $1.72 	 $68.73 	40
2001(7%)	18.8	451.9	 $4.52 	 $0.0110 	 $180.76 	 2.50 	2.436	 $1.86 	 $74.20 	40
2002(7%)	20.12	482.9	 $5.31 	 $0.0110 	 $212.47 	 2.27 	2.416	 $2.20 	 $87.94 	40
2003(7%)	21.52	516.5	 $5.68 	 $0.0110 	 $227.25 	 2.27 	2.396	 $2.37 	 $94.85 	40
2004(7%)	23.03	552.7	 $6.08 	 $0.0110 	 $243.20 	 2.27 	2.376	 $2.56 	 $102.36 	40
2005(7%)	24.64	591.4	 $6.50 	 $0.0110 	 $260.20 	 2.27 	2.356	 $2.76 	 $110.44 	40

CURRENT(5%)	16.6	398.2	 $3.53 	 $0.0089 	 $152.10 	 2.62 	2.476	 $1.43 	 $60.94 	42.7
2000(6%)	17.6	422.4	 $4.22 	 $0.0100 	 $168.80 	 2.50 	2.456	 $1.72 	 $68.73 	40
2001(7%)	18.8	451.9	 $4.52 	 $0.0120 	 $180.76 	 2.50 	2.436	 $1.86 	 $74.20 	40
2002(7%)	20.12	482.9	 $5.79 	 $0.0120 	 $231.78 	 2.08 	2.416	 $2.40 	 $95.94 	40
2003(7%)	21.52	516.5	 $6.20 	 $0.0120 	 $247.91 	 2.08 	2.396	 $2.59 	 $103.47 	40
2004(7%)	23.03	552.7	 $6.63 	 $0.0120 	 $265.31 	 2.08 	2.376	 $2.79 	 $111.66 	40
2005(7%)	24.64	591.4	 $7.10 	 $0.0120 	 $283.85 	 2.08 	2.356	 $3.01 	 $120.48 	40


If My forcasts ring true then KO;

Middle Case Scenario

Compounded return on 4/1/99 price = 81.23% for 6 years
Average yearly return = 10.42%

Best Case Scenario

Compounded return on 4/1/99 price = 97.70% for 6 years
Average yearly return = 12.03%

I beleive that the numbers that I have used are 
accurate, but I would appreciate it if others would
check them. I used the 1998 KO Anuual Report to get
my numbers. Remember as the stock falls these estimates
stay the same but the yearly average and compounded
returns go up. If one is worried about the market
then one might be able to get KO much cheaper but no
one can know what is going to happen. Even with a 5%
growth rate in UCV for 1999(E) KO will still sell 
19 Billion more servings of its products. 

Best of Luck to everyone,

MYCROFT
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