As filed with the Securities and Exchange Commission on April 30, 20122013
UNITED STATESUnited States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,Washington, D.C. 20549
FORM 20-F
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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OR | |
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x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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OR | |
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-13142
Embotelladora Andina S.A. |
(Exact name of Registrant as specified in its charter) |
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Andina Bottling Company |
(Translation of the Registrant’s name in English) |
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Republic of Chile |
(Jurisdiction of incorporation or organization) |
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(Address of principal executive offices) |
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Paula Vicuña, Tel. (56-2)
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(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) |
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class |
| Name of each exchange on which registered |
Series A Shares, Series B Shares of Registrant represented by American Depositary Shares |
| New York Stock Exchange |
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Securities registered or to be registered pursuant to Section 12(g) of the Act: None
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act
7.625% Notes due October 1, 2027 |
7.875% Notes due October 1, 2097 |
The number of outstanding shares of the issuer’s stock as of December 31, 20112012 was 760,274,542946,578,736 as follows:
473,289,368 Series A Shares 473,289,368 Series B Shares |
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
x Yes o No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
o Yes x No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
o Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x |
| Accelerated filer o |
| Non-accelerated filer o |
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing
U.S. GAAP o |
| International Financial Reporting Standards as issued |
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If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow
o Item 17 o Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x No
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UNRESOLVED SECURITIES AND EXCHANGE COMMISSION STAFF COMMENTS |
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MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
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PURCHASERS OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
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INTRODUCTION
References
Unless the context otherwise requires, as used in this annual report the following terms have the meanings set forth below:
· the “Company”, “we”, “Andina” and “we” means Andina and its consolidated subsidiaries;
·““Coca-Cola Andina” means Embotelladora Andina S.A.; and its consolidated subsidiaries;
· “Andina Brazil” means the Company’s subsidiary, Rio de Janeiro Refrescos Ltda. and its subsidiaries;
· “AESA” means the Company’s subsidiary, Andina Empaques Argentina S.A.
· “EDASA” means the Company’s subsidiary, Embotelladora del Atlántico S.A.;
· “PARESA” means the Company’s subsidiary, Paraguay Refrescos S.A.
·“CMF” means the Company’s affiliate, Envases CMF S.A.;
· “ECSA” means the Company’s affiliate, Envases Central S.A.;
· “Vital Jugos” means the the Company’s affiliate, Vital Jugos S.A., previously known as Vital S.A. ;
· “VASA” means the Company’s affiliate, Vital Aguas S.A.;
· “TAR” means the Company’s subsidiary, Transportes Andina Refrescos Ltda.
·“TP” means the Company’s subsidiary, Transportes Polar S.A.
· “The Coca-Cola Company” or “TCCC” means The Coca-Cola Company or any of its subsidiaries, including without limitation Coca-Cola de Chile S.A. (“CC Chile”), which operates in Chile, Recofarma Industrias do Amazonas Ltda. (“CC Brazil”), which operates in Brazil and Servicios y Productos para Bebidas Refrescantes S.R.L. (“CC Argentina”), which operates in Argentina.
· the “Chilean territory” means the Metropolitan Region of Santiago and the neighboring provinces of Cachapoal and San Antonio; starting in 4Q12, and due to the merger with Embotelladoras Coca-Cola Polar, we also participate in the regions of Antofagasta, Atacama, Coquimbo, Aisén and Magallanes.
· the “Brazilian territory” means the majority of the State of Rio de Janeiro, and the totality of the State of Espírito Santo; and
· the ���Argentine“Argentine territory” means the provinces of Córdoba, Mendoza, San Juan, San Luis, Entre Rios, Buenos Aires (only San Nicolás and Ramallo) and most of Santa Fe. Starting in 4Q12, and due to the merger with Embotelladoras Coca-Cola Polar, we also participate in the provinces of La Pampa, Neuquén, Río Negro, Chubut, Santa Cruz, Tierra del Fuego and part of the province of Buenos Aires.
·the “Paraguayan territory” means the country of Paraguay
PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION
Unless otherwise specified, references herein to “dollars,” “U.S. dollars” or “US$” are to United States dollars; references to “pesos,” “Chilean pesos”, “Ch$” or “ThCh$” are to Chilean pesos; references to “UF” are to Unidades de Fomento, a daily indexed Chilean peso-denominated monetary unit that takes into account the effect of the Chilean inflation rate during the previous month; references to “Argentine pesos” or “AR$” are to Argentine pesos; andpesos, references to “real” or “reais” or “R$” are to Brazilian reais.reais and references to “guaranies” or “guarani” or “G$” are to Paraguayan Guaranies. Certain percentages and amounts contained in this annual report have been rounded for ease of presentation.
For the convenience of the reader, this annual reportdocument contains translations of certain Chilean peso amounts into U.S. dollars at specified rates. Unless otherwise indicated, U.S. dollar equivalent information for amounts in Chilean pesos is based on the Observed Exchange Rate (as defined under “Item 3. Key Information—Exchange Rates”) reported by the Banco Central de Chile (the Central Bank of Chile), which we refer to as the “Central Bank.” The Federal Reserve Bank of New York does not report a noon buying rate in New York City for Chilean pesos. No representation is made that the peso or U.S. dollar figures presented in this annual report could have been or could be converted into U.S. dollars or pesos, as the case may be, at any particular rate or at all.
On August 28, 2007 the Chilean Superintendence of Insurance and Securities announced the adoption of the International Financial Reporting Standards (“IFRS”)in Chile which became mandatory for companies of a certain size beginning 2009 and 2010. The Company decided to adopt the IFRS as issued by the International Accounting Standards Board (“IASB”) as its accounting and reporting rules beginning January
1, 2010. Additionally the period between January 1 and December 31, 2009 constituted the transition period towards IFRS and the Financial Statements of the year 2010 were presented comparatively with 2009.
Forward-looking information
This annual report contains or incorporates by reference statements that constitute “forward-looking statements,” in that they include statements regarding the intent, belief or current expectations of our directors and officers with respect to our future operating performance. Such statements include any forecasts, projections and descriptions of anticipated cost savings or other synergies. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” variations of such words, and similar expressions are intended to identify such forward-looking statements. You should be aware that
any such forward-looking statements are not guarantees of future performance and may involve risks and uncertainties, and that actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, without limitations, the actions of competitors, future global economic conditions, market conditions, foreign exchange rates, and operating and financial risks related to managing growth and integrating acquired businesses), many of which are beyond our control. The occurrence of any such factors not currently expected by us would significantly alter the results set forth in these statements. You should not place undue reliance on such statements, which speak only as of the date that they were made. Our independent auditors have not examined or compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we might issue in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements after filing of this annual report to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
Market Data
We have computed the information contained in this annual report regarding annual volume and per capita growth rates and levels, and market share, product segment, and population data in bottling and franchise territories, and it is based upon statistics accumulated and certain assumptions we have made. Additional data was obtained from third parties. Market share information presented with respect to soft drinks, juices, waters and beer is based on data supplied by A.C. Nielsen Company (“A.C. Nielsen”) and by IPSOS company and is believed to be accurate although no assurances to that effect can be given. Certain market data herein (including percentage amounts) may not sum due to rounding.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable
A. Selected Financial Data
The following table presents our selected consolidated and other financial and operating information at the dates and for the periods indicated. The selected financial information at December 31, 2011, 20102012 and 2009,2011 and for each of the three years ended December 31, 20112012, has been derived from, should be read in conjunction with, and is qualified in its entirety by reference to our Consolidated Financial Statements, included in Item 18 of this annual report, that we refer to in this annual report as the “Consolidated Financial Statements .”Statements.” Our Consolidated Financial Statements are prepared in accordance with IFRS. The Securities and Exchange Commission (SEC) eliminated the requirement of preparing reconciliation between IFRS and U.S. GAAP for foreign listed companies that use IFRS as issued by the IASB.
Our consolidated financial results include the results of our subsidiaries located in Chile, Brazil, Argentina and Argentina.Paraguay. Our subsidiaries outside Chile prepare their financial statements in accordance with IFRS and to comply with local regulations in accordance with generally accepted accounting principles of the country in which they operate. The Consolidated Financial Statements reflect the results of the subsidiaries outside of Chile, translated to Chilean pesos (functional and reporting currency of the parent company) and are presented in accordance with IFRS. The International Financial Reporting Standards requires assets and liabilities to be translated from the functional currency of each entity to the reporting currency (Chilean peso) at end of period exchange rates and income and expense accounts to be translated at the average monthly exchange rate for the month in which income or expense is recognized. Unless otherwise specified, our financial data is presented herein in nominal Chilean pesos and U.S. dollars.
The following table presents our selected consolidated financial information. This information should be read in conjunction with, and is qualified in its entirety by reference to, our Consolidated Financial Statements, including the notes
thereto in Item 18. The selected financial information contained herein is presented on a consolidated basis, and is not necessarily indicative of our financial position or results of operations at or for any future date or period.
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| For the period ended December 31, |
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| For the period ended December 31, |
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| 2011 |
| 2011 |
| 2010 |
| 2009 |
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| 2012 |
| 2012 |
| 2011 |
| 2010 |
| 2009 |
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| (in million nominal Chilean pesos and million US$, with the exception of those related to debt, |
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| (in million nominal Chilean pesos and million US$, with the exception of those related to |
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| MUS$ |
| MCh$ |
| MCh$ |
| MCh$ |
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| MUS$ (6) |
| MCh$(6) |
| MCh$ |
| MCh$ |
| MCh$ |
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Income Statement Data |
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IFRS : |
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Net Sales |
| 1,893 |
| 982,864 |
| 888,714 |
| 785,845 |
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| 2,442 |
| 1,172,293 |
| 982,864 |
| 888,714 |
| 785,845 |
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Cost of sales |
| (1,114 | ) | (578,581 | ) | (506,882 | ) | (455,300 | ) |
| -1,456 |
| -698,955 |
| -578,581 |
| -506,882 |
| -455,300 |
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Administrative, distribution and selling expenses |
| (504 | ) | (261,859 | ) | (232,598 | ) | (197,422 | ) |
| -665 |
| -319,174 |
| -261,859 |
| -232,598 |
| -197,422 |
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Operating Income |
| 274 |
| 142,424 |
| 149,234 |
| 133,123 |
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Other Operating Income |
| 321 |
| 154,164 |
| 142,424 |
| 149,234 |
| 133,123 |
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Other (expense) income , net [financial results, exchange differences and share in equity investees] |
| (21 | ) | (10,712 | ) | (9,294 | ) | (5,972 | ) |
| -57 |
| -27,390 |
| -10,712 |
| -9,294 |
| -5,972 |
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Income taxes |
| (67 | ) | (34,685 | ) | (36,340 | ) | (29,166 | ) |
| -80 |
| -38,505 |
| -34,685 |
| -36,340 |
| -29,166 |
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Net Income |
| 187 |
| 97,027 |
| 103,600 |
| 97,985 |
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| 184 |
| 88,269 |
| 97,027 |
| 103,600 |
| 97,985 |
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Basic and diluted earnings per share |
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Series A |
| 0.23 |
| 121.54 |
| 129.78 |
| 122.75 |
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Series B |
| 0.26 |
| 133.69 |
| 142.75 |
| 135.02 |
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Series A(7) |
| 0.22 |
| 104.12 |
| 121.54 |
| 129.78 |
| 122.75 |
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Series B(7) |
| 0.24 |
| 114.53 |
| 133.69 |
| 142.75 |
| 135.02 |
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Basic and diluted earnings per ADR(3) |
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Series A |
| 1.40 |
| 729.24 |
| 778.68 |
| 736.50 |
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Series B |
| 1.54 |
| 802.14 |
| 856.50 |
| 810.12 |
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Series A(7) |
| 1.3 |
| 624.72 |
| 729.24 |
| 778.68 |
| 736.5 |
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Series B(7) |
| 1.43 |
| 687.18 |
| 802.14 |
| 856.5 |
| 810.12 |
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Capital Stock |
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Series A |
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| 380,137,271 |
| 380,137,271 |
| 380,137,271 |
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| 473,289,368 |
| 473,289,368 |
| 380,137,271 |
| 380,137,271 |
| 380,137,271 |
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Series B |
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| 380,137,271 |
| 380,137,271 |
| 380,137,271 |
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| 473,289,368 |
| 473,289,368 |
| 380,137,271 |
| 380,137,271 |
| 380,137,271 |
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Issued Capital |
| 444.71 |
| 230,892 |
| 230,892 |
| 230,892 |
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| 564 |
| 270,759 |
| 230,892 |
| 230,892 |
| 230,892 |
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Total dividends declared |
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Series A |
| 65 |
| 33,809 |
| 33,148 |
| 29,700 |
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Series B |
| 72 |
| 37,190 |
| 36,463 |
| 32,670 |
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Balance Sheet Data |
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IFRS: |
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Total assets |
| 1,429 |
| 741,959 |
| 688,314 |
| 642,692 |
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Current debt that accrues interest(1) |
| 23 |
| 12,117 |
| 11,996 |
| 5,800 |
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Non-current debt that accrues interest |
| 144 |
| 74,641 |
| 70,449 |
| 73,150 |
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Controlling and non-controlling shareholders’ equity |
| 812.7 |
| 421,979 |
| 394,865 |
| 373,558 |
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Other Financial Information |
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IFRS |
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Cash flows from operating activities |
| 268 |
| 138,950 |
| 125,848 |
| 131,126 |
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Cash flows from investing activities |
| (173 | ) | (89,621 | ) | (80,504 | ) | (84,318 | ) | |||||||||||
Cash flows from financing activities |
| (129 | ) | (67,159 | ) | (62,548 | ) | (67,756 | ) | |||||||||||
Depreciation and amortizations |
| 76 |
| 39,498 |
| 37,015 |
| 36,807 |
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Capital expenditures |
| 244 |
| 126,931 |
| 95,462 |
| 49,483 |
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Ratio of total debt to total capitalization(2) |
| 0.21 |
| 0.21 |
| 0.21 |
| 0.21 |
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Other Operating Data |
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Sales Volume |
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Coca-Cola Soft Drinks (million UCs)(5) |
| 447.9 |
| 447.9 |
| 438.0 |
| 419.6 |
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Other beverages (million UCs) (4)(5)(6) |
| 53.3 |
| 53.3 |
| 51.2 |
| 39.0 |
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Total Series A Shares |
| 71 |
| 34,018 |
| 33,809 |
| 32,578 |
| 29,700 |
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Total Series B Shares |
| 78 |
| 37,420 |
| 37,190 |
| 35,836 |
| 32,670 |
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Balance Sheet Data |
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IFRS: |
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Total assets |
| 3,208 |
| 1,539,836 |
| 741,959 |
| 688,314 |
| 642,692 |
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Current debt that accrues interest(1) |
| 192 |
| 92,002 |
| 12,117 |
| 11,996 |
| 5,800 |
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Non-current debt that accrues interest |
| 362 |
| 173,880 |
| 74,641 |
| 70,449 |
| 73,150 |
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Controlling and non-controlling shareholders’ equity |
| 1,861 |
| 893,605 |
| 421,979 |
| 394,865 |
| 373,558 |
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Other Financial Information |
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IFRS |
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Cash flows from operating activities |
| 393 |
| 188,857 |
| 138,950 |
| 125,848 |
| 131,126 |
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Cash flows from investing activities |
| -325 |
| -156,170 |
| -89,621 |
| -80,504 |
| -84,318 |
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Cash flows from financing activities |
| -7 |
| -3,551 |
| -67,159 |
| -62,548 |
| -67,756 |
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Depreciation and amortizations |
| 112 |
| 53,824 |
| 39,498 |
| 37,015 |
| 36,807 |
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Capital expenditures |
| 300 |
| 143,764 |
| 126,931 |
| 95,462 |
| 49,483 |
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Ratio of total debt to total capitalization(2) |
| 0.23 |
| 0.23 |
| 0.17 |
| 0.17 |
| 0.17 |
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Other Operating Data |
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Sales Volume |
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Coca-Cola Soft Drinks (million UCs)(5) |
| 517.6 |
| 517.6 |
| 448.2 |
| 438 |
| 419.6 |
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Other beverages (million UCs) (4)(5)(6) |
| 78.6 |
| 78.6 |
| 53.3 |
| 51.2 |
| 39.0 |
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(1) Includes interest bearing liabilities including current bank liabilities, bonds payable discounting issuance expenses and initial discounts that are recognized forming part of the liability and other financial liabilities that accrue short term bank interests and the portion of long—term bank liabilities and bonds payable within 12 months.
(2) Total debt is calculated as the sum of current and non-current financial interest bearing debt. Total capitalization is calculated as the sum of total financial debt, non-controlling interest and shareholders’ equity attributable to the controlling shareholder. Shareholders’ equity has been determined under IFRS.
(3) Each ADR represents six shares of common stock.stock of the corresponding series of Shares..
(4) Includes waters, juices, beer and juices (in Chile and Argentina) and beer, waters and juices (in Brazil).other spirits.
(5) Unit cases (“UCs”) refer to 192 ounces of finished beverage product (24 eight-ounce servings) or 5.69 liters.
(6) VolumeDue to the materialization of watersthe merger with Embotelladoras Coca Cola Polar S.A. on October 1, 2012, 2012 figures both monetary and juices in Chile includes total sales volume figures include the operations of the last quarter of the territories of Ex Embotelladoras Coca Cola Polar S.A., as well as the consolidated figures for the last quarter of Sociedades Vital Jugos S.A., Vital Aguas S.A. and water sales volume sold by Embotelladora Andina.Envases Central S.A. all which due to the merger passed from being associates to being subsidiaries that must be incorporated in the consolidation.
(7)For the calculation of the profits per share, it is taken into consideration the average amount of outstanding shares that is 400.809.380 shares.
Exchange Rates
The following table sets forth the annual low, high, average and period-end Observed Exchange Rate for U.S. dollars for each year beginning in 20072008 and for each month during the six months immediately preceding the month of this annual report, as reported by the Central Bank.
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| Daily Observed Exchange Rate Ch$ per US$(1) |
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Year |
| Low(2) |
| High(2) |
| Average(3) |
| Period End |
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2007 |
| 439.14 |
| 548.67 |
| 522.55 |
| 496.89 |
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2008 |
| 431.22 |
| 676.75 |
| 522.35 |
| 636.45 |
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2009 |
| 491.09 |
| 643.87 |
| 559.67 |
| 507.10 |
|
2010 |
| 468.01 |
| 549.17 |
| 510.22 |
| 468.01 |
|
2011 |
| 455.91 |
| 533.74 |
| 483.90 |
| 519.20 |
|
|
|
|
|
|
|
|
|
|
|
Month |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 2011 |
| 460.34 |
| 521.85 |
| 486.48 |
| 521.76 |
|
October 2011 |
| 490.29 |
| 533.74 |
| 510.67 |
| 490.29 |
|
November 2011 |
| 494.08 |
| 526.83 |
| 509.73 |
| 517.37 |
|
December 2011 |
| 508.67 |
| 522.62 |
| 517.26 |
| 519.20 |
|
January 2012 |
| 485.35 |
| 518.20 |
| 499.96 |
| 488.75 |
|
February 2012 |
| 475.29 |
| 487.73 |
| 480.89 |
| 476.27 |
|
March 2012 |
| 480.62 |
| 491.57 |
| 485.90 |
| 487.44 |
|
|
| Daily Observed Exchange Rate Ch$ per US$(1) |
| ||||||
Year |
| Low(2) |
| High(2) |
| Average(3) |
| Period End |
|
|
|
|
|
|
|
|
|
|
|
2008 |
| 431.22 |
| 676.75 |
| 522.35 |
| 636.45 |
|
2009 |
| 491.09 |
| 643.87 |
| 559.67 |
| 507.10 |
|
2010 |
| 468.01 |
| 549.17 |
| 510.22 |
| 468.01 |
|
2011 |
| 455.91 |
| 533.74 |
| 483.90 |
| 519.20 |
|
2012 |
| 469.65 |
| 519.69 |
| 486.59 |
| 479.96 |
|
|
|
|
|
|
|
|
|
|
|
Month |
|
|
|
|
|
|
|
|
|
September 2012 |
| 469.65 |
| 481.11 |
| 474.91 |
| 473.77 |
|
October 2012 |
| 471.54 |
| 481.98 |
| 475.67 |
| 480.59 |
|
November 2012 |
| 476.20 |
| 484.48 |
| 480.56 |
| 480.39 |
|
December 2012 |
| 474.36 |
| 481.28 |
| 477.11 |
| 479.96 |
|
January 2013 |
| 470.67 |
| 475.47 |
| 472.28 |
| 471.44 |
|
February 2013 |
| 470.67 |
| 473.60 |
| 472.42 |
| 472.96 |
|
March 2013 |
| 471.10 |
| 474.82 |
| 472.44 |
| 472.03 |
|
April 2013 (4) |
| 466.50 |
| 477.74 |
| 472.17 |
| 472.73 |
|
Source: Chilean Central Bank.
(1) Nominal Figures.
(2) Exchange rates are the actual low and high, on a day-by-day basis for each period.
(3) With respect to annual periods, the average of the exchange rates on the last day of each month during the year and, with respect to monthly periods, the actual daily exchange rates.
(4)Considers until April 26th, 2012
The Observed Exchange Rate on April 26, 20112012 was Ch$484.88472.73 per US$1.00.
B.Capitalization and Indebtedness
Not applicable.
C.Reasons for the offer and use of proceeds
Not applicable.
D.Risk Factors
The Company is subject to various economic, political, social and competitive conditions. Any of the following risks, if they materialize, could materially and adversely affect our business, results of operations, prospects and financial condition.
Risks Related to our Company
We rely heavily on our relationship with The Coca-Cola Company (“TCCC”) which has substantial influence over our business and operations
Approximately 84%82% of our net sales in 20112012 were derived from the distribution of Coca-Cola soft drinks and 13%15% from the distribution of other beverages bearing trademarks owned by TCCC. We produce, market and distribute Coca-Cola products through standard bottler agreements between our bottler
products through standard bottler agreements between our bottler subsidiaries and, in each case, the local subsidiary of TCCC or, in the case of fruit juices and nectars, The Minute Maid Company, a subsidiary of TCCC. TCCC has the ability to exercise substantial influence over our business through its rights under the Bottler Agreements. See “Item 7. Major Shareholders and Related Party Transactions—Bottler Agreements.” Under the Bottler Agreements, TCCC unilaterally sets the prices for Coca-Cola soft drink concentrates and Coca-Cola beverages (in the case of soft drinks pre-mixed by TCCC) sold to us. TCCC also monitors pricing changes we institute and has the right to review and approve our marketing, operational and advertising plans. These factors may impact our profit margins which could adversely affect our net income and results of operations. Our marketing campaigns for all Coca-Cola products are designed and controlled by TCCC. Pursuant to the Bottler Agreements, we are required to submit a business plan to TCCC for prior approval on a yearly basis. In accordance with the Bottler Agreements, TCCC may, among other things, require that we demonstrate financial ability to meet our business plan and if we are not able to demonstrate our financial capacity TCCC may terminate our rights to produce, market and distribute Coca-Cola soft drinks or other Coca-Cola beverages in territories where we have such approval. Under the Bottler Agreements, we are prohibited from producing, bottling, distributing or selling any products that could be substituted for, be confused with or be considered an imitation of, Coca-Cola soft drinks or other Coca-Cola beverages and products.
We depend on TCCC to renew the Bottler Agreements which are subject to termination by TCCC in the event we default or upon expiration of their respective terms. We cannot assure you that the Bottler Agreements will be renewed or extended upon their expiration, and even if they are renewed, we cannot be certain that renewal will be granted on the same terms as those currently in effect. Termination, non-extension or non-renewal of any of the Bottler Agreements would have a material adverse effect on our business, financial condition and results of operation.
In addition, any acquisition we make of bottlers of Coca-Cola products in other countries may require, among other things, the consent of TCCC under bottler agreements to which such other bottlers are subject. We cannot assure you that TCCC will consent to any future geographic expansion of our Coca-Cola beverage business. In addition, we cannot assure you that our relationship with TCCC will not undergo significant changes in the future. If such changes do occur, our operations, and financial results and condition could be materially affected.
Our business is highly competitive and subject to price competition which may adversely affect our net profits and margins
The soft drink and non-alcoholic beverage businesses are highly competitive in each of our Company’s franchise territories. In our franchise territories we compete with bottlers of regional brands, including low cost “B brand” beverages and Pepsi products. In Argentina and Brazil we compete with Companhia de Bebidas das Americas, commonly referred to as AmBev, the largest brewer in Latin America and a subsidiary of InBev S.A., which sells Pepsi products, in addition to a portfolio that includes local brands with flavors such as guaraná. This competition is likely to continue, and we cannot assure you that it will not intensify in the future which could materially and adversely affect our financial condition and results of operations. See “Item 4. Information on the Company — Part B. Business Overview— Soft Drink Business—Competition.”
Changes in the nonalcoholic beverages business environment could adversely affect our financial results
The nonalcoholic beverages business environment is rapidly evolving as a result of, among other things, changes in consumer preferences, including changes based on health and nutrition considerations and obesity concerns, shifting consumer tastes and needs, changes in consumer lifestyles and competitive product and pricing pressures. In addition, the industry is being affected by the trend toward consolidation in the retail channel. If we are unable to successfully adapt to this rapidly changing environment, our net income, share of sales and volume growth could be negatively affected.
Raw material prices may be subject to U.S. dollar/local currency exchange risk and price volatility which could increase our costs of operations
Numerous raw materials, including sugar and resin, are used in producing beverages and containers. We purchase raw materials from both domestic and international suppliers. See “Item 4. Information on the Company—Part B. Business Overview—Soft Drink Business—Raw Materials and Supplies.” Because the prices of raw materials are fixed in U.S. dollars, we are subject to local currency risk in each of our operations. If the Chilean peso, Brazilian real or Argentine peso were to depreciate significantly against the U.S. dollar, the cost of certain raw materials could rise significantly, which could have an adverse effect on our financial condition and results of operations. We cannot assure you that these currencies will
not lose value against the U.S. dollar in the future. Additionally, thesesome raw materials prices are subject to international pricehigh volatility that could also have a material negative effect over our profitability.
Instability in the supply of utility services and oil prices may adversely impact our results of operations
Our operations depend on a stable supply of utilities and fuel in the countries where we operate that the Company cannot assure fluctuations in oil prices have adversely affected our cost of energy and transportation in the threefour countries we operate and we expect that they will continue to do so in the future. We believe that the increase of energy prices will not have a significant effect over our results of operations.
Water scarcity and poor quality could negatively impact the Company’s production costs and capacity.
Water is the main ingredient in substantially all of our products. It is also a limited resource in many parts of the world, facing unprecedented challenges from overexploitation, increasing pollution and poor management. As demand for water continues to increase around the world, and as the quality of available water deteriorates, the Company may incur increasing production costs or face capacity constraints that could adversely affect our profitability or net operating revenues in the long run.
Significant additional labeling or warning requirements may inhibit sales of affected products.
The countries in which we operate, may adopt significant additional product labeling or warning requirements relating to the chemical content or perceived adverse health consequences of certain of the Coca-Cola products. These types of requirements, if they become applicable to one or more of the Coca-Cola products under current or future environmental or health laws or regulations, may inhibit sales of such products.
If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.
We are increasingly dependent on information technology networks and systems, including the Internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for digital marketing activities and electronic communications among the Company and our clients, suppliers and also among our subsidiaries. Security breaches of this infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent such breaches, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information.
Perception of risk in emerging economies may impede our access to international capital markets, hinder our ability to finance our operations and adversely affect the market price of our common shares and American Depositary Receipts.
As a general rule, international investors consider Argentina and Paraguay, and to a lesser extent Chile and Brazil, to be emerging market economies. Consequently, economic conditions and the market for securities of emerging market countries influence investors’ perceptions of Chile, Brazil and Argentina and their evaluation of companies’ securities located in these countries.
During periods of heightened investor concern regarding emerging market economies, in particular Argentina and to a lesser extent Brazil and Paraguay, have experienced significant outflows of U.S. dollars.
In addition, in these periods Brazilian, Argentine and ArgentineParaguayan companies have faced higher costs for raising funds, both domestically and abroad, as well as limited access to international capital markets, which have negatively affected the prices of Brazilian and Argentinethe aforementioned countries securities. Although economic conditions are different in each of the emerging-market countries, investors’ reactions to developments in one of these countries may affect the securities of issuers in the others, including Chile. For example, adverse developments in other developing or emerging market countries may lead to decreased investor interest in investing in Chile or in the securities of Chilean companies, including securities of the Company.
It may be difficult to enforce civil liabilities against us or our directors, executive officers or controlling persons
We are a sociedad anónima, or stock corporation, organized under the laws of Chile. Some of our directors, executive officers and controlling persons reside in Chile or outside of the United States. In addition, all or a substantial portion of the assets of these persons and of our assets are located outside of the United States. As a result, it may not be possible for
investors to effect service of process within the United States upon such persons, or to enforce against them in U.S. courts judgments predicated upon civil liability provisions of the federal securities laws of the United States or otherwise obtained in U.S. courts. Because our assets are located outside of the United States, any judgment obtained in the United States against us may not be fully collectible in the United States.
If we experience strikes, work stoppages or labor unrest, our business would suffer.
Strikes, work stoppages or other forms of labor unrest at any of our production facilities could impair our ability to supply products to customers, which would reduce our revenues and could expose us to customer claims.
Regulatory Risks
We are subject to regulation in each of the territories in which we operate. The principal areas in which we are subject to regulation are water, environment, labor, taxation, health and antitrust. Regulation could also affect our ability to set prices for our products. The adoption of new laws or regulations or a stricter interpretation or enforcement thereof in the countries in which we operate may increase our operating costs or impose restrictions on our operations which, in turn, may adversely affect our financial condition, business and results. Further changes in current regulations may result in an increase in compliance costs, which may have an adverse effect on our future results or financial condition.
Voluntary price restraints or statutory price controls have been imposed historically in several of the countries in which we operate. Currently there are no price controls applicable to our products in any of the territories in which we operate, other than in Argentina, were there are voluntary price restraints. There are currently no published laws or regulations imposing price controls on our products in Argentina. Nonetheless, the company has assented to the request by Argentine Government authorities to maintain prices of certain products sold through supermarkets. The imposition of these restrictions or voluntary price restraints in Argentina or other territories may have an adverse effect on our results and financial condition. We cannot assure you that government authorities in Argentina or in any country in which we operate will not impose statutory price controls, or that we will not be asked to accept further voluntary price restraints in the future.
The countries in which we operate may adopt new tax laws or modify existing laws to increase taxes applicable to our business.
We cannot assure you that any governmental authority in any country where we operate will not impose new taxes or increase taxes on our products in the future. The imposition of new taxes or increases in taxes on our products may have a material adverse effect on our business, financial condition, prospects and results.
For example, in Chile, a tax reform became effective on 2011, pursuant to which there was a temporary increase in the income tax rate from 17% to 20%, to finance the reconstruction of the country after the earthquake of 2010. Pursuant to an amendment issued on 2012, the 20% income tax rate will continue to apply through 2013 and onwards.
In Brazil, the federal taxes applied on the production and sale of beverages are based on the national average retail price, calculated based on a yearly survey of each Brazilian beverage brand, combined with a fixed tax rate and a multiplier specific for each class of presentation (glass, plastic or can). On October 1, 2012, a number of changes to the federal taxes on beverages became effective. These changes include the increase of the multipliers used to calculate soft drink taxes sold in cans or glass bottles. As of effectiveness, the multiplier for cans increased from 30.0% to 31.9%, and as of October 2014, the multiplier will further be increased gradually to 38.1% by October 1, 2018. The multiplier for glass bottles increased from 35.0% to 37.2% as of effectiveness, and as of October 2014, the multiplier will further be increased gradually to 44.4% by October 1, 2018. In addition, the amendment suspended the 50% production tax benefit that had previously applied to juice-added soft drinks, and raised the rate for such beverages to the level currently applied to cola beverages. In addition to the changes in the federal sales taxes on soft drinks, there was a reduction in the federal production tax rate on concentrate, from 27.0% to 20.0%. This reduction reduces the tax credit on the purchase of concentrate.
Risks Relating to Chile
Our growth and profitability depend on economic conditions in Chile
Approximately 43%49% of our assets and 31%32% of our net sales in 20112012 were derived from our operations in Chile. Thus, our financial condition and results of operations depend significantly on economic conditions prevailing in Chile. According to data published by the Central Bank, the Chilean economy grew at a rate of -1.7%6.1% in 2009, 5.22010, 6.0 % in 20102011 and 6.3%5.6% in 2011.2012. Our financial condition and results of operations could also be adversely affected by changes over which we have no control, including, without limitation:
· the economic or other policies of the Chilean government, which has a substantial influence over many aspects of the private sector;
· other political or economic developments in or affecting Chile;
· regulatory changes or administrative practices of Chilean authorities;
· inflation and governmental policies to combat inflation;
· currency exchange movements; and
· global and regional economic conditions.
Inflation in Chile may disrupt our business and have an adverse effect on our financial condition and results of operations
The annual rates of inflation in Chile which in 2009, 2010, 2011 and 20112012 were —1.4%3.0%, 3.0%4.4% and 4.4%1.5%, respectively (as measured by changes in the consumer price index and as reported by the Chilean National Institute of Statistics) could adversely affect the Chilean economy and have a material adverse effect on our financial condition and results of operations. We cannot assure you that, Chilean inflation will not continue to increase significantly. We cannot assure you that, under competitive pressure, we will be able to realize price increases, which could adversely impact our financial condition and results of operations. Additionally, an important part of our financial debt is UF denominated, this is, linked to the inflation of the country, and therefore the value of the debt reflects any increase of the inflation in Chile.
The Chilean peso is subject to depreciation and volatility which could adversely affect the value of an investment in our securities
The Chilean government’s economic policies and any future changes in the value of the Chilean peso against the U.S. dollar, could adversely affect our operations and financial results and the dollar value of an investor’s return. The Chilean peso has been subject to large nominal devaluations in the past and may be
subject to significant fluctuations in the future. Based on the Observed Exchange Rates for U.S. dollars in the period from 20082010 to 20112012 the Chilean peso relative to the U.S. dollar appreciated 7.39%5.62% in nominal terms. During 20112012 the Chilean peso relative to the U.S. dollar appreciated 5.15%depreciated 0.5% in nominal terms. See “Item 3. Key Information-Exchange Rates.”
Our Class A shares and Class B shares are traded in Chilean pesos on the Chilean Stock Exchanges. Cash distributions with respect to the shares will be received in Chilean pesos by the depositary, currently The Bank of New York Mellon Corporation (as depositary for the Series A and Series B shares represented by the Series A and Series B ADRs), which will convert such Chilean pesos to U.S. dollars at the then prevailing exchange rate to make U.S. dollar payments in respect of the ADRs. If the value of the Chilean peso depreciates relative to the U.S. dollar, the value of the ADRs and any distributions to be received from the depositary would be adversely affected. In addition, the depositary will incur costs (to be ultimately borne by the ADR holders) in connection with the foreign currency conversion and subsequent distribution of dividends or other payments with respect to our ADRs.
Exchange controls and withholding taxes in Chile may limit repatriation of foreign investments
Equity investments in Chile by persons who are not Chilean residents are generally subject to various exchange control regulations that govern the convertibility and repatriation of the investments and earnings. The ADRs are governed by an Agreement among us, the depositary and the Central Bank of Chile (the “Foreign Investment Agreement”). The Foreign Investment Agreement guarantees the depositary and the ADR holders access to Chile’s Formal Exchange Market, permits the depositary to remit dividends it receives from us to the ADR holders and permits the holders of ADRs to repatriate the proceeds of the sale of shares withdrawn from the ADR facility, thereby enabling them to acquire currencies necessary to repatriate investments in the shares and earnings there from. Pursuant to current Chilean law, the Foreign Investment Agreement may not be amended unilaterally by the Central Bank of Chile, and there are judicial precedents (which are not binding with respect to future judicial decisions) indicating that the Foreign Investment Agreement may not be voided by future legislative changes.
Dividends received by ADR holders of are paid net of foreign currency exchange fees and expenses of the depositary and are subject to Chilean withholding tax, currently imposed at a rate of 35%, subject to credits in certain cases as described under “Item 10. Additional Considerations —Tax Considerations Relating to Equity Securities”.
We cannot assure you that additional restrictions applicable to ADR holders , the disposition of the shares underlying the ADRs and the convertibility and/or the repatriation of the proceeds from such disposition or the payment of dividends will not be imposed in the future, nor can we advise as to the duration or impact of such restrictions if imposed. If for any reason, including changes in the Foreign Investment Agreement or Chilean law, the depositary was unable to convert Chilean pesos to U.S. dollars, investors would receive dividends or other distributions, if any, in Chile and in Chilean pesos.
Risks Relating to Brazil
Our business is dependent to some extent on economic conditions in Brazil
Approximately 41%21% of our assets and 45%38% of our consolidated net sales in 20112012 were derived from our operations in Brazil. Because demand for soft drinks and beverage products is usually correlated to economic conditions prevailing in the relevant local market, which in turn is dependent on the macroeconomic condition of the country in which the market is located, our financial condition and results of operations to a considerable extent are dependent upon political and economic conditions prevailing in Brazil. According to data available to general public, the Brazilian economy grew at a rate of -0.6% in 2009, 7.5% in 2010, 2.7% in 2011 and 2.8%1.0% in 2011.2012.
The Brazilian government exercises influence over the Brazilian economy, which together with historically volatile Brazilian political and economic conditions, could adversely affect our financial condition and results of operations and the market price of our shares and ADRs
Historically, the Brazilian government has changed monetary, credit, tariff, and other policies to influence the course of Brazil’s economy. Such government actions have included wage and price controls as well as other measures such as freezing bank accounts, imposing exchange controls and imposing limits on imports and exports. Changes in policy and other political and economic developments could adversely affect the Brazilian economy and have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that present economic conditions and policies intended to promote a sustainable economic development will continue.
Although inflation in Brazil has stabilized in recent years, increased inflation may adversely affect the operations of Andina Brazil which could adversely impact our financial condition and results of operations
As measured by the Brazilian Índice Nacional de Preços ao Consumidor or INPC, inflation in Brazil was 4.1% 6.5%, 6.1% and 6.1%6.2% in 2009, 2010, 2011 and 2011,2012, respectively. Increased inflation rates may result in lower consumer purchasing power on behalf of consumers and lower sales volume for Andina Brazil. We cannot assure you that levels of inflation in Brazil will not increase in future years and have a material adverse effect on our business, financial condition or results of operations. Inflationary pressures may lead to further government intervention in the economy, including the introduction of government policies that could adversely affect the results of operations of Andina Brazil and consequently our financial condition and results of operations and the market price of our shares and ADSs.
The Brazilian real is subject to depreciation and volatility which could adversely affect our financial condition and results of operations
During 2008,2010, the real depreciated 31.9% due to the world economic crisis and in 2009, 2010 and 2011, it appreciated 25.5% ,apreciated 4.3% and 4.9% respectively against the U.S. dollar compared to the prior year period. In the event of a devaluation of the real,Nevertheless in 2011 and 2012 it depreciated 12.6% and 8.9%, which had an impact in the financial condition and results of operations of our Brazilian subsidiary could be adversely affected.subsidiary.
Depreciation of the real relative to the U.S. dollar may increase the cost of servicing foreign currency-denominated debt that we may incur in the future, which could adversely affect our results of operations and financial condition. In addition, depreciation of the real can create inflationary pressures in Brazil that may negatively affect our results of operations. Depreciation generally curtails access to international capital markets and combined with other macroeconomic aspects, may prompt recessionary government intervention. It also reduces the U.S. dollar value of our revenues, distributions and dividends, and the U.S. dollar equivalent of the market price of our common shares. On the other hand, the appreciation of the real against the U.S. dollar may lead to the deterioration of Brazil’s public accounts and balance of payments, as well as to lower economic growth from exports.
The Brazilian government imposes certain restrictions on currency conversions and remittances abroad which could affect the timing and amount of any dividend or other payment we receive
Brazilian law guarantees foreign shareholders of Brazilian companies the right to repatriate their invested capital and to receive all dividends in foreign currency provided that their investment is registered with Brazil’s Central Bank. We registered our investment in Andina Brazil with the Brazilian Central Bank on October 19, 1995. Although dividend payments related to profits obtained subsequent to January 1, 1996 are not subject to income tax, after the sum of repatriated capital and invested capital exceeds the investment amount registered with the Brazilian Central Bank, repatriated capital is subject to a capital gains tax of 15%. Under current Chilean tax law, we will realize a tax credit in respect of all Brazilian taxes paid relating to Andina Brazil. There can be no assurance that the Brazilian government will not impose additional restrictions or modify existing regulations that would have an adverse effect on an investor’s ability to repatriate funds from Brazil nor can there be any assurance of the timing or duration of such restrictions, if imposed in the future.
Risks Relating to Argentina
Our business is dependent to some extent on economic conditions in Argentina
Approximately 17%13% of our assets and 24%27% of our net sales in 20112012 were derived from our operations in Argentina. Because demand for soft drinks and beverage products usually is correlated to economic conditions prevailing in the local market, which in turn is dependent on the macroeconomic condition of the country, the financial condition and results of operations of our franchise in Argentina are, to a considerable extent, dependent upon political and economic conditions prevailing in Argentina.
GDP growth in Argentina was 9.2% in 2010, 8.3% in 2011 and 9.2%2.0% in 2010.2012. Facing the international financial crisis, the public sector did not default and carried out payments using the reserves of Argentina’s Central bank and loans from Banco de la Nación Argentina, generating new and significant macroeconomic policy challenges. Although Argentina managed to roll with the punches of a recessive year and an international crisis without upsetting the main financial variables, we cannot assure that economic conditions in Argentina will continue improving or that our operations will continue experiencing good results.
Political and economic instability may recur which could have a material adverse effect on our Argentine operations and on our financial condition and results of operations.
In the period from 1998 through 2003, Argentina experienced acute economic problems that culminated with the restructuring of substantially all of Argentina’s sovereign bond indebtedness. A succession of presidents were inaugurated during this crisis period and various states of emergency were declared that suspended civil liberties and instituted restrictions on transfers of funds abroad and foreign exchange controls, among other measures. Argentina’s GDP contracted 10.9% in 2002. Beginning 2003, Argentine GDP began to recover and from 2004 to 2008 recorded an average rate of growth of 8.4%. In the political environment, legislative elections carried out in June of 2009 were a misfortune for the government’s political party losing the majority in both houses. This new political scenario in Argentina could make the executive power need to arrive at a consensus with the opposition regarding rules and regulations in order for them to be approved by the legislative power.
The macroeconomic condition in Argentina has been characterized by:
· increased inflation which has been slightly controlled by price control;
· deeper state of intervention in the economy;
· fiscal deficit ; and
· strong salary pressures.
The Argentine government continues to face significant exposure to litigation from holders of its defaulted debt that did not participate in the Argentine government’s exchange offer.
The Argentine government could impose certain restrictions on currency conversions and remittances abroad which could affect the timing and amount of any dividends or other payment we receive from our Argentine franchise
Until December 2001,Under current Argentine law, we may declare and distribute dividends with respect to our Argentine subsidiary and our Argentine banks may lawfully process payments of those dividends to us and other non-resident shareholders. Our declaration and distribution of dividends is subject to certain statutory requirements and must be consistent with our audited financial statements. The processing of payment of dividends by our Argentine banks is subject to Argentine Central Bank regulations, including verification of our Argentine subsidiary’s compliance with foreign debt and direct investment disclosure obligations. In addition to statutory and administrative rules affecting our Argentine subsidiary’s payment of dividends, during 2012 the Argentine peso was pegged 1-to-1Government imposed discretionary restrictions on Argentine companies as part of a policy to thelimit outbound transfers of U.S. dollar. From January 1st, 2002, thedollars. These de facto restrictions essentially halted dividend payments to non-resident shareholders. The Argentine pesoGovernment has been allowedbegun to float freely against the U.S. dollar and other foreign currencies.relax these restrictions. Nonetheless, we cannot give any assurances that we will be able to cause our Argentine subsidiary to
Since 2003 and following a series of restrictive measuresdistribute dividends to its non-resident shareholders now or in the money marketforeseeable future, despite otherwise meeting all statutory and fund movements, the Argentine Central Bank removed several of theregulatory requirements for payment.
Argentina’s government may impose certain restrictions on imports which could have an impact in our operation.
Argentina’s government could eventually limit our access to foreign exchange restrictions, including elimination of the requirement that the Argentine Central Bank approve the repayment of principal of financial indebtedness, extended the termto pay for the repatriation of export proceeds, allowed earlier payments of imports, and starting 2004, increased up to US$2 million, the monthly amount that Argentine-domiciled individualsalso could restrict raw materials or corporationsmachinery imports, which are allowed to purchase and transfer abroad.
There can be no assurance that the Argentine Central Bank will not once again require its prior authorizationnecessary for the transfer of funds abroadour operation in the form of dividends or payment of inter-company or third party loans. Any such inability to transfer funds outside of Argentina, in the form of dividends or otherwise, could adversely affect the value of our Argentine operations and the market value of our ADRs.country.
Inflation in Argentina may adversely affect our operations which could adversely impact our financial condition and results of operations
Argentina has experienced high levels of inflation in recent decades, resulting in large devaluations of its currency. Argentina’s historically high rates of inflation resulted mainly from its lack of control over fiscal policy and the money supply. The official annual rates of inflation (published by INDEC-Instituto Nacional de Estadísticas y Censos- National Statistics and Census Institute as measured by changes in the consumer price index) between 2009, 2010, 2011 and 20112012 were, 7.7%10.9%, 10.9%9.5% and 9.5%10.8%, respectively for each year. High levels of inflation in Argentina could adversely affect the Argentine economy and have a material adverse effect on our financial condition and results of operations. In the last years the accuracy of the national accounts of Argentina was questioned by some international public organizations.
The Argentine peso is subject to depreciation and volatility which could adversely affect our financial condition and results of operations
During 2011,2012, the exchange rate in Argentina underwent a depreciation of 5.6%13.8%. The Argentine government’s economic policies and any future devaluation of the Argentine peso against the U.S. dollar could adversely affect our financial
condition and results of operations. The Argentine peso has been subject to large devaluations in the past and may be subject to significant fluctuations in the future.
The Public Emergency Law and Foreign Exchange Regime Reform Law of 2002 put an end to more than ten years of U.S. dollar-peso parity and authorized the Argentine government to set the exchange rate. Subsequent to the devaluation of the Argentine peso in early 2002 and since the beginning of the Argentine economic crisis, there have been significant fluctuations in the value of the Argentine peso causing repeated Argentine Central Bank interventions to stabilize the Argentine peso through purchases and sales of U.S. dollars said devaluation of the Argentine peso has had a negative impact on our results.
We cannot assure you that the policies to be implemented by the Argentine government in the future will stabilize the value of the Argentine peso against foreign currencies. Therefore,currencies
Risks Related to Paraguay
Our business is dependent to some extent on economic conditions in Paraguay
Approximately 17% of our assets and 3% of our net sales in 2012 were derived from our operations in Paraguay. Since the Argentine pesodemand for soft drinks and drinks is generally related to the economic conditions prevailing in the local market which, in turn, depend on the macroeconomic and political conditions of the country, our financial situation and our operations results could be adversely affected by changes in these factors over which we have no control.
The Gross Domestic Product (GDP) for 2012 reveals a contraction of the real economy of around -1.2% compared to the previous year, result it is interrupted two years of a very good behavior of the economic activity (4% in 2011 and 15% in 2010),
The economic performance in 2012 was influenced by a predominant factor that motivated a declination in economic activity: the effects of the drought that had a negative impact in the agricultural industry for 2011/2012, mainly on soybeans, corn and sunflower crops, in addition to the outbreak of foot and mouth disease detected in the last months of 2011 that resulted in the closing of markets for Paraguayan meat and has had an effect in the reduction of the levels of slaughtering during the first half of this year which, however, was reversed during the second half of the year, experiencing a significant upturn with the return of more than 20 markets for Paraguayan meat.
Inflation in Paraguay may adversely affect our operations which could adversely impact our financial condition and results of operations
Inflation during 2012 was 4%, below 4,9% in 2011 and 7,2% in 2010. This annual inflationary result implies that the total inflation has, for the sixth consecutive year, a one-digit figure and is below the top of the target range (7,5%).
An increase in the inflation could decrease the purchasing power of our consumers, which could have an effect in our volume growth and therefore, could have an impact in our sales income. We can’t assure you that the Paraguayan inflation will continue to be under the current levels.
The Paraguayan Guaraní is subject to significant fluctuationsdepreciation and further depreciationsvolatility which might significantly andcould adversely affect our financial condition and the results of operations
The exchange rate is free and fluctuant and the BCP participate in the exchange market in order to smooth abrupt oscillations.
In 2012, the local currency appreciated in 3.0%. Nevertheless, it was very variable during the year. It was appreciated during the first quarter to then become strongly depreciated (around 11%), as a result of the lower export earnings to then be stabilized towards the last quarter of the year, closing 2012 with an appreciation of around 3%.
An important depreciation of the local currency could adversely affect our operations.financial situation and financial results, because 25% of our total costs of raw materials and supplies are in dollars, as well as other expenses such as professional fees and maintenance costs.
Risk Factors Relating to the ADRs and Common Stock
Preemptive rights may be unavailable to ADR holders
According to the Ley de Sociedades Anónimas No. 18.046 and the Reglamento de Sociedades Anónimas (collectively, the “Chilean Companies Law”), whenever we issue new shares for cash, we are required to grant preemptive rights to holders of our shares (including shares represented by ADRs), giving them the right to purchase a sufficient number of shares to maintain their existing ownership percentage. However, we may not be able to offer shares to United States holders of ADRs pursuant to preemptive rights granted to our shareholders in connection with any future issuance of shares unless a registration statement under the U.S. Securities Act of 1933, as amended, is effective with respect to such rights and shares, or an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended, is available.
Under the procedure established by the Central Bank of Chile, the foreign investment agreement of a Chilean company with an existing ADR program will become subject to an amendment (which will also be deemed to incorporate all laws and regulations applicable to international offerings in effect as of the date of the amendment) that will extend the benefits of such contract to new shares issued pursuant to a preemptive rights offering to existing ADR owners and to other persons residing and domiciled outside of Chile that exercise preemptive rights, upon request to the Central Bank of Chile. We intend to evaluate at the time of any rights offering the costs and potential liabilities associated with any such registration statement as well as the indirect benefits to us of enabling United States ADR holders to exercise preemptive rights and any other factors that we consider appropriate at the time, and then make a decision as to whether to file such registration statement.
We cannot assure you that any registration statement would be filed. To the extent ADR holders are unable to exercise such rights because a registration statement has not been filed, the depositary will attempt to sell such holders’ preemptive rights and distribute the net proceeds thereof if a secondary market for such rights exists and a premium can be recognized over the cost of any such sale. If such rights cannot be sold,
they will expire and ADR holders will not realize any value from the grant of such preemptive rights. In any such case, such holder’s equity interest in the Company would be diluted proportionately.
Shareholders’ rights are less well defined in Chile than in other jurisdictions, including the United States
Under the United States federal securities laws, as a foreign private issuer, we are exempt from certain rules that apply to domestic United States issuers with equity securities registered under the United States Securities Exchange Act of 1934, as amended, including the proxy solicitation rules, the rules requiring disclosure of share ownership by directors, officers and certain shareholders. We are also exempt from certain of the corporate governance requirements of the Sarbanes-Oxley Act of 2002 and the New York Stock Exchange, Inc., including the requirements concerning independent directors.
Our corporate affairs are governed by the laws of Chile and our estatutos or bylaws, which function not only as our bylaws but also as our articles of incorporation. Under such laws, our shareholders may have fewer or less well-defined rights than they might have as shareholders of a corporation incorporated in a U.S. jurisdiction.
Pursuant to Law No. 19,705, enacted in December 2000, the controlling shareholders of an open stock corporation can only sell their controlling shares via a tender offer issued to all shareholders in which the bidder would have to buy all the offered shares up to the percentage determined by it, when the price paid is substantially higher than the market price (that is, when the price paid was higher than the average market price of a period starting 90 days before the proposed transaction and ending 30 days before such proposed transaction, plus 10%).
The market for our shares may be volatile and illiquid
The Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. The Bolsa de Comercio de Santiago (the “Santiago Stock Exchange”), which is Chile’s principal securities exchange, had a market capitalization of approximately US$269,247313,456 million at December 31, 20112012 and an average monthly trading volume of approximately US$4,6983,870 million for 2011.2012. The lack of liquidity owing, in part, to the relatively small size of the Chilean securities markets may have a material adverse effect on the trading prices of our shares. Because the market for our ADRs depends, in part, on investors’ perception of the value of our underlying shares, this lack of liquidity for our shares in Chile may have a significant effect on the trading prices of our ADRs.
ITEM 4. INFORMATION ON THE COMPANY
A. History and development of the Company
Our legal name is Embotelladora Andina S.A. and our commercial name is Andina. We were incorporated and organized on February 7, 1946 under the Chilean Companies Law as a sociedad anónima (stock corporation). An abstract of our bylaws is registered with the Registro de Comercio de Santiago (Public Registry of Commerce of the City of Santiago) under No. 581 on page 768 of the year 1946. Pursuant to our bylaws, our term of duration is indefinite.
Our shares of common stock are listed and traded on the Bolsa de Comercio de Santiago (Santiago Stock Exchange), on the Bolsa Electrónica de Chile (the Chilean Electronic Stock Exchange) and the Bolsa de Comercio de Valparaiso (the Valparaiso Stock Exchange). Our Series A and Series B ADRs representing our Series A and Series B shares, respectively, are listed on the New York Stock Exchange. Our principal executive offices are located at Avenida El Golf 40,Miraflores 9153, Piso 4, Las Condes,7, Renca, Santiago, Chile. Our telephone number is +56-2-338-0520+56-2-2338-0520 and our website is www.embotelladoraandina.com.www.koandina.com.
Our depositary agent for the ADRs in the United States is The Bank of New York Mellon Corporation, located at One Wall Street, New York, New York 10286. Our depositary agent’s telephone number is (212) 815-2296. Our authorized representative in the United States is Puglisi & Associates, located at 850
Library Avenue, Suite 204, Newark, Delaware 19711, United States and their phone number is (302) 738-6680.
History
In 1941, The Coca-Cola Company licensed a private Chilean company to produce Coca-Cola soft drinks in Chile, and production began in 1943. In 1946, the original licensee withdrew from the license arrangement, and a group of U.S. and Chilean investors formed Andina, which became The Coca-Cola Company’s sole licensee in Chile. Between 1946 and the early 1980s, Andina developed the Chilean market for Coca-Cola soft drinks with a system of production and distribution facilities covering the central and southern regions of Chile. In the early 1980s, Andina sold its Coca-Cola licenses for most areas outside the Santiago metropolitan region and concentrated on the development of its soft drink business in the Santiago area. Although no longer the sole Coca-Cola bottler in Chile, Andina has been the principal manufacturer of Coca-Cola products in Chile for an uninterrupted period of 6566 years.
In 1985, a majority of Andina’s shares was acquired by four Chilean families who compromise Inversiones Freire Ltda. (“Freire” or “the Controlling Shareholders”). On December 31, 2011,2012, the Controlling Shareholders owned 55.0%55.3% of our outstanding Series A shares, which have preferred voting rights and thereby control the Company; and 42.4%45.3% of our outstanding Series B shares, consequently the Controlling Shareholders of Andina hold a 48.7%50.3% ownership interest in the Company. Further information regarding our Controlling Shareholders can be found on page 73114 of our 20112012 Annual Report which is available at our website: www.embotelladoraandina.com.www.koandina.com.
Andina Brazil, our Brazilian subsidiary, began production and distribution of Coca-Cola soft drinks in Rio de Janeiro in 1942. In June 1994, we acquired 100% of the capital stock of Andina Brazil for approximately US$120 million and
contributed an additional US$31 million to Andina Brazil’s capital immediately after the acquisition to repay certain indebtedness of Andina Brazil. In 2000, we purchased through Andina Brazil, from the Coffin Group, a Coca-Cola franchise license for a territory in Brazil comprising the State of Espírito Santo and part of the States of Rio de Janeiro and Minas Gerais (NVG), for US$74.5 million. NVG was merged into Andina Brazil in 2000, and its operations were integrated with Andina Brazil in 2001. In 2004, Andina Brazil entered into a franchise swap agreement with the Brazilian subsidiary of The Coca-Cola Company, Recofarma Indústria do Amazonas Ltda., for (1) an exchange of franchising rights, goods and other assets of Andina Brazil in the territory of Governador Valadares in the State of Minas Gerais, and (2) other franchise rights of The Coca-Cola Company in the territories of Nova Iguaçu in the state of Rio de Janeiro, which was previously owned by Companhia Mineira de Refrescos S.A. In 2007 TCCC along with the Coca-Cola bottlers in Brazil create a Joint Venture, Mais Indústria de Alimentos, in order to enhance the non-carbonated business for the entire System in that country, and in 2008 The Coca-Cola System acquires a second company that produces non carbonated beverages called Sucos del Valle do Brasil Ltda These two companies merged in 2011 and SABB (Sistema de Alimentos y Bebidas do Brasil) was created in which Andina Brazil holds a 5.74% ownership interest. In 2010 TCCC along with the Coca-Cola bottlers in Brazil acquired Leão Junior S.A. through a Joint Venture. Leão Junior S.A. among others, commercializes Matte Leão. This company has a consolidated presence and market share within the ready-to-drink teas category in Andina Brazil’s territory. Andina Brazil has an 18.20% ownership interest in Leão Junior S.A. Andina Brazil holds an average ownership interest of 10.74% in Leão Junior and SABB. In November, 2012 Andina Brazil materialized the acquisition of a 40% stake in Sorocaba Refrescos S.A., a Coca-Cola bottler located in the state of Sao Paulo, for $R146,946,004.
Production of Coca-Cola soft drinks in the Argentine territory began in 1943 with the start-up of operations in the province of Córdoba, Argentina, through Inti S.A.I.C., which we refer to as “INTI”. In July 1995, we (through Inversiones del Atlántico S.A., an investment company incorporated in Argentina), which we refer to as “IASA”, acquired a 59% interest in Edasa, the parent company of Rosario Refrescos S.A. and Mendoza Refrescos S.A. These entities were subsequently merged to create Rosario Mendoza Refrescos S.A., which we refer to as “Romesa”. In 1996 we acquired an additional 35.9% interest in Edasa, an additional 78.7% interest in Inti, a 100% interest in Cipet located in Buenos Aires (a PET plastic bottle and packaging business) and a 15.2% interest in Cican S.A. During 1997, the operations of Romesa were merged with INTI. In 1999, Edasa was merged into IASA. In 2000, IASA was merged into Inti, which in turn changed its
corporate name to Embotelladora del Atlántico S.A. (EDASA). In 2002 Cipet merged into Edasa. During 2007 EDASA’s ownership interest in Cican S.A. was sold to Femsa. Currently, Edasa is the Coca-Cola bottler in the provinces of Entre Rios, San Luis, San Juan, Mendoza, part of Santa Fe and part of Buenos Aires (San Nicolás y Ramallo.)
In 1998, Andina repurchased from The Coca-Cola Company its 49% stake in Vital. Concurrently with that transaction, The Coca-Cola Company purchased Vital’s mineral water springs located at Chanqueahue, 80 miles south of Santiago. As part of the transaction, the Vital bottler agreement was replaced with a juice bottler agreement with Minute Maid International Inc., as well as a new mineral water bottling agreement with The Coca-Cola Company. In addition, the 1995 shareholders’ agreement between us and The Coca-Cola Company regarding ownership of Vital was terminated. The restructuring of the water and juice business in Chile enhanced our focus on the production of soft drinks, water and juice. During 2005, the production and packaging business of water, juice and non-carbonated beverages licensed by TCCC in Chile was restructured. Vital Aguas S.A., which we refer to as VASA, was created to develop the production and packaging businesses of Vital de Chanqueahue, mineral water and other water products. VASA is focused on developing juice and non-carbonated beverages. Andina, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. own 56.5%, 26.4% and 17.1%, respectively, of the outstanding capital of VASA. During January of 2011, the juice business was restructured, allowing the incorporation of the other Coca-Cola bottlers in Chile to the property of Vital S.A. which changed its name to Vital Jugos S.A. Andina, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. own 57%, 28% and 15%, respectively, of the outstanding capital of Vital Jugos S.A.
In Chile we participate in the business of producing PET bottles through a 50/50 joint venture we entered into with Cristalerías de Chile in the year 2001. On January 27, 2012, Coca-Cola Embonor through its subsidiary, Embonor EmpauqesEmpaques S.A. acquired Cristalerías de Chile’s stake equivalente to a 50% ownership interest in Envases CMF.
On March 30, 2012, after completion of due-diligence procedures, the Company signed a Promissory Merger Agreement with Embotelladoras Coca-Cola Polar S.A. (“Polar”). Polar is also a Coca-Cola bottler with its operations in: Chile, servicing territories in Chilethe II, III, IV, XI and Paraguay.XII regions; Argentina, servicing territories in Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro La Pampa and the western zone of the province of Buenos Aires; and Paraguay, servicing the whole country. The merger was made in order to reinforce the Company’s leadership position among Coca-Cola bottlers in South America.
Prior to closing, the merger was approved by the shareholders of both of the companies, as well as the Chilean Superintendence of Securities and Insurance, and the Coca-Cola Company. The terms of the merger prescribeprescribed the exchange of newly issued Company shares at a rate of 0.33269 Series A shares and 0.33269 Series B shares, for each outstanding share of Polar. ThisPrior to the materialization of the merger and the approval of the Shareholder Meetings of the Company and Polar, dividends were distributed among their respective shareholders, in addition to those already declared and distributed with charge to 2011 income. The dividends distributed by the Company and Polar amounted to Ch$28,155,862,307 and Ch$29,565,609,857 respectively, that represented Ch$35.27 per each share of the Series A and Ch$38.80 per each share of the Series B.
The physical exchange rate implies that the currentof shares took place on October 16, 2012, with which former shareholders of Polar will acquirethen had a 19.68% ownership interest in the merged Company. Based upon the terms of the executed agreements, the actual control over day-to-day operations of Polar transferred to the Company as of October 1, 2012, and the Company began consolidating Polar’s operations from that date forward. Additionally and as a result of Embotelladora Andina becoming the legal successor of Polar’s rights and obligations, the Company indirectly acquired additional ownership interest in Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. that added to its previous ownership interest in those entities. The Company’s current ownership enables it to exercise control over these entities, and thus incorporate them into the consolidation of the financial statements beginning October 1, 2012.
PriorPARESA is the first authorized Coca-Cola Bottler Company in Paraguay, which started its operations in May 13, 1965. In 1967, Plant 1 was inaugurated with a capacity of 400,000 annual unit cases. In 1980, the Barcequillo Plant - located on Km 3.5 Barcequillo of the Ñemby route, in the City of San Lorenzo- was inaugurated, reaffirming and applying the concept of the highest end technology of bottling. Beginning in 2004, Paresa became property of the Grupo Polar from Chile, continuing its operations in the Paraguayan market. On October 1, 2012, Paresa became part of Grupo Coca-Cola Andina due to closing the merger and subject to the approval by of each of the respective shareholders’ meetings,Embotelladoras Coca-Cola Polar S.A. into Embotelladora Andina and Polar will each distribute dividends to their shareholders, in addition to those already declared and distributed to date. Company dividends will amount to Ch$28,155,862,307 and Ch$29,565,609,857, respectively, which represents Ch$35.27 per Series A share and Ch$38.80 per Series B share.
Closing of the merger first requires the approval of the Chilean Superintendence of Securities and Insurance, the Boards of Directors and shareholders of both companies, and the Coca-Cola Company. It also requires registration of new shares to be issued in the exchange. The merger is scheduled to close before August 31, 2012.
Based on the historical results for the year ended December 31, 2011, the merged entity would have a pro-forma net revenues of approximately US$2.643 million, becoming one of the largest Coca-Cola bottlers in Latin America with operations in Argentina, Brazil, Chile and Paraguay.S.A.
In 1996, our shareholders approved the Reclassification of Capital Stock, which we refer to as the “Reclassification”, of Andina’s common stock into two new series of shares. Pursuant to the Reclassification, each outstanding share of Andina’s common stock was replaced by one newly issued Series A share and one newly issued Series B share. The Series A and Series B shares are principally differentiated by their voting and economic rights:rights. Therefore, and after the modification of our bylaws as of June 25, 2012, that increased the number of directors from 7 to 14 — and thus, eliminating the alternate directors- the holders of the Series A shares have full voting power and are entitled to elect six12 of seven regular and alternate14 members of the board of directors, and the holders of the Series B shares have no voting rights but for the right to elect one regular and one alternate member2 members of the board of directors. In addition, holders of Series B shares are entitled to a dividend 10% greater than any dividend on Series A shares.
After the Reclassificaction, the Superintendence of Pension Fund Managers (Superintendencia de Administradores de Fondos de Pensiones) decreed that Chilean pension funds would not be permitted to acquire Series B Shares due to their limited voting rights. Later, during 2004, the Superintendence approved Series B shares as investment instruments for Chilean Pension funds. Series A shares have always been eligible as investment instruments.
Capital Expenditures
During 20112012 the Company financed its permanent investments exclusively from internal resources.
The following table sets forth our capital expenditures by territory and line of business for the periods indicated:
|
| Year ended December 31, |
|
| Year ended December 31, |
| ||||||||
|
| 2011 |
| 2010 |
| 2009 |
|
| 2012 |
| 2011 |
| 2010 |
|
|
| MCh$ |
| MCh$ |
| MCh$ |
|
| MCh$ |
| MCh$ |
| MCh$ |
|
Soft Drinks: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chilean territory |
| 72,669 |
| 46,673 |
| 21,369 |
|
| 53,249 |
| 72,669 |
| 46,673 |
|
Brazilian territory |
| 28,951 |
| 35,607 |
| 18,892 |
|
| 36,109 |
| 28,951 |
| 35,607 |
|
Argentine territory |
| 18,801 |
| 8,961 |
| 7,362 |
|
| 44,682 |
| 18,801 |
| 8,961 |
|
Paraguayan territory |
| 6,085 |
|
|
|
|
| |||||||
|
|
|
|
|
|
|
| |||||||
Other Beverages: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vital Jugos S.A. |
| — |
| 3,315 |
| 1,566 |
| |||||||
|
|
|
|
|
|
|
| |||||||
Vital Jugos S.A. and VASA |
| 1,487 |
| — |
| 3,315 |
| |||||||
Argentine territory |
| 3,780 |
| — |
| — |
|
| — |
| 3,780 |
| — |
|
PET Packaging: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Argentine territory |
| 2,730 |
| 906 |
| 294 |
|
| 2,152 |
| 2,730 |
| 906 |
|
Total |
| 126,931 |
| 95,462 |
| 49,483 |
|
| 143,764 |
| 126,931 |
| 95,462 |
|
During 2011,2012, the Company has made disbursements totaling Ch$3,1983,333 million (unaudited figures) for improvements in industrial processes, equipment to measure industrial waste flows, laboratory analyses, consulting on environmental impacts and other studies. For further details please refer to Note 27 of our Consolidated Financial Statements filed herewith.
Our total capital expenditures were Ch$126,931million in 2011, Ch$95,462143,764 million in 2010.2012 and Ch$126,931 million in 2011. In 2011,2012, capital expenditures were principally related to the following:
Soft drinks:
Chile
·�� Returnable bottles (glass and PET bottles) and bottle cases;
· Cooling equipment, post mix and other point of sale equipment;
· New equipment to increase efficiency and production capacity;
· Implementation of the new Renca bottling facility.
Brazil
· Returnable Ref Pet and glass bottles and bottle cases;
· Coolers, post-mix and other point-of-sale equipment;
· Equipment to increase efficiency and production capacity; and
· RemodelingPurchase of distribution trucks and automobiles for the Nova Iguacú distribution centersales force.
· Industrial projects at Jacarepaguá: cooling, syrup, tanksPet Ref Line, 2 volumetric fillers and “short finish”one blower.
Argentina
· Bottles (glass and PET bottles) and bottle cases;
· Coolers and pos tmixpost mix equipment;
· ReturnableOW PET production line;line and the adaptation of another existing OW line to improve productivity;
· Nueva Línea de Embotellado para productos de llenado en caliente “Hot Fill” Line for waters and sensitive productsproducts; (investment began in 2011) and a New Line of Tetra Pack Juice packaging;
· Semi-automatic sortingExpansion of the Finished product deposit and of the patio in the Floor of the Córdoba Plant (13,600 m2) and in the Bahia Blanca plant (2,800 m2);
· Injectors (2), one to increase operating capacityPurchase and the other onemodifying Moulds for the waters project.Short Finish.
Paraguay (only considers the investments materialized in 4Q12)
·New Line for waters and sensitive products.
·Equipment to increase efficiency and production capacity.
·Miebach Project — Warehouses, deposits and roof in the truck cargo loading area.
·Bottles (glass and PET bottles).
·Coolers and post mix equipment.
Juices and Waters
Juices
· New SACMI fillingIncorporation of a new Tetra Gemina line for Pet/glass OW Hot Fill bottles (Line N ° 3);and a new pasteurizer with a production capacity of 500cc, 750cc, 1000cc and 1.500cc. formats;
· Dase Seal labelor acquisitionWater Treatment System (Reverse Osmosis), for Line N°3 Pet/glass OW;production with controlled water demineralization formulated products;
· Automatic mixed system for beverages without pulp;
·Remodelling of quality control laboratory;Investment in a new PET Aseptic line (STORK);
· Adaptation of OW Pet Line N°2 Pet OWNo. 3 for the manufacture of new Powerade one liter format;Andina Sabores Caseros and Glaceau Vitamin Water products;
· AcquisitionPurchase and installation of automatic mixing systempasteurizer for beverages without pulp;line 3;
· Upgrade of the central controllingcontrol system in of the design//formulation room;
· RelocationAcquisition and enlargement of the general warehouseinstallation boiler for raw materials; andsteam generation;
· Expansion of the finished product warehouse.
Waters
·New network of for sanitary air;
·Gas boiler
·Electric generator bottling plant;
·Electric generator fire network;
·Electric generator neumatic transport Blowing Plant;
·Depalletizorproducts warehouse (system drive in) and transportation of line N°1 for the new 330 cc product
·Adpatation of Line N°2 for the new 6 lt formatfreight yard//patio.
·Increase of capacity and change of technology in the Industrial Water pumping systems (60 to 150 m3 hr).
Waters
·Construction of a new casino;
·Expansion of the finished product warehouse (system drive in);
·Monitoring system and ozonisation record;
·Conversion of cappings into Short Finish tops in Line 3 and 4;
·Installation of automatic volume controller for CO2;
·Riles containment pool.
Divestitures
In May 2011, EDASA sold the property where the bottling facility was originally located in the Castro Barros area in Córdoba for an amount of US$3.5 million.Not Applicable
B. Business Overview
Andina is among the tenseventh largest Coca-Cola bottlers in the world, servicing franchised territories with 3650 million people, delivering over 7.83,300 million liters of soft drinks, juices, and bottled waters on a daily basis.2012. We are nationwide producers of soft drinks in Paraguay, the largest producer of soft drinks in Chile and the second largest soft drink producer in Brazil and in Argentina. Our principal business is the production and distribution of Coca-Cola soft drinks, which accounted for 84.4%82% of our consolidated net sales in 2011.2012. On 2011,2012, we recorded consolidated net sales of Ch$829,888967,370 million and total sales volume of 447.9517.6 million unit cases of Coca-Cola soft drinks.
In addition to the Coca-Cola soft drinks business, through Vital Jugos S.A., we produce and distribute fruit juices and other fruit-flavored beverages in Chile under trademarks owned by TCCC. Through Vital Aguas S.A., we produce and sell mineral water and purified water in Chile under trademarks owned by TCCC. Through Envases Central S.A. we produce flavored waters and certain formats for soft drinks under trademarks owned by TCCC. We also manufacture PET bottles primarily for our own use in the packaging of Coca-Cola soft drinks in Chile and Argentina. In Brazil, we also distribute the beer brands Amstel, Bavaria, Birra Moretti, Dos Equis (XX), Edelweiss, Heineken, Kaiser, Murphy´s, Sol and Xingú. Also we distribute beer in the south of Argentina and spirits in the south of Chile.
Our Products
We produce, market and distribute the following Coca-Cola trademark beverages and brands licensed from third parties throughout our franchise territories:
Chile: Andina, Andina Light, Aquarius, Benedictino, Burn, Coca-Cola, Coca-Cola Light, Coca-Cola Zero, Dasani Citrus Antiox, Dasani Durazno, Dasani Manzana, Dasani Tangerine, Dasani Manzana Antiox, Fanta Frutilla, Fanta Limón, Fanta Naranja, Fanta Naranja Zero, Fanta Uva, Fanta Roja, Hugo, Kapo, Minute Maid 100%, Sabores Caseros, Fuze Tea, Fuze Tea Light, Nestea, Nestea Light, Nordic Mist Ginger Ale, Nordic Mist Tónica, Powerade, Glaceau, Powerade Light, Quatro Guarana, Quatro Light, Sprite, Sprite Zero, andVitalInca Kola, Inca Kola Zero, Tai, Cantarina, Vital and some spirits in Punta Arenas.
Brazil: Amstel, Aquarius Fresh, Bavaria, Birra Moretti, Burn, Chá Leão, Coca-Cola, Coca-Cola Light, Coca-Cola Light Plus, Coca-Cola Zero, Crystal, Del Valle, Del Valle Frut, Del Valle Limao & Nada, Del Valle Fruta & Nada, Del Valle Mais, Del Valle Mais Soja, Dos Equis, Edelweiss, Fanta, Fanta Diet, Fanta Zero, Gladiator, Guaraná Leão, Heineken, I9, Kaiser, Kapo, Kapo Chocolate, Kuat, Kuat Eko, Kuat Zero,
Leão Ice Tea, Matte Leão, Matte+Guaraná Leão, Murphy’s, Powerade, Schweppes, Schweppes Light, Sol, Sprite, Sprite Diet, Sprite Zero, Xingú.
Argentina: Aquarius Cepita (8 flavors)(Manzana, Naranja, Pera, Pomelo, Pomelo Rosado and Uva), Bonaqua (with and without gas), Cepita (Banana, Durazno, Naranja and Uva), Nutri Defense, CepitaDefensas; Manzana and Naranja 100%, Cepita; Multifruta; Naranja Light and Pomelo Rosado), Coca-Cola Coca-Cola(Regular, Light Coca-Colaand Zero), Crush (Lima-Limón and Naranja), Dasani (with and without gas), Epika, Fanta (Limón, Naranja, Naranja Zero and Pomelo), Kin (with and without gas), Powerade (Citrus, Frutas Tropicales, Mandarina, Manzana, Mountain Blast, Naranja and Naranja Light), Quatro Liviana (Pomelo, Limonada and Naranja Durazno), Schweppes (Citrus, Citrus Light, Plus,Lima limón, Pomelo and Tónica), Sprite (Regular and Zero) and Tai. Beers (Austral, Bieckert, Birra Moretti, Budweiser, Corona, Guiness, Heineken, Imperial, Kunstmann, Modelo, Otro mundo, Palermo, Paulaner, Salta and Schneider), Energy drinks Black Fire and Infusions (yerba La Vuelta).
Paraguay: Aquarius Manzana, Aquarius Naranja, Aquarius Pera, Burn Energy, Coca-Cola, Coca-Cola Zero, Crush Lima-Limón,Naranja, Crush Naranja,Piña, Crush Pomelo, Dasani Soda Kin,without Gas, Dasani with Gas, Fanta Limón, Fanta Pomelo,Guaraná, Fanta Naranja, Fanta Naranja Zero, PoweradeFanta Naranja Mandarina, Fanta Piña, Frugos Durazno, Frugos Manzana, Frugos Naranja, Frugos Pera, Powerade Manzana, Powerade Mountain Blast,blast, Powerade Frutas Tropicales (tropical fruits),Multifruta, Powerade Naranja, Light, Powerade Citrus, Quatro Liviana Schweppes Citrus, Schweppes Citrus LightSprite, Sprite Zero, Schweppes Tónica Sprite and Sprite Zero.Schweppes Citrus.
We produce, market and distribute Coca-Cola soft drinks in our franchise territories through standard bottler agreements between our bottler subsidiaries and the local subsidiary in each jurisdiction of TCCC (collectively, the “Bottler Agreements”). We consider the enhancement of our relationship with TCCC an integral part of our business strategy.
We seek to enhance our business throughout the franchise territories by developing existing markets, penetrating other soft drink, waters and juices markets, forming strategic alliances with retailers to increase consumer demand for our products, increasing productivity, and by further internationalizing our operations.
1. Soft Drink Business
Sales Overview
We measure sales volume in terms of unit cases, which we refer to as UCs. Unit cases contain 192 ounces of finished beverage product (24 eight-ounce servings) or 5.69 liters. The following table illustrates our historical sales volumes for each of our territories:
|
| Soft Drink Sales Volumes |
|
| Soft Drink Sales Volumes |
| ||||||||
|
| Year ended December 31, |
|
| Year ended December 31, |
| ||||||||
|
| 2011 |
| 2010 |
| 2009 |
|
| 2012 |
| 2011 |
| 2010 |
|
|
| (millions of UCs) |
|
| (millions of UCs) |
| ||||||||
Chile |
| 134.8 |
| 132.6 |
| 128.0 |
|
| 149.9 |
| 135.1 |
| 132.6 |
|
Brazil |
| 183.5 |
| 187.0 |
| 173.7 |
|
| 197.8 |
| 183.5 |
| 187.0 |
|
Argentina |
| 129.6 |
| 118.4 |
| 117.9 |
|
| 153.4 |
| 129.6 |
| 118.4 |
|
Paraguay |
| 16.5 |
|
|
|
|
|
In 2011,2012, our Coca-Cola soft drinks business accounted for net sales of Ch$829,888967,370 million and operating income of Ch$128,783147,381 million representing 84.4%82% and 90.4%96% of our consolidated net sales and operating income, respectively.
Our Chilean soft drink operations accounted for net sales in 20112012 of Ch$255,436299,673 million; the Brazilian soft drink operations for net sales of Ch$365,604 million; and359,116 million, the Argentine soft drink operations for net sales of Ch$208,848281,696 million, and the Paraguayan soft drinks operations for net sales of Ch$26,885 million.
The following tables set forth, for the periods indicated, our net sales and volume of Coca-Cola soft drinks sold in our franchise territories for the periods indicated.
|
| Year ended December 31, 2011 |
|
| Year ended December 31, 2012 |
| ||||||||||||||||||||||||
|
| Chile |
| Brazil |
| Argentina |
|
| Chile |
| Brazil |
| Argentina |
| Paraguay* |
| ||||||||||||||
|
| MCh$ |
| MUCs |
| MCh$ |
| MUCs |
| MCh$ |
| MUCs |
|
| MM$ |
| MMCUs |
| MM$ |
| MMCUs |
| MM$ |
| MMCUs |
| MM$ |
| MMCUs |
|
Colas |
| 197,610 |
| 104.3 |
| 302,278 |
| 148.5 |
| 162,180 |
| 101.7 |
|
| 228,651 |
| 114.4 |
| 280,829 |
| 154.7 |
| 218,878 |
| 119.2 |
| 16,373 |
| 10.1 |
|
Flavored soft drinks |
| 57,826 |
| 30.5 |
| 63,326 |
| 35.0 |
| 46,668 |
| 27.9 |
|
| 71,023 |
| 35.5 |
| 78,287 |
| 43.1 |
| 62,818 |
| 34.2 |
| 10,512 |
| 6.4 |
|
Total |
| 255,436 |
| 134.8 |
| 365,604 |
| 183.5 |
| 208,848 |
| 129.6 |
|
| 299,673 |
| 149.9 |
| 359,116 |
| 197.8 |
| 281,696 |
| 153.4 |
| 26,885 |
| 16.5 |
|
|
| Year ended December 31, 2010 |
| ||||||||||
|
| Chile |
| Brazil |
| Argentina |
| ||||||
|
| MCh$ |
| MUCs |
| MCh$ |
| MUCs |
| MCh$ |
| MUCs |
|
Colas |
| 189,941 |
| 104.4 |
| 297,644 |
| 155.6 |
| 127,808 |
| 91.5 |
|
Flavored soft drinks |
| 51,231 |
| 28.2 |
| 53,180 |
| 31.4 |
| 39,139 |
| 26.9 |
|
Total |
| 241,172 |
| 132.6 |
| 350,824 |
| 187.0 |
| 166,947 |
| 118.4 |
|
|
| Year ended December 31, 2009 |
|
| Year ended December 31, 2011 |
| ||||||||||||||||||||
|
| Chile |
| Brazil |
| Argentina |
|
| Chile |
| Brazil |
| Argentina |
| ||||||||||||
|
| MCh$ |
| MUCs |
| MCh$ |
| MUCs |
| MCh$ |
| MUCs |
|
| MM$ |
| MMCUs |
| MM$ |
| MMCUs |
| MM$ |
| MMCUs |
|
Colas |
| 179,470 |
| 102.5 |
| 253,514 |
| 144.3 |
| 120,982 |
| 90.8 |
|
| 197,610 |
| 104.6 |
| 302,278 |
| 148.5 |
| 162,180 |
| 101.7 |
|
Flavored soft drinks |
| 45,843 |
| 25.5 |
| 44,812 |
| 29.4 |
| 39,115 |
| 27.1 |
|
| 57,826 |
| 30.5 |
| 63,326 |
| 35.0 |
| 46,668 |
| 27.9 |
|
Total |
| 225,313 |
| 128.0 |
| 298,326 |
| 173.7 |
| 160,097 |
| 117.9 |
|
| 255,436 |
| 135.1 |
| 365,604 |
| 183.5 |
| 208,848 |
| 129.6 |
|
|
| Year ended December 31, 2010 |
| ||||||||||
|
| Chile |
| Brazil |
| Argentina |
| ||||||
|
| MM$ |
| MMCUs |
| MM$ |
| MMCUs |
| MM$ |
| MMCUs |
|
Colas |
| 189,941 |
| 104.4 |
| 297,644 |
| 155.6 |
| 127,808 |
| 91.5 |
|
Flavored soft drinks |
| 51,231 |
| 28.2 |
| 53,180 |
| 31.4 |
| 39,139 |
| 26.9 |
|
Total |
| 241,172 |
| 132.6 |
| 350,824 |
| 187.0 |
| 166,947 |
| 118.4 |
|
(*) Figures only reflect 4Q12 in Paraguay
In Chile, Coca-Cola soft drinks are distributed in returnable and non-returnable glass and PET bottles and aluminum cans of various sizes. It is also distributed as Post-mix syrup, which is mixed with carbonated water in a dispenser at the point of sale, in stainless steel and bag-in-box containers. In Brazil, Coca-Cola soft drinks are distributed in returnable and non-returnable glass inand PET bottles of various sizes, in aluminum cans and also as post-mix syrup. In Argentina, Edasa produces and distributes Coca-Cola soft drinks in returnable and non-returnable glass and PET bottles of various sizes, in aluminum cans and as post-mix syrup. In Paraguay Coca-Cola soft drinks are distributed in returnable and non-returnable glass and PET bottles and aluminum cans. It is also distributed as Post-mix syrup, which is mixed with carbonated water in a dispenser at the point of sale, in stainless steel and bag-in-box containers. Regarding Juices, they are distributed in non-returnable glass and PET bottles, returnable glass bottles, in bi-laminated sachets, cardboard Tetra Pak containers and bag-in-box as concentrated juice that is mixed with water at the point of sale. Waters are distributed in returnable glass bottles and non-returnable PET bottles.
The following table sets forth, for the periods indicated, our sales of Coca-Cola soft drinks in Chile, Brazil, Argentina and Argentina,Paraguay by packaging type, measured as a percentage of total sales volume:
Soft Drink Sales by Packaging Type
|
| Year Ended December 31, |
| |||||||||||||||||||||||||
|
| 2011 |
| 2010 |
|
| Year Ended December 31, |
| ||||||||||||||||||||
|
| Chile |
| Brazil |
| Argentina |
| Chile |
| Brazil |
| Argentina |
|
| 2012 |
| 2011 |
| ||||||||||
|
| % Total |
| % Total |
| % Total |
| % Total |
| % Total |
| % Total |
|
| Chile |
| Brazil |
| Argentina |
| Paraguay |
| Chile |
| Brazil |
| Argentina |
|
|
| Mix |
| Mix |
| Mix |
| Mix |
| Mix |
| Mix |
|
| % Total |
| % Total |
| % Total |
| % Total |
| % Total |
| % Total |
| % Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mix |
| Mix |
| Mix |
| Mix |
| Mix |
| Mix |
| Mix |
|
Returnable |
| 61 |
| 11 |
| 51 |
| 61 |
| 12 |
| 49 |
|
| 59 |
| 9 |
| 50 |
| 49 |
| 61 |
| 11 |
| 51 |
|
Non-returnable |
| 35 |
| 86 |
| 48 |
| 36 |
| 85 |
| 50 |
|
| 37 |
| 88 |
| 49 |
| 50 |
| 35 |
| 86 |
| 48 |
|
Post Mix |
| 4 |
| 3 |
| 1 |
| 3 |
| 3 |
| 1 |
|
| 4 |
| 3 |
| 1 |
| 1 |
| 4 |
| 3 |
| 1 |
|
Total |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
|
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
|
Customers and Distribution
As of December 31, 2011,2012, we sold our products to approximately 47,74363,000 customers in Chile, 67,90068,500 customers in Brazil, and 44,38279,401 customers in Argentina.Argentina and 49,300 customers in Paraguay. Although the mix varies significantly among the franchise territories, our distribution network generally relies on a combination of Company-owned trucks and independent distributors in each territory.
The following table sets forth, for the periods indicated, our sales of Coca-Cola soft drinks in Chile, Brazil, Argentina and Argentina,Paraguay, by type of customer, measured as a percentage of total sales volume:
Soft Drink Sales by Type of Customer
|
| Year ended December 31, |
|
| Year ended December 31, |
| ||||||||||||||||||||||
|
| 2011 |
| 2010 |
|
| 2012 |
| 2011 |
| ||||||||||||||||||
|
| Chile |
| Brazil |
| Argentina |
| Chile |
| Brazil |
| Argentina |
|
| Chile |
| Brazil |
| Argentina |
| Paraguay |
| Chile |
| Brazil |
| Argentina |
|
|
| (%) |
|
| (%) |
| ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mom & Pops |
| 53 |
| 22 |
| 50 |
| 59 |
| 20 |
| 50 |
|
| 51 |
| 24 |
| 47 |
| 40 |
| 53 |
| 22 |
| 50 |
|
Supermarkets |
| 17 |
| 28 |
| 18 |
| 21 |
| 30 |
| 18 |
|
| 20 |
| 30 |
| 20 |
| 9 |
| 17 |
| 28 |
| 18 |
|
On Premise |
| 11 |
| 26 |
| 3 |
| 13 |
| 26 |
| 3 |
|
| 13 |
| 22 |
| 3 |
| 22 |
| 11 |
| 26 |
| 3 |
|
Wholesale distributors |
| 19 |
| 24 |
| 29 |
| 7 |
| 24 |
| 29 |
|
| 16 |
| 24 |
| 30 |
| 28 |
| 19 |
| 24 |
| 29 |
|
Total |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
|
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
|
Chile. As of December 31, 2011,2012, Andina’s sales force consisted of 199297 salespeople (158(262 workers hired indefinitely and 4135 hired on a fixed term basis) who call on most customers on average 1.61.8 times per week. For sales to major supermarkets, we employ 86 key account heads, 1420 field supervisors and 522534 third party promoters who are on-site supervisors who handle our products, monitor displays and track the pricing and marketing strategies of our competitors. Account executives are also assigned to major fast food outlets to work with the customer to develop sales on a consistent basis. Our distribution system for our soft drink products consisted of a group of 1667 exclusive distributors, which are independent businesses that collectively deploy approximately 380571 trucks (30 of which are company property), depending on seasonal demand. The 1867 distributors collectively service all of our Chilean customers. In most cases, the distributor collects payment from the customer in cash or check. Where applicable, the driver also either collects empty returnable glass or PET bottles of the same type and quantity as the bottles being delivered, or collects cash deposits for the net returnable bottles delivered. This task is particularly significant in the Chilean territory where returnable containers accounted for approximately 61%59% of total soft drinks volume in 2011.2012. Certain important customers (such as supermarkets), maintain accounts receivables with us, which are settled on average every 45 days after invoices are issued. On average, accounts receivable from all clients are liquidated on a 20-day term.
Brazil. As of December 31, 2011,2012, Andina Brazil’s sales force in Brazil consisted of an average of 6121,325 salespeople (402(475 commercial representatives and 209375 supermarket promoters)promoters, 29 unpackers y 77 field supervisors) divided into three major groups responsible for: (i) sales to key accounts and fast food chains (who purchase soft drinks in post-mix dispensers, in cans and bottles), (ii) sales to supermarkets (consisting of bottle and can sales) and (iii) all other traditional customers. Each of these three groups also manages sales of the other beverages (beer, water, juice, energy drinks and ready-to-drink tea) distributed by Andina Brazil. In Brazil, we generally distribute Coca-Cola soft drinks through a distribution system that includes: (i) trucks operated by independent distributors pursuant to exclusive distribution arrangements with us andus; (ii) trucks operated by independent transport companies on a non-exclusive basis.basis and (iii) own trucks. In 2011, 9.5% were2012, 10% was distributed by exclusive distributors, and 90.5%85.5% by independent transport companies.companies and (iii) 5% by our own trucks. Distribution of all of Andina Brazil’s beverages takes place from distribution centers and production facilities. In 2011,2012, approximately 19%18% of Andina Brazil’ soft drink sales were paid for in cash at the time of delivery, 19%9% were paid by check to be cashed between one and ten days after delivery and 62%73% were paid between 10 and 45 days after delivery by invoice.were paid with other bank securities with an average payment term of 13 days.
Argentina. As of December 31, 2011,2012, our sales force in Argentina consisted of 416642 employees, grouped in salespeople, merchandisers, and Contact Center personnel. In 2011, 71%2012, 70% of Edasa’s Coca-Cola soft drinks were distributed by direct distribution (trucking) and 29%30% by wholesale distribution. All of the direct distribution is done by a group of independent transport companies (each with three or more trucks). In 2011,2012, approximately 78%75% of Edasa’sEDASA’s soft drink sales were paid for in cash and 22%25% were credit sales.
Paraguay: As of December 31, 2012, the sales force consisted of 282 people, grouped into sellers and shelf stackers or replenishers. Paresa distributed 71% Coca-Cola soft drinks through direct distribution, and 29% through wholesalers distributors. The frequency of visit of the direct sale is 1.6 times a week. For sales to important supermarkets, there is one key account manager, 5 sales people and 99 on-site outsourced sales promoters who handle our products, monitor exhibitions and follow up on our pricing strategies, exhibitions and the marketing of our competitors. There are also account executives appointed to major “fast food” chains that work with the client to develop sales in a consistent way. All direct distribution is done by a group of small truck businessmen. In 2012 approximately 64% of sales of Paresa soft drinks were paid in cash and 36% were credit sales.
Competition
We face intense competition throughout the franchise territories principally from bottlers of competing soft drink brands. See “Item 3. Key Information — Risk Factors — Risks Related to our Company — Our business is highly competitive and subject to price competition which may adversely affect our net profits and margins.”
Chile. The soft drink segment of the Chilean beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to deliver product in popular bottle sizes, distribution capacity, and the amount of returnable bottles held by retailers or by consumers. Returnable bottles can be exchanged at the time of new purchases in lieu of paying a bottle deposit, thereby decreasing the purchase price. Our main competitor in the Chilean franchise territory is Embotelladora Chilenas Unidas or ECUSA, a subsidiary of Compañía Cervecerías Unidas S.A. or CCU, the major brewer in Chile. ECUSA produces and distributes Pepsi-Cola products and its own brands (soft drinks and bottled water).
Brazil. The soft drink segment of the Brazilian beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising and distribution capacity (including the number and location of sales outlets). According to A.C. Nielsen, our main soft drink competitor in the Brazilian territory is American Beverage Company or Ambev, the largest beer producer and distributor in Brazil and also produces soft drinks, including Pepsi-Cola products.
Argentina. The soft drink segment of the Argentine beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to produce bottles in popular sizes and distribution capacity.
The greatest competitor is Ambev, the Latin American unit of the largest brewery group of the world (Inbev) that produces and commercializes Pepsi-Cola products. As far as B-brands, the most significant are: Talca, Pritty and NaranpolInterlagos representing over 78%60% of the volume for B-brands. Productora Alimentaria S.A. is dedicated to the production, commercialization, and distribution of juices, soft drinks, appetizers and mass consumption products; and among others it also commercializes, the Naranpol brand with a strong market presence in the coast of Argentina. Pritty S.A., a company established in the city of Córdoba, is dedicated to the production and sale of beverages without alcohol; it commercializes Pritty, Doble Cola, Saldán, Switty, Rafting, Hook and Magna. O.E.S.A., a preceding Pepsi bottler in the province of Mendoza, produces and commercializes soft drinks and soda water under the brand Talca. Embotelladora Comahue, located in Río Negro comercializes the brands Interlagos, Patagonia y Bardas Limay.
Paraguay: The soft drink segment of the Paraguayan beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to produce bottles in popular and the amount of returnable bottles held by retailers or by consumers.
The greatest competitor is the local brand “Niko/De La Costa” produced and bottled by Embotelladora Central S.A , which has a 20.7% market share. The segment of economic brands in Paraguay represents 29.6% of the soft drink industry. Pepsi which resumed its operations in Paraguay in November 2011, reached a market share of 10.2% in December 2012, and it is produced and marketed by Group Vierci, a local franchisee.
Based on reports by A.C. Nielsen, we estimate that in 2011,2012, our average soft drink market share within our franchise territories reached 69.3%69.5%, 57.4%59.1%, and 57.3%59.1% for Chile, Brazil, and Argentina, respectively. In the case of Paraguay, our average soft drink market share for October, November and December 2012 published by IPSOS reached 60,1%.
The following table presents the market share of our main competitors in Chile, Brazil and Argentina for the periods indicated:
Market Share
|
| Year ended December 31, |
|
| Year ended December 31, |
| ||||||||||||||||||||||
|
| 2011 |
| 2010 |
|
| 2012 |
| 2011 |
| ||||||||||||||||||
|
| Chile |
| Brazil |
| Argentina |
| Chile |
| Brazil |
| Argentina |
|
| Chile |
| Brazil |
| Argentina |
| Paraguay* |
| Chile |
| Brazil |
| Argentina |
|
|
| (%) |
|
| (%) |
| ||||||||||||||||||||||
Coca-Cola soft drinks |
| 69 |
| 57 |
| 57 |
| 69 |
| 57 |
| 55 |
|
| 69 | % | 59 | % | 59 | % | 60 | % | 69 |
| 57 |
| 57 |
|
ECUSA soft drinks |
| 20 |
|
|
|
|
| 20 |
| — |
| — |
|
| 21 |
| — |
| — |
| — |
| 20 |
| — |
| — |
|
Pepsi-Cola and 7 Up products |
| 4 |
| 4 |
| 21 |
| 3 |
| 5 |
| 21 |
|
| 4 |
| 5 |
| 20 |
| 9 |
| 4 |
| 4 |
| 21 |
|
Pritty products |
| — |
|
|
| 8 |
| — |
| — |
| 9 |
|
| — |
| — |
| 7 |
| — |
| — |
| — |
| 8 |
|
Antarctica products |
| — |
| 12 |
|
|
| — |
| 11 |
| — |
|
| — |
| 12 |
| — |
| — |
| — |
| 12 |
| — |
|
Brahma products |
| — |
| 2 |
|
|
| — |
| 2 |
| — |
|
| — |
| 1 |
| — |
| — |
| — |
| 2 |
| — |
|
Other |
| 7 |
| 25 |
| 14 |
| 8 |
| 25 |
| 15 |
|
| 6 |
| 23 |
| 14 |
| 31 |
| 7 |
| 25 |
| 14 |
|
Total |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
| 100 |
|
| 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
Source: A.C. Nielsen
(*)In the case of Paraguay, the average market share for October, November and December 2012 published by IPSOS
Seasonality
Each of our lines of business is seasonal. Most of our beverage products have their highest sales volumes during the South American summer (October through March), with the exception of nectar products, which have a slightly higher sales volume during the South American winter (April through September). Our Chilean and Argentine operations generally experience higher levels of seasonal price fluctuations than our Brazilian operations.
Raw Materials and Supplies(1)
The principal raw materials used in the production of Coca-Cola soft drinks are concentrate, sweetener, water and carbon dioxide gas. Production also requires glass and plastic bottles, bottle tops and labels. Water used in soft drink production is treated for impurities and adjusted for taste reasons. All raw materials, especially water, are subjected to continuous quality control.
Chile—Raw Materials. We purchase concentrate at prices established by TCCC. We mainly purchase sugar from Industria Azucarera Nacional S.A., IANSA the only producer of sugar inand to Sucden Chile S.A., although we may purchase sugar in the international market when prices are favorable, and have done so on occasion. Chilean sugar prices are subject to a price band established by the Chilean government on an annual basis. We obtain carbon dioxide gas from AGALinde Gas Chile S.A. and Praxair. Andina’s affiliate Envases CMF, produces returnable PET bottles and non-returnable PET pre-forms which are blown at our San JoaquínRenca plant. We purchase glass bottles principally from Cristalerías de Chile S.A. and Cristalerías Toro S.A.I.C. Bottle caps are purchased from Closure Systems International, Alucaps Mexicana S.A. de C.V., Inyecal S.A. and other suppliers.
(1) For detailed information please visit our website www.embotelladoraandina.com
During 2011, 77%2012, 80% of the variable cost of sales for softdrinks produced by Andina Chile coprrespondedcorresponded to main raw materials. The cost of each raw material within the total of main raw materials is the following: concentrate represents 59%63%; sugar and artificial sweeteners 28%24%; non-returnable bottles 8%; bottle caps 4% and carbon dioxide 1%. Water does not constitute an important cost as raw material. Additionally, the cost of finished products purchased from third parties (“ECSA”) is included within the cost of sales of soft drinks. These costs represent 21%17% of the total costs of sales of soft drinks and correspond to cans and some PET bottles.
Brazil - Raw Materials. Andina Brazil purchases concentrate in the city of Manaus at prices established by TCCC. Manaus has been designated as a duty-free development zone by the Brazilian government. Andina Brazil purchases sugar from Brazilian suppliers, in particular from Copersucar Ltda. It purchases carbon dioxide gas mainly from Companhia White Martins Gases S.A.. PET pre-forms from Braspla Ltda., and Amcor Ltda. Glass bottles are purchased from Owens-Illinois ; Cans are purchased from Rexam and Latapack Ball; metal bottle caps from Aro S.A.; and Plastic bottle caps are purchased from Closure Systems International and Rexam. Andina Brazil purchases water from the municipality of Rio de Janeiro.
During 2011, 98.1%2012, 99,3% of the variable cost of sales for softdrinks produced by Andina Brazil coprrespondedcorresponded to main raw materials The cost of each raw material within the total of main raw materials is the following: concentrate (including juice used for some flavors) represents 31.1%34,0%; sugar and artificial sweeteners 22.8.%22.6%; non-returnable bottles 21.4%21.0%; cans 12.2%13.9%, bottle caps 3.3%3.2%, carbon dioxide 7.3%and others 4.6%. Additionally, the cost of soft drinks finished products purchased from third parties is included within the cost of sales of soft drinks. These costs represent 1.89%0.7% of the total costs of sales of soft drinks and correspond to some formats of cans, PET and non-returnable glass bottles.
Argentina - Raw Materials. Edasa purchases concentrate at prices established by The Coca-Cola Company. Edasa purchases sugar mainly from Ing. y Refinería San Martín de Tabacal S.A., Cía. Azucarera Concepción S.A., and Atanor S.C.A.; fructose from Productos de Maíz S.A. and Glucovil S.A., and carbon dioxide gas from Praxair S.A. and Air Liquide S.A. Edasa producesbuys non-returnable and returnable PET bottles through its own packaging division,to
(1) For detailed information please visit our website www.embotelladoraandina.com
AEASA and glass bottles from Cattorini Hermanos S.A. ,Cristaleríand Cristalerías de Chile S.A. and Cristalerías Toro de Chile,, the plastic caps from Alusud S.A. and Inyecal S.A.Cristal Pet., and metal caps from Metalgráfica Cearense S.A. and Aro S.A. in Brazil. Regarding water supply for the production of soft drink, Edasa owns water wells and pays a fee to the Dirección Provincial de Aguas Sanitarias. Edasa also buys stretch wrap from Manuli Packaging Argentina, Plastiandino S.A., Sanlufilm S.A., Atiles S.A., IPESA Ind. Plast. S.A. and Rio Chico S.A., and carton from Cartocor S.A. and Papeltécica S.A.
The cost of each raw material as a percentage of the total cost of raw materials is the following: concentrate 46%52%; sugar and artificial sweeteners 26%27%; non-returnable bottles 14%13%; bottle caps 3% and carbon dioxide 1%, and the. The remaining 2% correspondcorresponds to packaging. Water does not represent a significant cost as raw material. Additionally, the cost of finished products purchased from third parties is included within the cost of sales of soft drinks. These costs represent 2% of the total costs of sales of soft drinks and correspond to can formats, juices and some bottled water products.
Argentina PET Packaging - Raw Materials. The principal raw material required for production of PET bottles is PET resin,resin; during 20112012 this raw material was mainly from DAK Américas de Argentina S.A. and Cabelma S.A. Also, but in a lesser extent, they imported from Nan Ya Plastics Corp., Far Eastern New Century and DAK Americas EE.UU. In 2011, the Edasa Packaging Division’s2012, AEASA’s costs for PET resin accounted for 92%61% of the total variable cost of its sales of PET bottles and preforms.
Paraguay - Commodities: Paresa acquires concentrates at prices established by TCCC. Paresa acquires sugar from Azucarera Paraguaya S.A. carbon dioxide gas is obtained from provider Liquid Carbonic (Praxair). Non-returnable pre-forms are mainly supplied by local provider Inpet, from Cristalpet, and from the associate company Andina Empaques de Argentina; the pre-forms are blown in our plant located in San Lorenzo. Glass bottles are bought from Cattorini Hermanos S.A. and Vidriolux. RefPet bottles are purchased from Cristalpet and Andina Empaques de Argentina. Plastic caps are bought from Sinea, and metal caps from Aro S.A. de Brazil. Plastic wrappers are purchased from suppliers Manuli, IPESA, Petropack, Bolsiplast and Anchor Packaging.
The cost of each commodity within the total cost of raw materials is the following: the concentrate (including juice used for some flavors) represents 44%, sugar and artificial sweeteners 32%, pet supplies 15%, bottle caps 3%; carbon dioxide 1% and packing material 2%. Water is not a significant cost as a raw material. Additionally, the cost of finished products purchased from third parties is included in the cost of sales of soft drinks; these costs represent 1% of total cost of sales of soft drinks and consist of cans
Marketing
We and TCCC jointly promote and market Coca-Cola soft drinks in our franchise territories, in accordance with the terms of our respective Bottler Agreements. During 2011,2012, we paid approximately 50% of the advertising and promotional expenses incurred by TCCC in our franchise territories. Nearly all media advertising and promotional materials for Coca-Cola soft drinks are produced and distributed by TCCC . See “Item 4. Information on the Company —Bottler Agreements.”
Channel Marketing. In order to provide more dynamic and specialized marketing of our products, our strategy is to divide our market into distribution channels. Our principal channels are small retailers, “on-premise” consumption such as restaurants and bars, supermarkets and third party distributors. Presence in these channels entails a comprehensive and detailed analysis of the purchasing patterns and preferences of various groups of soft drink consumers in each type of location or distribution channel. In response to this analysis, we seek to tailor our product, price, packaging and distribution strategies to meet the particular needs of and exploit the potential of each channel.
We believe that the implementation of our channel marketing strategy also enables us to respond to competitive initiatives with channel-specific responses as opposed to market-wide responses. This focused response capability isolates the effects of competitive pressure in a specific channel, thereby avoiding costlier market-wide responses. Our channel marketing activities are facilitated by our management information systems. We have invested significantly in creating such systems, including providing hand-held computer
and data gathering equipment to support the gathering of product, consumer and delivery information required to implement our channel marketing strategies effectively for most of our sales routes in Chile, Brazil, Argentina and Argentina.Paraguay. We will continue investing to increase pre-sale coverage in our territories.
Our consolidated total advertising expenditures in 20112012 were Ch$31,89238,667 million.
Advertising
We advertise in all major communications media. We focus our advertising efforts on increasing brand recognition by consumers and improving our customer relations. National advertising campaigns are designed and proposed by TCCC ‘s local affiliates, with our input at the local or regional level.
2. Other Beverages
Chile. In addition to Coca-Cola soft drinks, through Vital Jugos S.A., we produce and sell juices, other fruit flavored beverages, ready-to-drink tea and sports drinks, and through Vital Aguas S.A. we produce and sell mineral water and purified water. Juices are produced and sold under the brands Andina Frut (fruit juices)del Valle (juices and fruit nectars), Andina Nectar (fruit nectars), Kapo (fantasy drink), Aquarius (flavored water) Nestea, Fuze Tea (ready-to-drink tea), Hugo (dairy productGlaceau Vitamin Water (food for athletes with fruit juice)added vitamins and minerals) and Powerade (isotonic).Waters are produced and sold under the brands Vital (mineral water) in the following versions: with gas, without gas and Soft Gas; Dasani (purified water) in the following versions: with gas, without gas, and flavored;soft gas; Benedictino (purified water) in the following versions: with gas and without gas.
Brazil. We distribute beer under the Amstel, Birra Moretti, Dos Equis (XX), Edelweiss, Heineken, Kaiser, Murphys, Sol, Xingu and Bavária labels. We also distribute water under the labels Crystal and Aquarius Fresh and sell and distribute ready-to-drink juices under the labels Del Valle Frut, Del Valle Mais, and Kapo; milk and cocoa-based beverages under the Kapo Chocolate brand, energy drinks under the brand names Burn and Gladiator, isotonics under i9 and Powerade brand names and Chá Leão, Leão Ice Tea, Matte Leão, and Guaraná Leão ready-to-drink teas.
Argentina. We produce and distribute ready-to-drink juices under the Cepita brand name. We also produce and sell water under the brands Dasani (purified water)Kin, Bonaqua (mineral water with and without gas), Aquarius and Quatro Liveana (flavored water)waters), as well as Powerade in the isotonic segment. With the incorporation of Coca Cola Polar Argentina S.A. we distribute energizers under the trademark Black Fire and beers (among which are: Palermo, Schneider, Heineken, and Budweiser).
Paraguay: We produce and distribute juices ready to be consumed under the trademark Frugos. We also manufacture and sell water under the trademarks Dasani (purified water), Aquarius (flavored water) and isotonic drinks like Powerade. We also manufacture and sell energy drinks in disposable glass bottles under the trademark Burn and we import and distribute Burn cans.
Waters and Juices in Chile
Sales. In 2011,2012, net sales of waters and juices in Chile represented 16.2%6.4% of our consolidated net sales. On a consolidated basis, sales of waters and juices in Chile were Ch$49,51274,812 million.
The following table sets forth for the periods indicated, Vital Jugos’Jugos’and Vital Aguas’ net sales and sales by volume of unit cases of waters and juices:
Waters and Juices Sales by Net Sales and Volume(1)
|
| Year-ended December 31, |
| ||||||
|
| 2011 |
| 2010 |
| ||||
|
| In million Ch$ and million UCs |
| ||||||
|
| Ch$ |
| UCs |
| Ch$ |
| UCs |
|
Andina Frut an Andina Néctar |
| 29,222 |
| 17 |
| 24,637 |
| 14.5 |
|
Kapo |
| 6,629 |
| 4.6 |
| 5,578 |
| 3.9 |
|
Powerade |
| 2,545 |
| 1.0 |
| 1,713 |
| 0.7 |
|
Nestea |
| 951 |
| 0.5 |
| 689 |
| 0.3 |
|
Fruitopia, Hugo and Aquarius |
| 388 |
| 0.2 |
| 432 |
| 0.2 |
|
Dasani (purified and flavored water) |
| 450 |
| 0.4 |
| 535 |
| 0.6 |
|
Benedictino (purified water) |
| 2,225 |
| 4.0 |
| 2,000 |
| 3.5 |
|
Vital (mineral water) |
| 9,342 |
| 14.0 |
| 8,150 |
| 13.3 |
|
Total(2) |
| 51,752 |
| 41.6 |
| 43,734 |
| 37.0 |
|
|
| Year-ended December 31, |
| ||||||
|
| 2012 |
| 2011 |
| ||||
|
| In million Ch$ and million UCs |
| ||||||
|
| Ch$ |
| UCs |
| Ch$ |
| UCs |
|
Andina Frut an Andina Néctar |
| 37,826 |
| 21.4 |
| 29,222 |
| 17 |
|
Kapo |
| 6,636 |
| 4.8 |
| 6,629 |
| 4.6 |
|
Powerade |
| 4,384 |
| 1.7 |
| 2,545 |
| 1.0 |
|
Fuze Tea |
| 988 |
| 0.5 |
| 951 |
| 0.5 |
|
Vitamin Water and Aquarius |
| 162 |
| 0.1 |
| 388 |
| 0.2 |
|
Dasani (purified and flavored water) |
| 0 |
| 0 |
| 450 |
| 0.4 |
|
Benedictino (purified water) |
| 723 |
| 1.1 |
| 2,225 |
| 4.0 |
|
Vital (mineral water) |
| 11,730 |
| 17.2 |
| 9,342 |
| 14.0 |
|
Total(2) |
| 62,449 |
| 46.8 |
| 51,752 |
| 41.6 |
|
(1)Reflects the sale of Vital Jugos and Vital Aguas to bottlers of The Coca-Cola Company.
(2)Includes sales to related companies which are eliminated upon consolidation.
Marketing. Marketing and promotional programs, including television, radio and print advertising, point-of-sale advertising, sales promotions and entertainment are developed by TCCC for all Vital Jugos’ and Vital Aguas’ products.
Customers and Distribution. Juices and waters throughout Chile are distributed by means of distribution agreements between TCCC and the Coca-Cola bottlers in Chile. In 2011,2012, Andina distributed approximately 52%70% of the products of Vital Jugos and Vital Aguas, , and the other two Coca-Cola bottlersbottler in Chile distributed an aggregate of 48%the remaining 30%. Each Coca-Cola bottler in Chile distributes the products of Vital Jugos and Vital Aguas in its respective franchise territory. Under Vital Jugos’ and Vital Aguas’ distribution agreements, each bottler has the exclusive right to distribute waters and juices in its territory.
Our management believes that our distribution arrangements for waters and juices provide an effective means of distributing those products throughout Chile using the extensive distribution system of the Coca-Cola bottlers. We have a good working relationship with the other Coca-Cola bottlersbottler that distribute waters and juices. If anythe other Coca-Cola bottler were to cease distribution, our management believes it could arrange alternative distribution arrangements, but the transition to the new arrangements could involve significant delays in distributing products and would involve additional costs and an initial reduction in sales.
Competition. Vital Aguas’ principal competitor regarding water is CCU with the Cachantún brand. Additionally there are low priced brands (B-brands) in the water segment in Chile. Vital Jugos S.A.’s principal competitors regarding juices are, Watt’s-CCU, Corpora Tres Montes and three of the leading dairy producers in Chile: Soprole S.A., Nestlé Chile S.A. and Loncoleche S.A., who is also a subsidiary of Watt’s S.A. During 2006, the largest Chilean brewery CCU acquires from Watts S.A. a 50% ownership interest of the juice brands in Chile, creating a joint venture for the management of this business area. The Chilean market for fruit-flavored beverages and waters also includes low-cost, lower-quality fruit juice concentrates and artificially flavored powdered beverage mixes. We do not consider these products to compete with our waters and juices business because we believe that these products are of lower quality and value.
Based on reports by A.C. Nielsen, we estimate that in 2011,2012, our market share within our Chilean franchise territories reached 35.9%36.7% for the juice segment and 339.5%41.7% for waters.
Raw material for Juices. The principal raw materials used by Vital Jugos S.A. in the production of juices and as a percentage of total raw material costs, are sweeteners 15.3%13.2%, fruit pulp and juices 12.3%13.5%, flavors, aromas and citric acid 17.3%17.8%, containers 24.6%25.5% and wrapping material 5.1%4.7%, all of which during 20112012 accounted for 80.7%81.1% of total costs for sales of juice, including packaging.
Raw materials for Waters: The principal raw materials used by Vital Aguas S.A. in the production of mineral water and purified unflavored and purified flavored water and as a percentage of total raw material costs are: Non-returnable PET packaging 42.1%42.7%, mineral water, flavor, aromas, sweeteners and citric acid 23.9%23.6%, packaging material 5.2%5.0%, caps 5.3%5.8% and carbonation 0.8%0.9%, all of which during 20112012 accounted for 81.9%81.1% of total costs for sales of water, including packaging.
Beer, Juices and Waters in Brazil
Sales. In 2011,2012, net sales of beer, juices, waters, tea based beverages, isotonics and energy drinks in Brazil were Ch$80,08992,480 million, representing 8.1%7.9% of our consolidated net sales.
Andina Brazil uses its distribution system to distribute beer in the Brazilian territory. Andina Brazil started distributing beer in the 1980s as a result of the acquisition of Kaiser by a consortium of Coca-Cola bottlers (including Andina Brazil) in Brazil. In March 2002, the Canadian brewing company Molson Inc. acquired Cervejarias Kaiser S.A. (“Kaiser”). In 2006, Femsa acquired from Molson the controlling ownership interest over Kaiser y later in 2010 Heineken acquired the controlling interest of Femsa’s beer operation. Andina Brazil buys beer from Heineken at a price determined by Heineken and sells it to its customers with a fixed margin. In the case of certain discount sales that have been approved by Heineken, Heineken shares between 50% and 100% of the cost of such discounts. In 2011,2012, Andina Brazil’s net sales of beer were Ch$17,91325,320 million, of which Bavaria brand beer accounted for 52.4%44.4%, Heineken for 23.0%33.2%, Kaiser for 17.2%18.4%, Sol for 6.0%2.9%, y Xingú for 1.1%0.6%, and all the other brands accounted for 0.3%0.5% of net sales.
Competition. In the beer sector, Andina Brazil’s main competitor is Ambev that during 201112012 had a very dominant position in the Brazilian market.
The Distribution Agreements. TCCC and the Brazilian Association of Coca-Cola Manufacturers entered into an agreement regarding the distribution through the Coca-Cola System of beer produced and imported by Heineken. The agreements were signed May 30, 2003, and are renewable for a period of 20 years.
Andina Brazil is not allowed to produce, bottle, sell or obtain any interest in any bottled or tap beer under any other label or in any bottle or packaging that could be confused with brand beers, except as may be mutually agreed in writing between Andina Brazil and Heineken.
Under the terms of the distribution agreement, Heineken undertakes all responsibility for planning and managing advertising, marketing and promotional activities related to beer. Andina Brazil, however, is free to undertake marketing or promotional activities with Heineken´s prior approval. The parties have agreed to assume joint responsibility for the costs of certain promotional activities (radio or television) and for certain outdoor events which take place in the Rio de Janeiro and Espirito Santo region. Andina Brazil has agreed to devote at least 2.6%2.3% of its sales net of taxes of Heineken products to such promotional activities or events.
Andina Brazil is prohibited from assigning, transferring, or otherwise encumbering the Heineken distribution agreement or any interest therein for the benefit of third parties without prior written consent from Heineken may terminate the distribution agreement immediately in the event that Andina Brazil (i) declares bankruptcy, is made a party to bankruptcy proceedings or is placed under judicial administration, (ii) is dissolved or liquidated or its assets are nationalized, expropriated, attached or intervened, (iii) undergoes a change of business or of control, (iv) ceases to be a franchisee of TCCC or (v) causes a material breach of the Heineken distribution agreement. In addition, Heineken may terminate the Heineken distribution agreement one year after delivery of notice that Andina Brazil is not complying with the terms thereof. Andina Brazil may terminate the Heineken distribution agreement in the event of a material breach thereof by Heineken.
3. PET Packaging
Overview and Background
We produce PET bottles in both returnable and non-returnable formats. As a returnable packaging material, PET has advantages compared to glass because it is lightweight, difficult to break, transparent and easily recyclable. On average, returnable PET bottles can be used up to 12 times. Non-returnable PET bottles also are produced in various sizes and are used by a variety of soft drink producers and, in Chile, by producers of edible oil products, wine and personal hygiene products.
In 2011, the Edasa Packaging Division2012, AEASA was one of the largest manufacturers of PET products in Argentina. In 2011,2012, Andina Brazil purchased its PET preforms mainly from Brasalpla and also from Amcor and Owens-Illinois.
Sales . In 2011, the Edasa Packaging Division2012, AEASA had net sales of Ch$23,98513.261 million with sales to Edasa Soft Drinks DivisionEDASA amounting to Ch$16,1305,522 million. The Edasa Packaging DivisionAEASA also sold PET bottles to third parties accounting for approximately Ch$7,8557,739 million.
Competition. We are suppliers of returnable and non-returnable PET bottles for Coca-Cola bottlers in Argentina and Chile. According to the pre-existing agreements between TCCC and the other Coca-Cola bottlers within South America, we must obtain the consent and assistance of TCCC to expand our sales of returnable PET bottles to said bottlers.
In Chile, we do not have any principal competitors in the non—non–returnable PET bottles market for oils, wines and personal hygiene. There are a few producers of non-returnable PET bottles in Chile who are significantly smaller than CMF. Plasco S.A., the second Chilean manufacturer of non-returnable PET bottles, does not compete with us because it is the exclusive supplier of PET bottles for ECUSA. (The Chilean Pepsi bottler).
In Argentina, we compete principally with Alpla S.A. and Amcor. The Edasa Packaging DivisionAEASA is the supplier of returnable PET bottles to all Coca-Cola bottlers in Argentina.
4.Patents and Licenses
The Company has entered into Bottler Agreements with TCCC by which it has the license to produce and distribute Coca-Cola brand products within its operating franchise territories in Chile, Brazil and Argentina. The Company’s operations are highly dependent on maintaining and renewing the Bottler Agreements which provide for the production and distribution of Coca-Cola brand products.
Bottler Agreements
The Bottler Agreements are international standard contracts TCCC enters into with bottlers outside the United States for the sale of concentrates and beverage basis for certain Coca-Cola soft drinks and non-soft drink beverages.
Bottler Agreements are renewable upon request by the bottler and at the sole discretion of TCCC. We cannot assure you that the Bottler Agreements will be renewed upon their expiration, and even if they are renewed.
The Bottler Agreements provide that we will purchase our entire requirement of concentrates and beverage basis for Coca-Cola soft drinks and other Coca-Cola beverages from The Coca-Cola Company and other authorized suppliers. Although under the Bottler Agreements TCCC, in its sole discretion, may set the price of concentrates and beverage basis, among other terms, we set the price of products sold to retailers at our discretion, subject only to certain price restraints.
We are the sole producer of Coca-Cola soft drinks and other Coca-Cola beverages in our franchise territories. Although this right is not exclusive, TCCC has never authorized any other entity to produce or distribute Coca-Cola soft drinks or other Coca-Cola beverages in such territories, although we cannot assure you that in the future it will not do so. In the case of post-mix soft drinks, the Bottler Agreements explicitly establish such non-exclusive rights.
The Bottler Agreements include an acknowledgment by us that TCCC is the sole owner of the trademarks that identify the Coca-Cola soft drinks and other Coca-Cola beverages and of any secret formula used in concentrates.
All distribution must be in authorized containers. TCCC has the right to approve, at its sole discretion, any and all kinds of packages and containers for beverages, including their size, shape and any of their attributes. TCCC has the authority at its sole discretion to redesign or discontinue any package of any of the
Coca-Cola products, subject to certain limitations, so long as Coca-Cola soft drinks and other Coca-Cola beverages are not all discontinued at the same time. We are prohibited from producing or handling any other beverage products, other than those of TCCC or other products or packages that would imitate, infringe or cause confusion with the products, trade dress, containers or trademarks of TCCC, or from acquiring or holding an interest in a party that engages in such activities. The Bottler Agreements also impose restrictions concerning the use of certain trademarks, authorized containers, packaging and labeling of TCCC and prohibit bottlers from distributing Coca-Cola soft drinks or other Coca-Cola beverages outside their designated territories.
The Bottler Agreements require us to maintain adequate production and distribution facilities; inventories of bottles, caps, boxes, cartons and other exterior packaging or materials; to undertake adequate quality control measures prescribed by TCCC; to develop, stimulate, and fully satisfy the demand for Coca-Cola soft drinks and other Coca-Cola beverages and to use all approved means, and spend such funds on advertising and other forms of marketing, as may be reasonably required to meet that objective; and to maintain such sound financial capacity as may be reasonably necessary to assure performance by us and our affiliates of our obligations to TCCC. All Bottler Agreements require us annually to submit our business plans for such franchise territories to TCCC, including without limitation, marketing, management and promotional and advertising plans for the following year.
TCCC has no obligation to contribute to our expenditures derived from advertising and marketing, but it may, at its discretion, contribute to such expenditures and undertake independent advertising and marketing activities, as well as cooperative advertising and sales promotion that would require our cooperation and support. In each of the franchise territories, TCCC has been contributing approximately 50% of advertising and marketing expenses, but no assurances can be given that equivalent contributions will be made in the future.
Each bottler is prohibited from, directly or indirectly, assigning, transferring or pledging its Bottler Agreement, or any interest therein, whether voluntarily, involuntarily or by operation of law, without the consent of TCCC, and each Bottler
Agreement is subject to termination by TCCC in the event of default by us. Moreover, the bottler may not undergo a material change of ownership or control without the consent of TCCC.
TCCC may terminate a Bottler Agreement immediately, by written notice to the bottler, in the event that, inter alia, (i) the bottler suspends payments to creditors, declares bankruptcy, is declared bankrupt, is expropriated or nationalized, is liquidated, dissolved, changes its legal structure, or pledges or mortgages its assets; (ii) the bottler does not comply with instructions and standards established by TCCC relating to the production of its authorized soft drink products; (iii) the bottler ceases to be controlled by its controlling shareholders; or (iv) the terms of the Bottler Agreement come to violate applicable law.
Either party to any Bottler Agreement may, with 60 days’ notice thereof to the other party, terminate the Bottler Agreement in the event of non-compliance by the other party with the terms thereof so long as the party in non-compliance has not remedied such non-compliance during this period. In addition, if a bottler does not wish to pay the required price for concentrate for any Coca-Cola products, it must notify TCCC within 30 days of receipt of The Coca-Cola Company’s new prices. In the case of any Coca-Cola soft drink or other Coca-Cola beverages other than Coca-Cola concentrate, the franchise regarding such product shall be deemed automatically canceled three months after TCCC’ s receipt of the bottler’s notice of refusal. In the case of Coca-Cola concentrate, the Bottler Agreements shall be deemed terminated three months after TCCC’s receipt of the bottler’s notice of refusal. TCCC may also terminate the Bottler Agreements if the bottler or any individual or legal entity that controls, owns a majority share in or directly or indirectly influences the management of the bottler, engages in the production of any non-Coca-Cola beverage, whether through direct ownership of such operations or through control or administration thereof, provided that, upon request, the bottler shall be given six months to remedy such situation.
Chile Bottler Agreements: (i) . The licenses for the Bottler Agreement entered into between Andinaterritories in Chile expire in 2013 and TCCC celebrated on January 1, 2008 for a 5-year term until December 31, 2012;2018; (ii) on December 22, 2005, Vital S.A. and The Coca-Cola Company entered into a Juice Bottler Agreement
by which The Coca-Cola Company authorized Vital S.A. to produce, prepare and bottle in packaging previously approved by TCCC the following brands: Andina Frut Andina Nectar, Kapo, Nestea, Fruitopia and Powerade. The Agreement will expire on December 31, 2015, and sets forth that Andina, and the other two Chilean Coca-Cola bottlers,bottler, Embonor, and Polar, have the right to purchase products from Vital S.A. as well as produce, package, and sell these products at their respective production facilities; (iii) on December 22, 2005, Vital Aguas S.A. and TCCC entered into a Water Manufacturing and Packaging Agreement for the preparation and packaging of beverages that will be in effect until December 31, 2015, regarding the brands Vital, Chanqueahue, Vital de Chanqueahue, Benedictino, Dasani and Aquarius.
Brazil—Brazil–Bottler Agreement: the Bottler Agreement between Andinalicenses for the territories in Brazil and TCCC will expire on October 4, 2013.in 2017.
Argentina —Bottler–Bottler Agreement: the licenses for the territories in Argentina expires in 2013 and 2017.
Paraguay–Bottler Agreement: (i) the Bottler Agreement, between Edasa and TCCC expiredlicenses for the territories in February of 2012, and was renewed for another 5 years; and (ii) with respect to the Argentine territory the Juice and Water Bottler Agreement is currently being negotiated.Paraguay will expire in 2014.
PET Agreements
On June 29, 2001, we and Cristalerías de Chile S.A. signed a series of contracts forming a joint venture for the development of a PET production facility in Chile through the formation of Envases CMF S.A. We contributed the assets necessary to further the development of the joint venture. Our subsidiary Andina Inversiones Societarias S.A. holds a 50% stake in the joint venture while Cristalerías de Chile S.A. retains the other 50% interest. On January 27, 2012, Coca-Cola Embonor through its subsidiary, Embonor Empaques S.A. acquired Cristalerías de Chile’s stake equivalente to a 50% ownership interest in Envases CMF.
5.Regulation
General
We are subject to the full range of government regulations generally applicable to companies engaged in business in our franchise territories, including but not limited to labor, social security, public health, consumer protection, environmental, sanitation, employee safety, securities and anti-trust laws. Currently, no material legal or administrative proceedings are pending against us with respect to any regulatory matter in any of our franchise territories except those listed as such in “Item
8. Financial Information—Legal Proceedings.” We believe, to the best of our knowledge that we are in compliance in all material respects with applicable statutory and administrative regulations relating to our business in each of our franchise territories.
Chile. There are no special licenses or permits required to manufacture and distribute soft drinks and juices in the Chilean territory. Food and beverage producers in Chile, however, must obtain authorization from (and their activities are subject to supervision by) the Chilean Environmental Protection Services (Servicio Sanitario Metropolitano del Ambiente), which inspects production facilities and takes liquid samples for analysis on a regular basis. Our permit from the Chilean Environmental Protection Authority was obtained on January 8, 1992 and is in effect indefinitely. In addition, production and distribution of mineral water is subject to special regulations such that mineral water may be drawn only from sources designated for such purpose by presidential decree. Certification of compliance with such decree is provided by the National Health Service, the Undersecretary’s Office of the Ministry of Health (Servicio de Salud Metropolitano del Ambiente). Our mineral water production facilities have received the required certification.
Brazil. Labor laws, in addition to mandating employee benefits, include regulations to ensure sanitary and safe working conditions in our production facilities located in Brazil. Food and beverage producers in Brazil must register their products with and receive a ten-year permit from the Ministry of Agriculture and Provisioning and the Ministry of Health, which oversees diet products. Our permits from said Ministries are valid and in force for a term of ten years for each product we produce. Although we cannot assure you that they will be renewed, we have not experienced any material difficulties in renewing our permits in the past nor do we expect to experience any difficulties in the future. The Ministries do not regularly inspect facilities but they do send inspectors to investigate any complaints it receives.
Argentina. While most laws applicable to Edasa are enforced at the federal level, some, such as sanitary and environmental regulations, are primarily enforced by provincial and municipal governments. There are no licenses or permits required for the manufacture or distribution of soft drinks in the Argentine territory. However, our production facilities are subject to registration with federal and provincial authorities and to supervision by municipal health agencies, which certify compliance with applicable laws.
Environmental Matters
It is our policy to conduct environmentally sound operations on a basis consistent with applicable laws and with criteria established by TCCC. Although regulation of matters relating to the protection of the environment is not as well-developed in the franchise territories as in the United States and other industrialized countries, we expect that additional laws and regulations may be enacted in the future with respect to environmental matters that may impose additional restrictions on us which could materially or adversely affect our results of operations in the future. There are no material legal or administrative proceedings pending against us in any of the franchise territories with respect to environmental matters, and we believe that, to the best of our knowledge, we are in compliance in all material respects with all environmental regulations applicable to us.
Chile. The Chilean government has several regulations governing environmental matters relating to our operations. operations, whereby, starting from the Constitution, the right of property is established, providing that restrictions to such right may be set by law, among which is the conservation of the environment.
For instance, Law 3,133 regulated discharge of residual industrial waste, and the Sanitary Code contains provisions relating to liquid and solid waste disposal, basic environmental conditions in the workplace, and the protection of water for human consumption. Supreme Decree No. 594, ensues from the Sanitary Code, which governs some matters related to solid and liquid wastes, among which stands out the prohibition to discharge hazardous substances into the public system or groundwater.
Law 19,300, passed in March 1994, addresses general environmental concerns that may be applicable to our activities and which, if applicable, would require us to hire independent experts to conduct environmental impact studies or declarations of any future projects or activities that could be impacted by the regulations of Law 19,300. This Law creates the National Commission on the Environment, which is supported by regional commissions to supervise environmental impact studies and declarations for all new projects, to enforce the regulations of Law 19,300 and to grant discretionary power to regulators. In January 2010 the law suffered an organic amendment with the enactment publication of Law 20,417, which created a new environmental institution, contemplating the creation of the Ministry of Environment, Environmental Assessment Services, the Superintendence of Environmental Protection and the Environmental Courts (3), which became effective on December 2012. In Particular, the Environmental Court in the Metropolitan Region shall begin functioning during the first half of 2013.
The first Environmental Court to start operating in other regions is the Court in Antofagasta and Coquimbo, and shall begin its in June 2013.
1.Waste Waters
1.1 Generals: In 1993, the Chilean government published regulations that updated the provisions of Law 3,133, which was finally repealed in 2002 by Law 19,821, which also reaffirmed the control of the Superintendence of Sanitary Services over industrial liquid waste These regulations place limits on the disposal of harmful substances which may be hazardous to water used in irrigation or water for consumption by people or animals without prior authorization from the Ministry of Public Works and a favorable determination from the Superintendence of Sanitary Services. The regulations also mandate governmental approval of any systems to treat or discharge liquid industrial waste (regulated by Supreme Decree 90 for discharges to open courses and by Supreme Decree 609 for discharges to sewage collectors, amended during 2000 by Supreme Decree 3592).
1.2Santiago Plant: In 1996, we installed a liquid industrial waste treatment plant to comply with the Chilean liquid waste emissions standards, in effect since 1998. As of May of 2006, the first stages of liquid industrial waste treatment are done at our facilities and then it is completed at La Farfana. Currently there is an outsourcing agreement with the company Ecoriles for the treatment of liquid industrial waste.
1.3Coquimbo Plant: The construction of the liquid industrial waste treatment plant-which is the Coquimbo Plant- was approved by Resolution Nº 042, dated April 9, 1999, issued by the CONAMA of the IV Region of Coquimbo. On December 1, 2004, an agreement was executed with the local sanitary company (Aguas del Valle S.A.) for the direct discharge of liquid waste into the sewage system. This agreement remains in full force and effect in case there are any complications with the operation of the waste water (riles) treatment plant. On December 28, 2005, through SISS EX Resolution No. 3854, the monitoring program of the Quality of the Effluent generated by our Riles treatment plant. Therefore, DS 609 that Establishes the Emission Standard for regulation of contaminants associated with industrial liquid waste discharges to sewage systems —started being fulfilled. On November 20, 2012, SISS EX Resolution No. 3854/2005, was amended by Resolution Ex. No. 5089. This involved the modification of the parameters for the monitoring of the treatment plant, specifically the extension of the pH operating range (5.5-9.0). The water obtained/used for the preparation of our products is obtained from the well built within our premises, thus the company is complying Res No. 425/2008 that sets a new text for the Resolution that establishes the standards of exploration and exploitation ground waters.
1.4Punta Arenas Plant: Since 2005, it has its own effluent waters secondary treatment system, securing the compliance with the DS 609, with its own Environmental Qualification Resolution. This operation is carried out by specialist staff within the plant.
2.Solid Waste:
2.2General: On the other hand, the management and disposal of the generated solid waste must be operated having operational and sanitary disposal authorizations. Both [authorizations] are granted by the Health SEREMI as set forth in Resolution No. 5081 (Non-hazardous residues) and in DS N° 148. Sanitary Regulations for Hazardous Waste Management.
The next challenge is the bill on the Extended Producer’s Responsibility (REP or EPR) that is currently being considered, which returns the responsibility of managing the waste to the companies that manufacture such products that transform into waste.
Extended Producer Responsibility requires that the companies that manufacture and /or sell products or containers become financially or physically responsible for such products after their lifespan expires, that is, the responsibility of the producers to arrange, using sustainable processes, the collection, recycling and disposal of waste generated at the end of its life span.
2.3Santiago Plant: According to the arrangements that had been made in the Carlos Valdovinos Plant, as from August 2011 the Renca plant has a Solid Waste Management Center where the waste generated in the operation is temporarily stored in order to be sold (Non-hazardous waste) with the purpose of being recycled and destruct those that are hazardous.
Coquimbo Plant: In 2008, the Health SEREMI of the Region of Coquimbo, authorized through Exempt Resolution No. 2181, the SITIO DE ALMACENAMIENTO DE RESIDUOS PELIGROSOS (“HAZARDOUS WASTE STORAGE SITE) (September 2, 2008). Since August 2012, our plant has a Management Center of Non-hazardous Solid Waste where the waste generated in the operation (recyclable and non-recyclable) is temporarily stored, and has different destinations: 1. returned to its vendor (to CMF); 2. sold (Non-hazardous recyclable waste) 3. sent to a Sanitary Landfill (waste similar to household).
Additionally, the muds generated in our effluent treatment plant are considered solid waste. Their disposal is authorized by Resolution Exempt No. 3854 dated December
Law 19,300, passed28, 2005 issued by the Superintendency of Sanitary Services (SISS). Their definitive disposition is performed at the Panul – Coquimbo Landfill that is administered by Tasui Services S.A.
2.4Punta Arenas Plant: The Punta Arenas Plant has a waste collection center that has all its health authorizations:
·Sanitary Authorization for the operation of a warehouse for the temporary storage of hazardous waste generated by the industry itself, as requested by DS 148.
·Sanitary authorization for the accumulation of liquid and solid industrial non-hazardous waste within the facility, as set forth in March DS 594
3.Air pollution:
3.2 General: Emissions are regulated by several regulatory bodies, standing out, among others, the declaration of the metropolitan Region as a zone saturated of some contaminants, the obligation to compensate for emissions, the Air Pollution Prevention and Decontamination Plan for the Metropolitan Region, emission standards of particulate material and gases for stationary and group sources, the mandatory obligation to declare emissions of substances that deplete the ozone layer. Atmospheric emissions are regulated by several regulatory bodies:
· D.S. No. 4/1994 addresses general environmental concerns that may be- Establece Norma de Emisión de Contaminantes Aplicables a los Vehículos motorizados y fija los procedimientos para su control (Establishes Pollutant Standard Applicable to motor vehicles and sets procedures for its control).
· D.S. 211/1991- Norma sobre Emisiones de Vehículos motorizados livianos (Emissions standard for light motor vehicles)
· D.S. 54/1994 - Establece Norma de Emisión aplicables a Vehículos motorizados mediano que Indica (Establishes Emission Standard applicable to our activitiesthe medium motor vehicles that it indicates)
· D.S. 149/2007 - Regula las Concentraciones de Contaminantes como el NO, CO y HC (Regulates the concentrations of pollutants such as NO, CO and which, if applicable, would require usHC).
· D.S. 144/1961 - Establece normas para evitar emanaciones o contaminantes atmosféricos de cualquier naturaleza (Establishes standards to hire independent experts to conduct environmental impact studiesprevent atmospheric emissions or declarationspollutants of any future projects or activitieskind).
· D.S. 138/2005 - Establece Obligación de Declarar las Emisiones de Fuentes Fijas (Establishes the obligation to report emissions from stationary sources)
· D.S. 48/1984 - Reglamento de Calderas y Generadores de Vapor (Regulation of boilers and steam generators).
· The D.S. 686- Norma de Emisión para la Regulación de la Contaminación Lumínica” (Emission Standard for Control of Light Pollution) adopted on August 2, 1999. It was created considering that could be impacted by the regulationsheavens of Law 19,300. This Law createsRegions II, III and IV of our country is a valuable environmental and cultural heritage to develop the National Commission onastronomical observation activity.
· The D.S. No. 146 - Establece los niveles de ruido máximo que puede emitir una fuente fija y que afecte al entorno donde se encuentra ubicado esta fuente (Establishes the Environment, whichmaximum levels of noise that emit a fixed source and affecting the environment where such source is supported by regional commissions to supervise environmental impact studies and declarations for all new projects, to enforcelocated).
· In the regulationscase of Law 19,300 and to grant discretionary power to regulators. In January 2010Punta Arenas plant it complies with D.S. No. 48 — that requesting the law suffered an organic amendment with the enactment publication of Law 20,417, which created a new environmental institution, contemplating the creationregistration of the Ministry of Environment, Environmental Assessment Services andboiler before the Superintendence of Environmental Protection. Health Ministerial Regional Secretariat. Regarding air emissions, it [plant] declares that is complies with what D.S. 138 provides. This boiler is not controlled, since it operates with natural gas which makes this operation organic since it is the fuel that least contaminates.
There can be no assurance that future legislative regulatory developments will not impose further restrictions that would be material to our operations in Chile. We believe that, to the best of our knowledge we are in compliance with all material aspects of the Chilean environmental regulations.
4.Certifications
4.2Santiago Plant: In 2006 TCCC issued its audit regarding Certifications of Quality, Security and Environment Systems known as PHASE 3, and we have become the first
production facility in Chile to receive this certification with the maximum qualifications.. These certifications were revalidated according to the new KORE (Coca-Cola Requirements) dispositions beginning August 2010.
During 2005, our production facility in Chile , became the first plant in Latin America to achieve the four Quality System Certifications, Food Safety and Quality Management System (HACCP-Hazard Analysis and Critical Control Point), Environment (ISO 14001:2004), Security and Occupational Health (OHSAS 18001:1999) and Quality (ISO 9001:2000). Also in 2005 it achieves the National Award for Quality from Chilecalidad. In September of 2007 and 2010 these certifications were extended for another 3 years. Additionally during December 2010 we achieved certification for Food Safety Management (ISO 2200).
During 2011, with the new Renca Bottling facility beginning operations, the geographical spread of our integrated management system was expanded, in a first stage, certifying, the Quality Management System (ISO 9000) and Food Safety (ISO 22000). TheIn March 2012 we obtrained the respective certifications for Environment (ISO 14000)14001) and Security and Occupational Health (ISO 18000) remain pending18001) . For 2013, the Food Safety Management System will be certified under the FSSC 22000 (Food Safety System Certification) standard which is fully recognized and accepted by the Global Food Safety Initiative (GFSI) and the European Cooperation for 2012.Accreditation (EA).
The distribution centers also count with the following certifications: Food Safety and Quality Management System (HACCP) since 2007 and Security and Occupational Health (OHSAS 18001:2008) since June 2009, both valid for a period of 3 years. As part of the logistics management, distribution centers were audited during the first half of 2011 and 2012, maintaining the aforementioned systems certifications.
In 2003, the production facilities of Rengo and Vital were certified under the Codex Alimentarius and the Chilean regulation 2861:2004 for their production processes. These certifications were renewed in 2006.2009. As of December 31, 20112012 these production facilities held the following certifications: (i) Food Safety and Quality Management (HACCP); (ii) Quality Management (ISO 9001); (iii) Environment Management (ISO 14001); (iv) Security and Occupational Health (ISO 18000); and (v) Food Safety Management under ISO 22000 regulations and Best Practices of Food Manufacturing under PAS 220.
4.3Coquimbo Plant: The plant has the following certifications:
· In June 2003, HACCP Codex Alimentarius.
· In July 2006, Occupational Health and Safety (OHSAS 18001:2000)
· In November 2008, Environmental Certification (ISO 14001:2004) and Quality Certification (ISO 9001:2008).
· In January 2011 Food Safety System Certification (ISO 22000/2005), and PAS 220/2008. In November 2011, the latter were recertified for 3 additional years within the abovementioned systems. (ISO 9001 - ISO 14001 - OHSAS 18001).
· In 2009 and 2012 the plant meets the Coca-Cola Company standards, certifying the KORE Environmental Requirements and Safety and Occupational Health
4.4Punta Arenas Plant: Punta Arenas Plant 2003 certified its Quality, Environmental and Security system denominated “Evolution”. The system is required by TCCC. In 2010, the change from Evolution to KORE- the current TCCC system- was certified. In 2003 the Punta Arenas Plant was certified under ISO 9001 and HACCP. Later, in August 2006 it obtained the OHSAS 18001 certification, and in November 2008 ISO14001 and ISO22000, in addition to PAS 220 in January 2011. In December 2012 the Food Safety Certification was changed by SSC 22000, now being worldwide recognized and certifiable. The Integrated Management System is monitored annually and is recertified every three years, which ensuring the maintenance and continuous improvement of the system.
Brazil. Our Brazilian operations are subject to several environmental laws, none of which currently impose substantial restrictions on us. The Brazilian Constitution establishes the broad guidelines for the new treatment of environmental concerns, dedicating an entire chapter (Chapter VI, Article 225) to the protection
of the environment, along with several other articles related to the environmental law and urban law. Environmental issues are regulated at the federal, state and municipal levels. The Brazilian Constitution empowers the public authorities to develop regulations designed to preserve and restore the environment and to control industrial processes that affect human life. Violations of these regulations are subject to criminal, civil and administrative penalties.
In addition, Law No. 6,938 of 1981, known as the Brazilian Environmental Policy, introduced an entirely different environmental regime by which no environmental damage is exempt from coverage. The legislation is based on the idea that even a polluting waste tolerated under the established standards could cause environmental damage, and therefore subjects the party causing such damage to payment of an indemnity. Moreover, as mentioned above, activities damaging to the environment lead to criminal and administrative penalties, provided for in Law 9,605 of 1998 or the Environmental Crimes Act.
Numerous governmental bodies have jurisdiction over environmental matters. At the federal level, the Ministério do Meio Ambiente (Brazilian Ministry of Environment) and the Conselho Nacional do Meio-Ambiente or CONAMA dictate
environmental policy, including, without limitation, initiating environmental improvement projects, establishing a system of fines and administrative penalties and reaching agreements on environmental matters with offending industries. The Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis or IBAMA enforces environmental regulations set by CONAMA. In addition, various federal authorities have jurisdiction over specific industrial sectors, but none of these currently affect us. Finally, various state and local authorities regulate environmental matters in the Brazilian territory including the Fundação Estadual de Engenharia do Meio-Ambiente or FEEMA, the principal environmental authority in Rio de Janeiro and the Instituto Estadual de Medio Ambiente e Recursos Hídricos or IEMA, the principal environmental authority in Espírito Santo. FEEMA and IEMA periodically inspect industrial sites and test liquid waste for contamination. We believe to the best of our knowledge that we are in compliance in all material respects with the standards established by all the governmental authorities applicable to our operations in Brazil. We cannot assure you, however, that additional regulations will not be enacted in the future, and that such restrictions would not have a material adverse effect on our results or operations. The operation in Brazil as that of Chile counts with all certifications mentioned in terms of Quality, Environment and Occupational Health and Safety and those associated with Food Safety and Best Practices in Food Processing.
Argentina. The Argentine Constitution, as amended in 1994, allows any individual who believes a third party may be damaging the environment to initiate an action against it. No such action has ever been instituted against us, but we cannot assure you that an action will not be brought in the future. Though provincial governments have primary regulatory authority over environmental matters, municipal and federal authorities are also competent to enact decrees and laws on environmental issues. Thus, municipalities are competent on local environmental matters, such as waste management, while the federal government regulates inter-province environmental issues, such as transport of hazardous waste or environmental matters covered by international treaties.
In 2002, the National Congress approved federal Law No. 25,612, Gestión Integral de Residuos Industriales y de Actividades de Servicios (Integral Management of Industrial Residues and Service Activities)and Law No. 25,675, Ley General del Ambiente (General Environmental Law) establishing minimum guidelines for the protection of the sustainable environmental management and the protection of biodiversity, applicable throughout Argentina. The law establishes the purposes, principles and instruments of the national environmental policy, the concept of “minimum guidelines,” the judicial competence and the rules governing environmental education and information, citizens’ participation and self-management, among other provisions.
Provincial governments within the Argentine territory have enacted laws establishing a framework for the preservation of the environment. Provincial laws that are applicable to industrial facilities at EDASA, among others are Law No. 7,343 of the Province of Córdoba, and Law No. 11,459 of the Province of Buenos Aires. These laws contain principles on environmental policy and management, as well as rules on environmental impact assessment. They also give certain agencies competence in environmental issues.
Almost all provinces as well as many municipalities have established rules regarding the use of water, the sewage system and the disposal of liquids into underground flows of water or rivers. There are currently no claims pending against us on this matter. The violation of these rules usually results in fines.
During October of 2009, the National Award for Quality Foundation that promotes excellence in the development of processes and products in that country, granted us the 2009 National Award for Quality, which was handed by the president of Argentina, Cristina Fernandez de Kirchner.
In the operation in Argentina we maintain all certifications mentioned for Chile in addition to the Excellence Level Award of TCCC achieved in December 2010 by EDASA, due to the constant importance given to the excellence in the development of processes, products and activities.
Another international recognition was the obtaining achieving the Iberoamerican Quality Award for Plants from FUNDIBEQ, organization attached to the Ibero-American Summit of Heads of State and Government of the Iberoamerican Secretary General’s office (SEGIB).
In 2011 EDASA was recognized by the Ministry of Industry, Trade and Labor of the province of Córdoba, with the “Award for Eco efficiency”, for its efforts in reducing the carbon footprint in its operations during 2010. Another important award during of 2011 has been the “Live Positively” Cup awarded by the Latin America South Division of TCCC, who governed by the concept of sustainable development in our “social license” to operate, conducted a Ranking of bottlers
according to performance in sustainability based on 5 pillars: Work environment; Water; Energy; Sustainable packaging; Wellness and Community.
31In 2012 the Ministerio de Industria, Comercio y Trabajo (Department of Industry, Commerce and Labor) of the Province of Córdoba, recognized EDASA with the “Quality Award” for the implementation of its Integrated Sustainability System, aligning the management processes of international standards (ISO9001, ISO14001, ISO22000, PAS 220 and OHSAS18001) with six strategic areas: Products and Services, Business Partners, Environment, Profitability, People and Community; which has led the company to achieve sustained results over time and be recognized internationally for its level of excellence.
Paraguay: The environmental framework comprises several national and local environmental regulations. The Paraguayan Constitution of 1992 states that everyone has the right to live in a healthy and ecologically balanced environment and has the obligation to preserve it. All damage caused to the environment will carry the obligation to repair and compensate.
Considered the “Mother of Environmental Law” in the country, Law 1561/00 chartered the three primary environmental agencies in Paraguay. These are: the Secretaría del Ambiente (SEAM or the Environmental Department), Consejo Nacional del Ambiente (CONAM or the National Environmetal Counsel), y el Sistema Nacional del Ambiente (SISNAM or National Environmental System). The Law establishes the authorities and responsibilities of the agencies to develop and oversee the national environmental policy.
Of the three, the SEAM is the main environmental institution responsible for the development and implementation of national environmental laws. The SEAM is the main authority responsible for implementing most of the national environmental standards and the main agency responsible for monitoring their compliance. The CONAM is responsible for investigating and establishing the main goals in the environmental policies, which the SEAM must then implement. The SISNAM in turn, is integrated by several bodies -including governmental and municipal agencies and private sector stakeholders- all interested in solving environmental issues. The SISNAM provides a discussion forum for the public and private sectors to work together collectively, developing ideas and plans to promote a sustainable development. Law 1561/00 also provides that all actions of the SEAM must, ultimately, meet the mandates established in Articles 7 and 8 of the Constitution.
According to Law 1561/00, Law 294/93 on Environmental Impact Assessment and other relevant regulations, landowners and others who intend to exploit the land for industrial, agricultural or other purposes, are prevented from deforesting native forests, convert non-forested areas located in forested lands for commercial
purposes, or in general, exploit the land for industrial or agricultural purposes without preparation, appraisal and approval of an environmental impact study and the previous authorization granted as a permit issued by the SEAM.
Environmental Impact: Law 294/93 states that the above mentioned activities will be subject to an environmental impact assessment procedure and certain requirements applicable to such evaluation. Additionally, the Law sets out the rights and obligations that shall be triggered by any damage caused to the environment and mainly provides the obligation to restore the environment to its previous state or instead, if that is technically impossible, the corresponding payment or compensation. In accordance with Law 294/93, agricultural activities require and environmental impact assessment.
Illegal disposal of waste: The treatment, storage, disposal or removal of waste outside of the institutions designated to that effect, deviating from the applicable established laws and administrative regulations shall be punished with imprisonment of up to 5 years and/or a fine.
The Criminal Code defines waste including hazardous substances that can cause disease or infection, flammable or explosive substances that can pollute water and soil.
Hazardous industrial waste: Law 42/90 prohibits the importation or facilitation of the receipt, storage, use or distribution of products classified as hazardous or as industrial waste. Breaches to the law will be considered a crime against the human and the environmental health; and may be punishable with imprisonment of between 2 to 10 years. Public officials that breach this law may be removed from their positions and subsequently disqualified to hold public or commercial positions. Through Law 567/95, Paraguay ratified the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal.
Water Resources Act of Paraguay: Law 3239/07 on water resources establishes the sustainable management of all waters (superficial, ground, atmospheric) and the territories that generate such waters, regardless of their location, physical condition or natural occurrence within the Paraguayan territory, in order to make it socially, economically and environmentally sustainable for the people living in the territory of Paraguay. The supervising agency is the SEAM. Superficial and ground waters are property of the State’s public domain. The Law establishes the following order of priority for the use of water: i) Fulfillment of the needs of aquatic ecosystems; ii) Social use within the home environment; iii) Use and enjoyment for agricultural activities, including aquaculture; iv) use and utilization for power generation; v) Use and enjoyment for other industrial activities; vi) Use and enjoyment for other activities. The use of water for productive purposes is subject to the authorization granted by the State through a permit (for the use of small amounts of water) or through concessions (prior public bidding process), in both cases after the payment of applicable rights. Authorizations may be revoked based on the occurrence of the causes [situations] contemplated in the law. Concessions may be expropriated for public benefit, or be terminated in certain situations established by the Law. In addition, a National Registry of Water Resources has been created to keep record of all individuals or legal entities that utilize water resources or engage in activities related to them.
The SEAM, which is responsible for the fulfillment of laws on water resources, can apply sanctions, including: warnings, temporary or permanent suspension of authorizations or concessions, confiscations and/or fines. These penalties are applicable regardless of other civil or criminal sanctions or of the revocation of the environmental authorizations granted by SEAM.
Superficial and ground waters are property of the State public domain. All citizens of the Republic of Paraguay are holders of the right to use and enjoy water resources, not foreign States or their representatives. The use and enjoyment of superficial and ground water resources for human consumption are a priority. Other uses and enjoyments shall follow the order of priority established by law. The use and enjoyment for industrial activities is fifth in priority, having preeminence the social use within the home environment, fulfillment of the needs of aquatic ecosystems; the generation of energy and agricultural activities.
The use of water resources and their flows, except the direct personal or family use, may only be granted by a permit or concession.
Any work or activity related to the use of water resources must previously undergo the procedure of Environmental Impact Assessment. The issuance of a certificate by the SEAM regarding the water availability, in the quality and quantity required by the activity and in the area of the project site, is a pre-requisite for obtaining a positive Environmental Impact Statement.
Law 3239/07 controls most, but not all, types authorizations for the use of water. For example, Law 1614-1600 specifically regulates the public water supply service and sewage.
Authorizations for the use of water resources grant the holder a public precarious right to use water, but not the domain or other property right over it. This permit is revocable and may be granted through several authorizations: for use of small amounts of water, temporary uses and authorizations for the discharge of effluents.
Authorizations are granted through a Resolution and are personal and not transferable. The duration of the permit will be determined by taking into consideration the nature of the investment, the impact on water resource utilized and the social utility of the business venture.
On the other hand the right to use water resources may be granted for all such uses that do not need to be authorized by a permit. These authorizations will be granted through a contract, prior public bidding process, for a determined period of time.
Concessions for the use of water resources for commercial export purposes in whatever forms, shall be authorized by law. The holder of the concession acquires a subjective/personal public right to use water, but not the domain or any other property right over it. Concessions may be assigned to third parties prior approval by a Decree issued by Executive Branch in the form established in the regulations of this Law; and in accordance with the terms and conditions provided for in the corresponding concession contract.
Crimes againts the environment: Law 716/96 establishes the sanctions applicable to crimes against the environment. The breach of environmental laws and regulations is punishable with criminal, civil and administrative sanctions, including mitigation measures and the compensation of damages that may result from breaches to the environmental law and its regulations.
Any person (including directors, officers and managers of legal entities) who commits a crime against the environment and the quality of human life, such as: discharging gases or pollutant industrial waste into the atmosphere, the discharge of effluents and untreated industrial waste, cutting or burning forests or vegetation which seriously harm the ecosystem, among others; shall be punished by imprisonment and/or fines, sanctions that are graduated in each particular case according to the aggravating factors.
As for administrative sanctions, they may vary -from notices and fines to the complete or partial suspension of activities, a and they even may involve the revocation or cancellation of tax benefits, cancellation or termination of bank credit lines and the restriction to executing contracts with public entities.
Coca-Cola Paresa Paraguay fulfills all regulations established by governmental authorities applicable to our operations in Paraguay. However, it is not possible to guarantee that other rules may be passed in the future that might contain potential restrictions and that such restrictions would not have a material effect on our results or operations.
This operation has external certifications for the Management System such as: Quality Management ISO 9001-2008, Environmental Management ISO 14001-2004, Occupational and Safety Health Management OHSAS 18001-2007, Food Safety ISO 22005-2005 and PAS 220-2008.
C.Organizational Structure
The following table presents information relating to the main activity of our subsidiaries and our direct and indirect ownership interest in them as of the date of preparation of this document:
Subsidiary |
| Activity |
| Country of |
| Percentage |
|
Embotelladora Andina Chile S.A. |
| Manufacture, bottle, distribute, and commercialize non-alcoholic beverages. |
| Chile |
| 99.99 |
|
Vital Jugos S.A. (4) and (5) |
| Manufacture, distribute, and commercialize all kinds of food products, juices, and beverages. |
| Chile |
|
|
|
Vital Aguas S.A. (4) and (5) |
| Manufacture, distribute, and commercialize all kinds of waters and beverages in general. |
| Chile |
|
|
|
Servicios Multivending Ltda. |
| Commercialize products through equipment and vending machines. |
| Chile |
| 99.99 |
|
Transportes Andina Refrescos Ltda. | Provide administration services and management of domestic and foreign ground transportation. | Chile | 99.99 | ||||
Transporte Polar S.A. (6) |
| Provide administration services and management of domestic and foreign ground transportation. |
| Chile |
| 99.99 |
|
Envases CMF S.A. |
| Manufacture, acquire and commercialize all types of containers and packaging; and provide bottling services. |
| Chile |
| 50.00 |
|
Envases Central S.A. (4) |
| Manufacture and packaging of all kinds of beverages, and commercialize all kinds of packaging. |
| Chile |
|
|
|
Andina Bottling Investments S.A. |
| Manufacture, bottle and commercialize beverages and food in general. Invest in other companies. |
| Chile |
| 99.99 |
|
Andina Bottling Investments Dos S.A. |
| Carryout exclusively foreign permanent investments or lease all kinds of real estate. |
| Chile |
| 99.99 |
|
Inversiones Los Andes Ltda. (6) | Invest in all types of real property and chattels | Chile | 99.99 | ||||
Andina Inversiones Societarias S.A. |
| Invest in all types of companies and commercialize food products in general. |
| Chile |
| 99.99 |
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|
|
(2) (1)At the Extraordinary Shareholders’ Meeting held November 22, 2011, the shareholders of Embotelladora Andina Chile S.A. agreed to increase the capital of the latter from Ch$10,000,000 -divided into 10,000 shares- to Ch$4,778,206,076 -divided into 4,778,206 shares-. It was agreed that the capital increase was to be subscribed and paid by the shareholder Embotelladora Andina S.A. through the contribution of movable goods and real estate property, which are identified in the minutes of the Shareholders’ Meeting. The Shareholders’ Meeting was reduced to public document on November 28, 2011, granted by the notary public of Santiago, Cosme Gomila.
(3)(2) At the Extraordinary General Shareholders’ Meeting held November 1st 2011, Embotelladora del Atlántico S.A. decided to divide part of its equity to form a new company, Andina Empaques Argentina S.A., for the purpose of developing the design, manufacture and sale of all kinds of plastic products or products derived from the industry for plastics, primarily in the packaging division. Accounting and tax effects will begin on January 1st 2012.
(3) In October 2012, 40% of the Brazilian company Sociedad Brasilera Sorocaba Refrescos S.A. was acquired for a total price of 146. 9 million Brazilian Reais.
(4) Vital Aguas S.A., Vital Jugos S.A. and Envases Central S.A., modified their percentage interests, due to the merger with Embotelladoras Coca Cola Polar in 2012.
(5) During 2012 a capital increase was made for M$6,960,000, of which, Embotelladora Andina S.A. paid the M$2,380,320 according to its percentage of interests.
(6) Companies incorporated during 2012, due to the merger with Embotelladoras Coca Cola Polar S.A.
Subsidiary | Activity | Country of | Percentage | ||||
Rio de Janeiro Refrescos Ltda. | Manufacture and commercialize beverages in general, powdered juices and other related semi-processed products. | Brazil | 99.99 | ||||
Holdfab 2 Participações Ltda. | Manufacture, bottle and commercialize beverages and food in general, and beverage concentrate. Invest in other companies | Brazil | 36.40 | ||||
Sistema de Alimentos e Bebidas do Brasil Ltda | Manufacture, bottle and commercialize beverages and food in general. Invest in other companies. | Brazil | 5.74 | ||||
Leao Junior S.A. | Manufacture, bottle and commercialize beverages and food in general. Invest in other companies. | Brazil | 18.20 | ||||
Sorocaba Refrescos S.A. (3) | Manufacture, bottle and commercialize beverages and food in general. Invest in other companies. | Brazil | 40.00 | ||||
Kaik Participações Ltda. | Invest in other companies with own resources. | Brazil | 11.32 | ||||
Embotelladora del Atlántico S.A.(2) | Manufacture, bottle, distribute, and commercialize non-alcoholic beverages. Design, produce, and commercialize plastic products mainly packaging. | Argentina | 99.98 | ||||
Coca Cola Polar Argentina S.A. (6) | Manufacture, bottle, distribute, and commercialize non-alcoholic beverages. Design, produce, and commercialize plastic products mainly packaging. | Argentina | 99.99 | ||||
Andina Empaques S.A. (2) | Design, produce, and commercialize plastic products mainly packaging. | Argentina | 99.98 | ||||
Paraguay Refrescos S.A. (6) | Manufacture, bottle, distribute, and commercialize non-alcoholic beverages. Design, produce, and commercialize plastic products mainly packaging. | Paraguay | 97.83 | ||||
Abisa Corp. | Invest in financial instruments. | British Virgin Islands | 99.99 | ||||
Aconcagua Investing Ltda.(6) | Invest in financial instruments. | British Virgin Islands | 99.99 |
The following chart presents in summary form the Company’s direct and indirect ownership participations in subsidiaries and affiliates:
D. Property, Plants and Equipment
We maintain production plants in each of the principal population centers that comprise the franchise territories. In addition, we maintain distribution centers and administrative offices in each of the franchise territories. The following table sets forth in square meters, our principal properties, and facilities in each of the franchise territories:
|
| Main Use |
| Surface (Square |
|
CHILE | |||||
Embotelladora Andina S.A. | |||||
Región Metropolitana |
| Offices / Production of Soft Drinks / Distribution Centers / Warehouses |
| 494,386 |
|
Rancagua |
| Warehouses |
| 25,920 | |
| |||||
San Antonio |
| Warehouses |
| 19,809 |
|
Antofagasta | Offices / Production of Soft Drinks / Distribution Centers / Warehouses | 34,729 | |||
Coquimbo | Offices / Production of Soft Drinks / Distribution Centers / Warehouses | 31,383 | |||
Punta Arenas | Offices / Production of Soft Drinks / Distribution Centers / Warehouses | 109,517 | |||
Coyhaique | Warehouses | 5,093 | |||
Taltal | Warehouses | 975 | |||
Tocopilla | Warehouses | 562 | |||
Calama | Warehouses | 10,700 | |||
Ovalle | Warehouses | 6,223 | |||
Vallenar | Warehouses | 5,000 | |||
Copiapó | Warehouses | 26,800 | |||
Vital Jugos S.A. | |||||
Región Metropolitana |
| Offices / Production of Juices |
| 40,000 |
|
Vital Aguas S.A. | |||||
| |||||
Rengo |
| Offices / Production of Waters |
| 12,375 |
|
Envases CMF S.A. |
|
|
|
|
|
Región Metropolitana |
| Offices / Production of |
| 74,001 | |
| |||||
Envases Central S.A. | |||||
Región Metropolitana |
| Offices / Production of Soft Drinks |
|
| |
Total Chile | 947,573 |
| |||
|
|
|
|
|
|
BRAZIL |
|
|
|
|
|
Rio de Janeiro Refrescos Ltda. |
|
|
|
|
|
Jacarepaguá |
| Offices / Production of Soft Drinks / Distribution Centers / Warehouses |
| 249,470 |
|
Vitória |
| Offices / Production of Soft Drinks / Warehouses |
| 93,320 |
|
Nova Iguaçu |
| Warehouses |
| 82,618 |
|
Bangu |
| Distribution |
| 44,389 | |
| |||||
Campos |
| Distribution |
| 42,370 | |
| |||||
Cachoeira do Itapemirim |
| Cross Docking |
| 8,000 |
|
|
| Distribution |
| 4,500 |
|
|
| Distribution |
| 10,880 | |
| |||||
Cabo Frio |
| Distribution |
| 1,985 |
|
Sao Pedro da Aldeia | Distribution Centers | 10,139 |
Total Brazil |
|
|
| ||
|
|
|
| ||
|
|
|
|
|
|
ARGENTINA |
|
|
|
|
|
Embotelladora del Atlántico S.A. |
|
|
|
|
|
Córdoba |
| Offices / Production of Soft Drinks / Distribution Centers / Warehouses |
| 1,009,516 |
|
Santo Tomé |
| Offices / Warehouses |
| 89,774 |
|
San Juan |
| Offices / Warehouses |
| 48,036 |
|
Mendoza |
| Offices / Warehouses |
| 41,579 |
|
Rosario |
| Offices / Warehouses |
| 28,070 |
|
Río IV |
|
|
| 7,482 |
|
San Luis |
| Offices / Warehouses |
| 6,069 |
|
Bahía Blanca | Offices / Production of Soft Drinks / Distribution Centers / Warehouses | 31,280 | |||
Chacabuco | Offices / Distribution Centers / Warehouses | 5,129 | |||
Pergamino | Offices / Distribution Centers / Warehouses | 1,195 | |||
General Pico | Offices / Distribution Centers / Warehouses | 2,547 | |||
Neuquén | Offices / Distribution Centers / Warehouses | 5,400 | |||
Trelew | Offices / Production of Soft Drinks / Distribution Centers / Warehouses | 16,024 | |||
Andina Empaques Argentina S.A. | |||||
Buenos Aires |
| Production of PET bottles and preforms |
| 27,043 |
|
Total Argentina | 1,319,144 | ||||
PARAGUAY | |||||
Paraguay Refrescos S.A. | |||||
San Lorenzo | Offices / Production of Soft Drinks / Warehouses | 275,292 | |||
Coronel Oviedo | Offices / Warehouses | 32,911 | |||
Encarnación | Offices / Warehouses | 12,744 | |||
Ciudad del Este | Offices / Warehouses | 14,620 | |||
Total Paraguay | 335,567 | ||||
TOTAL | 3,149,955 |
We have full ownership of our properties and they are not subject to material encumbrances.
Capacity by Line of Business
Set forth below is certain information concerning the installed capacity and approximate average utilization of our production facilities, by line of business.
|
| Year Ended December 31, |
| ||||||||||
|
| 2011 |
| 2010 |
| ||||||||
|
| Annual |
| Average |
| Capacity |
| Annual |
| Average |
| Capacity |
|
Soft drinks (millions of UCs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Chile |
| 157 |
| 82 |
| 96 |
| 157 |
| 79 |
| 88 |
|
Brazil |
| 272 |
| 68 |
| 79 |
| 222 |
| 81 |
| 99 |
|
Argentina |
| 169 |
| 60 |
| 75 |
| 141 |
| 65 |
| 83 |
|
Other beverages (millions of UCs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Chile |
| 49 |
| 80 |
| 98 |
| 49 |
| 77 |
| 97 |
|
Argentina |
| 54 |
| 25 |
| 47 |
| 4 |
| 40 |
| 75 |
|
PET packaging (millions of bottles) |
| 750 |
| 92 |
| 100 |
| 639 |
| 93 |
| 100 |
|
|
| Year Ended December 31, |
| ||||||||||
|
| 2012 |
| 2011 |
| ||||||||
|
| Annual |
| Average |
| Capacity |
| Annual |
| Average |
| Capacity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Soft drinks (millions of UCs): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Chile |
| 301 |
| 56 |
| 66 |
| 157 |
| 82 |
| 96 |
|
Brazil |
| 307 |
| 72 |
| 79 |
| 272 |
| 68 |
| 79 |
|
Argentina |
| 273 |
| 67 |
| 80 |
| 169 |
| 60 |
| 75 |
|
Paraguay |
| 80 |
| 84 |
| 86 |
|
|
|
|
|
|
|
Other beverages (millions of UCs) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Chile |
| 49 |
| 80 |
| 98 |
| 49 |
| 80 |
| 98 |
|
Argentina |
| 46 |
| 37 |
| 59 |
| 54 |
| 25 |
| 47 |
|
Paraguay |
| 16 |
| 80 |
| 95 |
|
|
|
|
|
|
|
PET packaging (millions of bottles) |
| 750 |
| 92 |
| 100 |
| 750 |
| 92 |
| 100 |
|
Total installed annual production capacity assumes production of the mix of products and containers produced in 2011.2012.
In 2011,2012, we continued to modernize and renovate our manufacturing facilities in order to maximize efficiency and productivity; we also made significant improvements to our auxiliary services and complementary processes such as water treatment plants and effluent treatment stations. At present, we estimate we have the capacity in each of the franchise territories to meet consumer demand for each product format. Because bottling is a seasonal business with significantly higher demand during the South American summer and because soft drinks are perishable, it is necessary for bottlers to carry significant over-capacity in order to meet the substantially greater seasonal demand. We assure the quality of our products through worldwide class practices and procedures maintaining quality control laboratories and structures in each production facility where raw materials are tested and where we analyze samples of our products.
As of December 31, 2011,2012, we had total installed annual production capacity, including soft drinks, fruit juices, and water, of 7011,072 million unit cases. Our primary facilities include:
· through EmbotelladoraCoca-Cola Andina, in the Chilean territory, onefour soft drink production facilityfacilities with eightten production lines in Renca, six production lines in Antofagasta, three production lines in Coquimbo and tow production lines in Punta Arenas with total installed annual capacity of 157301 million unit cases (22.4%(28.1% of our total installed annual capacity) and one soft drink production facility that during 2012 will replace the current one and will increase capacity to 228 million unit cases;;
· through Vital Jugos in the Chilean territory, one fruit juice production facility, with six production lines, with total installed annual capacity of 21 million unit cases (3.0%(2.0% of our total installed annual capacity);
· through Vital Aguas in the Chilean territory, one mineral water production facility, with four production lines, with total installed annual capacity of 28 million unit cases (4.0%(2.6% of our total installed annual capacity);
· through Rio de Janeiro Refrescos in the Brazilian territory, two soft drink production facilities with eleventhirteen production lines with total installed annual capacity of 272307 million unit cases (38.8%(28.6% of our total installed annual capacity); and
· through Embotelladora del Atlántico in the Argentine territory, onethree soft drink production facilityfacilities with sevenfourteen production lines with a total installed annual capacity of 169273 million unit
cases (24.1%(25.5% of our total installed annual capacity); and one facility for the production of juices with four production lines that covers the needs of our franchise with a total installed annual capacity of 11 million unit cases (1.0% of our total installed annual capacity), and one production line for waters and sensistive products with a total installed annual capacity of 35 million unit cases (3.3% of our total installed annual capacity)
·through Andina Empaques Argentina S.A. in the Argentine territory one production facility for bottles and preforms that covers the needs of the Coca-Cola system in that country with a total installed annual capacity of 750 million units and one facility for
·through Paresa in the production of juices withParaguayan territory, one production line that covers the needs of our franchisefacility located in San Lorenzo, with a total installed annual capacity of 4 million unit cases (0.6%seven production lines and two tetra pack lines (1.5% of our total installed annual capacity), and one production line for waters and sensistive products with a total installed annual capacity of 51.2 million unit cases (7.3% of our total installed annual capacity) .
ITEM 4A. UNRESOLVED SECURITIES AND EXCHANGE COMMISSION STAFF COMMENTS
Not Applicable .
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Basis of Presentation
The following discussion should be read in conjunction with and is qualified in its entirety by reference to the Consolidated Financial Statements, including the notes thereto.
These Financial Statements have been prepared in accordance with IFRS issued by the IASB.
These Financial Statements reflect the consolidated financial position of Embotelladora Andina. S.A. and its subsidiaries as of December 31, 2011,2012, and 20102011 as well as the operating results, changes in shareholders’ equity and cash flows for the years ended December 31, 2012, 2011, 2010, and 2009,2010, all of which were approved by the Board of Directors on April 26,30, 2012.
Our consolidated financial results include the results of our subsidiaries located in Chile, Brazil, Argentina and Argentina.Paraguay. Our subsidiaries outside Chile prepare their financial statements in accordance with IFRS and to comply with local regulations in accordance with generally accepted accounting principles of the country in which they operate. The Consolidated Financial Statements reflect the results of the subsidiaries outside of Chile, translated to Chilean pesos (functional and reporting currency of the parent company) and are presented in accordance with IFRS. The International Financial Reporting Standards requires assets and liabilities to be translated from the functional currency of each entity to the reporting currency (Chilean peso) at end of period exchange rates and income and expense accounts to be translated at the average monthly exchange rate for the month in which income or expense is recognized
Factors Affecting Comparability
During 2011,2012, there were no changes in the application of IFRS as compared to the previous year that could materially affect the comparability of the financial statements. Nevertheless,However, on October 1, 2012, the merger with Embotelladoras Coca Cola Polar S.A. was materialized, so assets and liabilities of the said bottler were incorporated to the consolidation as of October 1, 2012, at their fair value, as well as the results of its operations in October, November and December in Argentina, Chile and Paraguay. Additionally, due to the partial salemerger and as a result of an increase of percentage interests, Vital Aguas S.A., Vital Jugos S.A. y Envases Central S.A. are included in Chile, this subsidiary no longer consolidates results with Andina. The main effect to consider is that Andina’s results for 2011 do not include the juice volumes that Vital Jugos sold to Embonor and Polar, while 2010 volumes include these sales.
Table of Contentsconsolidation.
Critical Accounting Estimates
Discussion of critical accounting estimates
In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of our results of operations and financial position in the preparation of financial statements in
conformity with IFRS. We cannot assure you that actual results will not differ from those estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates and assumptions about the effect of matters that are inherently uncertain. For a more detailed discussion of accounting policies significant to our operations, please see Note 2 to our Consolidated Financial Statements.
Impairment of goodwill and intangible assets of indefinite useful life
The Company tests if goodwill and intangible assets of indefinite useful life have suffered impairment loss on an annual basis or whenever there are indicators of impairment. The recoverable amounts of cash generating units are determined based on calculations of the value in use. The key variables that management calculates include the volume of sales, prices, marketing expenses and other economic factors. The estimation of these variables requires a material administrative judgment as those variables imply inherent uncertainties. However, the assumptions are consistent with our internal planning. Therefore, management evaluates and updates estimates according to the conditions affecting the variables. If these assets are deemed to have become impaired, they will be written off at their estimated fair value or future recovery value according to discounted cash flows.
Fair Value of Assets and Liabilities
IFRS requires in certain cases that assets and liabilities be recorded at their fair value. Fair value is the amount at which an asset can be purchased or sold or the amount at which a liability can be incurred or liquidated in an actual transaction among parties duly informed under conditions of mutual independence, different from a forced liquidation.
The basis for measuring assets and liabilities at fair value are the current prices in the active market. Lacking such an active market, the Company estimates said values based on the best information available, including the use of models or other valuation techniques.
The Company estimated the fair value of the intangible assets acquired as a result of the Polar merger based on the multiple period excess earning method, which implies the estimation of future cash flows generated by the intangible asset, adjusted by cash flows that do not come from the intangible asset, but from other assets. For this, the Company estimated the time during which the intangible asset will generate cash flows, the cash flows themselves, cash flows from other assets and a discount rate.
Other assets acquired and implicit liabilities in the business combination are carried at fair value using valuation methods that are considered appropriate under the circumstances including the cost of depreciated recovery and recent transaction values for comparable assets, among others. These methodologies require certain inputs to be estimated, including the estimation of future cash flows.
Provision for doubtful accounts
The Company evaluates the possibility of collecting trade accounts receivable using several factors. When the Company becomes aware of a specific inability of a customer to fulfill its financial commitments, a specific provision for doubtful accounts is estimated and recorded, which reduces the recognized receivable to the amount that the Company estimate will ultimately be collected. In addition to specifically identifying potential uncollectible customer accounts, debits for doubtful accounts are accounted for based on the recent history of prior losses and a general assessment of trade accounts receivable, both outstanding and past due, among other factors. The balance of the Company’s trade accounts receivable was ThCh$114,618,699159,540,993 at December 31, 20112012 (ThCh$105,059,078114,618,699 in 2010)2011), net of an allowance for doubtful accounts provision of ThCh$1,486,749 (ThCh$1,544,574 (ThCh$1,225,556 in 2010)2011). Historically, doubtful accounts have represented an average of less than 1% of consolidated net sales.
Property,Useful life, residual value and impairment of property, plant, and equipment
Property, plant, and equipment isare recorded at cost and is depreciated on ausing the straight-line basismethod over the estimated useful liveslife of suchthose assets. Changes in circumstances, such as technological advances, changes to ourthe
Company’s business model, or changes in ourits capital strategy could result inmight modify the actualeffective useful lives differing fromas compared to our estimates. In those cases where we determineWhenever the Company determines that the useful life of property, plant and equipment shouldmight be shortened, we depreciateit depreciates the excess between the net book value in excess ofand the estimated salvage value over itsrecoverable amount according to the revised remaining useful life. Factors such as changes in the planned use of manufacturing equipment, vending equipment,dispensers, and transportation equipment or computer software could result in shortenedmake the useful lives. We reviewlives of assets shorter. The Company reviews the impairment of long-lived assets for impairment whenevereach time events or changes in circumstances indicate that the carrying amountbook value of any such asset mayof those assets might not be recoverable.recovered. The estimate of future cash flows is based, upon, among other things, on certain assumptions about the expected future operating performance. Ourprofits in the future. Company estimates of undiscountednon-discounted cash flows may differ from actualreal cash flows due to,because of, among other things,reasons, technological changes, economic conditions, and changes to ourin the business model, or changes in the operating performance.profit. If the sum of the projected undiscountednon-discounted cash flows that have been projected (excluding interest) is less than the carrying value of the asset, the asset will be written down to its estimated fair value.
Estimated impairment loss on goodwill
The Group tests annually whether goodwill has undergone any impairment. The recoverable amounts of cash generating units have been determined on the basis of value in use calculations. The key variables that management must calculate include the sales volume, prices, marketing expense, and other economic factors. Estimating these variables requires considerable judgment by the management, as those variables imply inherent uncertainties. However, the assumptions used are consistent with the Company’s internal planning. Therefore, the management evaluates and updates estimates from time to time according to the conditions affecting these variables. If these assets are deemed to have become impaired, the estimated fair value will be written off, as applicable. Should these assets deteriorate, they will be written off to the estimated fair value or future recoverable value, in accordance with discounted cash flows. Estimated future free cash flows in Brazil and Argentina were discounted at a rate of 15% and generated a higher value than the respective assets, including the surplus value of the Brazilian and Argentine subsidiaries.
Liabilities for bottle and case collateral
We have a liability for deposits received for bottles and cases provided to our customers and distributors. The liability represents the deposit value that we may be required to remit upon receipt from the customer or distributor of the bottles and cases, in good condition, along with the original invoice. The liability is not subject to price level restatements as per current
agreements with customers and distributors. We estimate the liability for deposits based on an periodic inventory of bottles sold to customers and distributors, estimates of bottles in circulation and a weighted average historical deposit value per bottle or case. Deposits for returnable containers are presented as current liabilities because the Company does not have a legal ability to defer settlement for a period in excess of one year. However, the Company does not anticipate any material cash settlements for such amounts during the upcoming year. Significant management judgment is involved in estimating the number of bottles in circulation, the deposit value that could be subject to redemption and the timing of disbursements related to this liability.
5.A Operating Results
Summary of Operations
The following table sets forth, for the periods indicated, sales volume, net sales and operating income for the Company’s operations in Chile, Brazil, Argentina and Argentina,Paraguay, respectively, expressed in each case in nominal million Chilean pesos as of December 31, 2012, 2011 2010 and 2009,2010, and as a percentage of consolidated net sales or operating income, as the case may be:
|
| Years ended December 31, |
| ||||
|
| 2011 |
| 2010 |
| 2009 |
|
|
| MUCs |
| MUCs |
| MUCs |
|
Sales volume: |
|
|
|
|
|
|
|
Chile |
| 157.8 |
| 161.5 |
| 152.4 |
|
Soft Drinks |
| 134.8 |
| 132.6 |
| 128.0 |
|
Mineral Water |
| 10.6 |
| 9.3 |
| 8.1 |
|
Juices |
| 12.4 |
| 19.6 |
| 16.3 |
|
Brazil |
| 205.1 |
| 202.5 |
| 185.3 |
|
Soft Drinks |
| 183.5 |
| 187.0 |
| 173.7 |
|
Mineral Water |
| 4.5 |
| 3.7 |
| 2.5 |
|
Juices |
| 13.4 |
| 7.9 |
| 5.0 |
|
Beer |
| 3.7 |
| 3.9 |
| 4.1 |
|
Argentina |
| 138.3 |
| 125.2 |
| 120.9 |
|
Soft Drinks |
| 129.6 |
| 118.4 |
| 117.9 |
|
Mineral Water |
| 6.1 |
| 4.8 |
| 1.7 |
|
Juices |
| 2.6 |
| 2.0 |
| 1.3 |
|
|
| Years ended December 31, |
|
| Years ended December 31, |
| |||||||||||||||||
|
| 2011 |
| 2010 |
| 2009 |
|
| 2012 |
| 2011 |
| 2010 |
| |||||||||
|
| MCh$ |
| % |
| MCh$ |
| % |
| MCh$ |
| % |
|
| MUCs |
| MUCs |
| MUCs |
| |||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Sales volume: |
|
|
|
|
|
|
| ||||||||||||||||
Chile |
| $ | 304,948 |
| 31.0 | % | $ | 295,659 |
| 33.3 | % | $ | 273,098 |
| 34.8 | % |
| 185.4 |
| 158.0 |
| 161.5 |
|
Soft Drinks |
| 149.9 |
| 135.1 |
| 132.6 |
| ||||||||||||||||
Mineral Water |
| 16.8 |
| 10.6 |
| 9.3 |
| ||||||||||||||||
Juices |
| 18.6 |
| 12.4 |
| 19.6 |
| ||||||||||||||||
Brazil |
| 445,693 |
| 45.4 |
| 407,782 |
| 45.9 |
| 339,546 |
| 43.2 |
|
| 225.0 |
| 205.1 |
| 202.5 |
| |||
Soft Drinks |
| 197.8 |
| 183.5 |
| 187.0 |
| ||||||||||||||||
Mineral Water |
| 5.8 |
| 4.5 |
| 3.7 |
| ||||||||||||||||
Juices |
| 16.2 |
| 13.4 |
| 7.9 |
| ||||||||||||||||
Beer |
| 5.2 |
| 3.7 |
| 3.9 |
| ||||||||||||||||
Argentina |
| 232,223 |
| 23.6 |
| 185,273 |
| 20.8 |
| 174,438 |
| 22.2 |
|
| 167.0 |
| 138.4 |
| 125.2 |
| |||
Inter-country eliminations(1) |
| — |
|
|
| — |
| — |
| (1,237 | ) | (0.20 | ) | ||||||||||
Total |
| $ | 982,864 |
| 100 | % | $ | 888,714 |
| 100 | % | $ | 785,845 |
| 100 | % | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Chile |
| 56,170 |
| 39.4 | % | 57,442 |
| 38.5 | % | 53,905 |
| 40.4 | % | ||||||||||
Brazil |
| 64,047 |
| 45.0 |
| 72,252 |
| 48.4 |
| 59,949 |
| 45.0 |
| ||||||||||
Argentina |
| 25,942 |
| 18.2 |
| 23,442 |
| 15.7 |
| 23,212 |
| 17.4 |
| ||||||||||
Corporate expenses(2) |
| (3,735 | ) | (2.6 | ) | (3,902 | ) | (2.6 | ) | (3,943 | ) | (2.8 | ) | ||||||||||
Total |
| $ | 142,424 |
| 100 | % | $ | 149,234 |
| 100 | % | $ | 133,123 |
| 100 | % | |||||||
Soft Drinks |
| 153.4 |
| 129.6 |
| 118.4 |
| ||||||||||||||||
Mineral Water |
| 9.8 |
| 6.2 |
| 4.8 |
| ||||||||||||||||
Juices |
| 3.8 |
| 2.6 |
| 2.0 |
| ||||||||||||||||
Paraguay |
| 18.8 |
|
|
|
|
| ||||||||||||||||
Soft Drinks |
| 16.5 |
|
|
|
|
| ||||||||||||||||
Mineral Water |
| 1.5 |
|
|
|
|
| ||||||||||||||||
Juices |
| 0.8 |
|
|
|
|
|
|
| Years ended December 31, |
| |||||||||||
|
| 2012 |
| 2011 |
| 2010 |
| |||||||
|
| MCh$ |
| % |
| MCh$ |
| % |
| MCh$ |
| % |
| |
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Chile |
| 374,873 |
| 32.0 |
| $ | 304,948 |
| 31.0 |
| 295,659 |
| 33.3 |
|
Brazil |
| 451,597 |
| 38.5 |
| 445,693 |
| 45.4 |
| 407,782 |
| 45.9 |
| |
Argentina |
| 315,336 |
| 26.9 |
| 232,223 |
| 23.6 |
| 185,273 |
| 20.8 |
| |
Paraguay |
| 32,028 |
| 2.7 |
|
|
|
|
|
|
|
|
| |
Inter-country eliminations(1) |
| (1,541 | ) | (0.1 | ) | — |
|
|
| — |
| — |
| |
Total |
| 1,172,293 |
| 100 |
| 982,864 |
| 100 |
| 888,714 |
| 100 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| MCh$ |
| % |
| MCh$ |
| % |
| MCh$ |
| % |
| |
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Chile |
| 57,685 |
| 37.4 |
| 56,170 |
| 39.4 |
| 57,442 |
| 38.5 |
| |
Brazil |
| 64,647 |
| 41.9 |
| 64,047 |
| 45.0 |
| 72,252 |
| 48.4 |
| |
Argentina |
| 32,091 |
| 20.8 |
| 25,942 |
| 18.2 |
| 23,442 |
| 15.7 |
| |
Paraguay |
| 4,620 |
| 3.0 |
|
|
|
|
|
|
|
|
| |
Corporate expenses(2) |
| (4,879 | ) | (3.1 | ) | (3,735 | ) | (2.6 | ) | (3,902 | ) | (2.6 | ) | |
Total |
| 154.164 |
| 100 |
| 142,424 |
| 100 |
| 149,234 |
| 100 |
| |
(1)Eliminations represent intercompany sales.
(2)Corresponds to corporate expenses that are not distributable in the operations.
The following table sets forth, for the periods indicated, the net sales and operating income contributed by each of our business segments,product type, expressed in each case in nominal million Chilean pesos as of December 31, 2011,2012, 2012 and 2010, and 2009, and as a percentage of consolidated net sales or operating income, as the case may be:
|
| Years ended December 31, |
|
| Years ended December 31, |
| |||||||||||||||||||||||
|
| 2011 |
| 2010 |
| 2009 |
|
| 2012 |
| 2011 |
| 2010 |
| |||||||||||||||
|
| MCh$ |
| % |
| MCh$ |
| % |
| MCh$ |
| % |
|
| MCh$ |
| % |
| MCh$ |
| % |
| MCh$ |
| % |
| |||
Net sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Soft drinks |
| $ | 829,888 |
| 84.4 | % | $ | 758,943 |
| 85.4 | % | $ | 683,736 |
| 87.0 | % |
| 967,370 |
| 82.5 |
| 829,888 |
| 84.4 |
| 758,943 |
| 85.4 |
|
Other beverages(1) |
| 145,121 |
| 14.8 |
| 121,650 |
| 13.7 |
| 94,005 |
| 12.0 |
|
| 197,900 |
| 16.9 |
| 145,121 |
| 14.8 |
| 121,650 |
| 13.7 |
| |||
Packaging |
| 7,855 |
| 0.8 |
| 8,121 |
| 0.9 |
| 8,104 |
| 1.0 |
|
| 8,564 |
| 0.7 |
| 7,855 |
| 0.8 |
| 8,121 |
| 0.9 |
| |||
Inter-company eliminations(2) |
| (1,541 | ) | (0.1 | ) |
|
|
|
|
|
|
|
| ||||||||||||||||
Total |
| $ | 982,864 |
| 100 | % | $ | 888,714 |
| 100 | % | $ | 785,845 |
| 100 | % |
| 1,172,293 |
| 100 |
| 982,864 |
| 100 |
| 888,714 |
| 100 |
|
Operating income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Soft drinks |
| $ | 128,783 |
| 90.4 | % | $ | 136,891 |
| 91.7 | % | $ | 120,738 |
| 90.7 | % |
| 147,381 |
| 95.6 |
| 128,783 |
| 90.4 |
| 136,891 |
| 91.7 |
|
Other beverages(1) |
| 10,923 |
| 7.7 |
| 9,518 |
| 6.4 |
| 9,319 |
| 7.0 |
|
| 4,421 |
| 2.9 |
| 10,923 |
| 7.7 |
| 9,518 |
| 6.4 |
| |||
Packaging |
| 2,718 |
| 1.9 |
| 2,825 |
| 1.9 | % | 3,066 |
| 2.3 |
|
| 2,362 |
| 1.5 |
| 2,718 |
| 1.9 |
| 2,825 |
| 1.9 |
| |||
Total |
| $ | 142,424 |
| 100 | % | $ | 149,234 |
| 100 | % | $ | 133,123 |
| 100 | % |
| 154,164 |
| 100 |
| 142,424 |
| 100 |
| 149,234 |
| 100 |
|
(1) Includes, in Chile, waters and juices; in Brazil, beer, water, energy drinks, Nestea products and fruit flavored juices; and in Argentina fruit flavored waters, waters and juices.
(2)Eliminations represents intercompany sales
The following table sets forth, for the periods indicated, information derived from our consolidated income statements, expressed in nominal million Chilean pesos as of December 31, 2012, 2011 2010 and 2009,2010, and as a percentage of consolidated net sales or operating income, as the case may be:
|
| Year ended December 31, |
|
| Year ended December 31, |
| |||||||||||||||||||||||
|
| 2011 |
| 2010 |
| 2009 |
|
| 2012 |
| 2011 |
| 2010 |
| |||||||||||||||
|
| MCh$ |
| % |
| MCh$ |
| % |
| MCh$ |
| % |
|
| MCh$ |
| % |
| MCh$ |
| % |
| MCh$ |
| % |
| |||
Net sales |
| $ | 982,864 |
| 100 | % | $ | 888,714 |
| 100 | % | $ | 785,845 |
| 100 | % |
| 1,172,293 |
| 100.0 |
| 982,864 |
| 100 |
| 888,714 |
| 100 |
|
Cost of sales |
| (578,581 | ) | (58.9 | ) | (506,882 | ) | (57.0 | ) | (455,300 | ) | (57.9 | ) |
| (698,955 | ) | (59.6 | ) | (578,581 | ) | (58.9 | ) | (506,882 | ) | (57.0 | ) | |||
Gross profit |
| 404,283 |
| 41.1 |
| 381,832 |
| 43.0 |
| 330,545 |
| 42.1 |
|
| 473,338 |
| 40.4 |
| 404,283 |
| 41.1 |
| 381,832 |
| 43.0 |
| |||
Distribution, administrative and selling expenses |
| (261,859 | ) | (26.6 | ) | (232,598 | ) | (26.2 | ) | (197,422 | ) | (25.1 | ) |
| (319,174 | ) | (27.2 | ) | (261,859 | ) | (26.6 | ) | (232,598 | ) | (26.2 | ) | |||
Operating income |
| 142,424 |
| 14.5 |
| 149,234 |
| 16.8 |
| 133,123 |
| 16.9 |
|
| 154,164 |
| 13.2 |
| 142,424 |
| 14.5 |
| 149,234 |
| 16.8 |
| |||
Non-operating income (expenses), net |
| (10,712 | ) | (1.1 | ) | (9,294 | ) | (1.0 | ) | (5,972 | ) | (1.0 | ) |
| (27,390 | ) | (2.3 | ) | (10,712 | ) | (1.1 | ) | (9,294 | ) | (1.0 | ) | |||
Income taxes |
| (34,685 | ) | (3.5 | ) | (36,340 | ) | (4.1 | ) | (29,166 | ) | (3.7 | ) |
| (38,505 | ) | (3.3 | ) | (34,685 | ) | (3.5 | ) | (36,340 | ) | (4.1 | ) | |||
Net income |
| $ | 97,027 |
| 9.9 | % | $ | 103,600 |
| 11.7 | % | $ | 97,985 |
| 12.5 | % |
| 88,269 |
| 7.5 |
| 97,027 |
| 9.9 |
| 103,600 |
| 11.7 |
|
Results of Operations for the Years Ended December 31, 2011and 20102012 and 2011
|
| Chile |
| Brazil |
| Argentina |
| Total (1) |
|
| Chile |
| Brazil |
| Argentina |
| Paraguay |
| Eliminations |
| Total (1) |
| ||||||||||||||||||||||||||
|
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| |||||||||||||||||||||||||||||||
M Ch$ |
| 2012 |
| 2011 |
| 2012 |
| 2011 |
| 2012 |
| 2011 |
| 2012 (3) |
| 2012 |
| 2011 |
| 2012 |
| 2011 |
| |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net sales |
| $ | 304,948 |
| $ | 295,659 |
| $ | 445,693 |
| $ | 407,782 |
| $ | 232,223 |
| $ | 185,273 |
| $ | 982,864 |
| $ | 888,714 |
|
| 374,873 |
| 304,948 |
| 451,597 |
| 445,693 |
| 315,336 |
| 232,223 |
| 32,028 |
| (1,541 | ) |
|
| 1,172,293 |
| 982,864 |
|
Cost of sales |
| (176,464 | ) | (170,125 | ) | (267,389 | ) | (232,906 | ) | (134,728 | ) | (103,851 | ) | (578,581 | ) | (506,882 | ) |
| (224,024 | ) | (176,464 | ) | (272,890 | ) | (267,389 | ) | (181,924 | ) | (134,728 | ) | (21,658 | ) | 1,541 |
|
|
| (698,955 | ) | (578,581 | ) | ||||||||
Gross profit |
| 128,484 |
| 125,534 |
| 178,304 |
| 174,876 |
| 97,495 |
| 81,422 |
| 404,283 |
| 381,832 |
|
| 150,849 |
| 128,484 |
| 178,707 |
| 178,304 |
| 133,412 |
| 97,495 |
| 10,370 |
|
|
|
|
| 473,338 |
| 404,283 |
| ||||||||
Distribution, administrative and selling expenses(2) |
| (72,314 | ) | (68,092 | ) | (114,258 | ) | (102,624 | ) | (71,552 | ) | (57,980 | ) | (258,124 | ) | (228,696 | ) |
| (93,164 | ) | (72,314 | ) | (114,060 | ) | (114,258 | ) | (101,321 | ) | (71,552 | ) | (5,750 | ) |
|
|
|
| (314,295 | ) | (258,124 | ) | ||||||||
Corporate expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| (3,735 | ) | (3,902 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (4,879 | ) | (3,735 | ) | ||||||||
Operating income |
| $ | 56,170 |
| $ | 57,442 |
| $ | 64,046 |
| $ | 72,252 |
| $ | 25,943 |
| $ | 23,442 |
| $ | 142,424 |
| $ | 149,234 |
|
| 57,685 |
| 56,170 |
| 64,647 |
| 64,046 |
| 32,091 |
| 25,943 |
| 4,620 |
|
|
|
|
| 154,164 |
| 142,424 |
|
(1) Total does not equal the sum of all the franchise territories due to inter-country eliminations.
(2)The majority of corporate expenses were distributed in the operations.
(3)Only 4Q12 figures
Opening Remarks
The merger by absorption with Embotelladoras Coca-Cola Polar (“Polar”) took place on October 1, 2012, whereby Embotelladora Andina (the Company) increased its ownership interest in Vital, Vital Jugos and ECSA, incorporating them into the consolidation of results as of that date, as well as the results of Polar for the fourth quarter of 2012.
Net Sales
Consolidated Sales Volume was 596.2 million unit cases in 2012, an increase of 18.9%. Soft drinks grew 15.5%, while juices and waters together increased 47.9%. Excluding the effect of the merger with Polar, consolidated sales volume grew 8.7%, where soft drinks grew 6.7% and juices and waters together grew 24.3%. The incorporation of Polar’s operations as of October 1, 2012, contributed with 51.1 million unit cases.
The variations of the Brazilian Real, the Argentine Peso and the Paraguayan Guaraní, all relative to the Chilean Peso, have an impact on the conversion of figures to Chilean Pesos. On average, during the year and with respect to the Chilean Peso, the Brazilian Real depreciated 13.9%, the Argentine Peso 8.8%, and the Paraguayan Guarani 5.1%, generating a negative impact on income and a positive impact on costs and expenses.
Net Sales totaled Ch$1,172,293 million, a 19.3% increase, primarily explained by higher volumes and prices in the four countries where we operate, and partially offset by the effect of conversion of figures. In 2012, the soft drink segment represented 82.4% of consolidated Net Sales , which was slightly lower than the 84.4% we reported in 2011. Excluding the effect of the merger with Polar, Net Sales increased 8.9%, mainly explained by: (i) the effect of the increase in volumes, especially in Brazil and Argentina, as a result of the industry’s growth and of an increase in our market share, and (ii) the increase in revenues per unit case in local currency, mainly due to price increases in line with local inflation. These two effects are partially offset by the effect of the conversion of figures to Chilean Pesos. The incorporation of Polar’s operations as of October 1, 2012 contributed Ch$102,168 million to Net Sales.
In Chile, Sales Volume during 2012 reached 185.4 million unit cases, which represents an increase of 17.3%, and is mainly explained by the 54.1% growth of the juice and water segments and the 11.0% growth of the soft drinks segment. Excluding the effect of the merger with Polar, Sales Volume grew 5.5%, driven by the juice and water segments that together grew 18.9%, while the soft drinks category grew 3.2%. The incorporation of Polar`s operations as of October 1, 2012, contributed 18.7 million unit cases.
The incorporation of Polar did not involve significant changes in market share, since both companies had very similar figures. Regarding the soft drink segment, our market share reached 69.4%, which on average involved a gain of 20 basis points compared with the previous year. Average value market share was 71.9% in 2012, which compares with 71.6% in 2011. Categories of waters and juices still have a very low market penetration when compared to other developed countries, and therefore have presented high growth rates in recent years.
Net Sales in Chile were Ch$374,873 million, representing an increase of 22.9% explained by the following two effects: (i) greater volumes, mainly due to the merger with Polar, and by higher volumes of waters and juices resulting from the strong growth that these industries are experiencing and (ii) the increase of average revenue per unit case, basically explained by higher prices, in line with local inflation. Excluding the effect caused by the merger with Polar, Net Sales grew 10.1%. The incorporation of Polar’s operations as of October 1, 2012, contributed Ch$39,064 million to Net Sales.
Soft drinks Net Sales in Chile were Ch$299,673 million in 2012, an increase of 17.3% over the previous year, mainly due to the 11.0% increase in volumes and by a higher average revenue per unit case. Excluding the effect of the merger with Polar, Net Sales for soft drinks in Chile were Ch$276,014 million, an increase of 8% due to a 3.2% increase in volumes and an increase of the average revenue per unit case of 5%. Net sales of juices and water in Chile were Ch$74,902 million in 2012, 51.3% higher than in 2011, explained by the 54.1% increase in volumes and partially offset by a reduction in the average revenue per unit case. Excluding the effect of the merger with Polar, this figure was Ch$59,795 million, which represented an increase of 21% due to a volume growth of 19% and an increase in the average revenue per unit case of 2%. The incorporation of Polar’s operations as of October 1, 2012, contributed with Ch$23,659 million in soft drinks, and Ch$15,106 million in juices and waters.
In Brazil, 2012 Sales Volume reached 225.0 million unit cases, which represented a growth of 9.7%, explained by higher volumes in the juices and waters categories (23.0%), while the soft drink category expanded 7.8%. Sales volumes were positively impacted by: (i) a better execution at the points of sale as a result of an increase in the sales force, and (ii) industry growth, influenced by the 14% adjustment in the minimum wage. Net sales were Ch$451,597 million (+1.3%), explained by higher volumes and price increases slightly lower than local inflation. These effects were partially offset by the negative effect of the conversion of figures. In 2012, our average market share in the soft drink segment was 59.1%, 170 basis points higher than the previous year, which reflects our strong competitive position and the positive impact that our sales’ strategy has had. In value terms, our average market share reached 67.0% in 2012, in comparison with the 66.4% obtained in 2011.
Net Sales of soft drinks in Brazil were Ch$359,116 million in 2012, a drop of 1.8% over the previous year, which is explained by a 7.8% increase in volumes and by price increases slightly below local inflation. These effects were more than offset by the strong negative impact of conversion of figures. Net sales of juices, waters and beer in Brazil were Ch$92,480 million in 2012, representing an increase of 15.5% due to higher volumes and mix effect, partially offset by the conversion of figures.
In Argentina, 2012 Sales Volume reached 167 million unit cases, representing an increase of 20.7%, basically due to a 55.9% growth in the segment of juices and waters, leveraged by the launching of our new Bonaqua mineral water, and by the 18.3% growth of the soft drinks segment. Excluding the effect of the merger with Polar, sales volumes grew 10.8%, driven by juices and waters that together grew 41.3%, while the soft drinks category grew by 8.8%. The incorporation of Polar’s operations as of October 1, 2012, contributed 13.6 million unit cases.
The incorporation of Polar did not involve significant changes in market share, as both companies had very similar figures. Regarding the soft drink segment, our market share reached 58.8%, which -on average- involves a market share gain of 150 basis points in comparison with the previous year, and is mainly explained by a greater presence in supermarkets and a better execution in the returnable bottle segment. Average value market share was 63.9% in 2012, which compares to 63.4% in 2011. The waters and juices categories still have a very low penetration in the market compared to other developed countries, and therefore have presented high growth rates in recent years.
Net Sales in Argentina were Ch$315,336 million, which represents an increase of 35.8%, that is explained by the following effects: (i) greater volumes, mainly due to the merger with Polar, as well as by the incorporation of Bonaqua; and (ii) and increase of revenues per unit case, basically explained by price increases in line with local inflation, and partially offset by the effect of conversion of figures. Excluding the effect of the merger with Polar, Net Sales grew 21.7%, explained by the following two effects: (i) growth in volumes due to the same reasons explained above, and (ii) increases in the average revenue per unit case, basically explained by price increases in line with local inflation. The incorporation of Polar’s operations as of October 1, 2012, contributed Ch$32,618 million.
Net Sales of soft drinks in Argentina were Ch$281,696 million in 2012, an increase of 34.9% over the previous year, mainly due to an 18.3% increase in volume and to a higher average revenue per unit case. Excluding the effect of the merger with Polar, Net Sales of soft drinks in Argentina were Ch$253,319 million, an increase of 21.3% explained by an 8.8% increase in volumes and by price increases in line with local inflation, partially offset by the effect of the conversion of figures.
Net Sales of juices and water in Argentina were Ch$23,827 million in 2012, a 53.5% increase when compared with 2012, mainly due to the 55.9% increase in volumes and partially offset by a decrease in the average revenue per unit case. This decrease is explained by the effect of the launching of Bonaqua, which has a lower per unit case price than juices. On the other hand, without considering the effect of the merger with Polar, Net Sales for juices and waters were Ch$20,836 million, which represented an increase of 34%, due to the reasons already commented. The incorporation of Polar’s operations as of October 1, 2012, contributed Ch$28,377 million to the sales of soft drinks in Argentina and Ch$2,991 million to the sales of juices and waters.
In Paraguay, Sales Volume for the fourth quarter of 2012 reached 18.8 million unit cases. The soft drinks segment represented 87.8% of sales volume, while the remaining 12.2% were juices and waters. Net sales amounted to Ch$32,028 million. In the fourth quarter of 2012 our average market share in the soft drink segment was 60.7%. In terms of value, our average market share reached 70.4% during the fourth quarter of 2012.
Net Sales of soft drinks in Paraguay reached Ch$26,885 million in the fourth quarter of 2012. Net sales of juices and water in Paraguay amounted Ch$5,144 million in the fourth quarter of 2012.
Cost of Sales
Cost of Sales reached Ch$698,955 million in 2012, increasing 20.8% when compared to Ch$578,581 million in 2011. Excluding the effect of the merger with Polar, Cost of Sales were Ch$634,752 million, which represents an increase of 9.7%. In addition to the incorporation of Polar, that represents a cost of Ch$64,203 million, the increase in Costs of Sales is explained by: (i) changes in the products mix in Chile and Brazil, towards products with higher costs; (ii ) increases in the cost of concentrate in Chile, Brazil and Argentina;(iii) higher labor costs in Chile and Argentina; (iv) an increase of depreciation in Chile; (v) high inflation in Argentina, which affects a significant portion of our Cost of Sales; and (vi) the depreciation of local currencies in relation to the dollar, which has an impact on raw materials indexed to such currency. All the above effects were partially offset by the effect of conversion of our operations figures in Brazil and Argentina. Cost of Sales represented a 59.6% of Net Sales in 2012 and 58.9% in 2011.
In Chile, Costs of Sales amounted to Ch$224,025 million in 2012, an increase of 27.0% when compared to Ch$176,464 million in 2011. Cost of Sales per unit case was Ch$1,209 in 2012, an increase of 8.2% when compared to 2011. Excluding the effect of the merger with Polar, which contributes Ch$25,400 million, Cost of Sales was Ch$198,625 million, representing an increase of 12.6% over 2011. Costs of Sales per unit case, without considering the merger with Polar was Ch$1,191 in 2012, 6.7% higher than in 2011. In addition to the incorporation of Polar, the increase in Costs of Sales per unit case is explained by: (i) higher depreciation per unit case, as the new lines of the Renca plant began to be depreciated, which explains the 43% of the increase of cost per unit case; (ii) a greater participation of distributed products, which explains an 18% of the increase in Costs of Sales per unit case; and (iii) greater labor costs due to an increase of salaries, which accounts for 8% of the increase in costs per unit case. These increases were partially offset, among others by: (i) a decrease of the cost of products purchased from third parties, since the Renca plant started producing soft drinks in PET bottles of 591cc and 250cc; and (ii) a lower cost of sugar due to the price reduction it has presented on the international markets. Cost of Sales represented a 59.8% of Net Sales in 2012 and 57.9% in 2011.
In Brazil, Costs of Sales reached Ch$272,890 million in 2012, 2.1% higher than Ch$267,389 million in 2011. In local currency Costs of Sales increased 18.4%. Cost of Sales per unit case was Ch$1,331 in 2012, which is 2.1% higher than in 2011, mainly due to the change in the product mix, towards distributed products which have a higher Cost of Sales. This effect was partially offset by the effect of converting figures, due to the depreciation of the Brazilian Real in relation to the Chilean Peso. Cost of Sales represented a 60.4% of Net Sales in 2012 and 60.0% in 2011.
In Argentina, Cost of Sales reached Ch$181,924 million in 2012, 35.0% higher than the Ch$134,728 million in 2011. In local currency, Cost of Sales increased 50.0%. Cost of Sales per unit case was Ch$1,090 in 2012, an increase of 11.9% when compared to 2011. Excluding the effect of the merger with Polar, which explains an additional cost of Ch$18,687 million, Cost of Sales was Ch$163,237 million, that is, an increase of 12.6% over 2011, while Cost of Sales per unit case was Ch$1,064 in 2012, 9.3% higher than in 2011. In addition to the incorporation of Polar, the increase in Cost of Sales per unit case in local currency is explained by: (i) higher costs of concentrate explained by price increases, accounting for the 42% of the increase in the cost per unit case; (ii) higher labor costs, mainly caused by the increase in real wages and increase of headcount as a result of higher volumes; (iii) higher depreciation due to the investments we have made in recent years; and (iv) change in the product mix towards distributed products. All these effects were partially offset by: (i) a lower cost of PET bottles and (ii) the effect of conversion of figures. Cost of Sales represented a 57.7% of Net Sales in 2012 and 58.0% in 2011.
Gross Profit
Due to the aforementioned, gross profit in 2012 increased by 17.1% in 2012, reaching Ch$473,338 million, or 40.4% of Net Sales, compared to Ch$404,283 million, or 41.1%, of Net Sales, in 2011. Excluding the effect of the merger with Polar, gross profit in 2012 reached $435,373 million, representing 40.7% of Net Sales, and an increase of 7.7% compared with the previous year. The incorporation of Polar accounted for Ch$37,965 million of additional Gross Profit.
Sales and Administrative Expenses
Sales and Administrative (SG&A) Expenses totaled Ch$314,295 million in 2012, representing 26.8% of Net Sales in 2012, 21.8% higher than the Ch$258,124 million in 2011 (26.3% of Net Sales for that year). Excluding the effect of the merger with Polar, SG&As were Ch$286,444 million, representing 26.8% of Net Sales and were 11.0% higher than the previous year. In addition to the incorporation of Polar, which explains and additional cost of Ch$27,851 million, the increase in SG&A Expenses is explained by: (i) greater costs of distribution in the three countries in which we operate; (ii) higher labor costs in Argentina and Chile; and (iii) greater depreciationcharges in Brazil.
In Chile, SG&A Expenses were Ch$93,164 million in 2012, representing 24.9% of Net Sales, and 28.8% higher than the Ch$72,314 million in 2011 (23.7% of Net Sales for that year). Excluding the effect of
the merger with Polar, SG&As were Ch$84,257 million, representing 25.1% of Net Sales and an increase of 16.5% when compared to the previous year. In addition to the incorporation of Polar, which explains an additional cost of Ch$8,907 million, the increase of SG&A Expenses is mainly explained by the fact that during the fourth quarter of 2011 there was a positive effect caused by other operating income classified under this item and, in this period, such situation did not happen. Excluding this item, SG&A Expenses would have increased 12%, mainly due to: (i) greater costs of distribution, 20% higher when compared to the previous year, due to greater volumes and increases of tariffs; and (ii) a 16% increase in labor costs, due to increases of real wages and the simultaneous operation of two production plants during 2012.
In Brazil, SG&A Expenses were Ch$114,060 million in 2012, 0.2% lower when compared to Ch$114,258 million 2011. This reduction is explained by the effect of currency conversion. In local currency SG&A Expenses increased 15.8%, mainly due to: (i) higher costs of labor, which in local currency were 31% higher than last year; (ii) greater distribution costs in local currency, that were 14% higher when compared to the year above, and (iii) greater depreciation charges, which in local currency was 29% higher than the previous year. As a percentage of Net Sales, SG&A Expenses were 25.3% in 2012, and 25.6% in 2011.
In Argentina, SG&A Expenses were Ch$101,321 million in 2012, representing 32.1% of Net Sales, and 41.6% higher when compared to Ch$71,552 million in 2011 (30.8% of the Net Sales for that year). Excluding the effect of the merger with Polar, SG&As were Ch$88,126 million, representing 31.2% of Net Sales, 23.2% higher when compared to the previous year. In addition to the incorporation of Polar, which explains the additional cost of Ch$13,195 million, the increase in SG&As is mainly explained by the effect of local inflation in these costs, among which the following stand out: (i) greater costs of distribution, which -in local currency- were 39 % higher when compared to the previous year and were also affected by higher volumes; and (ii) higher labor costs, which -in local currency- were 29% higher than the previous year. These effects were partially offset by the effect of conversion of figures.
In Paraguay, SG&A Expenses were Ch$5,750 million and, as a percentage of sales, they reached 18.0%.
Operating Income
As a consequence of the aforementioned, Operating Income increased 8.2% in 2012, reaching Ch$154,164 million, or 13.2% of net sales, compared to Ch$142,424 million, or 14.5% of net sales in 2011. Excluding the effects of the merger with Polar, Operating Income was Ch$144,050 million, representing 13.5% of Net Sales and a 1.1% increase when compared to the previous year. The incorporation of the operations of Polar explained Ch$10,114 million additional Operating Income.
Non-operating Income (Expense), Net
The following table sets forth, for the periods indicated, the items of non-operating income (expense), net:
|
| For the year ended |
| ||
|
| 2012 |
| 2011 |
|
|
| (million Ch$) |
| ||
|
|
|
|
|
|
Other income and expenses, by function and other gains and losses |
| (14,490 | ) | (7,511 | ) |
Financial Income |
| 2,728 |
| 3,182 |
|
Financial Costs |
| (11,173 | ) | (7,235 | ) |
Share of income (losses) from affiliated companies and joint business that are accounted for using the equity method |
| 1,770 |
| 2,026 |
|
Exchange rate differences |
| (4,471 | ) | 3 |
|
Profit from unit of adjustment |
| (1,754 | ) | (1,177 | ) |
Non-operating income, net |
| (27,390 | ) | (10,712 | ) |
Non-Operating Results totaled a loss of (Ch$27,390) million, which compares negatively to a loss of (Ch$10,712) million recorded during 2011. The account with greater variation is “Other income and expenses, by function and other gains and losses” which reflects a higher loss of Ch$6,979 million due to (i) expenses of the merger with Polar recognized in 2012 for MM$4,518; (ii) higher expenses for derivatives transactions for MM$2,584. Financial costs increased Ch$3,938 in 2012, mainly due to: (i) greater debt mainly originated in Chile; and (ii) recognition for 3 months of the financial liabilities for the debts of the companies incorporated by the merger with Polar. Finally, exchange rate differences had a higher loss of MM$4,474 than the previous year, caused by the update of accounts payables to related companies.
Income Taxes
Income taxes in 2012 increased 11.0% to Ch$38,505 million compared to Ch$34,685 million in 2011. The increase is principally explained by i) higher tax liabilities due to the incorporation of Polar during 2012; (ii) profit increase of our subsidiary in Argentina, country that has the highest income tax rate of the group; and (iii) recognition of expenses caused by the change of the income tax rate from 18.5% to 20%, occurred in Chile during 2012
Net Income
As a result of the aforementioned, net income in 2012 was Ch$88,269 million, representing 7.5% of net sales and a decrease of 9.0% compared to net income of Ch$97,027 million in 2011.
Impact of Foreign Currency Fluctuations
In Chile we had losses of Ch$4,471 million in 2012 due to the revaluation of the Chilean peso with respect to the Argentinean peso and the Brazilian real, currencies in which we maintained accounts receivables. This loss compares to a profit of Ch$3 million in 2011, where the Chilean peso did not appreciated respect to the other local currencies of the countries in which we operate. Our net asset position in U.S. dollars is insignificant.
In accordance with IFRS conversion methods, assets and liabilities from Argentina, Paraguay and Brazil are converted from their functional currency (Argentine Peso, Paraguayan Guaraní and Brazilian Real respectively) to the reporting currency of the parent company (Chilean peso) at the end of period exchange rate, and income accounts at the exchange rate as of the date of the transaction or monthly average exchange rate of the month when it took place. The effects of translation are presented as comprehensive income and do not affect the results for the years ended December 31, 2012, 2011 and 2010. The translation effects due to the currency conversion undertaken for assets and liabilities in accordance with the method previously explained resulted in a decrease of other comprehensive income of Ch$35,983 during 2012 (net decrease of Ch$1,965 million during 2011 and decrease of Ch$9,450 million during 2010) We also present under other comprehensive income the net effect as result of the restatement of Chilean pesos to U.S. Dollars and Brazilian Reais to U.S. dollars resulting from the update of intercompany accounts that have designated as part of the Company’s investment, this effect resulted in an increase of Ch$5,113 million during 2012 ( decrease of Ch$1,087 and Ch$1,845 million during 2011 and 2010).
In Chile we use hedge agreements, to protect against foreign currency risk, which has an impact on our dollar denominated raw materials needs. The mark to market of these contracts was recorded in 2012 and 2011 as other earnings and losses in the consolidated statements of income. For further information about the instruments we use to protect against foreign currency risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk.”
Impact of Governmental Policies
Our business is dependent upon the economic conditions prevailing in our countries of operation. Various governmental economic, fiscal, monetary and political policies, such as those related to inflation or foreign exchange, may affect these economic conditions, and in turn may impact our business. These government policies may also affect investments by our shareholders.
For a discussion of political factors and governmental, economic, fiscal and monetary policies that could materially affect investments by U.S. shareholders as well as our operations, please refer to “Item 3. Key Information—Risk Factors” and “Item 10. Additional Information”
Results of Operations for the Years Ended December 31, 2011and 2010
|
| Chile |
| Brazil |
| Argentina |
| Total (1) |
| ||||||||
M Ch$ |
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| 2011 |
| 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
| 304,948 |
| 295,659 |
| 445,693 |
| 407,782 |
| 232,223 |
| 185,273 |
| 982,864 |
| 888,714 |
|
Cost of sales |
| (176,464 | ) | (170,125 | ) | (267,389 | ) | (232,906 | ) | (134,728 | ) | (103,851 | ) | (578,581 | ) | (506,882 | ) |
Gross profit |
| 128,484 |
| 125,534 |
| 178,304 |
| 174,876 |
| 97,495 |
| 81,422 |
| 404,283 |
| 381,832 |
|
Distribution, administrative and selling expenses(2) |
| (72,314 | ) | (68,092 | ) | (114,258 | ) | (102,624 | ) | (71,552 | ) | (57,980 | ) | (258,124 | ) | (228,696 | ) |
Corporate expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| (3,735 | ) | (3,902 | ) |
Operating income |
| 56,170 |
| 57,442 |
| 64,046 |
| 72,252 |
| 25,943 |
| 23,442 |
| 142,424 |
| 149,234 |
|
(4)Total does not equal the sum of all the franchise territories due to inter-country eliminations.
(5) The majority of corporate expenses were distributed in the operations.
Net Sales
Consolidated Sales Volume amounted to 501.2 million unit cases in 2011, an increase of 2.5%. Soft Drinks grew 2.3%, while the other categories of, Juices, Waters, and Beer together increased by 4.2%. Particularly, the Waters segment recorded a significant 19.6% increase.
The variations in the exchange rates of the Brazilian real and Argentine peso with respect to the Chilean peso, affect our results expressed in Chilean pesos. On average during the year and with respect to the Chilean peso, the Brazilian real devalued 0.3% resulting in a slight negative accounting effect upon translation of figures from Brazil; and the Argentine peso devalued 10.15%, resulting in a negative accounting impact over income and a positive impact over costs and expenses upon translation of figures for consolidation, in the end, having a negative accounting effect over results upon translation of figures from Argentina.
Net Sales amounted to Ch$982,864 million, a 10.6% increase mainly explained by the increase in volume and prices in the three countries. Of the consolidated net sales, soft drinks represented 84.4% in 2011, slightly lower when compared to the 85.4% in 2010.
In Chile, Sales Volume amounted to 157.8158.0 million unit cases, a 2.3% decline, mainly explained by the 37.1% decrease in the juice segment. Due to the partial sale of Vital Jugos in Chile which occurred in January of 2011, this subsidiary no longer consolidates with Andina, therefore, 2011 volumes do not include the juice volume that Vital Jugos sold to Embonor and Polar (the other two Chilean Coca-Cola bottlers). Without
considering this effect, volumes in Chile would have posted a 3.4% growth, with soft drink volumes growing 1.7% and the Juice and Water segment growing 14.9%. Regarding soft drinks, better execution in the market, allowed us to gain 10 bps of market share, thus reaching 69.2%. Our average value market share was 71.6% during 2011 compared to 71.8% in 2010. With respect to Juices and Waters, these are categories which still have low per capita consumption as compared with more developed markets, and thus have been presenting high growth rates in the last years.
Net Sales amounted to Ch$304,948 million, a 3.1% improvement, driven by higher volumes and prices, and offset by the non consolidation of Vital Jugos, which participated in 2010 in 4.5% of total revenues. Soft drink net sales in Chile amounted to Ch$255,436 million during 2011, representing a 5.9% increase regarding the previous year, principally explained by a 1.7% increase in volumes and by an increase of the average income per unit case. Net sales of juices and waters in Chile was Ch$49,512 million in 2011, showing a decrease of 9.1% from 2010. This decrease was led by a 37.1% decrease of sales volume of the juice segment, explained by the non consolidation of Vital Jugos in 2011. When considering proforma sales, juice sales would have grown 20.5%, led by a 15.1% volume increase, coupled with price increases slightly above local inflation.
In Brazil, Sales Volume amounted to 205.1 million unit cases, a 1.3% increase driven by the Juice, Water and Beer segment (+39.4%), while the soft drinks category showed a 1.9% decrease. Soft drink volumes were negatively impacted by the consumption slowdown observed in the economy during all of 2011, by higher inflation and by adverse weather conditions. Juices and Waters were positively impacted by the incorporation to our portfolio of the Matte Leão brand. Net Sales reached Ch$445,693 million (+9.3%) due to higher volumes, price adjustments in line with local inflation and a change of our product mix towards more expensive products. In year 2011, our average volume market share in the soft drink market in Brazil reached 57.4%, same figure as 2010, reflecting a strong competitive position. Our average value market share was 66.4% during 2011 compared to 67.0% in 2010.
Soft drink Net Sales in Brazil amounted to Ch$365,604 million during 2011, representing a 4.2% increase regarding the previous year, mainly explained by price adjustments that were slightly below local inflation, coupled with the decrease of 1.9% in soft drinks volumes. On the other hand, the Company’s beer, water and juice operations in Brazil generated net sales in 2011 of Ch$80,089 million, representing a 40.6% increase from 2010, mainly explained by increased volumes due to the incorporation to our portfolio of the Matte Leão brand.
In Argentina, Sales Volume amounted to 138.3138.4 million unit cases, an increase of 10.5%. Soft drinks grew 9.4% and the other categories of juices and waters together grew 29.1%. Net Sales reached Ch$232.223 million (+25.3%), explained by (i) price increases in local currency, in line with local inflation, (ii) volume increases, and (iii) the devaluation of the Argentine peso with respect to the Chilean peso. In year 2011, our average volume market share in the soft drink market in Argentina increased to 57.3% reflecting that we maintain a strong competitive position. Our average value market share was 63.4% during 2011 compared to 62.8% in 2010.
Soft drinks Net Sales in Argentina amounted to Ch$208.848 million during 2011, representing a 25.1% increase when compared to the previous year, mainly explained by higher volumes in this segment and price increases, that were in line with local inflation, in local currency. Net sales of PET packaging and juices in Argentina were Ch$23,375 million in 2011, representing an increase of 27.5% compared to 2010 resulting from the same reasons given for the increase in Soft Drinks Net Sales.
Cost of Sales
Cost of sales were Ch$578,581 million in 2011, representing 58.9% of net sales, compared to Ch$506,882 million, or 57.0% of net sales in 2010. The increase in cost of sales in 2011 was principally due to (i) significant increase in the cost of sugar per unit case in the three countries where we operate; (ii) change in the mix of products in Chile and Brazil, and (iii) increased concentrate costs in Chile and in Argentina, (iv) increased labor costs in Chile and (v) high inflation in Argentina that affects an important portion of our cost of sales.
In Chile, Cost of Sales were Ch$176,464 million in 2011, a 3.7% increase when compared to the Ch$170,125 million in 2010. The cost of sales per unit case sold reached Ch$1,118 in 2011, a 6.2% increase when compared to 2010, mainly due to (i) sugar costs per unit case that on average were approximately 16% above last year, explaining 20% of the increase in the cost of sales per unit case (ii) higher mix of distributed juice and water products in our total sales, which explains 35% of the increase in the cost of sales per unit case, (iii) an 8% increase in the concentrate cost per unit case, which explains 23% of the increase in the cost of sales per unit case, and (iv) higher labor costs due to an increase in wages and to the fact that the Company has been running two production plants simultaneously during the fourth quarter of 2011. The percentage representing cost of sales regarding net sales was 57.9% for the year 2011 and 57.5% for the year 2010.
In Brazil, Cost of Sales were Ch$267,389 million in 2011, a 14.8% increase when compared to the Ch$232,906 million in 2010. The cost of sales per unit case reached Ch$1,304 in 2011, increasing 13.4% when compared to 2010, mainly due to (i) higher mix of distributed products in our total sales, which explains 74% of the increase in the cost of sales per unit case, (ii) increased costs of PET bottles (approximately 14% higher per unit case when compared to 2010), and which explains 11% of the increase in cost of sales per unit case and (iii) sugar costs per unit case, that on average were approximately 5% higher when compared to 2010, and which explains 5% of the increase in the cost of sales per unit case. The percentage representing cost of sales regarding net sales was 60.0% for 2011 and 57.1% for the year 2010.
In Argentina, Cost of Sales were Ch$134,728 million in 2011, a 29.7% increase when compared to the Ch$103,851 million in 2010. The cost of sales per unit case reached Ch$974 in 2011, increasing 17.4% when compared to 2010, mainly due to increases in (i) sugar costs, that on average, and in local currency, were approximately 68% higher per unit case, when
compared to last year, and which explains 45% of the increase in cost of sales per unit case, (ii) higher concentrate prices, due to price increases, which explains 26% of the increase in cost of sales per unit case and (iii) the 10.15% devaluation of the Argentine peso with respect to the Chilean peso, resulting in a positive accounting impact upon translation of figures from local currency to Chilean pesos. The percentage representing cost of sales regarding net sales was 58.0% during 2011 and 56.1% for the year 2010.
Gross Profit
Due to the aforementioned, gross profit in 2011 increased by 5.9%, reaching Ch$404,283 million, or 41.1% of net sales, compared to Ch$381,832 million, or 43.0% of net sales in 2010.
Distribution, , Administrative and Selling Expenses
Distribution, administrative and selling expenses amounted to Ch$261,859 million in 2011, representing 26.6% of net sales for 2011, a 12.6% increase with respect to the Ch$232,598 million in 2010, that represented 26.2% of net sales for that year. SG&A expenses increased principally because of (i) higher distribution costs in the three countries where we operate, (ii) higher labor costs in Argentina and in Chile and (iii) higher inflation in Argentina.
In Chile, SG&A expenses were Ch$72,314 million in 2011, a 6.2% increase when compared to the Ch$68,092 million in 2010. This increase was mainly due to (i) distribution costs which were 14% higher than the previous year, (ii) a 12% increase in labor costs due to wage increases, hiring of third party logistic personnel, and to the fact that the Company has been running two production plants simultaneously during the fourth quarter of 2011, and (iii) higher depreciation charges (57% increase) mainly associated with the new bottling facility. As a percentage of net sales, selling and administrative expenses were 23.7% in 2011 compared with 23.0% in 2010
In Brazil, SG&A expenses were Ch$114,258 million in 2011, a 11.3% increase when compared to the Ch$102,624 million in 2010. The main factors that explain this increase are (i) higher distribution costs, which grew 14% when compared to 2010, and (ii) higher marketing expenses, which grew 17%. As a
percentage of net sales, selling and administrative expenses were 25.6% in 2011 compared with 25.2% in 2010.
In Argentina SG&A expenses were Ch$71,552 million in 2011, a 23.4% increase when compared to the Ch$57,980 million in 2010. This increase was mainly due to (i) distribution costs which were 24% higher than the previous year, due to higher volumes and local inflation, (ii) a 28% increase in labor costs due to wage increases as a result of local inflation, and (iii) higher plant to warehouse transportation costs, which increased 25%. As a percentage of net sales, selling and administrative expenses were 30.8% in 2011 compared with 31.3% in 2010.
Operating Income
As a consequence of the aforementioned, Operating Income decreased 4.6% in 2011, amounting to Ch$142,424 million, or 14.5% of net sales, compared to Ch$149,234 million, or 16.8% of net sales in 2010.
Non-operating Income (Expense), Net
The following table sets forth, for the periods indicated, the items of non-operating income (expense), net:
|
| For the year ended |
| ||||
|
| 2011 |
| 2010 |
| ||
|
| (million Ch$) |
| ||||
|
|
|
|
|
| ||
Other income and expenses, by function and other gains and losses |
| $ | (7,511 | ) | $ | (7,143 | ) |
Financial Income |
| 3,182 |
| 3,376 |
| ||
Financial Costs |
| (7,235 | ) | (7,402 | ) | ||
Share of income (losses) from affiliated companies and joint business that are accounted for using the equity method |
| 2,026 |
| 2,315 |
| ||
Exchange rate differences |
| 3 |
| (222 | ) | ||
Profit from unit of adjustment |
| (1,177 | ) | (218 | ) | ||
Non-operating income, net |
| $ | (10,712 | ) | $ | (9,294 | ) |
|
| For the year ended |
| ||
|
| 2011 |
| 2010 |
|
|
| (million Ch$) |
| ||
|
|
|
|
|
|
Other income and expenses, by function and other gains and losses |
| (7,511 | ) | (7,143 | ) |
Financial Income |
| 3,182 |
| 3,376 |
|
Financial Costs |
| (7,235 | ) | (7,402 | ) |
Share of income (losses) from affiliated companies and joint business that are accounted for using the equity method |
| 2,026 |
| 2,315 |
|
Exchange rate differences |
| 3 |
| (222 | ) |
Profit from unit of adjustment |
| (1,177 | ) | (218 | ) |
Non-operating income, net |
| (10,712 | ) | (9,294 | ) |
Non-Operating Results totaled a loss of (Ch$10,712) million, which compares negatively to a loss of (Ch$9,294) million recorded during 2010. The account with greater variation is “Other income and expenses, by function and other gains and losses” which reflects a higher loss of Ch$368 million due to (i) increased provisions for contingencies relating primarily to the Brazilian operation; (ii) greater property, plant and equipment write-offs relating mainly to the construction of the new plant located in Renca; partially offset by (iii) losses registered in 2010 and not present in the year 2011 resulting from the earthquake on February 27, 2010 (iii) earnings recognized in 2011 resulting from benefits associated with tax credits from previous years recognized by Brazilian authorities (iv) earnings in the proportional sale of the affiliate Vital juices S.A. in January 2011 (v) greater earning per the update of judicial deposits (vi) lower expenses in 2011 regarding 2010 resulting from non-operating fees and donations.
Income Taxes
Income taxes in 2011 decreased 4.6% to Ch$34,685 million compared to Ch$36,340 million in 2010. The decrease is principally explained by (i) lower profits from the Brazilian operation during the year 2011 versus the year 2010, which are partially offset by (ii) greater profits from the Argentine operation during the year 2011 versus the year 2010.
Net Income
As a result of the aforementioned, net income in 2011 was Ch$97,027 million, representing 9.9% of net sales and a decrease of 6.3% compared to net income of Ch$103,600 million in 2010.
Results of Operations for the Years Ended December 31, 2010 and 2009
|
| Chile |
| Brazil |
| Argentina |
| Total (1) |
| ||||||||||||||||
|
| 2010 |
| 2009 |
| 2010 |
| 2009 |
| 2010 |
| 2009 |
| 2010 |
| 2009 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net sales |
| $ | 295,659 |
| $ | 273,098 |
| $ | 407,782 |
| $ | 339,546 |
| $ | 185,273 |
| $ | 174,438 |
| $ | 888,714 |
| $ | 785,845 |
|
Cost of sales |
| (170,125 | ) | (155,157 | ) | (232,906 | ) | (201,346 | ) | (103,851 | ) | (100,034 | ) | (506,882 | ) | (455,300 | ) | ||||||||
Gross profit |
| 125,534 |
| 117,941 |
| 174,876 |
| 138,200 |
| 81,422 |
| 74,404 |
| 381,832 |
| 330,545 |
| ||||||||
Distribution, administrative and selling expenses(2) |
| (68,092 | ) | (64,036 | ) | (102,624 | ) | (78,251 | ) | (57,980 | ) | (51,192 | ) | (228,696 | ) | (193,479 | ) | ||||||||
Corporate expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| (3,902 | ) | (3,943 | ) | ||||||||
Operating income |
| $ | 57,442 |
| $ | 53,905 |
| $ | 72,252 |
| $ | 59,949 |
| $ | 23,442 |
| $ | 23,212 |
| $ | 149,234 |
| $ | 133,123 |
|
(1)Total does not equal the sum of all the franchise territories due to inter-country eliminations.
(2)The majority of corporate expenses were distributed in the operations.
Net Sales
Consolidated Sales Volume amounted to 489.2 million unit cases in 2010, an increase of 6.7%. Soft Drinks grew 4.4%, while the other categories of, Juices, Waters, and Beer together increased by 35.1%. Particularly, the Waters segment recorded a significant 43.9% increase. Net Sales amounted to Ch$888,714 million, a 13.1% increase mainly explained by the increase of volume and prices in the three countries in addition to the positive effect upon translation of figures from Brazil and negative effect in the case of Argentina. Net sales of Coca-Cola soft drinks represented 85.4% of total Consolidated Net Sales.
In Chile, Sales Volume amounted to 161.5 million unit cases, a 6.0% growth. This growth was a result of increased soft drink volumes (+3.6%), our main category, as well as an increase in juices and waters (18.4%). Regarding soft drinks, better execution at the point of sales allowed us to gain 50 bps of market share, thus reaching 69.1%. Our average value market share in the soft drinks category was 71.8% during 2010 compared to 71.7% in 2009. With respect to Juices and Waters, these are categories which still have low per capita consumption compared with more developed markets, and thus have been presenting high growth rates in the last years. Also, we launched new flavors and packages in some categories like Powerade Frutilla (Strawberry) and Aquarius Uva (Grape).
Net Sales amounted to Ch$295,659 million, an 8.3% improvement, driven by the aforementioned higher volumes and price increases slightly below local inflation. Soft drink Net Sales in Chile amounted to Ch$241,172 million during 2010, representing a 7.0% increase regarding the previous year, principally explained by a 3.6% increase in volumes and by an increase of the average income per unit case, as a result of price increases which aim at compensating our cost inflation. Net sales of Juices and Waters in Chile was Ch$54,486 million in 2010, showing an increase of 14.0% from 2009. This growth was led by an 18.4% increase in sales volumes of these segments, and partially offset by lower income per unit case, mainly due to an increase in the mix of water, which has lower prices than juices.
In Brazil, Sales Volume amounted to 202.5 million unit cases, a 9.3% increase driven by Soft drinks (+7.7%) and the Juice, Water and Beer segment (+52.8%). This significant growth reflects the economic and consumption recovery and favorable weather conditions. Net Sales reached Ch$407,782 million (+20.1%) due to the effect upon translation of figures in addition to higher volumes and price adjustments above local inflation. The Brazilian real appreciated 3.5% on average with respect to the respect the Chilean peso, resulting in a positive accounting impact over costs and expenses upon translation of figures for consolidation. In year 2010, our average volume market share in the soft drink market in Brazil reached 57.4% reflecting that we maintain a strong competitive position. Our average value market share was 67.0% during 2010 compared to 67.6% in 2009.
Soft drink Net Sales in Brazil amounted to Ch$350,824 million during 2010, representing a 17.6% increase regarding the previous year, principally explained by the effect upon translation of figures, increased volumes and price adjustments made in this segment. On the other hand, the Company’s beer, water and juice operations in Brazil generated net sales in 2010 of Ch$56,958 million, representing a 38.2% increase from 2009.
In Argentina, Sales Volume reached 125.2 million unit cases, an increase of 3.6%. Soft drinks grew 0.5% and the other categories of Juices and Waters together grew 126%. Net Sales reached Ch$185,273 million (+6.2%), explained by price adjustments and increased volumes, offset by the effect upon translation of figures. The Argentine peso devalued 13.1% on average with respect to the Chilean peso resulting in a negative accounting impact over income and a positive impact over costs and expenses upon translation of figures for consolidation, in the end, having a negative impact over results. In year 2010, our average volume market share in the soft drink market in Argentina increased to 55.3% reflecting that we maintain a strong competitive position. Our average value market share was 62.8% during 2010 compared to 61.2% in 2009.
Soft drink net sales in Argentina amounted to Ch$166,947 million during 2010, representing a 4.3% increase regarding the previous year, principally explained by higher volumes in this segment , offset by the negative effect upon translation of figures. Net sales of PET packaging and juices in Argentina were Ch$18,327 million in 2010, representing an increase of 39.9% compared to 2009 resulting from the same reasons given for the increase in soft drinks net sales.
Cost of Sales
Cost of sales were Ch$506,882 million in 2010, representing 57.0% of net sales, compared to Ch$455,300 million, or 57.9% of net sales in 2009. The increase in cost of sales in 2010 was principally due to (i) significant increases in the cost of sugar in Chile and in Brazil; (ii) increased concentrate costs in Chile due to a price increase; (iii) change in the mix of products in Chile and Brazil, partially offset by lower PET prices in Brazil.
In Chile, Cost of Sales were Ch$170,125 million in 2010, a 9.6% increase when compared to the Ch$155,157 million in 2009. The cost of sales per unit case sold reached Ch$1,053 in 2010, increasing 3.5% when compared to 2009, mainly due to increases in (i) sugar costs per unit case, that on average were approximately 25% above last year, explaining 29% of the increase in the cost of sales per unit case, (ii) a 14% cost increase in the concentrate cost per unit case, which explains 42% of the increase in the cost of sales per unit case, and (iii) higher mix of distributed juice and water products in our total sales, which explains 18% of the increase in the cost of sales per unit case. The percentage representing cost of sales regarding net sales was 57.5% for the year 2010 and 56.8% for the year 2009.
In Brazil, Cost of Sales were Ch$232,906 million in 2010, a 15.7% increase when compared to the Ch$201,346 million in 2009. The cost of sales per unit case sold reached Ch$1,150 in 2010, increasing 5.8% when compared to 2009, mainly due to (i) sugar costs per unit case that on average was approximately 30% above last year, explaining 54% of the increase in the cost of sales per unit case, (ii) higher mix of distributed products in our total sales, which explains 70% of the increase in the cost of sales per unit case, and partially offset by a 12% decrease in PET costs per unit case, explaining a 26% decrease in the total cost of sales per unit case. The percentage representing cost of sales regarding net sales was 57.1% for the year 2010 and 59.3% for the year 2009.
In Argentina, Cost of Sales were Ch$103,851 million in 2010, a 3.8% increase when compared to the Ch$100,034 million in 2009. The cost of sales per unit case sold reached Ch$829 in 2010, flat when compared to 2009, where the increase in the sugar price and the change in the mix towards distributed products were offset by the decrease in the price of bottle caps and PET resin, and by lower depreciation charges. The percentage representing cost of sales regarding net sales was 56.1% for the year 2010 and 57.3% for the year 2009.
Gross Profit
Due to the aforementioned, gross profit in 2010 increased by 14.7%, reaching Ch$381,832 million, or 43.0% of net sales, compared to Ch$330,545 million, or 42.1% of net sales in 2009.
Distribution, Administrative and Selling Expenses
Administrative and Selling expenses amounted to Ch$232,598 million in 2010, this represented 26.2% of net sales for 2010 and a 17.8% increase with respect to the Ch$197,422 million in 2009, that represented 25.1% of net sales for that year. SG&A increased by (i) higher distribution costs in the 3 countries where we operate, (ii) the effect upon translation of figures of our operations in Brazil and (iii) the adjustment of freight fees.
In Chile SG&A expenses were Ch$68,092 million in 2010, a 6.3% increase when compared to the Ch$64,036 million in 2009. This increase was mainly due to (i) distribution costs which were 9% higher than the previous year, mainly
explained by an increase in volumes, and by an increase in our third party freight fees, as a result of higher labor and fuel costs, and (ii) higher expenses from the Company’s IT division, among others. As a percentage of net sales, selling and administrative expenses were 23.0% in 2010 compared with 23.4% in 2009.
In Brazil SG&A expenses were Ch$102,624 million in 2010, a 31.1% increase when compared to the Ch$78,251 million in 2009. The main factors that explain this increase are (i) higher distribution costs, which grew 26%, and (ii) higher labor costs, which grew 35% and (iii) ) other fixed costs which were affected by local inflation, mainly third party services. As a percentage of net sales, selling and administrative expenses were 25.2% in 2010 compared with 23.0% in 2009
In Argentina SG&A expenses were Ch$57,980 million in 2010, a 13.3% increase when compared to the Ch$51,192 million in 2009. This increase was mainly explained by (i) distribution costs which were 16% higher than the previous year, due to higher volumes and local inflation (ii) a 13% increase in labor costs due to wage increases as a result of local inflation, and (iii) other fixed costs which were affected by local inflation, mainly leases and third party services. As a percentage of net sales, selling and administrative expenses were 31.3% in 2010 compared with 29.3% in 2009
Operating Income
As a consequence of the aforementioned, Operating Income increased 12.1% in 2010, amounting to Ch$149,234 million, or 16.8% of net sales, compared to Ch$133,123 million, or 16.9% of net sales in 2009.
Non-operating Income (Expense), Net
The following table sets forth, for the periods indicated, the items of non-operating income (expense), net:
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Other income and expenses, by function and other gains and losses |
| $ | (7,143 | ) | $ | (3,423 | ) |
Financial Income |
| 3,376 |
| 3,952 |
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Financial Costs |
| (7,402 | ) | (8,124 | ) | ||
Share of income (losses) from affiliated companies and joint business that are accounted for using the equity method |
| 2,315 |
| 1,604 |
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Exchange rate differences |
| (222 | ) | (621 | ) | ||
Profit from unit of adjustment |
| (218 | ) | 640 |
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Non-operating income, net |
| $ | (9,294 | ) | $ | (5,972 | ) |
Non-Operating Results totaled a loss of (Ch$9,294) million, which compares negatively to a loss of (Ch$5,972) million recorded during 2009. The account with greater variation is “Other income and expenses, by function and other gains and losses” which reflects a higher loss of Ch$3,720 million due to (i) a lower restatement of judicial deposits in Brazil with respect to the previous year; (ii) higher debit and credit taxation in Argentina during year 2010; (iii) losses given the February 27 earthquake in Chile (below insurance deductibles); and (iv) greater contingency adjustments in year 2010 compared to year 2009. The Ch$711 million variation of from affiliated companies that are accounted for using the equity method is mainly due to improved results from the juice business Joint Venture in Brazil and from the packaging subsidiary in Chile.
Income Taxes
Income taxes in 2010 increased 24.6% to Ch$36,340 million compared to Ch$29,166 million in 2009. The increase is principally explained by: (i) greater earnings from the three countries in which the Company operates; (ii) a lower charge for tax expenses during 2009 in Chile, due to taxable assets in accordance with the variation of the exchange rate, generating tax savings as a result of the strong appreciation of the Chilean peso in 2009; and (iii) a lower use of fiscal incentives during 2010 in Brazil.
Net Income
As a result of the aforementioned, net income in 2010 was Ch$103,600 million, representing 11.7% of net sales and an increase of 5.7% compared to net income of Ch$97,985 million in 2009.
Impact of Foreign Currency Fluctuations
In Chile we had gains of Ch$3 million in 2011 due to the revaluation of the Chilean peso, compared to a negative impact of foreign currency fluctuations in 2010 in the amount of approximately Ch$222 million, due to our low net asset position in U.S. dollars amounting to a total of approximately US$3 million.
In accordance with IFRS conversion methods, assets and liabilities from Argentina and Brazil are converted from their functional currency (Brazilian Real and Argentine Peso, respectively) to the reporting currency of the parent company (Chilean peso) at the end of period exchange rate, and income accounts at the exchange rate as of the date of the transaction or monthly average exchange rate of the month when it took place. The effects of translation are presented as comprehensive income and do not affect the results for the years ended December 31, 2011, 2010 and 2009. The translation effects due to the currency conversion undertaken for assets and liabilities in accordance with the method previously explained resulted in a decrease of other comprehensive income of Ch$2,600 during 2011 (decrease of Ch$5,171 million during 2010 and increase of Ch$6,496 million during 2009) for Brazil and an increase of other comprehensive income of Ch$635 million during 2011 (decrease of Ch$4,279 and Ch$15,428 million during 2010 and 2009 respectively) for Argentina. We also present under other comprehensive income the net effect as result of the restatement of Chilean pesos to U.S. Dollars and Brazilian Reais to U.S. dollars resulting from the update of intercompany accounts that have designated as part of the Company’s investment, this effect resulted in an increase of Ch$1,087 million during 2011 ( decrease(decrease of Ch$1,845 and Ch$1,355 million during 2010 and 2009).
We use hedge agreements, to protect against foreign currency risk. In 200112011 and 2010 these agreements partially offset the effects of the variation of the Chilean peso exchange rate, whose results are recorded as earnings and losses in the consolidated statements of income. For further information about the instruments we use to protect against foreign currency risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk.”
Impact of Governmental Policies
Our business is dependent upon the economic conditions prevailing in our countries of operation. Various governmental economic, fiscal, monetary and political policies, such as those related to inflation or foreign exchange, may affect these economic conditions, and in turn may impact our business. These government policies may also affect investments by our shareholders.
For a discussion of political factors and governmental, economic, fiscal and monetary policies that could materially affect investments by U.S. shareholders as well as our operations, please refer to “Item 3. Key Information—Risk Factors” and “Item 10. Additional Information”
A.5.B Liquidity and Capital Resources
Capital Resources, Treasury and Funding Policies
The products we sell are mainly paid for in cash and short term credit, and thereforeourtherefore our main source of financing comes from the cash flow of our operations. This cash flow has historically been generally sufficient to cover the investments necessary for the normal course of our business, as well as the distribution of dividends approved by the General Shareholders’ Meeting. Nevertheless, in 2012 was necessary to use banking loans to finance the acquisition of the 40% stake of Sorocaba Refrescos in Brazil for R$147 million. Also, aour net cash position diminished after the merger with Polar, mainly because Polar used to have more debt when compared to Andina’s balance sheet. Should additional funding be required for future geographic expansion or other needs, the main sources of financing to consider are: (i) debt offerings in the Chilean and foreign capital markets (ii) borrowings from commercial banks, both internationally and in the local markets where we have operations; and; (iii) public equity offerings.
Certain restrictions could exist to transfer funds among our operating subsidiaries. We have transferred funds from Argentina to Chile through capital reductions in 2009 and 2010, but in 2011 and 2012, all cash flow generated by the subsidiary in Argentina was reinvested in the operation. During 2009, 2010, 2011 and 20112012 we received dividends from our subsidiary in Brazil. No assurance can be made that we will not face restrictions in the future regarding the distribution of dividends from our foreign subsidiaries.
Our management believes that through these sources, we have sufficientaccess to financial resources available to maintain our current operations and provide for our current capital expenditure and working capital requirements, scheduled debt payments, interest and income tax payments and dividends to shareholders. The amount and frequency of future dividends to our shareholders will be determined by the General Shareholders’ Meeting upon the proposal of our board of directors in light of our earnings and financial condition at such time, and we cannot assure you that dividends will be declared in the future, except for the minimum 30% of annual profits required by Chilean law.
Our board of directors has been empowered by our shareholders to define our financing and investment policies. Our bylaws do not define a strict financing structure, nor do they limit the types of investments we may make. Traditionally, we have preferred to use our own resources to finance our investments.
Our general financing policy is that each subsidiary should finance its own operations. From this perspective, each subsidiary’s management must focus on cash generation and should establish clear targets for operating income, capital expenditures and levels of working capital. These targets are reviewed on a monthly basis to ensure that their objectives are met. Should increased financing needs arise, either as a result of a cash deficit or to take advantage of market opportunities, our general policy is to prefer local financing to allow for natural hedging. If local financing conditions arewere not acceptable, because of costs or other constraints, Andina will provide financing.financing, or our subsidiary could finance itself in a currency different than the local one.
Our cash surplus policy is that Andina invests any cash surplus in a portfolio of investment grade securities until such time as our board of directors makes a final decision as to the disposition of the surplus.
Derivative instruments are utilized only for business purposes, and never for speculative purposes. Forward currency contracts are used to cover the risk of local currency devaluation relative to the U.S. dollar in an amount approximately equal to our budgeted purchases of U.S. dollar-denominated raw materials. Depending on market conditions, instead of forward currency contracts, from time to time we prefer to utilize our cash surplus to purchase raw materials in advance to obtain better prices and a fixed exchange rate.
Cash Flows from Operating Activities 2012 vs Cash Flows from Operating Activities 2012
Cash flows from operating activities during 2012 amounted to Ch$188,857 million compared to Ch$138,950 million in 2011. The increase in cash flow generation came mainly from greater collections from clients partially offset by greater payments to suppliers, mainly due to the incorporation of Polar during the 4Q12. Cash flows from operating activities without considering the merger with Polar amounted to Ch$172,754 million.
Cash Flows from Operating Activities 2011 vs Cash Flows from Operating Activities 2010
Cash flows from operating activities during 2011 amounted to Ch$138,950 million compared to Ch$125,848 million in 2010. The increase in cash flow generation came mainly from greater collections from clients partially offset by greater payments to suppliers, due to greater sales volume and increased prices in line with local inflation in each country. Other operating cash flows did not vary significantly.
Cash Flows from OperatingInvesting Activities 20102012 vs Cash Flows from OperatingInvesting Activities 20092011
Cash flows from operatingfor investing activities during 2010(includes purchase and sale of: property, plant and equipment; investment in associated companies; and financial investments) amounted to Ch$125,848156,170 million in 2012 compared to Ch$131,12689,621 million during 2012. The investment activities of Andina during 2012, without considering the effect of the merger with Polar amounted to Ch$149,334 million.
The main item of investing activities is the purchase of property, plant and equipment which went from Ch$126,931 million in 2009. The decrease2011 to Ch$143,764 million in cash flow generation2012. In 2012, and without considering the effect of the merger with Polar, Andina invested Ch$131,552 million. This figure is mainly due to lower income tax chargeshighly influenced by the investment in a new bottling facility in Chile. Also, during 2009 resulting from tax loss carry forwards2012 we liquidated net financial investments in the amount of Ch$13,410 million and during 2011 we liquidated net financial investments in the amount of Ch$35,938 million. However, as of December 31, 2011, we had Ch$30,480 million invested in time deposits and other tax benefitsshort-term investments.
Finally, during 2012 was also materialized the purchase of 40% of the capital interest in Sorocaba Refrescos S.A., which did not occur during 2010.resulted in a flow of investment of $33,497 million. Additionally, a capital contribution was made to subsidiary Vital Jugos S.A. for $2,380 million.
Cash Flows from Investing Activities 2011 vs Cash Flows from Investing Activities 2010
Cash flows for investing activities (includes purchase and sale of: property, plant and equipment; investment in associated companies; and financial investments) amounted to Ch$89,621 million in 2011 compared to Ch$80,504 million during 2010.
The main item of investing activities is the purchase of property, plant and equipment which went from Ch$95,462 million in 2010 to Ch$126,931 million in 2011. This figure is highly influenced by the investment in a new bottling facility in Chile. Also, during 2011 we liquidated net financial investments in the amount of Ch$35,938 million and during 2010 we liquidated net financial investments in the amount of Ch$25,590 million. However, as of December 31, 2011, we had Ch$46,959 million invested in time deposits and other short-term investments.
Finally, during 2011we carried out the sale of 43% of Vital Jugos, along with capital contributions in the associated company amounting to Ch$829 million.
During 2010 we carried out investments in Brazilian associated companies related to the iced tea and matte business, amounting to Ch$15,229 million, which was financed with own operating resources.
Cash Flows from Investing Activities 2010 vs Cash Flows from Investing Activities 2009
Cash flows for investing activities (includes purchase and sale of: property, plant and equipment; investment in associated companies; and financial investments) amounted to Ch$80,504 million in 2010 compared to Ch$84,318 million during 2009.
The main item of investing activities is the purchase of property, plant and equipment which went from Ch$49,482 million in 2009 to Ch$95,462 million in 2010. This figure is highly influenced by the investment in a new bottling facility in Chile. Also, during 2010 we liquidated net financial investments in the amount of Ch$25,590 million offset by greater net financial investments during 2009 in the amount of Ch$33,761 million. Additionally, during 2010 we carried out investments in Brazilian associated companies related to the iced tea and matte business, amounting to Ch$15,229 million, which was financed with own operating resources.
At December 31, 2011, we had no material commitments for the purchase of capital assets other than those related to normal replacement of equipment.
We believe that cash flow generated by operations, cash balances, available lines of credit, including lines of credit from suppliers, and borrowings from third parties, are currently sufficient to meet our working capital, debt service and capital expenditure requirements.
Cash Flows from Financing Activities 20112012 vs Cash Flows from Financing Activities 20102011
Our financing activities are directly related to dividend distributions to our shareholders, that record a utilization of cash resources amounting to Ch$70,90669,766 million compared to $66,525$70,906 million during 2010,2011, and borrowings from banks and payment of these loans, in order to finance these dividend payments and investments. Worth mentioning is that as a result of our business’ seasonality, we generate greater cash flows during the summer months (December through March), therefore during the winter season we require short term financing in order to fulfill our dividend and investment commitments.
As of that date, we had available short-term credit lines in an amount equivalent to Ch$77,370million. The aggregate unused portion of such lines of credit at that date was equivalent to Ch$44,300 million. Our unused sources of liquidity include 17 lines of credit. In Chile, we had the equivalent of Ch$15,000 million in credit available from two separate lines. The unused portion of such lines of credit at that date was equivalent to Ch$7,094 million. In Brazil, we had the equivalent of Ch$14,543 million in credit available with 4 lines. The unused portion of such lines of credit at that date was equivalent to Ch$6,719 million. In Argentina, we had the equivalent of Ch$47,719 million in credit available with six lines. The unused portion of such lines of credit at that date was equivalent to Ch$30,487 million. In Paraguay, we had the equivalent of Ch$33,751
million in credit available with five lines. The unused portion of such lines of credit at that date was equivalent to Ch$32,655 million.
Cash Flows from Financing Activities 20102011 vs Cash Flows from Financing Activities 20092010
Our financing activities are directly related to dividend distributions to our shareholders, that record a utilization of cash resources amounting to Ch$66,52570,906 million compared to $62,348$66,525 million during 2009,2010, and borrowings from banks and payment of these loans, in order to finance these dividend payments and investments. Worth mentioning is that as a result of our business’ seasonality, we generate greater cash flows during the summer months (December through March), therefore during the winter season we require short term financing in order to fulfill our dividend and investment commitments.
As of that date, we had available short-term credit lines in an amount equivalent to Ch$109.160 million. The aggregate unused portion of such lines of credit at that date was equivalent to Ch$87.046 million.
Our unused sources of liquidity include 14 lines of credit. In Chile, we had the equivalent of Ch$32.25032,010 million in credit available from two separate lines. The unused portion of such lines of credit at that date was equivalent to Ch$30,02530,876 million. In Brazil, we had the equivalent of Ch$35.80651,312 million in credit available with 6 lines. The unused portion of such lines of credit at that date was equivalent to Ch$29,32635,805 million. In Argentina, we had the equivalent of Ch$40,73126,838 million in credit available with fivesix lines. The unused portion of such lines of credit at that date was equivalent to Ch$29,32620,363 million.
Liabilities
For the period ending December 31, 2011,2012, our total liabilities, excluding non controlling interest, were Ch$319,980646,231 million, representing a 9.0%102.0% increase compared to December 31, 2010.2011. The increase in total liabilities resulted principally from higherincrease on current and non-current financial liabilities, mainly due to the incorporation of the debt arising from the incorporation of Polar in 2012, and increases of debt arising from Andina to cover investment projects. Another item that significantly explains the increase of liabilities are deferred taxes generated by the recognition at fair value of the assets contributed by Polar. Finally, and as a result of the abovementioned merger, the balances of trade accounts payable, higher no-current provisions and higher bank liabilitiespayables record a significant increase caused by the greater level of operations in Argentina, partially offset by lower accounts payable2012, in relation to related companies and lower post-employement benefit liabilities.2011. As of December 31, 2011,2012, our non-current liabilities included (i) other non currentnon-current financial liabilities of Ch$74,641173,880 million, (ii) other non-current provisions of Ch$7,8836,423 million, (iii) deferred tax liabilities for Ch$35,245 million;111,415million; (iv) non-current employee benefit provisions for Ch$5,1307,037 million; and (v) other non-current non-financial liabilities for Ch$4372,106 million, totaling non-current liabilities for Ch$300,861 million during 2012 compared to Ch$123,337 million during 2011 compared to Ch$117,895 million during 2010.2011.
For the period ending December 31, 2011,2012, our current liabilities, included (i) other current financial liabilities of Ch$23,093106,248 million, (ii) commercial accounts and other accounts payable for Ch$127,941184,318 million; (iii) current accounts payable to related entities for Ch$11,35932,727 million; (iv) other current provisions for Ch$88593 million; (v) current tax liabilities for Ch$3,8211,115 million and (vi) other non financial current liabilities for Ch$30,34120,369 million. Total current liabilities during 20112012 amounted to Ch$345,370 million compared to Ch$196,644 million compared to Ch$175,554 million during 2010.2011.
As of December 31, 2011,2012, our bond liabilities had a weighted average interest rate of 6.50%5.25% while our bank liabilities had a weighted average interest rate of 10.18%6.23%.
Summary of Significant Debt Instruments
The following is a brief summary of our significant long-term indebtedness outstanding as of December 31, 2011:2012:
Unsecured Notes. On October 1, 1997 we entered into an indenture pursuant to which we issued three series of bonds. One of which expired during in 2007. The indenture imposes certain restrictions on liens, sale and leaseback transactions, assets sales and subsidiary indebtedness and certain conditions in the event of merger or consolidation.
The two series of bonds issued in 1997 under this indenture are the following:
· US$100 million of 7.625% Unsecured Notes due 2027; and
· US$100 million of 7.875% Unsecured Notes due 2097.
The Company has repurchased, through our subsidiary Abisa Corp., for cash at par value the notes outstanding and the following notes were tendered:
· US$100 million of the 7.625% Unsecured Notes due 2027; and
· US$100 million of the 7.875% Notes due 2097.
During 2001, Andina completed a local bond placement in the Chilean capital markets of two series of bonds, one of which expired during 2008. The outstanding series as of December 31, 2011 is the following:
· UF 3.7 million seriesSeries B of bonds due 2026, with annual interest rate over inflation of 6.50%
Additionally, due to the merger with Polar, and as of December 31, 2012, Andina becomes creditor of two additional bond issuances placed in the Chilean market in 2010, with the following characteristics:
· UF 1.0 million Serie A of bonds, due 2017, with annual interest rate over inflation of 3.00%.
·UF 2.5 million Serie C of bonds due 2031, with annual interest rate over inflation of 4.00%.
The bond issue and placement in the Chilean market is subject to the following restrictions:
·Andina must maintain an indebtedness level wherein consolidated financial liabilities must be less than 1.20 times of Consolidated Shareholders´ Equity in the case of the Series B bond. For this purpose, Consolidated Financial Liabilities will be equal to accruing interest current liabilities, i.e (i) other current financial liabilities, plus (ii) other non-current financial liabilities. Consolidated Equity means Total Shareholders’ Equity including non-controlling interest ·For series A and C, Embotelladora Andina S.A. must keep in its quarterly financial statements a level of “Net Financial Debt” not exceeding 1.5 times, measured over the figures of the consolidated financial statement. For this purpose, the level of net financial debt shall be the ratio between the net financial debt and the issuer’s total equity (equity attributable to controlling owners and to non-controlling interests). Also, the term net financial debt shall mean the difference between the financial debt and the issuer’s cash. ·Andina must maintain consolidated assets free of any pledge, mortgage or other encumbrances for an amount equal to at least 1.30 times the consolidated liabilities that are not guaranteed by the investee. ·For Series B, it must be kept, and under no circumstance loose, sell, assign or transfer to a third party, the geographical area currently denominated “Metropolitan Region” as a franchised territory by The Coca-Cola Company in Chile, for the elaboration, production, sale and distribution of the products and brands of the licensor, according to corresponding Bottler or License Agreement, renewable from time to time. ·For Series B, not to lose, sell, assign or transfer to a third party any other territory of Argentina or Brazil that to this date is currently franchised to the Company by TCCC for the elaboration, production, sale and distribution of products and brands of the licensor; provided that, any such areas represent more than 40% of Consolidated Operating Cash Flow of the Issuer. ·For Series A and C, not to invest in securities issued by related parties, nor perform other operations outside of the ordinary course of business with such parties, under conditions that are less favorable to the Issuer in relation to those prevailing in the market . ·For series A and C it quarterly financial statements must keep a level of “Net Financial Debt Coverage” higher than 3 times.”Net Financial Debt Coverage “ shall mean the ratio between issuer’s EBITDA of the last 12 months and the issuer’s net financial expenses (financial income less financial expenses) of the last 12 months. However, it will be understood that this restriction has been breached when said Net Financial Debt Coverage is below the level indicated above for 2 consecutive quarters. |
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5. C. Research and development, patents and licenses
Given the nature of the business and the support provided by TCCC as franchisor to its bottlers, the Company’s research and development expenses are not meaningful. For more information on patents and licenses, see “Patents and Licenses”.
D.5.D. Trend Information
Our results will likely continue to be influenced by changes in the level of consumer demand in the countries in which we operate, resulting from governmental economic measures that are or may be implemented in the future. Additionally, principal raw materials used in the production of soft drinks, such as sugar and resin, may experience price increases in the future. Such price increases may affect our results if we are unable to pass the cost increases on to the sales price of our products due to depressed consumer demand and/or heightened competition.
Increased competition from low-price brands is another factor that could limit our ability to grow, and thus negatively affect our results.
Finally, exchange rate fluctuations, in particular the potential devaluations relative to the U.S. dollar of local currencies in the countries in which we operate, may adversely affect our results because of the impact on the cost of U.S. dollar-denominated raw materials and the conversion of monetary assets.
E.5.E Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
F.5.F Contractual Obligations
The following table presents our contractual and comercial obligations as of December 31, 2011:2012:
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| Years |
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|
|
| Years |
| ||||||||||||
|
| Total |
| Less than 1 |
| 1-3 Years |
| 3-5 Years |
| More than 5 |
|
| Total |
| Less than |
| 1-3 Years |
| 3-5 Years |
| More than |
|
|
| (in million nominal Ch$ as of December 31, 2011) |
|
| (in million nominal Ch$ as of December 31, 2012) |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(1) |
| 8,023 |
| 1,636 |
| 3,615 |
| 2,772 |
| — |
| |||||||||||
Short-term debt |
| 8,464 |
| 8,464 |
| — |
| — |
| — |
| |||||||||||
Debt with financial institutions |
| 150,930 |
| 95,603 |
| 32,528 |
| 22,799 |
| — |
| |||||||||||
Bonds payable(1) |
| 116,436 |
| 8,030 |
| 16,060 |
| 16,060 |
| 76,286 |
|
| 189,037 |
| 10,264 |
| 31,694 |
| 42,888 |
| 104,191 |
|
Operating lease obligations |
| 3,780 |
| 2,683 |
| 616 |
| 481 |
| — |
|
| 7,629 |
| 4,697 |
| 2,362 |
| 570 |
| — |
|
Purchase obligations |
| 27,259 |
| 11,593 |
| 8,274 |
| 7,392 |
|
|
|
| 57,185 |
| 42,450 |
| 9,839 |
| 4,896 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations |
| 163,962 |
| 32,406 |
| 28,565 |
| 26,705 |
| 76,286 |
|
| 404,781 |
| 153,014 |
| 76,423 |
| 71,153 |
| 104,191 |
|
(1)See Note 1615 of the Notes to the Consolidated Financial Statements for additional information.
The following table presents future expirations for the remaining long-term liabilities. These expirations have been made based on accounting estimates because the liabilities do not have specific dates of future payment as allowance for severance indemnities, contingencies, and liabilities are included.
|
| Maturity Years |
| ||||||
|
| Total |
| 1-3 Years |
| 3-5 Years |
| More than 5 |
|
|
| (in million nominal Ch$ as of December 31, 2011) |
| ||||||
Provisions |
| 7,883 |
| 7,883 |
| — |
| — |
|
Other long-term liabilities |
| 5,567 |
| 855 |
| 1,292 |
| 3,420 |
|
Total long term liabilities |
| 13,450 |
| 8,738 |
| 1,292 |
| 3,420 |
|
|
|
|
| Maturity Years |
| ||||
|
| Total |
| 1-3 Years |
| 3-5 Years |
| More than 5 |
|
|
| (in million nominal Ch$ as of December 31, 2012) |
| ||||||
Provisions |
| 6,423 |
| 6,423 |
| — |
| — |
|
Other long-term liabilities |
| 9,143 |
| 4,008 |
| 1,902 |
| 3,233 |
|
Total long term liabilities |
| 15,566 |
| 10,431 |
| 1,902 |
| 3,233 |
|
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Pursuant to Chilean law, we are managed by a group of executive officers under the supervision of our board of directors. The Company’s operations in Chile, Brazil, Argentina and ArgentinaParaguay report to the Corporate Office. Effective December 31, 2011, the following officers no longer work at the Company:
·Jaime García, former Chief Executive Officer (his resignation was reported as a material event on July 13, 2011 to the Chilean SuperintendenceAs of Securities and the SEC, and also posted on our website)
·Michael Cooper, former Vice-president of Business Development
·Osvaldo Garay, former Chief Administration Officer
·Renato Barbosa joins the Company in Brazil effective January 1, 2012, replacing2013, Alejandro Feuereisen who joins the Corporate Office asis no longer Chief Value Chain Officer.
As of January 4, 2013 Pablo Court is replaced by Alan Dunford as Chief Human Resources Officer.
Principal Officers
The following table includes information regarding our senior executives:
Name |
| Title |
| Biography |
|
|
|
|
|
Miguel Ángel Peirano |
| Chief Executive Officer |
| Joined the Company in 2011, as Chief Executive Officer. Prior to his appointment in Andina he was President at FEMSA Cerveza Brazil from 2009 through 2011. With Coca-Cola FEMSA he held several positions: Vice-President. 2006-2008; Director of Operations in Argentina from 2003 though 2005; Commercial Director during 2002; Manufacturing Director in 2000 and Strategic Planning Director in 1999. He also worked as Assistant Manager at McKinsey & Company in 1999. Date of birth: March 22, 1959 |
|
|
|
|
|
Andrés Wainer |
| Chief Financial Officer |
| Joined the Company in 1996 as research analyst in the corporate office. In 2000 he was appointed development manager in EDASA and in 2001 he returned to the corporate office as research and development officer. In 2006 he was appointed finance and administration manager at the Chilean operation and in November 2010 he returns to the corporate office as Chief Financial Officer. Date of birth; October 15, 1970 |
|
|
| ||
|
|
|
|
|
Rodrigo Ormaechea |
| Chief Strategic Planning Officer |
| Joined the Company in 2011 as Chief Strategic Planning Officer, prior to joining Andina he held the position of projects’ manager at Virtus Partners, strategic consultant at Bain & Co. in London, executive director at Uruguay Junior Achievement (NGO), relationship manager Corporate Banking and M&A at ABN AMRO Bank Uruguay and risk analyst at ABN AMRO Bank Brazil and Uruguay. Date of Birth: January 7, 1976 |
|
|
|
|
|
Jaime Cohen |
| Chief Legal Officer |
| Joined the Company in 2008, as chief legal officer. Prior to joining Andina, he held similar position at Socovesa S.A. since 2004. Prior to that he formed part of the legal division of Citibank since the year 2000. He also was an attorney at the law offices of Cruzat, Ortuzar & Mackenna, Baker & McKenzie from 1996 until 1999. He began his professional career in 1993 as lawyer at Banco de A. Edwards. Date of birth: October 14, 1967 |
Name | Title | Biography | ||
|
|
|
|
|
Pablo Court |
| Chief Human Resources Officer |
| Joined the Company in 2008 as Chief Human Resources Officer . Prior to joining Andina he was strategic planning and human resources corporate officer at Indura S.A. from 1998. Before that he was the human resources manager of Watt’s Alimentos S.A. (from 1993-2007); human resources manager of Pesquera San José S.A. (from 1989 — 1993); and human resources manager of Compañía Minera Disputada Las Condes (1986-1989). He did business consulting since 1980. Date of birth: September 22, 1956 |
|
|
|
|
|
German Garib |
| Chief Process and Information Officer |
| Joined the Company in 1998, as chief information officer. Prior to Andina, he was the marketing manager of IBM Chile. Date of birth: August 28, 1961 |
|
|
|
|
|
Alejandro A. Feuereisen |
| Chief Value Chain Officer |
| Joined the company in 1993. On January 1, 2012 he was appointed Chief Value Chain Officer at our Corporate Office. In 2010 he was appointed General Manager of our Brazilian operation. In August of 1998 he was appointed General Manager of EDASA. From September 1995 to July 1998, he served as the commercial manager of Embotelladora del Atlántico S.A. From 1993 to 1995, he was a sales manager at Andina and, from 1981 to 1992, an officer at Citibank, Santiago de Chile. During the last three years of his tenure at Citibank, he was vice president of the International Financial Institutions Group. From 1977 to 1980, he served as financial analyst at Leasing Andino S.A., a subsidiary of Banco de Chile. Date of birth: May 19, 1953 |
Cristián Mandiola | Chief Comercial Operations Officer | He joined the Company after the merger with Embotelladoras Coca-Cola Polar assuming the position of Commercial Operations Corporate Manager. In 1996 he joined Embotelladoras Coca-Cola Polar S.A. assuming the responsibility for planning, organizing, strategic direction and company results as Chile General Manager (1996-1998), Chile and Argentina General Manager (1998-2002), Chile, Argentina and Paraguay Executive Vice-President from August 2002 until the merger with Andina. Date of Birth: September 6, 1957. | ||
Alan Dunford | Chief Projects Officer | He joined the Company after the merger with Embotelladoras Coca-Cola Polar assuming the position of Corporate Project Manager. In 2009 he joined Embotelladoras Coca-Cola Polar S.A. assuming the Corporate Management of Administration and Finances, to then, in 2012, assume the General Management of the Argentinean subsidiary. As of January 4, 2013, he assumed as Human Resources Corporate Manager replacing Pablo Court. Date of Birth: February 11, 1957. |
Name |
| Title |
| Biography |
|
|
|
|
|
Abel Bouchon |
| General Manager of Chilean Soft Drink Operation |
| Joined the Company in March 2009. Previously he worked for LAN during 13 years where he served as general manager of the international business from 2008 until March 2009; from 1998 until 2007, he served as commercial manager for the passenger business unit and manager of the international business unit; he started working at LAN in 1996 as manager of the domestic business unit. Prior to LAN, he worked for Booz, Allen & Hamilton, Inc. in Buenos Aires, Argentina, where he did his MBA summer internship as an associate in 1993, and then was appointed project manager from 1994 until 1995. He began his professional career in 1990 as an associate at The Chase Manhattan Bank where he worked until 1992. Date of birth : May 23, 1968 |
|
|
|
|
|
Renato Barbosa |
| General Manager of Rio de Janeiro Refrescos Ltda. |
| Joins the Company on January 1, 2012 as General Manager of our operation in Brazil. Has worked in the Coca-Cola System for 23 years, primarily as General Manager of Brasal (Coca-Cola bottling company servicing the western central part of Brazil.) He also has worked for other large companies such as McDonald’s and Banco do Brasil. Date of birth: January 14, 1960 |
|
|
|
|
|
José Luis Solorzano |
| General Manager of Embotelladora del Atlántico S.A. |
| Joined the Company in 2003, where he served in various managerial positions in the commercial area, passing through the management of key accounts sales, traditional channel sales management, and management of marketing and commercial areas. Since March of the year 2010 he took over as general manager of Andina’s Argentine operations. Prior to his arrival at Andina, he worked as marketing manager, plant manager and business manager of Coca-Cola Polar, for five years. Before his incorporation to the Coca-Cola bottier system, he worked at Malloa. Date of birth: October 9, 1970 |
Board of Directors
In accordance with our current bylaws, the board of directors must consist of seven regular directors and seven alternatefourteen directors. Each director is assigned a specific alternate director. The directors may or may not be shareholders and are elected for a term of three years subject to indefinite re-election. In the case of Series A shares, it is necessary to have 14.29% of the total shares represented in a shareholders’ meeting in order to elect one director assuming there is 100% shareholder vote participation. In the case of series B shares, it is necessary to have a total of 50.1% of the total shares represented in a shareholders’ meeting to elect a director if it is also assumed that there is 100% shareholder vote participation. All members of the board of directors are nominated and elected every three years by and during the ordinary annual shareholders’ meeting. Cumulative voting is permitted for the election of directors.
In the event of a vacancy, the designated alternate director fills the vacancy for the remaining period of the director’s term. If the alternate director is unable or unwilling to serve, the board of directors may appoint a replacement to fill the vacancy, and the entire board of directors must be elected or re-elected at the next regularly scheduled shareholders’ meeting.
The majority shareholders’ agreement for the election of directors is contained in Inversiones Freire S.A.’s Shareholderthe Agreement and further explained on Item 7 “Major Shareholders and Related Companies”. In addition, pursuant to the terms and conditions of the Deposit Agreement, if no instructions are received by The Bank of New York Mellon, as depositary, it shall give a discretionary proxy to a person designated by the chairman of the board of directors of Embotelladora Andina with respect to the shares or other deposited securities that represent the ADRs.
As of December 31, 2011,2012, our board of directors consisted of the following directors and alternate directors:
Name |
| Title |
| Information |
Series A | ||||
|
|
|
|
|
Juan Claro |
| Chairman of the Board of Directors |
| Has been a member of the board of directors since April 2004. Principal occupation: Entrepreneur and company directorships Other directorships: Chairman of Embotelladora Andina, Energía Andina Energía Covanco and Energía Llaima. Director of Entel, Antofagasta Minerals, Antofagasta Plc, Date of birth: November 7, 1950 |
|
|
|
|
|
|
| Vice Chairman of the Board of Directors |
| Has been a member of the board of directors since Principal occupation: Other directorships:
|
|
|
Date of birth: March | ||
|
|
|
|
|
Arturo Majlis |
| Director |
| Has been a member of the board of directors since April 1997. Principal occupation: Principal partner of the law offices of Grasty, Quintana, Majlis y Compañía Other directorships: Asesorías e Inversiones Til Til S.A.; Asesorias e Inversiones MJS Ltda., Banchile Seguros de Vida, Seguros Orion and Mathiesen Group. Date of birth: April 7, 1962 |
José Antonio Garcés, Jr. | Director | Has been a member of the board of directors since April 1992. Principal occupation: General manager of Inversiones San Andrés Ltda. Other directorships: Banco Consorcio, Banvida S.A.; Inmobiliaria FFV S.A., Fundación Paternitas, Viña Montes, Viña Garcés Silva Ltda., and USEC. Date of birth: March 1, 1966 | ||
|
|
|
|
|
Gonzalo Said (1) |
| Director |
| Has been a member of the board of directors since April 1993. Principal occupation: General manager and director of Newport Ltda. Other directorships: Banco BBVA, Director Grupo Sid Handal, Member of the “Circle of Finance” of ICARE, Participates in the Board of Universidad Finnis Terrae. Date of birth: October 16, 1964 |
Salvador Said (1) | Director | Has been a member of the board of directors since April 1992. Principal occupation: Director of Said Holding Group Other directorships: Cruz Blanca Salud S.A., Isapre Cruz Blanca S.A., , Parque Arauco S.A., Edelpa S.A., BBVA Date of birth: | ||
|
|
|
|
|
Brian J.Smith |
| Director |
| Has been a member of the board of directors since April 2009. Principal occupation: President Coca-Cola de Mexico Other directorships: Embotelladoras Coca-Cola Polar S.A. Date of birth: December 10, 1955 |
|
|
| ||
|
|
|
Name |
| Title |
| Information |
|
|
|
|
|
|
|
|
| |
|
|
| ||
|
|
| Has been a member of the board of directors since April 2009. Principal occupation: Other directorships: Date of birth: September 14, 1952 | |
Enrique Cibié (2) | Director | Has been a member of the board of directors since April 2012. Principal occupation: Company directorships Other directorships: Endesa, Masisa, Terramater and The Grange School. Date of birth: July | ||
|
|
|
|
|
José |
|
|
| Has been a member of the Principal occupation: Other directorships: Compañía Sudamericana de Vapores; Intervial S.A. and Ruta del Maipo S.A. Date of birth: |
|
|
|
|
|
|
|
|
| Has been a member of the Principal occupation: Other directorships: Date of birth: |
|
|
|
|
|
|
|
|
| Has been a member of the Principal occupation: Vice President of Finance for Latin America, The Coca-Cola Company Other directorships: None Date of birth: November 27, 1963 |
Series B | ||||
Ricardo Vontobel | Director | Has been a member of the Board since June 2012. Principal occupation: General Manager of Vonpar S.A. Other directorships: Vonpar S.A. Date of birth: September | ||
Mariano Rossi | Director | Has been a member of the Board since June 2012. Principal occupation: Consultancies Other directorships: None Date of birth: January 22, 1966 |
(1) Salvador Said is the cousin of Gonzalo Said.
(2) Independent from controlling shareholder pursuant to Article 50 bis, paragraph 6 of the Chilean Public Company Law N° 18,046.
B. Compensation
Compensation of Principal Officers
The Company does not have any incentive plans other than salaries. The compensation system is a mixed one, composed by a base salary and participation, which are in accordance with each market and the
competitive conditions of each one. For General Managers it also considers use of cash flow versus the budget and market share versus the established goals. Amounts are different depending on each officer, position and/or responsibility, but it is applicable to all of the Company. For the year ended December 31, 2011,2012, compensation paid out to the principal officers of Embotelladora Andina S.A. amounted to Ch$5,235 million (Ch$5,663 million (Ch$5,180 million in 2010)2011). Of the Ch$5,6635,235 million paid to the main officers of Embotelladora Andina S.A., the variable portion was 42%35.5% and for the period ended December 31, 2010 of the Ch$5,180 million paid to the main officers of Embotelladora Andina S.A.,2011 the variable portion was 36%42%. SeveranceThere were not severance payments to former managers or former principal officers for the period ended December 31, 2011 amounted to Ch$2,290 million.
Table of Contents20112.
We do not make available to the public information as to the compensation of our executive officers on an individual basis, as disclosure of such information is not required under Chilean law.
Compensation of Directors
Directors and alternate directors receive an annual fee for attendance to meetings of the board of directors and committees. The amounts paid to each director and alternate director for attendance at board meetings varies in accordance with the position held and the period of time during which such position is held. Total compensation paid to each director or alternate director during 2011,2012, which was approved by our shareholders, was as follows:
|
| Directors’ |
| Executive |
| Directors’ |
| Audit |
|
|
|
| Directors’ |
| Executive |
| Directors’ |
| Audit |
|
|
|
|
| Compensation |
| Committee |
| Committee |
| Committee |
| Total |
|
| Compensation |
| Committee |
| Committee |
| Committee |
| Total |
|
2011 |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| |||||||||||
2012 |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Juan Claro González |
| 72,000 |
| 72,000 |
|
|
|
|
| 144,000 |
|
| 144,000 |
| — |
| — |
| — |
| 144,000 |
|
Salvador Said Somavía |
| 72,000 |
| 72,000 |
| 12,000 |
| 12,000 |
| 168,000 |
| |||||||||||
Jose Antonio Garcés Silva (Hijo) |
| 72,000 |
| 72,000 |
|
|
|
|
| 144,000 |
| |||||||||||
Arturo Majlis Albala |
| 72,000 |
| 72,000 |
| 12,000 |
| 12,000 |
| 168,000 |
|
| 72,000 |
| 72,000 |
| 12,000 |
| 12,000 |
| 168,000 |
|
Gonzalo Said Handal |
| 72,000 |
| 72,000 |
| — |
| — |
| 144,000 |
|
| 72,000 |
| 72,000 |
| — |
| — |
| 144,000 |
|
Jose Antonio Garcés Silva (Hijo) |
| 72,000 |
| 72,000 |
| — |
| — |
| 144,000 |
| |||||||||||
Salvador Said Somavía |
| 72,000 |
| 72,000 |
| 7,000 |
| 7,000 |
| 158,000 |
| |||||||||||
Eduardo Chadwick Claro |
| 33,000 |
| 33,000 |
| — |
| — |
| 66,000 |
| |||||||||||
Brian J. Smith |
| 36,000 |
| 36,000 |
| — |
| — |
| 72,000 |
|
| 72,000 |
| — |
| — |
| — |
| 72,000 |
|
Gonzalo Parot Palma |
| 56,000 |
| — |
| 8,000 |
| 8,000 |
| 72,000 |
| |||||||||||
Enrique Andrés Cibie Bluth |
| 40,000 |
| — |
| 5,000 |
| 5,000 |
| 50,000 |
| |||||||||||
José Fernando De Gregorio Rebeco |
| 36,000 |
| — |
| — |
| — |
| 36,000 |
| |||||||||||
Juan Andrés Fontaine Talavera |
| 36,000 |
| — |
| — |
| — |
| 36,000 |
| |||||||||||
Franz Alscher |
| 36,000 |
| — |
| — |
| — |
| 36,000 |
| |||||||||||
Ricardo Vontobel |
| 36,000 |
| — |
| — |
| — |
| 36,000 |
| |||||||||||
Mariano Rossi |
| 36,000 |
| — |
| — |
| — |
| 36,000 |
| |||||||||||
Heriberto Urzúa Sánchez |
| 36,000 |
| 36,000 |
| 12,000 |
| 12,000 |
| 96,000 |
|
| 24,000 |
| — |
| 4,000 |
| 4,000 |
| 32,000 |
|
Ernesto Bertelsen Repetto |
| 12,000 |
| 12,000 |
| — |
| — |
| 24,000 |
|
| 12,000 |
| — |
| — |
| — |
| 12,000 |
|
José Domingo Eluchans Urenda |
| 12,000 |
| 12,000 |
| — |
| — |
| 24,000 |
|
| 12,000 |
| — |
| — |
| — |
| 12,000 |
|
Cristian Alliende Arriagada |
| 12,000 |
| 12,000 |
| — |
| — |
| 24,000 |
|
| 12,000 |
| — |
| — |
| — |
| 12,000 |
|
Patricio Parodi Gil |
| 12,000 |
| 12,000 |
| — |
| — |
| 24,000 |
|
| 12,000 |
| — |
| — |
| — |
| 12,000 |
|
Gonzalo Parot Palma |
| 12,000 |
| 12,000 |
| — |
| — |
| 24,000 |
| |||||||||||
Jorge Hurtado Garreton |
| 12,000 |
| 12,000 |
| — |
| — |
| 24,000 |
|
| 12,000 |
| — |
| — |
| — |
| 12,000 |
|
José María Eyzaguirre Baeza |
| 12,000 |
| 12,000 |
| — |
| — |
| 24,000 |
|
| 12,000 |
| — |
| — |
| — |
| 12,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Gross Amounts |
| 516,000 |
| 516,000 |
| 36,000 |
| 36,000 |
| 1,104,000 |
|
| 909,000 |
| 321,000 |
| 36,000 |
| 36,000 |
| 1,302,000 |
|
For the year that ended on December 31, 2011,2012, the aggregate amount of compensation we paid to all directors and executive officers as a group was Ch$6,7676,537 million of which Ch$5,6635,235 million was paid to our executive officers. We do not disclose to our shareholders or otherwise make available to the public information as to the compensation of our executive officers on an individual basis. We do not maintain any pension or retirement programs for our directors or executive officers. See “—Employees.”
C. Board Practices
Our board of directors has regularly scheduled meetings at least once a month, and extraordinary meetings are convened when called by the chairman or when requested by one or more directors. The quorum for a meeting of the board of directors is established by the presence of an absolute majority of its regular directors, without taking alternate directors into consideration, unless regular directors are absent.directors. Resolutions are passed by the affirmative vote of an absolute majority of those directors present at the meeting, with the chairman determining the outcome of any tie vote.
Executive Committee
The Company’s Board of Directors is counseled by an Executive Committee that proposes Company policies and is currently comprised by the following Directors: Mr. Arturo Majlis Albala, Mr. José Antonio Garcés Silva (junior), Mr. Gonzalo Said Handal, Eduardo Chadwick Claro and Mr. Salvador Said Somavía, who were elected during Extraordinaryordinary Board Session N°10311,078 held
April 14, 2009. July 31, 2012. It is also comprised by the Chairman of the Board, Mr. Juan Claro González and by the Chief Executive Officer of the Company who participate by own right. This committee meets permanently throughout the year and normally holds three or four monthly sessions.
Directors’ Committee
Pursuant to Article 50 bis of Chilean Company Law N°18,046 and in accordance to the dispositions of Circular N°1956 and Circular N°560 of the Chilean Superintendence of Securities and Insurance, a new Directors’ Committee was elected during Board Session N°10421078 dated January 26, 2010,July 31, 2012, applying the same election criteria set forth by Circular N°1956. Mr. Heriberto Urzúa SánchezGonzalo Parot Palma (as Committee Chairman), Mr. Arturo Majlis Albala, and Mr. Salvador Said SomavíaEnrique Cibie Bluth comprise the Committee. Should any of the members be unable to attend a Committee session, their respective alternates will be Mr. Gonzalo Parot Palma, Mr. Cristian Alliende Arriagada and Mr. José Domingo Eluchans Urenda, respectively.
The duties developed by this Committee during 2011,2012, following the same categorization of faculties and responsibilities established by Article 50 bis of Company Law N°18,046 were the following:
DIRECTORS’ COMMITTEE
Pursuant to Article 50 bis of Chilean Company Law N°18,046 and in accordance to the dispositions of Circular N°1956 and Circular N°560 of the Chilean Superintendence of Securities and Insurance, a new Directors’ Committee was elected during Board Session N°1042 dated January 26, 2010, applying the same election criteria set forth by Circular N°1956. Mr. Heriberto Urzúa Sánchez (as Committee Chairman), Mr. Arturo Majlis Albala, and Mr. Salvador Said Somavía comprise the Committee. Should any of the members be unable to attend a Committee session, their respective alternates will be Mr. Gonzalo Parot Palma, Mr. Cristian Alliende Arriagada and Mr. José Domingo Eluchans Urenda, respectively.
The duties developed by this Committee during 2011, following the same categorization of faculties and responsibilities established by Article 50 bis of Company Law N°18,046 of the Chilean Superintendence of Securities and Insurance, were the following:
· Examine the reports of external auditors, of the balance sheets and other financial statements, presented by the administrators or liquidators of the Company to the shareholders, and to take a position on such reports before they are presented to shareholders for their approval.
In 20112012 these matters were addressed during Sessions: N°93106 on January 25;31; N°96110 on April 26;May 29; N°99112 on July 26;31; and N°102116 on October 25.
November 19.
· Propose names of External Auditors and Private Rating Agencies, accordingly to the Board of Directors that will then be proposed to the Shareholders’ Meeting.
This matter was addressed during Session N°95108 on March 29, 2011.
27, 2012.
· Examine information regarding the operations referred to by Title XVI of Law N°18,046 and report on these operations. For detailed information regarding these operations, please refer to the table on Note 11 of the Consolidated Financial Statements included in this Form 20F .
annual report. In 20112012 these matters were addressed during Sessions: N°94 on February 22; N°96 on April 26; N°97110 on May 24;29; N°115 on October 29; and N°105116 on December 22.November 19.
·Examine salary and compensation plans for managers, principal officers and employees of the company.
In 2011 the Committee was informed that the salary systems and compensation plans of the company had not changed since the last reviews addressed during Sessions N°91 on November 30, 2010 and N°92 on December 21, 2010.
·Examine the salary systems and compensation plans of managers, principal officers and employees. During 2012, the Committee was informed about the changes of company officers and of the new guidelines for salary and compensation plans. In addition, Company management informed the Committee that it is studying a new compensation system to be analyzed, approved and implemented during the year 2013. During January 2013 session, the Committee received and revised a report regarding Coca-Cola Andina’s salary and compensation system.
· Report to the Board of Directors whether it is convenient or not to hire an external auditing companyCompany to render services that do not form part of the external audit, when they are not forbidden in accordance to article 242 of Chilean Law N°18,045, in that the nature of those services may generate a risk of loss of independence.
In 20112012 this matter was addressed during Sessions N°98106 on January 31; Nº 110 on May 29; Nº111 on June 2825; Nº112 on July 31; and N°105Nº115 on December 22.October 29.
·All other matters required by companyCompany bylaws or that may be required by the Shareholders’ Meeting or by the Board of Directors. During 2011,2012, the following matters were addressed:
· Review anonymous reports: During Sessions: N°93106 on January 25;31; N°94107 on February 22;28; N°95108 on March 29;27; N°96109 on April 26; N°97110 on May 24;29; N°98111 on June 28;25; N°99112 on July 26:31: N°100113 on August 29;17; N°101114 on September 30;24; N°102115 on October 25;29; N°103116 on November 22;19; and N°104114 on December 2; and N°105 on December 22.17.
· Review and approve Annual Report: Session N°95108 on March 29.27.
· Review and approve 20F and fulfill Rule 404 of the Sarbanes-OxleySarbanes- Oxley Act: SessionSessions N°98108 on June 28.March 27; N°109 on April 26; and N°116 on November 19.
· Review lawsuits and contingencies: During SessionsSession N°93 on January 25, N°99112 on July 26, N°100 on August 29; and N°104 on December 2.31.
· Approve Audit Committee budget: Session N°95108 on March 29.27.
· Review pending legal proceedings: Session N°112 on July 31.
Review Internal Audit reports: Sessions N°100109 on April 26; N°113 on August 29,17; N° 101 on September 30, N°102115 on October 25,29; and N°103116 on November 22, N°104 on December 2; and N°105 on December 22.
·Review treatment of expenses on preforms: Session N°103 on November 22.
·Review Internal Control reports: Sessions N°103 on November 22 and N°104 on December 2.19.
The main expenses incurred by the Directors’ Committee have been those resulting from counseling and research in order to optimize the Company’s structure.research. During 20112012 these expenses amounted to Ch$29.48.1 million.
Sarbanes-Oxley Audit Committee
In accordance with NYSE and SEC requirements regarding compliance with the Sarbanes-Oxley Act, the Board of Directors established the first Audit Committee on July 26, 2005. This Audit Committee is renewed every year. During Board Session N°10421078 dated January 26, 2010,July 31, 2012, Mr. Heriberto Urzúa Sánchez,Gonzalo Parot Palma, Mr. Arturo Majlis Albala, and Mr. Salvador Said SomavíaEnrique Cibié Bluth were elected as members of the Audit Committee. It was determined that Mr. Heriberto Urzúa Sánchez compliesGonzalo Parot Palma and Mr. Enrique Cibié Bluth complied with the independence standards set forth in the Sarbanes-Oxley Act, SEC and NYSE regulations. Mr. Heriberto Urzúa SánchezEnrique Cibié Bluth has been appointed by the Board of Directors as the financial expert in accordance with the definitions of the listing standards of the NYSE and the Sarbanes-Oxley Act.
The resolutions, agreements and organization of the Audit Committee are governed by the rules relating to Board Meetings and to the Company’s Directors’ Committee. Since its creation, the sessions of the Audit Committee have been held with the Directors’ Committee, since some of the functions are very similar and the members of both of these Committees are the same.
The Audit Committee Charter defines the duties and responsibilities of this Committee. The Audit Committeeis responsible for analyzing the Company’s financial statements; supporting the financial supervision and rendering of accounts; ensuring management’s development of reliable internal controls; ensuring compliance by the audit department and external auditors of their respective roles; and reviewing auditing practices.
The main expenses incurred by the Audit Committee have been those resulting from counseling on tax matters. During 20112012 these expenses amounted to Ch$3.617.1 million.
D.6.D Employees
On December 31, 2011,2012, we had 6,03011,984 employees, including 1,7323,148 in Chile, 2,8474,403 in Brazil, and 1,8923,189 in Argentina.Argentina and 1,244 in Paraguay. Of these employees, 324332 were temporary employees in Chile, 122 were temporary employees in Paraguay and 343578 in Argentina. During the South American summer, it is customary for us to increase the number of employees in order to meet peak demand.
On December 31, 2011, 954, 301,2012, 1,485; 286; 2,284 and 1,309257 of our employees in Chile, Brazil, Argentina and Argentina,Paraguay, respectively, were members of unions.
The following table represents a breakdown of our employees for the years ended December 31, 2011,2012, and 2010 :2011:
|
| 2011 |
| ||||||||||||||||
|
| Chile |
| Brazil |
| Argentina |
| ||||||||||||
|
| Total |
| Union |
| Non- |
| Total |
| Union |
| Non- |
| Total |
| Union |
| Non- |
|
Executives |
| 42 |
| — |
| 42 |
| 79 |
| 2 |
| 77 |
| 85 |
| — |
| 85 |
|
Technicians and professionals |
| 650 |
| 315 |
| 335 |
| 1,451 |
| 247 |
| 1,204 |
| 349 |
| 6 |
| 343 |
|
Workers |
| 716 |
| 639 |
| 77 |
| 1,317 |
| 52 |
| 1,265 |
| 1,115 |
| 966 |
| 149 |
|
Temporary workers |
| 324 |
| — |
| 324 |
| — |
| — |
| — |
| 343 |
| 337 |
| 6 |
|
Total |
| 1,732 |
| 954 |
| 778 |
| 2,847 |
| 301 |
| 2,546 |
| 1,892 |
| 1,309 |
| 583 |
|
|
| 2010 |
|
| 2012 |
| ||||||||||||||||||||||||||||||||||||||
|
| Chile |
| Brazil |
| Argentina |
|
| Chile |
| Brazil |
| Argentina |
| Paraguay |
| ||||||||||||||||||||||||||||
|
| Total |
| Union |
| Non- |
| Total |
| Union |
| Non- |
| Total |
| Union |
| Non- |
|
| Total |
| Union |
| Non-Union |
| Total |
| Union |
| Non-Union |
| Total |
| Union |
| Non-Union |
| Total |
| Union |
| Non-Union |
|
Executives |
| 40 |
| — |
| 40 |
| 71 |
| 1 |
| 70 |
| 81 |
| — |
| 81 |
|
| 69 |
| –– |
| 69 |
| 66 |
| 3 |
| 63 |
| 109 |
| — |
| 109 |
| 24 |
| — |
| 24 |
|
Technicians and professionals |
| 643 |
| 320 |
| 323 |
| 1,233 |
| 43 |
| 1,190 |
| 342 |
| 5 |
| 337 |
|
| 1,040 |
| 388 |
| 652 |
| 2,537 |
| 236 |
| 2,301 |
| 637 |
| 29 |
| 608 |
| 1019 |
| 201 |
| 818 |
|
Workers |
| 699 |
| 649 |
| 50 |
| 1,246 |
| 364 |
| 882 |
| 1,083 |
| 933 |
| 150 |
|
| 1,707 |
| 1,083 |
| 624 |
| 1,800 |
| 47 |
| 1,753 |
| 1,865 |
| 1,684 |
| 181 |
| 79 |
| 56 |
| 23 |
|
Temporary workers |
| 324 |
| — |
| 324 |
| — |
| — |
| — |
| 268 |
| 262 |
| 6 |
| |||||||||||||||||||||||||
Temporary Workers |
| 332 |
| 14 |
| 318 |
| — |
| — |
| — |
| 578 |
| 571 |
| 7 |
| 122 |
| — |
| 122 |
| |||||||||||||||||||
Total |
| 1,706 |
| 969 |
| 737 |
| 2,550 |
| 408 |
| 2,142 |
| 1,774 |
| 1,200 |
| 574 |
|
| 3,148 |
| 1,485 |
| 1,663 |
| 4,403 |
| 286 |
| 4,117 |
| 3,189 |
| 2,284 |
| 905 |
| 1,244 |
| 257 |
| 987 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
|
|
|
| 2011 |
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
|
| Chile |
| Brasil |
| Argentina |
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||
|
| Total |
| Union |
| Non-Union |
| Total |
| Union |
| Non-Union |
| Total |
| Union |
| Non-Union |
|
|
|
|
|
|
| |||||||||||||||||||
Executives |
| 42 |
| — |
| 42 |
| 79 |
| 2 |
| 77 |
| 85 |
| — |
| 85 |
|
|
|
|
|
|
| |||||||||||||||||||
Technicians and professionals |
| 650 |
| 315 |
| 335 |
| 1,451 |
| 247 |
| 1,204 |
| 349 |
| 6 |
| 343 |
|
|
|
|
|
|
| |||||||||||||||||||
Workers |
| 716 |
| 639 |
| 77 |
| 1,317 |
| 52 |
| 1,265 |
| 1,115 |
| 966 |
| 149 |
|
|
|
|
|
|
| |||||||||||||||||||
Temporary Workers |
| 324 |
| — |
| 324 |
| — |
| — |
| — |
| 343 |
| 337 |
| 6 |
|
|
|
|
|
|
| |||||||||||||||||||
Total |
| 1,732 |
| 954 |
| 778 |
| 2,847 |
| 301 |
| 2,546 |
| 1,892 |
| 1,309 |
| 583 |
|
|
|
|
|
|
|
Management believes that is has good relations with its employees.
In Chile we continue to make provisions for severance indemnities in accordance with our collective bargaining agreements and labor legislations, in the amount of one month’s salary for every year of employment subject to certain restrictions. In addition, we complement our employees’ contribution to our health insurance system, thus decreasing health costs for the employees’ families. Employees are required to contribute funds for financing pension funds, which are mainly managed by private entities.
In Chile, 67.8%52.1% of employees with indefinite work contracts are members of labor unions. The following collective bargaining agreements are in effect as of December 31, 2011:2012: (i) with Labor Union N° 1, that mainly represents workers from the Bottling area, from December 1, 2010 to November 30, 2012;2015; (ii) with Labor Union N°2, that mainly represents personel from the areas of management, logistics and operations specialists from June 1, 2011 to MayJune 31, 2015; (iii) with Labor Union N°3 that mainly represents sales force employees from May 1st, 2010 to April 31, 2014; (iv) with the new salesforce negotiating group from June 1, 2010 to May 31, 2013; (iv)(v) with Labor Union TAR, that represents workers from the distribution area from July 1, 20082012 to June 30, 2012;2014; (vi) with the picking area workers from the Distribution Centers in Puente Alto, Maipú, Rancagua and San Antonio from September 1, 2010 to August 31, 2014; and with the picking area workers from the Venecia, Renca and Carlos Valdovinos branches, from March 2011, to February 28, 2015 and (viii) collective agreement with a group of workers in the area of operations of the new plant Renca, effective as from October 1, 2011, until June 30, 2015.
Also, due to the merger the unions and collective agreements executed by Andina in Regions were also included. The ones in full force and effect as of December 31, 2012 in Coquimbo are: (ix) Collective bargaining agreement executed with Union No. 1, mainly integrated by workers in the production area, effective from March 1, 2010 until February 28, 2013; (x) Collective bargaining agreement with National Union No. 1, which represents part of the Administration employees and vendors, effective from January 1, 2011 until December 31, 2013; (xi) Collective bargaining agreement executed with a negotiating
group of replenishers, effective from September 1, 2010 until June 30, 2013; (xii) Collective bargaining agreement executed with vendors from the base area, effective from June 1, 2011 until May 1, 2014; (xiii) Collective bargaining agreement executed with Administration employees, effective from February 1, 2011 until July 31, 2013; (xiv) Collective bargaining agreement executed with a negotiating group of Administration employees, effective from January 1, 2012 until January 31, 2014; (xv) Collective bargaining agreement executed with mostly transportation workers, effective from July 1, 2011 until June 30, 2014, and (xvi) Collective bargaining agreement executed with a negotiating group of transportation employees, effective from May 1, 2012 to April 30, 2014. The collective bargaining agreements in full force and effect as of December 31, 2012 in Antofagasta are: (xvii) Collective bargaining agreement executed with Union No. 1, integrated mainly by workers from the production area, effective from May 1, 2012 until April 30, 2014; (xviii) Collective bargaining agreement executed with Union No. 2 that represents a negotiating group employees from different areas, effective from November 27, 2011 until November 26, 2013, (xix) Collective bargaining agreement execute with a negotiation group of vendors, effective from December 1, 2010 until November 30, 2013, (xx) Collective bargaining agreement executed with transportation employees in the base zone, effective from May 4, 2012 to May 4, 2014 and (xxi) Collective bargaining agreement executed with transportation employees of Calama, effective from September 1, 2010 until September 30, 2013. Finally, collective bargaining agreements in full force and effect from December 31, 2012 in Punta Arenas are; (xxii) Collective bargaining agreement executed with Operario Unit, which mainly represents works from the production area, effective from August 1, 2011 until July 31, 2013; (xxiii) Collective bargaining agreement executed with the administration staff, effective from January 1, 2012 until December 31, 2013 and (xxiv) Collective bargaining agreement executed with transportation workers, effective from December 1, 2011 until November 30, 2013.
Chilean Law 20,123 (regulates Subcontracting employment) beginning January 16, 2007. The most significant aspects are the following: (i) amendment on the responsibility that the main company formerly had with the workers of its contractors. The main company shared responsibility regarding labor and social security obligations that can affect contractors and subcontractors favoring the workers of the contractors and subcontractors, expressly including the corresponding legal indemnities pursuant to termination of the labor relation of the workers assigned to the services. Nevertheless, this responsibility could be supplementary if the main company exerts information and retention rights in accordance to the law; (ii) an obligation is established for the main company in the sense of adopting necessary measures to effectively protect the life and health of all workers who perform duties for the company, at any of the company’s locations; (iii) creation of the concept “temporary services companies” (EST for its meaning in Spanish-Empresa de Servicios Transitorios) that are solely and exclusively dedicated to providing workers to third parties as temporary workers for other companies; as well as selection, qualification and formation of workers and other activities within the scope of human resources; and (iv) jurisdictional faculties are granted to la Direccion del Trabajo by which resolutions of this organism could be appealed before the respective Court of Appeals. In 2009, Andina implemented different actions to assure a proactive fulfillment of the new law, among other actions, the Company incorporated a group of contractor workers, as company employees, updating service agreements and implementing a Labor Audit system with contractor companies. A Contractor Regulation was established along with an internal procedure for the hiring of contractors, which must be fulfilled permanently, and must include a process of pre-qualification and a compliance assessment.
In Brazil, 11.0%6.5% of employees are members of labor unions. Collective bargaining agreements are negotiated on an industry-wide basis, although companies can negotiate special terms for their affiliates that apply to all employees in each jurisdiction where companies have a plant. Collective bargaining agreements are generally binding for one year.
With respect to Andina Brazil, there are sixeight collective bargaining agreements currently in force. FourSix agreements for employees in the State of Rio de Janeiro; (i) the Soft Drink Industry Employees’ Union agreement from July 1, 20112012 to June 30, 2012;2013; (ii) the
Sales Force Union agreement from October 1, 20112012 to September 30, 2012;2013; (iii) the “Stack Machine” Operator Union agreement from May 1, 20112012 to April 30, 2012;2013; (iv) the Driver and Helper of the Lagos Region Union agreement from May 1, 20112012 through April 30, 2012.2013; (v) Collective bargaining agreement executed with the Drivers and Nova Iguaçu Helpers affective from May 1, 2012 until April 30, 2013, and (vi) Collective bargaining agreement executed with Drivers and São Gonçalo helpers effective form May 1, 2012 until April 30, 2013.. Two agreements for employees in the
State of Espírito Santo: (i) the Nourishment Union agreement from July 1, 20112012 to June 30, 2012;2013; (ii) the Sales Force Union agreement from December 1, 20112012 to November 30, 2012.2013. These agreements do not require us to increase wages on a collective basis. Selected increases were granted, however, mainly in the manufacturing area. We provide benefits to our employees according to the relevant legislation and to the collective bargaining agreements. Andina Brazil experienced its most recent work stoppages in January and October 1990, for eight days in each instance.
In Argentina, 69.2%71.6% of EDASA’’sEDASA’s employees are parties to collective bargaining agreements and are represented by local workers’ unions associated with a national federation of unions. The Argentine Chamber of Non-Alcoholic Beverages of the Argentine Republic (Cámara Argentina de Industria de Bebidas sin Alcohol de la República Argentina (the “Chamber”) and the Argentine Workers Federation of Carbonated Water (Federación Argentina de Trabajadores de Aguas Gaseosas) (the “Federation”) are parties to a collective bargaining agreement that began July 29, 2008. On November 21, 2010,2011, the Chamber and the Federation entered into a new collective bargaining agreement establishing new salaries, new non salary benefits a new labor category, new figures for company contributions, contributions and a new complementary regulation on company contributions.
Argentine law requires severance payments upon dismissal without cause in an amount at least equal to an average of one-month’s wages for each year of employment or a fraction thereof if employed longer than three months. Severance payments are subject to maximum and minimum amounts fixed by legislations and jurisprudence of the Justice Supreme Court of Argentina.
At the end of 2008 Congress sanctioned Law N° 26,425 by which beginning 2009, private pension funds were eliminated instructing that all employee contributions must be destined to the government social security system, Most of the health system in the Argentine territory is run by the unions through contributions from union and non-union employees.
In Paraguay, 20.5% of PARESA’s employees are members of labor unions. Collective bargaining agreements are negotiated with the company (Coca-Cola Paresa Paraguay). Unions can negotiate special terms for their members, which are applicable to all employees. Collective bargaining agreements generally have a two year term of duration.
Collective bargaining agreements that are currently in force are: (1) Collective bargaining agreement executed with Sindicato Autentico de Trabajadores de Paraguay Refrescos effective from June 16, 2011 to June 15, 2013; and (2) Sindicato de Empleados de Paraguay Refrescos effective from November 9, 2012 to May 3, 2014.
E.6.E. Share Ownership of Directors, Members of the Directors’ Committee and Senior Executives
The following table sets forth the amount and percentage of our shares beneficially owned by our directors, members of the Directors’ Committee and senior executives as of December 31, 20112012
|
| Series A |
| Series B |
|
| Series A |
| Series B |
| ||||||||||||||||||||||||||||||||||||||||
|
| Beneficial |
| % |
| Direct |
| % |
| Indirect |
| % |
| Beneficial |
| % |
| Direct |
| % |
| Indirect |
| % |
|
| Beneficial |
| % |
| Direct |
| % |
| Indirect |
| % |
| Beneficial |
| % |
| Direct |
| % |
| Indirect |
| % |
|
|
| Owner |
| Class |
| Owner |
| Class |
| Owner |
| Class |
| Owner |
| Class |
| Owner |
| Class |
| Owner |
| Class |
|
| Owner |
| Class |
| Owner |
| Class |
| Owner |
| Class |
| Owner |
| Class |
| Owner |
| Class |
| Owner |
| Class |
|
Shareholder |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
José Antonio Garcés Silva (junior) |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 4,529,700 |
| 1.1916 | % |
| — |
| — |
| — |
| — |
| 52,987,375 |
| 11.19 |
| — |
| — |
| — |
| — |
| 25,728,183 |
| 5.43 |
|
Arturo Majlis Albala |
| — |
| — |
| — |
| — |
| 2,150 |
| 0.0006 |
| — |
| — |
| 5,220 |
| 0.0014 |
| — |
| — |
|
| — |
| — |
| — |
| — |
| 2,150 |
| 0.0006 |
| — |
| — |
| 5,220 |
| 0.0014 |
| — |
| — |
|
Salvador Said Somavía |
| — |
| — |
| — |
| — |
| 1,000 |
| 0.0003 |
| — |
| — |
| — |
| — |
| 1,000 |
| 0.0003 |
|
| — |
| — |
| — |
| — |
| 52,987,375 |
| 11.19 |
| — |
| — |
| — |
| — |
| 49,700,463 |
| 10.50 |
|
Gonzalo Said Handal |
| 50,001,651 |
| 13.1536 |
| — |
| — |
| — |
| — |
| 11,761,462 |
| 3.094 |
| — |
| — |
| 4,241,565 |
| 1.1158 |
|
| — |
| — |
| — |
| — |
| 52,987,375 |
| 11.19 |
| 11,761,462 |
| 3.094 |
| — |
| — |
| 37,914,463 |
| 8.018 |
|
Eduardo Chadwick Claro |
|
|
|
|
|
|
|
|
| 52,987,375 |
| 11.19 |
|
|
|
|
|
|
|
|
| 52,989,382 |
| 11.19 |
|
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth certain information concerning beneficial ownership of our capital stock at December 31, 2011,2012, with respect to the principal shareholders known to us who maintain at least a 5% beneficial ownership in our shares and with respect to all of our directors and executive officers as a group:
|
| Series A |
| Series B |
| ||||
Shareholder |
| Shares |
| % Class |
| Shares |
| % Class |
|
|
|
|
|
|
|
|
|
|
|
Controlling Shareholders (1) |
| 208,965,796 |
| 54.97 |
| 161,269,184 |
| 42.42 |
|
The Bank of New York Mellon(2) |
| 10,120,224 |
| 2.66 |
| 59,916,810 |
| 15.76 |
|
The Coca-Cola Company, directly or through subsidiaries |
| 41,962,864 |
| 11.04 |
| 41,962,864 |
| 11.04 |
|
|
| Series A |
| Series B |
|
| Series A |
| Series B |
| ||||||||
Shareholder |
| Shares |
| % Class |
| Shares |
| % Class |
|
| Shares |
| % Class |
| Shares |
| % Class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Controlling Shareholders (1) |
| 261,955,178 |
| 55.3 |
| 214,258,566 |
| 45.3 |
| |||||||||
The Bank of New York Mellon(2) |
| 9,073,560 |
| 1.9 |
| 50,263,248 |
| 10.62 |
| |||||||||
The Coca-Cola Company, directly or through subsidiaries |
| 69,348,241 |
| 14.65 |
| 69,348,241 |
| 14.65 |
| |||||||||
AFPs as a group (Chilean pension funds) |
| 57,954,803 |
| 15.25 |
| 5,994,743 |
| 1.58 |
|
| 42,776,601 |
| 9.04 |
| 1,425,912 |
| 0.6 |
|
Principal foreign mutual funds as a group |
| 9,713,114 |
| 2.56 |
| 33,794,992 |
| 8.89 |
|
| 58,025,352 |
| 0.081 |
| 79,959,878 |
| 0.059 |
|
Executive officers as a group |
| 165,474 |
| 0.04 |
| 180,474 |
| 0.05 |
|
| 184,066 |
| 0.038 |
| 180,430 |
| 0.038 |
|
Directors as a group(3) |
| 50,004,801 |
| 13.15 |
| 20,542,041 |
| 5.40 |
| |||||||||
Directors as a group(3) |
| 211,955,657 |
| 44.78 |
| 166,332,491 |
| 35.14 |
|
(1) Embotelladora Andina´s Controlling Shareholders is comprised by: Inversiones Freire Ltda.S.A., Inversiones Freire Alfa S.A., Inversiones Freire Beta S.A., Inversiones Freire Gamma S.A. and Inversiones Freire Delta S.A.; Inversiones Freire Dos S.A., Inversiones Freire Dos Ltda., Mr. José Antonio Garcés Silva (senior), Mr. José Said Saffie, Mr. Alberto Hurtado Fuenzalida, the estate of Mr. Jaime Said Demaría, Inversiones Nueva Sofía S.A..Alfa S.A., Inversiones S.H. Seis Ltda.Freire Dos Beta S.A., Inversiones Mar Adentro Ltda.,Freire Dos Gamma S.A. e Inversiones HB S.A, Inversiones CaburgaFreire Dos Delta S.A., and Inversiones Ledimor Chile Ltda. Los Aromos Limitada. For more information on the Controlling Shareholders please refer to page 72114 of the Company’s 20112012 Annual Report available on the Company’s website: www.embotelladoraandina.com.
(2) Acting as depositary for the ADRs.
(3) Represents shares to which Mr. Gonzalo Said Handal, Mr. José Antonio Garcés Silva (junior), Mr. Salvador Said Somavía, Mr. Eduardo Chadwick Claro and Mr. Arturo Majlis Albala would claim direct and indirect.
The Controlling Shareholders act pursuant to an agreement among partners dated May 29, 1992(the “Agreement”). The Agreement establishes that sets forththe controlling group will jointly exercise the control of Andina in order to assure most of the votes at shareholders’ meetings and board sessions.
The Agreement contemplates as general rule a majority of four of the five parties, except for the following matters that no memberwill require unanimity:
(i) new businesses different from the current line of said group may, disposebusiness (unless related to “ready to drink products” or products under a Coca-Cola franchise); (ii) amendment of his pro rata portionthe number of hisdirectors; (iii) series of shares ; (iv) split or merger (v) capital increases (subject to certain debt thresholds); and (vi) the joint acquisition of stock, unlessAndina’s Series A shares. The Agreement has an indefinite duration. On the other hand, and subject to the fulfillment of the rules under Title XXV of the Chilean Securities Law, sales options are established in accordancethe Agreement for each party with respect to the previously mentioned Agreement.other at market price plus a premium of 9.9% and 25%, with a 30-day exercise period in June of each year, and in June 2017 and June 2027 respectively; and a 30 day right of first option purchase is set, if at least one of the parties decides to sell.
In connection with TCCC’s investment in Andina, the Coca-Cola shareholdersTCCC and the Controlling Shareholders entered into a Shareholders’ Agreement dated September 2, 1996June 25, 2012 (the “Shareholders’“Amended and Restated Shareholders Agreement or Shareholders’ Agreement”-incorporated as Exhibit xx to the Form 20F), providing for certain restrictions on the transfer of shares of Andina’s capital stock by the Coca-Cola Shareholders and the Controlling Shareholders. Specifically, the Controlling Shareholders are restricted from transferring its Series A shares without the prior authorization of TCCC .TCCC. The Shareholders’ Agreement also provides for certain corporate governance matters, including the right of the Coca-Cola shareholders to elect one regular and one alternate membertwo members of our board of directors so long as
TCCC and its subsidiaries collectively own, in aggregate, at least 4%certain percentage of the Series A shares. In addition, in related agreements, the Controlling Shareholders granted TCCC an option, exercisable upon the occurrence of certain changes in the beneficial ownership of Freire (majority shareholder of the Controlling Shareholders),Group, to acquire 100% , of the Series A shares held by Freirethe Controlling Group at a price and in accordance with procedures established in such agreements
An Agreement dated September 5, 1996, entered into by the Controlling Shareholders, the Company and other parties establishes that none of the shareholders, party to the Agreement, may transfer Series A shares of the Company they hold unless it involves:
·Transfers to wholly-owned subsidiaries of any Controlling Shareholder, provided that any shares transferred to such entities remain subject to the provisions of the Agreement;
·Acceptance by a member of the Controlling Shareholders party to the Agreement of a bona fide offer from a third party to purchase some or all of the shares held by such shareholder, so long as the member of the Controlling Shareholder first offers such shares for sale, on the same terms and conditions as those proposed to be sold to the third-party purchaser and to the other shareholder party to the Agreement; and
·A proposal by a shareholder party to the Agreement to sell its shares in a public offering or in a brokers’ transaction, so long as it first offers such shares to the other shareholders party to the Agreement at the price proposed in the public sale notice.
B. Related Party Transactions
In the ordinary course of our business, we engage in a variety of transactions with certain of our affiliates and related parties. Financial information concerning these transactions is set forth in Note 11.3 to our Consolidated Financial Statements and were carried out under the following conditions: (i) they were previously approved by the Company’s Board of Directors, with the abstainment of the director involved in the corresponding case; (ii) the purpose of these transactions was to contribute to the Company’s interest; and (iii) they were consistent to the prevailing market price, terms and conditions at
the time of their aproval . Our Directors’ Committee is charged with evaluating transactions with related parties and to report on these transactions to the full board of directors. See “Item 6. Directors, Senior Management and Employees—Directors’ Committee.”
Our management believes, to the best of its knowledge, it has complied, in all material respects with the Chilean Public Company law regarding to the transactions with related parties in full force and effect at December 31, 2011.2012. There can be no assurance, however, that these regulations will not be modified in the future.
C. Interests of Experts and Counsel
Not applicable.
A. Consolidated Statements and Other Financial Information
See “Item 18 —Financial Statements” for our Consolidated Financial Statements filed as part of this annual report.
Contingencies
We are party to certain legal proceedings that have arisen during the normal course of business, and we believe none of them are likely to have a material adverse effect on our financial condition. In accordance with accounting principles, the provisions regarding legal proceedings must be recorded if said procedures are reasonably probable to be resolved against the Company.
The following table represents accounting provisions made as of December 31, 20112012 and 2010,2011, for potential loss contingencies stemming from labor, tax, commercial and other litigation faced by our Company:
|
| For the period ended December 31, |
| ||
|
| 2011 |
| 2010 |
|
|
| ThCh$ |
| ThCh$ |
|
Chile |
| 57,512 |
| 29,843 |
|
Brazil |
| 6,870,999 |
| 3,363,568 |
|
Argentina |
| 1,042,324 |
| 934,956 |
|
Anti-Competition Lawsuit filed by the FNE (Chile’s National Economic Prosecutor)
|
| For the period ended December 31, |
| ||
|
| 2012 |
| 2011 |
|
|
| Million Ch$ |
| Million Ch$ |
|
Chile |
| 123 |
| 58 |
|
Brazil |
| 5,098 |
| 6,871 |
|
Argentina |
| 1,600 |
| 1,042 |
|
On November 22, 2011 the Tribunal de Defensa de la Libre Competencia (Chile’s antitrust court, the “TLDC”) approved the terms of the conciliation agreement proposed on November 15, 2011 by the Chilean Fiscalía Nacional Económica (the National Economic Prosecutor’s Office), Embotelladora Latinoamericana S.A., Embotelladora Castel Ltda., Industrial and Comercial Lampa S.A., Sociedad Comercial Antillanca Ltda., Coca-Cola Embonor S.A. and Embotelladora Andina S.A. According to the agreement, the Company assumes several commitments, including the liberation of 20% of the cooling capacity of the equipment that Andina has provided to certain points of sale in the traditional market that do not count with other cooling equipments, and for a term of 5 years. The conciliation agreement does not contemplate payment of fines and in no way constitutes recognition of responsibility of unlawful anti-competitive practices. Consequently, the process initiated before the TDLC on April 19, 2011 has concluded.
On April 28, 2011 the Company was legally informed of an anti-competition lawsuit filed by the Chilean Fiscalía Nacional Económica (“Chile’s National Economic Prosecutor”, the FNE) before the Tribunal de Defensa de la Libre Competencia (“Chile’s Court on Anti-Competition Cases”, the TDLC) against Embotelladora Andina S.A. and Coca-Cola Embonor S.A. This lawsuit indicates that said companies would have violated the regulation of free competition by establishing a system of granting incentives in the traditional distribution channel (“mom & pop’s”) with the purpose that these points of sale do not advertise, exhibit and/or commercialize, in any manner, the so called B-brands or alternative soft drink beverages. Pursuant to the aforementioned, the FNE requires the TDLC to impose a fine to each of the companies amounting to 10,000 Unidades Tributarias Anuales yearly taxable units (currently USD9.6 million approximately).
Dividend Policy
Pursuant to Chilean law, we must distribute cash dividends equal to at least 30% of our annual net income, calculated in accordance with IFRS, unless otherwise provided for by a unanimous vote of the Series A shareholders. If there is no net income in a given year, we are not legally required to distribute dividends from accumulated earnings. At the annual meeting of shareholders held in April 2011,2012, the shareholders authorized the board of directors to distribute, at its discretion, interim dividends during July2012 and Octoberbeginnings of 2013.
During 2010, 2011 and January 2012. During 2010 and 2011,2012 the respective shareholders’ meetings approved additional dividend payments to be paid from retained earnings fund in light of significant cash generation. There can be no assurance that these additional dividend payments will be available in the future.
The following table sets forth the nominal amount in Chilean pesos of dividends declared and paid per share each year and the U.S. dollar amounts paid to ADR holders, on each of the respective payment dates:
|
| Date |
|
|
| Series A |
| Series B |
|
|
|
|
|
| Series A |
| Series B |
| ||||||||
|
| Dividend |
| Fiscal year with respect to which |
| Ch$ per share |
| US$ per |
| Ch$ per share |
| US$ per |
|
| Date |
| Fiscal year with respect to |
| Ch$ per |
| US$ per ADR |
| Ch$ per share |
| US$ per ADR |
|
Year |
| Paid |
| dividend was declared |
| (nominal) |
| ADR |
| (nominal) |
| ADR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2012 |
| 23-Jan |
| 2011 |
| 8.50 |
| 0.01742 |
| 9.35 |
| 0.01916 |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11-May |
| 2011 |
| 10.97 |
| 0.02256 |
| 12.067 |
| 0.02481 |
|
2012 |
| 23-Jan |
| 2011 |
| 8.50 |
| 0.01742 |
| 9.35 |
| 0.01916 |
| |||||||||||||
|
| 31-May |
| Retained Earnings |
| 24.30 |
| 0.04692 |
| 26.730 |
| 0.05161 |
| |||||||||||||
|
| 31-Oct |
| 2012 |
| 12.240 |
| 0.0255 |
| 13.460 |
| 0.02805 |
| |||||||||||||
|
| 11-May |
| 2011 |
| 10.97 |
|
|
| 12.067 |
|
|
|
| 27-Dec |
| 2012 |
| 24.480 |
| 0.0511 |
| 26.930 |
| 0.05621 |
|
2011 |
| 27-Jan |
| 2010 |
| 8.50 |
| 0.01734 |
| 9.35 |
| 0.01907 |
|
| 27-Jan |
| 2010 |
| 8.50 |
| 0.01734 |
| 9.35 |
| 0.01907 |
|
|
| 12-May |
| 2010 |
| 13.44 |
| 0.02870 |
| 14.784 |
| 0.03157 |
|
| 12-May |
| 2010 |
| 13.44 |
| 0.02870 |
| 14.784 |
| 0.03157 |
|
|
| 26-Jul |
| Retained Earnings |
| 50 |
| 0.10811 |
| 55 |
| 0.11892 |
|
| 26-Jul |
| Retained Earnings |
| 50 |
| 0.10811 |
| 55 |
| 0.11892 |
|
|
| 26-Jul |
| 2011 |
| 8.50 |
| 0.01838 |
| 9.35 |
| 0.02022 |
|
| 26-Jul |
| 2011 |
| 8.50 |
| 0.01838 |
| 9.35 |
| 0.02022 |
|
|
| 27-Oct |
| 2011 |
| 8.50 |
| 0.01696 |
| 9.35 |
| 0.01866 |
|
| 27-Oct |
| 2011 |
| 8.50 |
| 0.01696 |
| 9.35 |
| 0.01866 |
|
2010 |
| 28-Jan |
| 2009 |
| 7.00 |
| 0.01344 |
| 7.70 |
| 0.01479 |
|
| 28-Jan |
| 2009 |
| 7.00 |
| 0.01344 |
| 7.70 |
| 0.01479 |
|
|
| 28-Apr |
| 2009 |
| 11.70 |
| 0.02239 |
| 12.87 |
| 0.02462 |
|
| 28-Apr |
| 2009 |
| 11.70 |
| 0.02239 |
| 12.87 |
| 0.02462 |
|
|
| 18-May |
| Retained Earnings |
| 50.00 |
| 0.09283 |
| 55.00 |
| 0.10212 |
|
| 18-May |
| Retained Earnings |
| 50.00 |
| 0.09283 |
| 55.00 |
| 0.10212 |
|
|
| 27-jul |
| 2010 |
| 8.50 |
| 0.01635 |
| 9.35 |
| 0.01799 |
|
| 27-jul |
| 2010 |
| 8.50 |
| 0.01635 |
| 9.35 |
| 0.01799 |
|
|
| 27-oct |
| 2010 |
| 8.50 |
| 0.01731 |
| 9.35 |
| 0.01904 |
|
| 27-oct |
| 2010 |
| 8.50 |
| 0.01731 |
| 9.35 |
| 0.01904 |
|
2009 |
| 22-Jan |
| 2008 |
| 7.00 |
| 0.01125 |
| 7.70 |
| 0.01237 |
| |||||||||||||
|
| 30-Apr |
| 2008 |
| 14.13 |
| 0.02401 |
| 15.54 |
| 0.02641 |
| |||||||||||||
|
| 28-May |
| Retained Earnings |
| 43.00 |
| 0.07603 |
| 47.30 |
| 0.08363 |
| |||||||||||||
|
| 30-Jul |
| 2009 |
| 7.00 |
| 0.01288 |
| 7.70 |
| 0.01417 |
| |||||||||||||
|
| 28-Oct |
| 2009 |
| 7.00 |
| 0.01314 |
| 7.70 |
| 0.01445 |
|
B. Significant Changes since the Annual Financial Statements
Not applicable.
A. Offer and Listing Details
Shares of Andina’s common stock trade in Chile on the Bolsa de Comercio de Santiago, the Bolsa de Valores Electrónica and the Bolsa de Valores de Valparaíso. Also shares of Andina’s common stock have traded in the United States on the New York Stock Exchange (“NYSE”) since July 14, 1994 in the form of
ADRs, which represent six shares of common stock. The Depositary for the ADRs is The Bank of New York Mellon.
The table below shows the high and low daily closing prices of the common stock in Chilean pesos and the trading volume of the common stock on the Santiago Stock Exchange for the periods indicated. It also shows the high and low daily closing prices of the ADRs and the volume traded in the NYSE.
|
| Share Volume |
|
|
|
|
|
|
|
|
| ||
|
| (in thousands) |
| Ch$ per Share |
| ||||||||
|
| Series A |
| Series B |
| Series A |
| Series B |
| ||||
|
|
|
|
|
| High |
| Low |
| High |
| Low |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
| 81,787 |
| 242,133 |
| 1,750 |
| 1,300 |
| 1,930 |
| 1,420 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
| 76,084 |
| 147,144 |
| 1,426 |
| 919 |
| 1,581 |
| 1,164 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 |
| 63,647 |
| 125,476 |
| 1,440 |
| 1,088 |
| 1,740 |
| 1,262 |
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
| 10,790 |
| 20,290 |
| 1,433 |
| 1,282 |
| 1,736 |
| 1,621 |
|
2nd Quarter |
| 1,217 |
| 2,389 |
| 1,668 |
| 1,423 |
| 2,074 |
| 1,678 |
|
3rd Quarter |
| 1,095 |
| 45,210 |
| 2,033 |
| 1,639 |
| 2,406 |
| 1,976 |
|
4th Quarter |
| 2,094 |
| 42,160 |
| 2,072 |
| 1,904 |
| 2,501 |
| 2,273 |
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
| 15,153 |
| 23,597 |
| 2,025 |
| 1,670 |
| 2,411 |
| 1,899 |
|
2nd Quarter |
| 9,429 |
| 19,655 |
| 1,924 |
| 1,746 |
| 2,235 |
| 2,071 |
|
3rd Quarter |
| 10,555 |
| 19,600 |
| 1,972 |
| 1,586 |
| 2,232 |
| 1,766 |
|
4th Quarter |
| 3,279 |
| 16,748 |
| 1,931 |
| 1,749 |
| 2,390 |
| 1,991 |
|
Last six months: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct-11 |
| 1,061 |
| 5,563 |
| 1,915 |
| 1,749 |
| 2,323 |
| 2,063 |
|
Nov-11 |
| 521 |
| 4,650 |
| 1,931 |
| 1,810 |
| 2,390 |
| 2,111 |
|
Dec-11 |
| 1,000 |
| 4,556 |
| 1,921 |
| 1,817 |
| 2,351 |
| 1,991 |
|
Jan-12 |
| 6,386 |
| 8,020 |
| 1,941 |
| 1,842 |
| 2,376 |
| 2,220 |
|
Feb-12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar-12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share Volume |
|
|
|
|
|
|
|
|
| ||
|
|
| (in thousands) |
| Ch$ per Share |
| ||||||||
|
|
| Series A |
| Series B |
| Series A |
| Series B |
| ||||
|
|
|
|
|
|
| High |
| Low |
| High |
| Low |
|
| 2010 |
| 15,196 |
| 110,049 |
| 2,072 |
| 1,282 |
| 2,501 |
| 1,621 |
|
| 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
|
| 15,153 |
| 23,597 |
| 2,120 |
| 1,749 |
| 2,521 |
| 1,985 |
|
2nd Quarter |
|
| 9,429 |
| 19,655 |
| 2,000 |
| 1,828 |
| 2,336 |
| 2,150 |
|
3rd Quarter |
|
| 10,555 |
| 19,600 |
| 2,000 |
| 1,600 |
| 2,300 |
| 1,780 |
|
4th Quarter |
|
| 3,279 |
| 16,748 |
| 1,940 |
| 1,765 |
| 2,400 |
| 1,999 |
|
| 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
|
| 10,809 |
| 20,786 |
| 2,300 |
| 1,847 |
| 2,780 |
| 2,220 |
|
2nd Quarter |
|
| 13,897 |
| 19,454 |
| 2,350 |
| 2,135 |
| 2,800 |
| 2,552 |
|
3rd Quarter |
|
| 10,339 |
| 23,451 |
| 2,300 |
| 2,090 |
| 2,835 |
| 2,440 |
|
4th Quarter |
|
| 10,832 |
| 59,746 |
| 2,550 |
| 2,220 |
| 3,155 |
| 2,728 |
|
Last six months: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
oct-12 |
|
| 3,675 |
| 13,408 |
| 2,550 |
| 2,220 |
| 3,155 |
| 2,728 |
|
nov-12 |
|
| 4,156 |
| 27,602 |
| 2,540 |
| 2,375 |
| 3,100 |
| 2,991 |
|
Dec-12 |
|
| 3,001 |
| 18,737 |
| 2,460 |
| 2,375 |
| 3,100 |
| 2,950 |
|
Jan-13 |
|
| 2,921 |
| 4,144 |
| 2,440 |
| 2,312 |
| 3,140 |
| 2,960 |
|
feb-13 |
|
| 1,575 |
| 6,185 |
| 2,585 |
| 2,440 |
| 3,320 |
| 3,002 |
|
mar-13 |
|
| 4,107 |
| 6,299 |
| 2,622 |
| 2,470 |
| 3,350 |
| 3,000 |
|
|
|
| ADR Volume |
|
|
|
|
|
|
|
|
| ||
|
|
| (in thousands) |
| US$ per Share |
| ||||||||
|
|
| Series A |
| Series B |
| Series A |
| Series B |
| ||||
|
|
|
|
|
|
| High |
| Low |
| High |
| Low |
|
| 2010 |
| 2,076 |
| 7,140 |
| 29 |
| 15 |
| 31 |
| 19 |
|
| 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
|
| 297 |
| 1,764 |
| 25.72 |
| 20.65 |
| 31.41 |
| 25.19 |
|
2nd Quarter |
|
| 200 |
| 1,161 |
| 25.27 |
| 22.69 |
| 29.75 |
| 27.35 |
|
3rd Quarter |
|
| 198 |
| 1,153 |
| 26.25 |
| 19.25 |
| 30.17 |
| 21.00 |
|
4th Quarter |
|
| 216 |
| 1,011 |
| 24.05 |
| 19.65 |
| 29.48 |
| 23.62 |
|
| 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
|
| 645 |
| 1,257 |
| 28.40 |
| 20.87 |
| 34.63 |
| 26.21 |
|
2nd Quarter |
|
| 150 |
| 693 |
| 29.00 |
| 24.29 |
| 35.30 |
| 29.04 |
|
3rd Quarter |
|
| 267 |
| 1,117 |
| 28.51 |
| 25.52 |
| 36.31 |
| 30.60 |
|
4th Quarter |
|
| 214 |
| 2,963 |
| 33.16 |
| 27.59 |
| 39.85 |
| 34.06 |
|
Last six months: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
oct-12 |
|
| 81 |
| 713 |
| 33.16 |
| 27.59 |
| 39.85 |
| 34.06 |
|
nov-12 |
|
| 69 |
| 1,929 |
| 31.43 |
| 29.46 |
| 38.72 |
| 36.99 |
|
Dec-12 |
|
| 65 |
| 321 |
| 31.47 |
| 29.25 |
| 39.19 |
| 37.28 |
|
Jan-13 |
|
| 50 |
| 270 |
| 31.43 |
| 30.03 |
| 39.94 |
| 37.75 |
|
feb-13 |
|
| 69 |
| 227 |
| 33.34 |
| 30.48 |
| 41.85 |
| 38.71 |
|
mar-13 |
|
| 42 |
| 301 |
| 34.07 |
| 30.84 |
| 42.23 |
| 38.39 |
|
|
| ADR Volume |
|
|
|
|
|
|
|
|
| ||
|
| (in thousands) |
| US$ per Share |
| ||||||||
|
| Series A |
| Series B |
| Series A |
| Series B |
| ||||
|
|
|
|
|
| High |
| Low |
| High |
| Low |
|
2007 |
| 5,080 |
| 6,346 |
| 20.75 |
| 13.66 |
| 22.55 |
| 14.54 |
|
2008 |
| 2,564 |
| 5,459 |
| 20.10 |
| 8.41 |
| 21.79 |
| 10.53 |
|
2009 |
| 1,307 |
| 6,366 |
| 17.19 |
| 10.26 |
| 18.50 |
| 12.36 |
|
2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
| 360 |
| 642 |
| 12.70 |
| 10.26 |
| 15.71 |
| 12.36 |
|
2nd Quarter |
| 171 |
| 1,180 |
| 15.15 |
| 11.87 |
| 17.40 |
| 13.91 |
|
3rd Quarter |
| 265 |
| 3,041 |
| 15.70 |
| 14.15 |
| 18.50 |
| 16.90 |
|
4th Quarter |
| 511 |
| 1,503 |
| 17.19 |
| 15.00 |
| 17.19 |
| 17.96 |
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1st Quarter |
| 297 |
| 1,764 |
| 24.71 |
| 19.90 |
| 30.26 |
| 24.34 |
|
2nd Quarter |
| 200 |
| 1,161 |
| 24.49 |
| 21.92 |
| 28.75 |
| 26.55 |
|
3rd Quarter |
| 198 |
| 1,153 |
| 25.44 |
| 19.11 |
| 29.30 |
| 20.86 |
|
4th Quarter |
| 216 |
| 1,011 |
| 23.96 |
| 19.50 |
| 29.38 |
| 23.46 |
|
Last six months: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oct-11 |
| 30 |
| 404 |
| 23.23 |
| 19.50 |
| 28.93 |
| 23.46 |
|
Nov-11 |
| 149 |
| 316 |
| 23.96 |
| 20.02 |
| 29.38 |
| 24.27 |
|
Dec-11 |
| 37 |
| 291 |
| 21.86 |
| 20.11 |
| 27.34 |
| 25.14 |
|
Jan-12 |
| 216 |
| 529 |
| 23.15 |
| 20.79 |
| 28.65 |
| 26.12 |
|
Feb-12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar-12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Source:Bloomberg
The total number of registered ADR holders Andina had at December 20112012 was 34 (2235 (23 in the Series A ADRs and 12 in the Series B ADRs). At December 31, 2011,As of this date the ADRs represented 9.2%6.3% of the total number of our issued and outstanding shares. On December 31, 2011,2012, the closing price for the Series A shares on the Santiago Stock Exchange was Ch$1,8502,436.90 per share (US$20.929.94 per Series A ADR), and Ch$2,2703,011.70 for the Series B shares (US$25.937.97 per Series B ADR). At December 31, 2011,2012, there were 1,686,704Series1,512,260 Series A ADRs (equivalent to 10,120,224Series9,073,560 Series A shares) and 9,985,8358,377,208 Series B ADRs (equivalent to 59,915,01050,263,248 Series B shares).
Trading activity on the Santiago Stock Exchange is on average substantially less than that on the principal national securities exchanges in the United States. We estimate that for the year ended December 31, 2011,2012, Andina’s shares were traded on the Santiago Stock Exchange on an average of approximately 81.27%73.89% and 100% of such trading days, for Series A and Series B shares respectively.
Other than as previously discussed in “Item 7-Major Shareholders” we are not aware of any other existing contracts or documents that impose material limitations or qualifications on the rights of shareholders of our listed securities.
The Yankee Bonds
Our 7 5/8% Notes due 2027 and 7 7/8% Notes due 2097 are not listed on any stock exchange or other regulated market and through its subsidiary, Abisa Corp S.A. (formerly Pacific Sterling), Embotelladora Andina S.A. repurchased its Yankee Bonds issued on the U.S. Market during the years 2000, 2001, 2002, 2007 and 2008. The entire placement amounted to US$350 million, of which US$200 million are outstanding and are presented after deducting the long-term liability from the other financial liabilities item.
Debt Securities
The Central Bank is responsible, inter alia, for Chile’s monetary policies and exchange controls. The Central Bank has authorized Chilean issuers to offer bonds in Chile and abroad under the terms of Chapter XIV of the Compendium of Foreign Exchange Regulations (Compendio de Normas de Cambios Internacionales or CFER). The following paragraphs summarize some of the Central Bank rules on international bond issuances. This summary does not intend to be complete and those interested in a full description should refer to Chapter XIV of the CFER.
Effective April 19, 2001 the CFER greatly simplified the procedure to register capital contributions, investments and foreign loans, including bonds issuances. Payments or remittances of funds, to or from Chile, in connection with credits granted abroad should be made through the Formal Exchange Market, which is composed by the main commercial banks that operate in Chile. When foreign currency resulting from loans or bonds is made available to the beneficiary in the country, the intervening bank should issue the pertinent “Form” and request certain information from the debtor and creditor, as applicable, pursuant to Chapter XIV.
Payments or remittances of foreign currency as capital, interest, adjustments, profits and other benefits originating in the transactions regulated under Chapter XIV must be reported to the Central Bank as follows: (i) if the foreign currency represents a remittance made from Chile, the intervening Formal Exchange Market bank should issue the above form; (ii) the issuer or borrower should inform the Central Bank, within the first 10 days of the month following the date of the transaction, if the foreign currency used to make the pertinent payments originates from credit transactions for which the foreign currency has been used directly abroad or if the corresponding payment obligation is fulfilled abroad using funds other than those indicated in Chapter XIV.
Any change in the terms of the transaction must be reported to the Central Bank within 10 days after formalization. This requirement applies, among others, to the substitution of the debtor or creditor, total or
partial assignments of credits or rights and the modification of the financial terms of the respective credit regarding investments or capital contributions.
Exchange rule amendments dated April 2001 established that transactions recorded prior to April 19, 2001 will continue to be governed by the rules in force at the time they were recorded, but that the parties may choose to apply the new regulations.
These procedures also apply to foreign loans obtained through the placement of convertible bonds, in which case the issuer shall report to the Central Bank any increase or decrease in their registered amount as a result of the conversion of convertible bonds denominated and payable in Chilean pesos, for other convertible bonds denominated and payable in foreign currency or shares, as applicable, acquired by foreign investors with proceeds that had entered Chile under the terms of Chapter XIV.
According to Chapter XIV, the Central Bank established that credits relating to acts, agreements or contracts which create a direct obligation of payment or remittance of foreign currency abroad by persons domiciled or residing in Chile, that exceed on an individual basis the sum of US$100,000 or the equivalent in other foreign currencies, absent any special rule in the CFER, shall be reported to the Chilean Central Bank by the obligor either directly or through a Formal Exchange Market entity using the forms contained in the CFER, within 10 days from formalization.
In February 1999, after obtaining the requisite authorization from the Central Bank, we issued bonds in the international markets, subject to the exchange regulations in effect at that time. The main difference between the exchange regime applicable to our bond issuances and those currently in effect, is that in the case of our bond issuances the Central Banks warrants the access to currency markets. However, the regime applicable to our bond issuance has less flexibility as far as the procedures to carry out payments or remittances to bond holders.
We cannot give any assurance that the Central Bank will not impose future restrictions applicable to the holders of debt securities, nor can we make any evaluation of the duration or impact of such restrictions, if imposed.
B. Markets.
See Item 9. The Offer and Listing —–– A. Offer and Listing Details.
ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
Our By-Laws (“Estatutos”) are incorporated as Exhibit xx to this Form 20F, and are also available on our website www.embotelladoraandina.com, under Corporate Governance/Board of Directors/Deeds of Incorporation
C. Material Contracts
On August 30, 2012, Andina Brazil entered into a Share Purchase and Sale Agreement for the acquisition of 40% of the capital shares of Sorocaba Refreshments S.A., a manufacturer authorized by TCCC, based in the city of Sorocaba, State of São Paulo, owned by Compañía Maranhense de Refrigerantes (sucesora de Renosa Ind. Brasileira de Bebidas S/A) and in November 2012 RJR paid the purchase price of R$146,946,044.00
The General Extraordinary Shareholders Meeting of Embotelladora Andina S.A. held on June 25, 2012, approved the merger (by absorption) of Embotelladora Coca Cola Polar S.A. and Embotelladora
Andina S.A. On September 28, 2012 Embotelladora Andina S.A. and Embotelladora Coca Cola Polar S.A. signed the public deed of the merger of their operations, in which they declared that merger has been materialized and perfected on October 1, 2012. This operation began on February 2, 2012, and allows Embotelladora Andina S.A. to consolidate its leading position in the business of bottling products licensed by The Coca-Cola Company in the southern cone and generate opportunities for growth and generation of value for its shareholders and employees. In practice, Embotelladora Andina S.A. is the second largest Coca-Cola bottler in South America and the seventh in the world, with operations in Argentina, Brazil, Chile and Paraguay. The transaction took the form of a merger (by absorption) and the exchange of newly issued shares of Andina, at a ratio of 0.33268606071 shares of Andina Series A shares and 0.33268606071 Andina Series B shares for each share of Embotelladoras Coca-Cola Polar S.A. The final process of exchange of shares took place on October 16, 2012.
During 2012, Andina Argentina held, among others, the following contracts with economic or strategic transcendent content: natural gas supply agreements, and electricity supply agreements; IP telephony services agreement (with supplier SIEMENS); purchase of new forklift agreement (with supplier Toyota) which are necessary due to enlargement of the Cordoba Plant Deposit; and agreement for the extension of the Deposit of Final Products and Patio of the Cordoba Plant (13,600 m2) and at the Bahia Blanca Plant (2,800 m2).
During 2012, PARESA executed a contract with TECNOEDIL S.A. building company for the construction of Warehouse 9, extension of Warehouse 8 for forklifts and the construction of the Distribution building, which represents additional storage capacity, the total contract value Gs.8,262,784,550. Additionally, on June 1, 2012 and agreement was signed with AZPA (Azucarera Paraguaya S.A.) for the supply of sugar, raw material, which considers the provision of 38.500 tons (Thirty eight thousand five hundred tons) until May 31, 2013, the total value of the contract is Gs.192,500,000,000.
In October 2011, Andina Brazil entered into an agreement with the company “Light Esco — Prestação de Serviços S/A”, for the construction and operation of an electrical cogeneration station at the Jacarepaguá bottling facility. The term of this agreement is 15 years, since the date on which the station begins operating, which would enter into operation towards the year 2013 and will ensure the supply of energy for the plant. The estimated value of the agreement is of $738 million reals. At the end of the contractual term, ownership of the cogeneration station will be transferred to Andina Brazil and equipment maintenance and upgrades will be carried out by Light Esco.
On June 30, 2011, Andina Brazil together with the other bottlers of the Coca-Cola System in Brazil, and Recofarma (company of the Coca-Cola Group Brazil), signed an amendement to the agreement with SABB - SISTEMA DE ALIMENTOS E BEBIDAS DO BRASIL, new corporate name of Sucos del Valle, approving the incorporation of Mais Indústria de Alimentos Ltda to SABB, and bottlers remained with 50% of the share capital of SABB. With this agreement, Andina Brazil went on to have a total ownership of 5.74% of the share capital of SABB.
During January of 2011, the juice business in Chile was restructured, allowing the incorporation of the other Coca-Cola bottlers in Chile in the property of Vital S.A. which changed its name to Vital Jugos S.A. Andina, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. own 57%, 28% and 15%, respectively, of the outstanding capital of Vital Jugos S.A.
During 2011, Edasa, among others, entered into the following materially significant agreements: construction of the new plant for raw sugar; purchase of machinery and equipment for the REF PET line N°8 and N°7 (600 bottles per minute) ; construction and equipment for a new filling line for water and sensitive products; supply of natural gas; supply of electric power and long distance and inter-deposit service agreements.
On August 31, 2010, Andina Brazil along with the other Coca-Cola bottlers in Brazil, entered into an agreement with Recofarma (A Coca-Cola Brazil Group company) to transfer all of the shares of Leão Junior S.A. (Matte Leão), by which the bottlers will now hold 50% ownership interest of the capital stock of that company. With this joint venture, Andina Brazil now holds a 18.20% of the capital stock of Leão Junior S.A. With this transfer agreement, Leão Junior S.A. will produce Matte Leão products and supply the bottlers so that they can commercialize them in their respective territories.
During 2009, Edasa entered into the following materially significant agreements: construction of the new juice plant; leasing of processing equipment and filling lines for the juice plant; supply of natural gas; supply of power; and purchase and sale agreement of a blow molding machinery system for PET bottles.
D. Exchange Controls
Foreign Investment and Exchange Controls in Chile
The Central Bank is responsible, among other matters, for setting monetary policies and exchange controls in Chile. As of April 19, 2001, the Chilean Central Bank (“CCB”) eliminated prior foreign exchange controls, imposed certain reporting requirements and determined that certain operations be conducted through the Formal Exchange Market (“FEM”). The main purpose of these amendments, as declared by the Central Bank, is to facilitate the flow of capital into Chile and outside the country and to foster foreign investment.
Equity investments in Chile (including investments in stock) by non-resident persons or entities must comply with some of the existing exchange control restrictions. Foreign investments may be registered with the Foreign Investment Committee (Comité de Inversiones Extranjeras) in accordance with Law N° 600 of 1974 and amendments or with the Central Bank in accordance with Chapter XIV of the Compendium of Foreign Exchange Regulations (Compendio de Normas de Cambios Internacionales or CFER) of the Central Bank. In the case of Decree Law N° 600, foreign investors execute a foreign investment agreement with Chile, thus guaranteeing access to the FEM. However, investors under Decree Law N° 600 will only be able to repatriate capital one-year after the investment. Earnings can be remitted abroad at any time. In the case of CFER, capital as well as earnings can be repatriated at any time, without an agreement with the Central Bank.
During 2001 the CCB eliminated certain exchange controls. For instance, it revoked Chapter XXVI of the CFER, which regulated the issuance and placement of ADRs by Chilean corporations. Pursuant to the new rules, the Central Bank’s approval is no longer a pre-condition for ADR issuances or foreign investment contracts with the CCB. ADR issuances are now regarded as an ordinary foreign investment, and the only requirements are that the CCB be informed of the transaction, by fulfilling the rules of Chapter XIV of the CFER, that mainly establishes that the monies come in or leave the country exclusively through the Formal Exchange Market, if the recipient of the investment decides to enter the foreign currency to the country or if it carries out payments or remittances from Chile.
Notwithstanding these changes, exchange transactions authorized prior to April 19, 2001 remained subject to the rules in force as of the date of such transactions. The new exchange regime did not affect Chapter XXVI of the CFER and the Foreign Investment Contract - FIC between Andina, the Central Bank and The Bank of New York Mellon (as depositary of the shares represented by ADRs). Notwithstanding the previous, the parties to the FIC may choose to adopt the norms imposed by the CCB, resigning to those of the FIC, and which has been the option we have taken until this date. The FIC is the agreement by which access to the FEM is given to the depositary and ADR holders. The FIC adopted the dispositions of Chapter XXVI and was celebrated pursuant to Article 47 of the Constitutional Organic Act of the CCB.
Under Chapter XXVI of the CFER, if the funds to purchase the common shares underlying the ADRs are brought into Chile, the depositary must deliver, on behalf of foreign investors, an annex providing information on the transaction to the Formal Exchange Market entity involved, together with a letter instructing such entity to deliver the foreign currency or the equivalency in pesos, on or before the date the foreign currency is brought or is to be brought into Chile.
Repatriation of amounts received with respect to deposited common shares or common shares withdrawn from deposits on surrender of ADRs (including amounts received as cash dividends and proceeds from the sale in Chile of the underlying common shares and any rights arising there from) need be made through the FEM. The FEM entity intervening in the repatriation must provide certain information to the CCB on the following banking business day.
Under Chapter XXVI and the FIC, the CCB agreed to grant to the depositary, on behalf of ADR holders, and to any investor not residing nor domiciled in Chile who acquire shares or replace ADRs for common stock, which we refer to as the Withdrawn Shares, FEM access to convert Chilean pesos into U.S. dollars and to remit those dollars outside Chile including amounts received as: (i) cash dividends; (ii) proceeds from the sale in Chile of Withdrawn Shares; (iii) proceeds from the sale in Chile of preemptive rights to subscribe for additional shares; (iv) proceeds from the liquidation, merger or consolidation of
Andina; (v) proceeds resulting from capital decreases or earnings or liquidations; and (vi) other distributions, including those in respect of any re-capitalization resulting from holding shares, ADRs or by Withdrawn Shares.
The guarantee of FEM access under the FIC will extend to the participants of the ADR offering if the following requirements are met: (i) that the funds to purchase the shares underlying the ADRs are brought into Chile and converted into Chilean pesos through the FEM; (ii) that the purchase of the underlying shares is made on a Chilean stock exchange; and (iii) that within five business days from the conversion of the funds into Chilean pesos, the CCB is informed that the funds converted were used to purchase the underlying shares, if those funds are not invested in shares within that period, it can access the FEM to reacquire foreign currency, provided that the request is submitted to the CCB within seven banking business days of the initial conversion into pesos.
Chapter XXVI provides that FEM access in connection with dividend payments is conditioned to our certifying to the CCB that a dividend payment has been made and that any applicable tax has been withheld. Chapter XXVI also provides that FEM access in connection with the sale of Withdrawn Shares, or distribution thereon, is conditioned upon receipt by the CCB (i) a certificate by the depositary or custodian, as the case may be, that the shares have been withdrawn in exchange for delivery of the appropriate ADRs, and (ii) a waiver of the benefits of the FIC with respect to ADRs (except in connection with the proposed sale of the shares) until the Withdrawn Shares are re-deposited.
FEM access under any of the circumstances described above is not automatic. Pursuant to Chapter XXVI, such access needs the BCC’s approval on a request submitted to that end through a banking institution established in Chile. The FIC provides that if the BCC has not acted upon the request within seven banking days, the request is deemed to have been granted.
Under current Chilean law, the BCC cannot unilaterally change the FIC. The Chilean Courts (although not binding on future judicial decisions) also have established that the FIC cannot be annulled by future legislative changes. No assurance can be given, however, that additional Chilean restrictions applicable to the holders of ADRs, to the disposition of underlying shares, or to the repatriation of proceeds from their disposition, will not be imposed in the future; nor can there be any assessment of the duration or impact of any restrictions that might be imposed. If for whatever reason, including changes in the FIC or Chilean law, the Depositary is prevented from converting Chilean pesos into U.S. dollars; the investors shall receive dividends or other payments in Chilean pesos, which shall subject the investors to exchange rate risks. It cannot be assured that the CFER, as amended, or any other exchange regulation will not be amended in the future, or that if new regulations are enacted that they shall have no material bearing on Andina or the ADR holders.
No assurance can be given that Andina will be able to purchase U.S. dollars in the local exchange market at any time in the future, nor that any such purchase will be for the amounts necessary to pay any sum due under any of its capital or debt instruments. Likewise, it is not possible to guarantee that changes to the regulations of the CCB or other legislative changes relating to exchange controls will not restrict nor impair Andina’s ability to purchase U.S. dollars in order to make payment on its debt instruments.
E. Taxation
Tax Considerations Relating to Equity Securities
Chilean Tax Considerations
The following discussion summarizes the material Chilean income tax consequences of an investment in Andina’s stock or ADRs by an individual who is not domiciled or resident in Chile or a legal entity that is not organized under the laws of Chile and does not have a permanent establishment in Chile (a “foreign holder”). This discussion is based upon Chilean income tax laws presently in force, including Ruling No. 324 of January 29, 1990 of the Servicio de Impuestos Internos (the Chilean Internal Revenue Service or “SII”) and other applicable regulations and rulings that are subject to change without notice. The discussion is not intended as a tax advice to any particular investor, which can be rendered only in light of that investor’s particular tax situation. Each investor or potential investor is encouraged to seek independent tax advice with respect to consequences of investing in Andina’s stock or the ADRs.
Under Chilean law, all matters regarding taxation such as tax rates (including tax rates applicable to foreign investors), the computation of taxable income for Chilean purposes, the manner in which Chilean taxes are imposed and collected, and others thereof, may only be imposed or amended by a law enacted by Congress. In addition, the SII is empowered to issue rulings and regulations of either general or specific application, and to interpret the provisions of Chilean tax law. Chilean tax may not be assessed retroactively against taxpayers who act in good faith relying on such rulings, regulations and interpretations, but the SII may change said rulings, regulations and interpretations prospectively. There is no income tax treaty in force between Chile and the United States.
Cash Dividends and Other Distributions
Dividends we pay with respect to the shares of stock held by a foreign holder will be subject to Chilean withholding tax at a rate of 35% (the “Withholding Tax”). The tax paid by the Company on profits originating from Chile from which the dividends are paid (the “First Category Tax”), imposed at a rate of 17%20%, will be credited against the Withholding Tax. The credit will increase the base upon which the Withholding Tax is imposed. Consequently, dividends that are attributable to current profits will be subject to an effective dividend withholding tax rate of 21.7%18.7%, calculated as follows:
|
| Ch$ |
|
Company taxable income |
| 100.0 |
|
First Category Tax |
| ( | ) |
Net distributable income |
|
|
|
|
|
|
|
Dividend distributed |
|
|
|
|
|
|
|
Withholding Tax (35% of the sum of Ch$ |
| (35.0 | ) |
Credit for First Category Tax |
|
|
|
|
|
|
|
Net additional tax withheld |
| ( | ) |
Net dividend received |
| 65.0 |
|
|
|
|
|
Effective dividend withholding rate |
|
| % |
Profits originating from Brazil, Argentina or ArgentinaParaguay have a different tax treatment for credit on First Category Tax.
For purposes of determining the amount of First Category Tax we pay on profits from which the dividends are paid, dividends are attributed to our oldest retained profits.
The two aforementioned factors generate a profit origin mix and thus, an additional net tax withholding.
Dividend distributions made in property will be subject to the same Chilean tax rules as cash dividends. Our stock dividends are not subject to Chilean taxation.
Capital Gains
Gains recognized from the sale or exchange of ADRs by a foreign holder outside Chile will not be subject to Chilean taxation. Gains recognized on a sale or exchange of shares of stock will be subject to both the First Category Tax and the Withholding Tax (the former being credited against the latter) if either: (i) the foreign holder has held the shares of common stock for less than one year, (ii) the foreign holder acquired and disposed of the shares of common stock in the ordinary course of its business or as an habitual trader of shares; or (iii) the foreign holder transfers shares of common stock to a related person, as defined by Chilean tax law. In all other cases, gain on the disposition of shares of common stock will be subject only to the First Category Tax, currently imposed at a rate of 17%, except if it is for shares resulting from an exchange of ADRs for shares (flow back) in which case, the Chilean Internal Revenue Service pursuant to Oficio 1,705 dated May 15, 2006 has interpreted that said shares may benefit from article 18 ter if the ADRs were acquired through a stock broker or by any other circumstance stipulated by that norm.
The tax basis of shares of common stock received in exchange for ADRs will be determined in accordance with the valuation procedure set forth in the deposit agreement, which values shares of common stock at the highest reported sales price at which they trade on the Santiago Stock Exchange on the date of the withdrawal of the shares of common stock from the depositary. Consequently, the conversion of ADRs into shares of common stock, and the immediate sale of the shares for the value established under the deposit agreement, will not generate a capital gain subject to taxation in Chile. However, in the case where the sale of the shares is made on a day that is different than the date in which the exchange is recorded, capital gain subject to taxation in Chile may be generated. In connection thereto, on October 1, 1999 the Chilean Internal Revenue Service issued Ruling No. 3708 whereby it allowed Chilean issuers of ADRs to amend the deposit agreements to which they are parties in order to include a clause that states that, in the case that the exchanged shares are sold by the ADRs’ holders on a Chilean Stock Exchange either on the same day in which the exchange is recorded or within the two business days prior to such date, the acquisition price of such exchanged shares shall be the price registered in the invoice issued by the stock broker that participated in the sale transaction. Consequently, should this amendment be included in the deposit agreement, the capital gain that may be generated if the exchange date is different than the date in which the shares received in exchange for ADRs were sold, will not be subject to taxation. We reiterate that if a contributor in good faith adopts Oficio 1,705, then the excess value will not be subject to taxation in Chile.
The distribution and exercise of preemptive rights relating to the shares of common stock will not be subject to Chilean taxation. Any gain on the sale or assignment of preemptive rights relating to the shares of common stock will be subject to both the First Category Tax and the Withholding Tax (the former being credited against the latter).
Other Chilean Taxes
No Chilean inheritance, gift or succession taxes apply to the transfer or disposition of the ADRs by a foreign holder, but such taxes generally will apply to the transfer at death or by gift of shares of common stock by a foreign holder. No Chilean stamp, issue, registration or similar taxes or duties apply to foreign holders of ADRs or shares of common stock.
Withholding Tax Certificates
Upon request, we will provide to foreign holders appropriate documentation evidencing the payment of Chilean withholding taxes.
United States Tax Considerations Relating toADRs or Shares of Common Stock
The following discussion summarizes certain U.S. federal income tax consequences of an investment in ADRs or shares of common stock. This discussion is based upon U.S. federal income tax laws presently in force. The discussion is not a full description of all tax considerations that may be relevant to a decision to purchase ADRs or shares of common stock. In particular, the discussion is directed only to U.S. holders (as defined below) that hold ADRs or shares of common stock as capital assets, and it does not address the tax treatment of holders that are subject to special tax rules under the Internal Revenue Code of 1986 as amended (the “Code”), such as financial institutions, regulated investment companies, real estate investment trusts, investors in pass-through entities, dealers in securities or currencies, traders in securities that elect to use a
mark-to-market method of accounting for their securities holdings, insurance companies, tax-exempt entities, persons holding ADRs or shares of common stock as part of a hedging, integrated, conversion or constructive sale transaction or a straddle, holders of 10% or more of our voting shares, persons liable for alternative minimum tax or persons whose “functional currency” is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Code and regulations, rulings and judicial decisions there under as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. In addition, the discussion below assumes that the Deposit Agreement, and all other related agreements, will be performed in accordance with their terms. If a partnership holds our ADRs or shares of common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partners in a partnership holding ADRs or shares of common stock should consult their tax advisors. This summary does not contain a detailed description of all the United States federal income tax consequences to a holder in light of its particular circumstances and does not address the effects of any state, local or non-United States tax laws. Prospective purchasers should consult their tax advisors about the federal, state, local and foreign tax consequences to them of the purchase, ownership and disposition of ADRs or shares of common stock.
As used herein, the term “U.S. holder” means a holder of ADRs or shares of common stock that is (i) an individual U.S. citizen or resident, (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust that: (a) is subject to the primary supervision of a court within the United States and with respect to which one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
If the obligations contemplated by the deposit agreement are performed in accordance with its terms, ADR holders generally will be treated for U.S. federal income tax purposes as the owners of the shares of common stock represented by those ADRs. Deposits or withdrawals of shares of common stock by U.S. holders in exchange for ADRs will not result in the realization of gain or loss for U.S. federal income tax purposes. The U.S. Treasury has expressed concerns that intermediaries in the chain of ownership bewtween the holder of an ADR and the issuer of the security underlying the ADR may be taking actions that are inconsistent with the claiming of foreign tax credits for U.S. holders of ADRs. Such actions would also be inconsistent with the claiming of the reduced rate of tax, described below, applicable to dividends received by certain non-corporate holders. Accordingly, the analysis of the creditability of Chilean taxes and the availability of the reduced tax rate for dividends received by certain non-corporate holders, each described below, could be affected by actions taken by that intermediaries in the chain of ownership bewtween the holder of an ADR and the Company.
Cash Dividends and Other Distributions
Cash dividends (including the amount of any Chilean taxes withheld) paid to U.S. holders with respect to the ADRs or shares of common stock generally will be treated as dividend income to such U.S. holders, to the extent paid out of current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such income will be includable in the gross income of a U.S. holder as ordinary income on the day received by the Depositary, in the case of ADRs, or by the U.S. holder, in the case of shares of common stock. The dividends will not be eligible for the dividends received deduction allowed to corporations under the Code. With respect to non-corporate U.S. holders, certain dividends received before January 1, 2011 from a qualified foreign corporation may be subject to reduced rates of taxation. A foreign corporation is treated as
a qualified foreign corporation with respect to dividends received from that corporation on shares (or ADRs backed by such shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that our ADRs (which are listed on the New York Stock Exchange), but not our shares of common stock, are readily tradable on an established securities market in the United States. Thus, we do not believe that dividends that we pay on our shares of our common stock that are not backed by ADRs currently meet the conditions required for these reduced tax rates. There can be no assurance that our ADRs will be considered readily tradable on an established securities market in later years. Non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. Non-corporate U.S. holders should consult their own tax advisors regarding the application of these rules given their particular circumstances.
Dividends paid in Chilean pesos will be includable in income in a U.S. dollar amount based on the exchange rate in effect on the day of receipt by the Depositary, in the case of ADRs, or by the U.S. holder in the case of shares of common stock, regardless of whether the Chilean pesos are converted into U.S. dollars. If the Chilean pesos received as dividends are not converted into U.S. dollars on the date of receipt, a U.S. holder will have a basis in the Chilean pesos equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the Chilean pesos will be treated as U.S. source ordinary income or loss, regardless of whether the pesos are converted into U.S. dollars.
The Chilean Withholding Tax (net of any credit for the First Category Tax) paid by or for the account of any U.S. holder may be eligible, subject to generally applicable limitations and conditions, for credit against the U.S. holder’s federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid with respect to the ADRs or shares of common stock generally will be foreign source income and will generally constitute passive category income. Further, in certain circumstances, a U.S. holder that (i) has held ADRs or shares of common stock for less than a specified minimum period during which it is not protected from risk of loss or (ii) is obligated to make payments related to the dividends, will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on ADRs or shares of common stock. The rules governing the foreign tax credit are complex. Investors are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Distributions to U.S. holders of additional shares of common stock or preemptive rights with respect to shares of common stock that are made as part of a pro rata distribution to all shareholders of the Company generally should not be subject to U.S. federal income tax.
To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the ADRs or shares of common stock (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the investor on a subsequent disposition of the ADRs or shares of common stock), and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. Consequently, such distributions in excess of our current and accumulated earnings and profits generally would not give rise to foreign source income and a U.S. holder generally would not be able to use the foreign tax credit arising from any Chilean withholding tax imposed on such distributions unless such credit can be applied (subject to applicable limitations) against U.S. taxes due on other foreign source income in the appropriate category for foreign tax credit purposes. However, we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles. Therefore, a U.S. holder should expect that a distribution will generally be treated as a dividend (as discussed above).
We do not believe that we are, for U.S. federal income tax purposes, a passive foreign investment company (a “PFIC”), and expect to continue our operations in such a manner that we will not be a PFIC. If, however, we are or become a PFIC, U.S. holders could be subject to additional U.S. federal income taxes on
gain recognized with respect to the ADRs or shares of common stock and on certain distributions, plus an interest charge on certain taxes treated as having been deferred by the U.S. holder under the PFIC rules of the U.S. federal income tax laws.
Non-corporate U.S. holders will not be eligible for reduced rates of taxation on any dividends received from us prior to January 1, 2011, if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.
Capital Gains
U.S. holders that hold ADRs or shares of common stock as capital assets will recognize capital gain or loss for federal income tax purposes on the sale or other disposition of such ADRs or shares (or preemptive rights with respect to such shares) held by the U.S. holder or the Depositary. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. holder generally will be treated as U.S. source gain or loss. Consequently, in the case of a disposition of shares of common stock (which, unlike a disposition of ADRs, may be taxable in Chile), the U.S. holder may not be able to use the foreign tax credit for Chilean tax imposed on the gain unless it can apply (subject to applicable limitations) the credit against tax due on other income from foreign sources.
Estate and Gift Taxation
As discussed above under “Chilean Tax Considerations — Other Chilean Taxes,” there are no Chilean inheritance, gift or succession taxes applicable to the transfer or disposition of ADRs by a foreign holder, but such taxes generally will apply to the transfer at death or by gift of shares of common stock by a foreign holder. The amount of any inheritance tax paid to Chile may be eligible for credit against the amount of U.S. federal estate tax imposed on the estate of a U.S. holder. U.S. holders should consult their personal tax advisors to determine whether and to what extent they may be entitled to such credit. The Chilean gift tax generally will not be treated as a creditable foreign tax for U.S. tax purposes.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to dividends in respect of ADRs or the shares of common stock or the proceeds received on the sale, exchange, or redemption of the ADRs or the shares of common stock paid within the United States (and in certain cases, outside of the United States) to U.S. holders other than certain exempt recipients. A backup withholding tax may apply to such payments if the U.S. holder fails to provide an accurate taxpayer identification number or certification of other exempt status or fails to report interest and dividends required to be shown on its federal income tax returns. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a refund or a credit against the U.S. holder’s U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service.
Tax Considerations Relating to Debt Securities
General
In October 1997, we issued US$100 million of 7.625% Unsecured Notes due 2027 and US$100 million of 7.875% Unsecured Notes due 2097 (together the “Debt Securities”). The following is a summary of certain Chilean tax and U.S. federal income tax considerations relating to the purchase, ownership and disposition of Debt Securities. The summary does not purport to be a comprehensive description of all tax considerations that may be relevant to a decision to purchase Debt Securities. This summary does not describe any tax consequences arising under the laws of any state, locality or taxing jurisdiction other than the United States and Chile.
This summary is based on the tax laws of Chile and the United States as in effect on the date hereof, as well as regulations, rulings and decisions of Chile and the United States available on or before such date and
now in effect. All of the foregoing is subject to change, which change could apply retroactively and could affect the continued validity of this summary.
There is currently no tax treaty between the United States and Chile.
Chilean Tax Considerations
The following is a general summary of the material consequences under Chilean tax law, as currently in effect, of an investment in the Debt Securities made by a Foreign Holder. The term “Foreign Holder” means: (i) an individual, who is not a resident in Chile (for purposes of Chilean taxation, an individual is resident in Chile if he or she has resided in Chile for more than six months in one calendar year, or a total of more than six months in two consecutive fiscal years); or (ii) a legal entity that is not organized under the laws of Chile, unless the Debt Securities are assigned to a branch or an agent, representative or permanent establishment of such entity in Chile.
Under Chile’s Income Tax Law, payments of interest made in respect of the Debt Securities to a Foreign Holder will generally be subject to a Chilean withholding tax (the “Chilean Interest Withholding Tax”) currently assessed at a rate of 4.0%. If the Debt Securities are issued through our offshore branch, payment to Foreign Holders of Debt Securities by such branch generally will not be subject to the Chilean withholding tax.
Chile’s Income Tax Law provides that any capital gains realized on the sale or other disposition by a Foreign Holder of the Debt Securities generally will not be subject to any Chilean income taxes provided that such sale or other disposition occurs outside of Chile (except that any premium payable on redemption of the Debt Securities will be treated as interest and subject to the Chilean Interest Withholding Tax, as described above).
A Foreign Holder will not be liable for gift, inheritance or similar taxes with respect to its holdings unless the securities held by a foreign holder:
· are located in Chile at the time of such Foreign Holder’s death, or
· if they are located outside of Chile, they were purchased or acquired with funds derived from Chilean source income,
The initial issuance of the Debt Securities by a foreign entity (be they a company or a branch) is generally not subject to stamp taxes in Chile. If stamp taxes apply, a foreign or Chilean holder will not be liable for Chilean stamp, registration or similar taxes because these would be payable by the Company.
United States Tax Considerations Relating to Debt Securities
The following summary describes certain U.S. federal income tax consequences of the ownership of Debt Securities by U.S. holders (as defined below) as of the date hereof. Except where noted, it deals only with Debt Securities held as capital assets and does not deal with special situations, such as those of dealers in securities or currencies, financial institutions, insurance companies, regulated investment companies, real estate investment trusts, tax-exempt entities, investors in pass-through entities, persons holding the Debt Securities as a part of a hedging, integrated, conversion or constructive sale transaction or a straddle, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, persons liable for the alternative minimum tax or holders of Debt Securities whose “functional currency” is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Code, and regulations, rulings and judicial decisions there under as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. If a partnership holds our Debt Securities, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partners in a partnership holding our Debt Securities should consult their tax advisors.
Persons considering the purchase, ownership or disposition of the Debt Securities should consult their own tax advisors concerning the federal income tax consequences in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction.
As used herein, a “U.S. holder” of the Debt Securities means a holder of the Debt Securities that is (i) an individual U.S. citizen or resident, (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust that (a) is subject to the primary supervision of a court within the United States and with respect to which one or more U.S. persons have the authority to control all substantial decision of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
Payments of Interest
Interest on the Debt Securities will generally be taxable to a U.S. holder as ordinary income at the time it is paid or accrued in accordance with the U.S. holder’s method of accounting for tax purposes. In addition to interest on the Debt Securities, a U.S. holder will be required to include in income any additional amounts and any tax withheld from interest payments notwithstanding that such withheld tax is not in fact received by such U.S. holder. A U.S. holder may be entitled to deduct or credit such tax, subject to applicable limitations in the Code, including that the election to deduct or credit foreign taxes applies to all of the U.S. holder’s foreign taxes for a particular year. Interest income, including Chilean taxes withheld there from and additional amounts on the Debt Securities, generally will constitute foreign source income and generally will be considered passive category income, which is treated separately from other types of income in computing the foreign tax credit that may be allowable to U.S. holders under U.S. federal tax laws. A U.S. holder will generally be denied a foreign tax credit for Chilean taxes imposed with respect to the Debt Securities where such a holder does not meet a minimum holding period requirement during which the holder is not protected from risk of loss.
The rules governing the foreign tax credit are complex. We urge investors to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Market Discount
If a U.S. holder purchases a Debt Security for an amount that is less than its principal amount, the amount of the difference will be treated as “market discount” for U.S. federal income tax purposes, unless that difference is less than a specified de minimis amount. Under the market discount rules, the U.S. holder will be required to treat any principal payment on, or any gain on the sale, exchange, retirement or other disposition of, a Debt Security as ordinary income to the extent of the market discount that the U.S. holder has not previously included in income and is treated as having accrued on the Debt Security at the time of its payment or disposition.
In addition, the U.S. holder may be required to defer, until the maturity of the Debt Security or its earlier disposition in a taxable transaction, the deduction of all or a portion of the interest expense on any indebtedness attributable to the Debt Security. A U.S. holder may elect, on a bond-by-bond basis, to deduct the deferred interest expense in a tax year prior to the year of disposition. U.S. holders should consult their own tax advisors before making this election.
Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the Debt Security, unless the U.S. holder elects to accrue on a constant interest method. A U.S. holder may elect to include market discount in income currently as it accrues, on either a ratable or constant interest method, in which case the rule described above regarding deferral of interest deductions will not apply.
Amortizable Bond Premium
A U.S. holder that purchases a Debt Security for an amount in excess of its principal amount will be considered to have purchased the Debt Security at a “premium.” The U.S. holder may elect to amortize the premium over the remaining term of the Debt Security on a constant yield method as an offset to interest when includible in income under the holder’s regular accounting method. If the U.S. holder does not elect to amortize bond premium, that premium will decrease the gain or increase the loss the holder would otherwise recognize on disposition of the Debt Security.
Sale, Exchange and Retirement of Debt Securities
Upon the sale, exchange, retirement or other disposition of the Debt Securities, a U.S. holder will recognize gain or loss equal to the difference between the amount realized upon the sale, exchange, retirement or other disposition (less any accrued interest, which will be taxable as such if not previously included in income) and the U.S. holder’s adjusted tax basis in the Debt Securities. A U.S. holder’s tax basis in the Debt Securities generally will be the U.S. holder’s cost therefore, increased by market discount previously included in income, and reduced by any amortized premium. Except as described above with respect to market discount, gain or loss realized by a U.S. holder on the sale, exchange, retirement or other disposition of the Debt Securities will generally be capital gain or loss. Gain or loss realized by a U.S. holder on the sale, exchange, retirement or other disposition of the Debt Securities will generally be treated as U.S. source gain or loss. Consequently, a U.S. holder may not be able to claim a credit for any Chilean tax imposed on the sale, exchange, retirement or other disposition of the Debt Securities due to limitations on the foreign tax credit under the Code. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to certain payments of principal and interest on the Debt Securities and to the proceeds of the sale of the Debt Securities made to U.S. holders other than certain exempt recipients. A backup withholding tax will apply to such payments if the U.S. holder fails to provide its taxpayer identification number or a certification of exempt status, or, in the case of interest payments, fails either to report in full dividend and interest income or to make certain certifications.
Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the U.S. holder’s U.S. federal income tax liability provided the required information is furnished to the Internal Revenue Service.
Special Tax Considerations Relating to the 2097 Debentures
As a result of the 2097 Debentures’ 100 year term, it is not certain whether such Debentures will be treated as debt or as equity for U.S. federal income tax purposes. We have taken the position that the 2097 Debentures constitute debt for financial reporting and U.S. federal income tax purposes. Our position, however, is not binding on the Internal Revenue Service. Although classification of the 2097 Debentures as equity generally would not significantly affect a U.S. holder’s taxable income resulting from an investment in the 2097 Debentures, the discussion that follows also briefly describes certain U.S. federal income tax consequences that would arise if the 2097 Debentures were not treated as debt for U.S. federal income tax purposes.
If the 2097 Debentures are treated as equity for U.S. federal income tax purposes, the potential differences in the U.S. federal income tax treatment to U.S. holders of the 2097 Debentures that would result include (i) payments denominated as interest on the 2097 Debentures (including additional amounts) would be reclassified as dividends to the extent paid out of the current or accumulated earnings and profits of the Company (as determined using U.S. federal income tax principles) and (ii) U.S. holders would be required to report such payment amounts as ordinary income when actually or constructively received (instead of accruing such amounts as interest, even if such U.S. holders are accrual method taxpayers). To the extent any such payments exceed such earnings and profits, they would be treated as a return of capital or capital gain (although, as we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles. U.S. holders should expect that such payments will generally be treated as dividends). Amounts
treated as dividends will not be eligible for the dividends received deduction generally allowed U.S. corporations. In addition, because our 2097 Debentures are not readily tradable on an established securities market in the United States, we do not believe that any amounts treated as dividends currently meet the conditions required for the reduced tax rates that apply to qualified dividend income received by non-corporate U.S. holders. Persons considering the purchase, ownership or disposition of the 2097 Debentures should consult their own tax advisors concerning additional potential tax consequences, including those arising upon a sale, exchange or redemption of the 2097 Debentures, which could result from the treatment of the 2097 Debentures as equity for U.S. federal income tax purposes.
F.Dividends and Paying Agents
Not applicable.
G.Statement by Experts
Not applicable.
H.Documents on Display
We are subject to the informational reporting requirements of the U.S. Securities Exchange Act of 1934, as amended, which requires that we file periodic reports and other information with the SEC. As a foreign private issuer, we file annual reports on Form 20-F as opposed to Form 10-K. We do not file quarterly reports on Form 10-Q but furnish quarterly reports and reports in relation to material events on Form 6-K. As a foreign private issuer, we are exempt from the rules under the U.S. Securities Exchange Act of 1934, as amended, prescribing the furnishing and content of proxy statements and short-swing profit disclosure and liability.
You may read and copy all or any portion of the annual report or other information in our files in the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can also access these documents through the SEC’s website at www.sec.gov or from our corporate website www.embotelladoraandina.com or request a hard copy through our website also. You can also request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. In addition, reports and other information concerning us may be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which our ADRs are listed.
We also file reports with the Chilean Superintendencia de Valores y Seguros. You may read and copy any materials filed with the SVS directly from its website www.svs.cl of from our corporate website www.embotelladoraandina.com or request a hard copy through our website also. The documents referred to in this annual report can be inspected at El Golf 40 Oficina 401, Las Condes, Santiago, Chile.
I.Subsidiary Information
Not applicable.
ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk generally represents the risk that losses may occur in the values of financial instruments as a result of movements in interest rates, foreign currency exchange rates and commodity prices. We are exposed to changes in financial market conditions in the normal course of our business due to our use of certain financial instruments as well as transacting in various foreign currencies and translation of our foreign subsidiaries’ financial statements into the Chilean peso.
Interest Rate Risk
Our primary interest rate exposures relate to U.S. dollar denominated and UF long-term fixed rate bond liabilities and other long-term variable and fixed rate bank liabilities. We also invest in certain medium-term bond securities that bear a fixed interest rate. We monitor our exposure to interest rate fluctuations regularly depending on market conditions.
The following table provides information about our long-term debt and bond investments that are sensitive to changes in market interest rates as of December 31, 2011.2012.
|
| Expected Maturity Date |
| Estimated Fair |
|
| Expected Maturity Date |
| Estimated Fair |
| ||||||||||||||||||||||||
|
| 2012 |
| 2013 |
| 2014 |
| 2015 |
| 2016 |
| There- |
| Total |
| Total |
|
| 2012 |
| 2013 |
| 2014 |
| 2015 |
| 2016 |
| Thereafter |
| Total |
| Total |
|
|
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
|
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Earning Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Time deposits and credit links |
| 14,249 |
| — |
| — |
| — |
| — |
| — |
| 14,249 |
| 14,249 |
|
| 783 |
| — |
| — |
| — |
| — |
| — |
| 783 |
| 783 |
|
Weighted average interest rate |
| 4.75 | % | — |
| — |
| — |
| — |
| — |
| 4.75 | % | — |
|
| 3.50 | % | — |
| — |
| — |
| — |
| — |
| 3.50 | % | — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Interest Bearing Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
| 3,427 |
| 3,241 |
| 3,471 |
| 3,717 |
| 3,981 |
| 55,149 |
| 72,986 |
| 89,523 |
| |||||||||||||||||
Long-term debt (Bonds) |
| 4,377 |
| 9,514 |
| 9,762 |
| 10,025 |
| 10,305 |
| 86,750 |
| 130,733 |
| 176,410 |
| |||||||||||||||||
Fixed Rate |
| 6.50 | % | 6.50 | % | 6.50 | % | 6.50 | % | 6.50 | % | 6.50 | % | 6.50 | % | — |
|
| 6.50 | % | 4.40 | % | 4.45 | % | 4.51 | % | 4.56 | % | 5,54 | % | 5.23 | % | — |
|
Bank liabilities |
| 8,503 |
| 1,171 |
| 1,171 |
| 1,171 |
| 1,171 |
| — |
| 13,187 |
| 13,187 |
|
| 87,281 |
| 15,613 |
| 12,292 |
| 9,934 |
| 8,514 |
| — |
| 133,634 |
| 133,634 |
|
Weighted average interest rate |
| 10.39 | % | 9.90 | % | 9.90 | % | 9.90 | % | 9.90 | % | — |
| 10.48 | % | — |
|
| 7.05 | % | 5.32 | % | 5.02 | % | 4.25 | % | 3.52 | % | — |
| 6.23 | % | — |
|
Variable Rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Bank liabilities |
| 187 |
| 159 |
| 159 |
| 80 |
| — |
| — |
| 585 |
| 585 |
| |||||||||||||||||
Weighted average interest rate |
| 9.40 | % | 9.40 | % | 9.40 | % | 9.40 | % | 9.40 | % | — |
| 9.40 | % | — |
|
Foreign Currency Risk
AtAs of December 31, 2011, the Company does not have long-term interest bearing debt subject to exchange rate fluctuations between the Chilean peso and the U.S. dollar. The company maintains cash, short term deposits and money market mutual fundsonly has short-term liabilities denominated in U.S. dollars, amountingwhich are counterbalanced by cash balances and mutual funds also denominated in that currency, thus the risk of exposure to Ch$2,968 million atthe accrual of fluctuations of the value of the US dollar is low. Net assets balance is denominated in dollars as of December 31, 20112012, which amounts to $2,393 million as detailed below:
The following table summarizes the financial instruments held December 31, 2012, denominated in US dollars we held as of December 31, 2011.dollars:
|
| Expected Maturity Date |
| Estimated Fair |
| ||||||||||||
Assets |
| 2012 |
| 2013 |
| 2014 |
| 2015 |
| 2016 |
| Thereafter |
| Total |
| Market Value |
|
|
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
| MCh$ |
|
US$ denominated: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
| 90 |
| — |
| — |
| — |
| — |
| — |
| 90 |
| 90 |
|
Money market mutual funds |
| 2,878 |
| — |
| — |
| — |
| — |
| — |
| 2,878 |
| 2,878 |
|
|
| 2013 |
| 2014 |
| 2015 |
| 2016 |
| 2017 |
| 2018 |
| Total |
| Fair |
|
|
| MM$ |
| MM$ |
| MM$ |
| MM$ |
| MM$ |
| MM$ |
| MM$ |
| MM$ |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deminonated in US Dollars |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash equivalents |
| 5,067 |
|
|
|
|
|
|
|
|
|
|
| 5,067 |
| 5,067 |
|
Mutual Fund |
| 3,610 |
|
|
|
|
|
|
|
|
|
|
| 3,610 |
| 3,610 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank debt |
| (6,284 | ) |
|
|
|
|
|
|
|
|
|
| (6,284 | ) | (6,284 | ) |
Net Assets (Liabilities) |
| 2,393 |
|
|
|
|
|
|
|
|
|
|
| 2,393 |
| 2,393 |
|
ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
ITEM 12.D.3.AMERICAN DEPOSITARY RECEIPITS
The Bank of New York Mellon serves as the depositary for our ADRs. ADR holders are required to pay various fees to the depositary, and the depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid.
ADR holders are required to pay the depositary amounts in respect of expenses incurred by the depositary or its agents on behalf of ADR holders, including expenses arising from compliance with applicable law, taxes or other governmental charges, or conversion of foreign currency into U.S. dollars. The depositary may decide in its sole discretion to seek payment by either billing holders or by deducting the fee from one or more cash dividends or other cash distributions.
ADR holders are also required to pay additional fees for certain services provided by the depositary, as set forth in the table below.
Depositary service |
| Fee payable by ADR holders |
Issuance and delivery of ADRs, including in connection with share distributions |
| Up to US$ 5.00 per 100 ADSs (or portion thereof) |
Withdrawal of shares underlying ADRs |
| Up to US$ 5.00 per 100 ADSs (or portion thereof) |
Registration for the transfer of shares |
| Registration or transfer fees that may from time to time be in effect |
Cash distribution fees |
| US$ 0.02 or less per ADS |
In addition, holders may be required to pay a fee for the distribution or sale of securities. Such fee (which may be deducted from such proceeds) would be for an amount equal to the lesser of (1) the fee for the issuance of ADRs that would be charged as if the securities were treated as deposited shares and (2) the amount of such proceeds.
12.D.4DIRECT AND INDIRECT PAYMENTS BY THE DEPOSITARY
Fees Incurred in Past Annual Period
From January 1, 2010 to December 31, 2011, the Company received from the depositary US$182,412.55125,112.74 for continuing annual stock exchange listing fees, standard out-of-pocket maintenance costs for the ADRs (consisting of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls), any applicable performance indicators relating to the ADR facility, underwriting fees and legal fees.
Fees to be Paid in the Future
The Bank of New York Mellon, as depositary, has agreed to reimburse the Company for expenses they incur that are related to establishment and maintenance expenses of the ADR program. The depositary has agreed to reimburse the Company for its continuing annual stock exchange listing fees. The depositary has also agreed to pay the standard out-of-pocket maintenance costs for the ADRs, which consist of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. It has also agreed to reimburse the Company annually for certain investor relationship programs or special investor relations promotional activities. In certain instances, the depositary has agreed to provide additional payments to the Company based on any applicable performance indicators relating to the ADR facility. There are limits on the amount of expenses for which the depositary will reimburse the Company, but the amount of reimbursement available to the Company is not necessarily tied to the amount of fees the depositary collects from investors.
The depositary collects its fees for delivery and surrender of ADRs directly from investors depositing shares or surrendering ADRs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.
ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
The information requested by this item has been previously provided in the annual report for the year 2004. See “Item 4. Information on the Company—Part A. History and Development of the Company.”
ITEM 15.CONTROLS AND DISCLOSURE PROCEDURES
Evaluation of disclosure controls(a)Disclosure Controls and proceduresProcedures.
Under the supervision andWe have evaluated, with the participation of our management, including our Chief Executive Officer, Chief Financial Officer, we have evaluatedchief executive officer and chief financial officer, the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2011. Based on that evaluation, our Chief Executive Officer, Chief Financial Officer have concluded that these2012. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, areincluding the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to ensureprovide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the SEC’sapplicable rules and forms, and that such informationit is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b)Management’s Annual Report on Internal Control overOver Financial Reporting.Reporting
CompanyOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f) promulgatedRules 13a—15(f) and 15d—15(f) under the Securities Exchange Act of 1934, as amended, asamended. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Our internal control over financial reporting is a process designed by, or under the supervision of, the Company’s Chief Executive Officer, Chief Financial Officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles andIFRS as issued by the IASB. Our internal control over financial reporting includes those policies and procedures that:that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;or our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,IFRS as issued by the IASB, and that our receipts andan expenditures of the Company are being made only in accordance with authorizations of our management and directors of the Company;directors; and (iii)provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions,acquisition, use, or disposition of the Company’sour assets that could have a material effect on theour financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. ProjectionsAlso, projections of any evaluation of effectiveness as to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management assessed Based on our evaluation under the effectiveness of the Company’s internal control over financial reporting as of December 31, 2011. In making this assessment, the Company’s management used the criteria set forthframework in Internal Controls—Integrated framework issued by the Committee of Sponsoring Organizations of the TreadwayTread way Commission, (COSO) in Internal Control-Integrated Framework. Based on our assessment, management concluded that as of December 31, 2011, the Company’sour internal control over financial reporting was effective based on those criteria.as of December 31, 2012.
TableManagement’s assessment of Contentsand conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the acquired company Embotelladoras Coca Cola Polar S.A. and the subsidiaries Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. which are included in the 2012 consolidated financial statements of Embotelladora Andina S.A. and subsidiaries, and constituted 20% and 15% of total assets and net assets, respectively, as of December 31, 2012 and 9% and 6% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of Embotelladora Andina S.A. and subsidiaries, also did not include an evaluation of the internal control over financial reporting of Embotelladoras Coca Cola Polar S.A. and subsidiaries.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 20112012 has been audited by the Company’s registered independent accounting firm, which opinion is stated in their report, included on pages F-2 and F-3 herein.
Changes in Internal Controls over Financial Reporting.
There were no changes in our internal control over financial reporting during the year ended December 31, 2011 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Mr. Heriberto Urzúa SánchezEnrique Cibié Bluth is our Audit Committee Financial Expert as defined in the instructions to Item 16A of Form 20-F. Our board of directors has also determined that Mr. Heriberto Urzúa Sánchez is anEnrique Cibié Bluth and Mr. Gonzalo Parot Palma are Independent DirectorDirectors as defined in Section 303A.02 of the NYSE’s Listed Company Manual.
We have adopted a Code of Business Conduct that constitutes a code of ethics for our employees. This Code applies to our Chief Executive Officer and all senior financial officers of our Company, including the Chief Financial Officer or any other persons performing similar functions, as well as to all other officers and employees of the Company. Our Code of Business Conduct is available on our website www.embotelladoraandina.com. If we make any substantive amendment to the Code or grant any waivers, including any implicit waiver, from a provision of the Code, we will disclose the nature of such amendment or waiver on the above mentioned website through a 6-K form.
ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees Paid To Independent Public Accountants
The following table sets forth, for each of the years indicated, the kinds of fees paid to our external auditors and the percentage of each of the fees out of the total amount paid to them.
|
| Year Ended December 31, |
| ||||||
|
| 2011 |
| 2010 |
| ||||
Services rendered |
| Fees |
| % of Total |
| Fees |
| % of Total |
|
|
|
|
|
|
|
|
|
|
|
Audit fees(1) |
| 545 |
| 95 | % | 496 |
| 88 | % |
Audit-related fees(2) |
| 16 |
| 3 | % | 52 |
| 9 | % |
Tax fees(3) |
| 10 |
| 2 | % | 17 |
| 3 | % |
Total |
| 571 |
| 100 | % | 565 |
| 100 | % |
|
| Year Ended December 31, |
| ||||||
|
| 2012 |
| 2011 |
| ||||
|
| Fees |
| % of Total |
| Fees |
| % of Total |
|
Services rendered |
| MCh$ |
| Fees |
| MCh$ |
| Fees |
|
Audit fees(1) |
| 861 |
| 85 | % | 545 |
| 95 | % |
Audit-related fees(2) |
| 10 |
| 1 | % | 16 |
| 3 | % |
Tax fees(3) |
| 11 |
| 1 | % | 10 |
| 2 | % |
Other Fees |
| 131 |
| 13 | % |
|
|
|
|
Total |
| 1,013 |
| 100 | % | 571 |
| 100 | % |
(1)Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements, including services that generally only the independent accountant can reasonably provide.
(2)Audit-related fees relate to assurance and associated services that traditionally are performed by the independent accountant, including: attest services that are not required by statute or regulation; accounting consultation and audits in connection with mergers, acquisitions and divestitures; employee benefit plans audits; and consultation concerning financial accounting and reporting standards.
(3)Tax fees relate to services performed by the tax division for tax compliance, planning, and advice.
Directors’ Committee and Audit Committee Pre-Approval Policies and Procedures
We have adopted pre-approval policies and procedures under which all audit and non-audit services provided by our external auditors must be pre-approved by our Director’s Committee and Audit Committee and then it is discussed and approved by these committees during its meetings, which take place at least four times a year. Once the proposed service is
approved, our subsidiaries or we formalize the engagement of services. In addition, the members of our board of directors are briefed on matters discussed by the different committees of our board of directors.
ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
The Company’s Audit Committee is comprised of Salvador Said Somavía, Heriberto Urzúa Sánchez,Gonzalo Parot Palma, Enrique Cibié Bluth and Arturo Majlis Albala.
The Company discloses that, with respect to the current membership of Mr. Salvador Said and Mr. Arturo Majlis Albala on the Company’s Audit Committee, it has relied on the exemption from the independence requirements provided by Rule 10A-3(b)(1)(iv)(D) of the Securities and Exchange Act of 1934, as amended . Pursuant to said rule, a director who is either an affiliate or a representative of an affiliate of the listed company may serve as a member of the audit committee to the extent the director is not a voting member or chairperson of the audit committee and to the extent that neither the director nor the affiliate the director represents is an executive officer of the listed company.
Mr. Salvador Said and Mr. Arturo Majlis Albala meet, for the duration of theirhis membership, the requirements of Rule 10A-3(b)(1)(iv)(D) because they (i) arehe is a representative of the controlling shareholder group of the Company, Inversiones Freire Ltda.;Company; (ii) havehas an observer-only status on the audit committee of the Company; and (iii) areis not officers of the Company.
The Company’s reliance on the exemption provided by Rule 10A-3of the Exchange Act, with respect to Mr. Salvador Said and Mr. Juan Claro,Arturo Majlis Albala, would not materially adversely affect the ability of the audit committee of the Company to act independently.
ITEM 16E.PURCHASERS OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
During 2011, no issuer or affiliated parties2012, the Company made purchases pursuantthe following acquisition of its own shares (treasury shares), due to publicly announced plans or programs or not pursuantthe exercise of the shareholders’ dissenter’s right generated as a consequence of the merger with Polar:
Period |
| Number of Shares |
| Price (Pesos per share) |
| |
August 2012 |
| 67 Series A shares |
| $ | 2,165.73 |
|
August 2012 |
| 8.065 Series B shares |
| $ | 2,675.69 |
|
According to legislation currently in force, the shares acquired by the Company due to a shareholders’ exercise of its dissenter’s right have to be sold in the term of one year, as of the date of their acquisition, otherwise the shares and their registration at the Company’s name will be cancelled and the capital shall be reduced ipso iure in an amount equal to the value at which the Company acquired such plans.shares.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not Applicable.Previous independent registered public accounting firm
On April 25, 2013, Andina dismissed Ernst & Young Limitada as its independent registered public accounting firm, effective upon the filing of this 2012 Form 20-F which would contain Ernst & Young Limitadas’ PCAOB audit report dated April 30, 2012 on the Company’s 2012 consolidated financial statements. Andina’s Board of Directors participated in and approved the decision to change its independent registered public accounting firm.
The reports of Ernst & Young Limitada on the consolidated financial statements for the past two fiscal years (specifically the years ended December 31, 2012 and 2011) contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertain, audit scope or accounting principle.
During the two most recent fiscal years (specifically the years ended December 31, 2012 and 2011) and through April 30, 2012, there have been no disagreements with Ernst & Young Limitada on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Ernst & Young Limitada would have caused them to make reference thereto in their reports on the consolidated financial statements for such years.
During the two most recent fiscal years (specifically the years ended December 31, 2012 and 2011) and through April 30, 2013, there have been no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).
Andina requested that Ernst & Young Limitada furnish it with a letter addressed to the SEC stating whether it agrees or not with the above statements. Ernst & Young Limitadas’ letter dated April 30, 2012 is filed as Exhibit 8.2 filed herewith.
New independent registered public accounting firm
Andina engaged PricewaterhouseCoopers Consultores Auditores y Compañía Limitada public accountants as its new independent registered public accounting firm as of April 25, 2013. During the two most recent fiscal years and through April 25, 2013, Andina has not consulted with PricewaterhouseCoopers Consultores Auditores y Compañía Limitada regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on Andina’s financial statements, and neither a written report was provided to Andina or oral advice was provided that PricewaterhouseCoopers Consultores Auditores y Compañía Limitada concluded was an important factor considered by Andina in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(I)(v) of Regulation S-K.
ITEM 16G. CORPORATE GOVERNANCE
NYSE and Chilean Corporate Governance Requirements
In accordance with Section 303A.11 of the NYSE’s Listed Company Manual, the following table sets forth significant differences between Chilean corporate governance practices and those corporate governance practices followed by domestic corporations under NYSE listing standards. Significant ways in which our corporate governance practices differ from those followed by U.S. companies under NYSE listing standards are also publicly available on our website at www.embotelladoraandina.com.
ITEM |
| NYSE REQUIREMENTS |
| CHILEAN LAW REQUIREMENTS |
|
|
|
|
|
303A.01
|
| Members of the Board of Directors must be independent in their majority. |
| There is no legal obligation to have a Board of Directors composed mainly of independent members. In addition, according to section 303A regarding Controlled Companies, the requirements of 303A do not apply to our Company. |
|
|
| ||
|
|
|
|
|
303A.02
|
| Members of the Board of Directors must meet the Test of Independence. |
| No similar legal obligation exists under Chilean law. However, |
|
|
|
|
|
303A.03
|
| Non-Management Directors must meet regularly without management of the company. |
| No similar legal obligation exists under Chilean law. Under Chilean law, the position of director of a corporation is incompatible with the position of manager, auditor, accountant or president of the company. The Non-Management Director does not exist under Chilean law. Directors, however, are required to convene in legally established meetings to resolve matters required by Chilean Corporation Law. |
|
|
|
|
|
303A.04
|
| Listed companies must have a Nominating/Corporate Governance Committee composed entirely of independent directors and must have a written charter addressing certain matters. |
| There is no similar legal obligation under Chilean law.Andina has a Directors’ Committee whose functions are set by Chilean Corporation Law. In addition, section 303 A regarding Controlled Companies does not apply to our Company |
|
|
|
|
|
303A.05
|
| Listed companies must have a Compensation Committee composed entirely of independent directors, and must have a written charter addressing certain matters. |
| There is no similar legal obligation under Chilean law. In accordance with Chilean law, the above-mentioned Directors’ Committee is in charge of reviewing management compensation. In addition, section 303 A regarding Controlled Companies does not apply to our Company. |
ITEM | NYSE REQUIREMENTS | CHILEAN LAW REQUIREMENTS | ||
|
|
|
|
|
303A.06
|
| Listed companies must have an Audit Committee that satisfies the requirements of Rule 10A-3 under the Exchange Act.
|
| No similar legal obligation exists under Chilean law. However, in accordance with the Chilean Public Companies Law 18,046, public companies that have a net worth of more than 1.5 million UFs and/or at least a 12,5% of its issued shares with voting rights are held by individual shareholders who control or own less than 10% of such shares must have a Directors’ Committee, formed by three members who are in their majority independent of the controller. Andina designated an Audit Committee in accordance with Rule 10 A.3.The functions of this committee are described under “Item 6. Directors, Senior Management and Employees-Board Practices” |
|
|
|
|
|
303A.07
|
| Listed companies must maintain an Internal Audit Function to provide management and the Audit Committee with ongoing assessments of the company’s risk management processes and systems of internal control. A listed company may choose to outsource this function to a third party service provider other than its independent auditor. |
| There is no similar obligation under Chilean law. Chilean law requires that companies must have both account inspectors and external auditors. However, Andina has an Internal Auditor who reports to the Audit Committee. |
|
|
| ||
|
|
|
|
|
303A.08
|
| Shareholders must have the opportunity to vote on the creation or amendment of compensation plans regarding board members, executives and employees. |
| There is no similar obligation under Chilean law, with the exception of Directors’ compensation which annually approved during the General Shareholders’ Meeting. |
|
|
|
|
|
303A.09
|
| Listed companies must adopt and disclose Corporate Governance Practices. |
| Chilean Law does not require the adoption of Corporate Governance Practices because they have been established by Chilean Corporate Law. However, the Superintendency of Securities and Insurance in General Rule No. 341 requires publicly traded corporations to report their corporate governance practices. |
ITEM | NYSE REQUIREMENTS | CHILEAN LAW REQUIREMENTS | ||
|
|
|
|
|
303A.10
|
| A company must adopt a Code of Business Conduct for its directors, officers and employees. Such company must disclose any waiver of its code of conduct that is granted to an officer or director. |
| There is no legal obligation to adopt a Code of Business Conduct. Chilean law requires that a company have a set of internal regulations which regulate the company and its relations with personnel. Such regulations must contain, among other things, regulations related to ethics and good behavior. Notwithstanding the above, a company may create internal codes of conduct, provided they do not require or prohibit behavior that contravenes Chilean law. In 1996, Andina created a Code of Business Conduct that applies to the entire Company. Andina has posted this information on its website www.embotelladoraandina.com |
|
|
|
|
|
303A.11
|
| A company must provide a summary description of significant differences between its home country corporate governance practices and the corporate governance requirements established by the NYSE as applicable to U.S. domestic listed companies |
| No similar obligation exists under Chilean law. However, Andina has posted this information on its website www.embotelladoraandina.com |
|
|
|
|
|
303A.12
|
| Each listed company CEO must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards. Each listed company CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any material non-compliance with any of the applicable provisions of Section 303 A. Each listed company must submit an executed Written Affirmation annually to the NYSE. In addition, each listed company must submit an interim Written Affirmation each time a change occurs to the Board of Directors or any of the committees subject to Section 303 A. The annual and interim Written Affirmations must be in the form specified by the NYSE. |
| No similar obligation exists under Chilean law. However, in accordance with Chilean law, the directors of a company must annually submit for approval the company’s annual report and financial statements to its shareholders at the company’s annual shareholders’ meeting. Similarly, public companies must, from time to time, provide all relevant company information by means of the publications and notifications established by law. |
ITEM |
| NYSE REQUIREMENTS |
| CHILEAN LAW REQUIREMENTS |
|
|
|
|
|
303A.13
|
| The NYSE may issue a Public Reprimand letter to any listed company, regardless of the type of security listed or country of incorporation if it determines the company has violated a NYSE listing standard. |
| No similar obligation exists under Chilean law, with the exception of sanctions imposed by the Chilean Superintendence of Securities and Insurance (SVS). |
|
|
|
|
|
307
|
| Listed Companies must have a company website which is accessible from the United States. The website must contain its all NYSE requirements including those referring to Corporate Governance. |
| Chilean law does not require listed companies to maintain a website. However, if a listed company does have a website, the company must make available on its website certain information required by the rules under Chilean Company Law N° 18,046 . |
Reference is made to Item 18 for a list of all financial statements filed as part of this annual report.
The following financial statements, together with the report of independent registered accounting firm, are filed as part of this Annual Report:
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Financial Statements
Translation of consolidated financial statements previously issued in Spanish
| F-3 | |
|
| |
Consolidated Statements of Financial Position at December 31, |
| F-6 |
|
| |
| F-8 | |
|
| |
| F-9 | |
|
| |
| F-10 | |
|
| |
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 |
| F-12 |
|
| |
| F-13 |
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Embotelladora Andina S.A.:
We have audited the accompanying consolidated statements of financial position of Embotelladora Andina S.A. and subsidiaries (“the Company”) as of December 31, 20112012 and 2010,2011, and the related consolidated income statements, statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2011.2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America)States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Embotelladora Andina S.A. and subsidiaries as ofat December 31, 20112012 and 2010,2011 and the consolidated results of their operations and their cash flows for the each of the three years in the period ended December 31, 2011,2012, in conformity with International Financial Reporting Standards, (IFRS), as issued by the International Accounting Standards Board (“IASB”).Board.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of America)States), the Company’s internal control over financial reporting as of December 31, 2011,2012, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“the COSO criteria”) and our report dated April 26, 2012,30, 2013, expressed an unqualified opinion thereon.
/s/ERNST & YOUNG LIMITADA
ERNST & YOUNG LIMITADA
Santiago, Chile,
April 26, 201230, 2013
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of
Embotelladora Andina S.A.:
We have audited Embotelladora Andina S.A. and subsidiaries’ internal control over financial reporting as of December 31, 2011,2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“the COSO criteria”). Embotelladora Andina S.A. and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards.Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,IFRS as issued by the IASB, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the acquired companies Embotelladoras Coca Cola Polar S.A. and its subsidiaries, Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. which are included in the 2012 consolidated financial statements of Embotelladora Andina S.A., and constituted 20% and 15% of total assets and net assets, respectively, as of December 31, 2012 and 9% and 6% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of Embotelladora Andina S.A. and subsidiaries, also did not include an evaluation of the internal control over financial reporting of Embotelladoras Coca Cola Polar S.A. and subsidiaries.
In our opinion, Embotelladora Andina S.A. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011,2012, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of America), the consolidated statements of financial position of Embotelladora Andina S.A. and subsidiaries as of December 31, 2012 and 2011, and 2010, and the related consolidated income statements, statements of comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2011,2012, and our report dated April 26, 201230, 2013 expressed an unqualified opinion thereon.
/s/ERNST & YOUNG LIMITADA
Santiago, Chile, April 26, 201230, 2013
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Financial Position
at December 31, 20112012 and 20102011
(Translation of consolidated financial statements originally issued in Spanish –— See Note 2.3)2.2)
ASSETS |
| NOTE |
| 12.31.2011 |
| 12.31.2010 |
|
|
|
|
| ThCh$ |
| ThCh$ |
|
Current Assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
| 4 |
| 31,297,922 |
| 48,263,080 |
|
Other financial assets |
| 5 |
| 15,661,183 |
| 48,914,734 |
|
Other non-financial assets |
| 6.1 |
| 14,760,858 |
| 6,935,817 |
|
Trade and other accounts receivable, net |
| 7 |
| 107,443,039 |
| 97,254,597 |
|
Accounts receivable from related companies |
| 11.1 |
| 6,418,993 |
| 248,273 |
|
Inventory |
| 8 |
| 57,486,658 |
| 53,715,509 |
|
Current tax assets |
| 9.1 |
| 2,463,566 |
| 2,288,725 |
|
Total Current Assets |
|
|
| 235,532,219 |
| 257,620,735 |
|
|
|
|
|
|
|
|
|
Non-Current Assets: |
|
|
|
|
|
|
|
Other non-financial, non-current assets |
| 6.2 |
| 30,193,809 |
| 21,507,754 |
|
Trade and other accounts receivable, net |
| 7 |
| 7,175,660 |
| 7,804,481 |
|
Accounts receivable from related companies, net |
| 11.1 |
| 11,187 |
| 8,847 |
|
Property, plant and equipment, net |
| 10.1 |
| 350,064,467 |
| 291,482,180 |
|
Equity method investments |
| 13.1 |
| 60,290,966 |
| 50,754,168 |
|
Intangible assets, net |
| 14.1 |
| 1,138,857 |
| 1,365,595 |
|
Goodwill |
| 14.2 |
| 57,552,178 |
| 57,770,335 |
|
Total Non-Current Assets |
|
|
| 506,427,124 |
| 430,693,360 |
|
Total Assets |
|
|
| 741,959,343 |
| 688,314,095 |
|
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Financial Position
at December 31, 2011 and 2010
(Translation of consolidated financial statements originally issued in Spanish – See Note 2.3)
LIABILITIES AND NET EQUITY |
| NOTE |
| 12.31.2011 |
| 12.31.2010 |
|
|
|
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
Other financial liabilities |
| 15 |
| 23,093,402 |
| 20,915,723 |
|
Trade and other accounts payable |
| 16 |
| 127,940,772 |
| 105,282,335 |
|
Accounts payable to related companies |
| 11.2 |
| 11,359,038 |
| 14,323,473 |
|
Provisions |
| 17 |
| 87,966 |
| 60,748 |
|
Income tax payable |
| 9.2 |
| 3,821,247 |
| 4,009,389 |
|
Other non-financial liabilities |
| 18 |
| 30,341,479 |
| 30,962,748 |
|
Total Current Liabilities |
|
|
| 196,643,904 |
| 175,554,416 |
|
|
|
|
|
|
|
|
|
Non-Current Liabilities: |
|
|
|
|
|
|
|
Other non-current financial liabilities |
| 15 |
| 74,641,403 |
| 70,449,459 |
|
Provisions |
| 17 |
| 7,882,869 |
| 4,267,619 |
|
Deferred tax liabilities |
| 9.4 |
| 35,245,490 |
| 35,600,739 |
|
Post-employment benefit liabilities |
| 12.2 |
| 5,130,015 |
| 7,256,590 |
|
Other non-current liabilities |
| 18 |
| 436,742 |
| 320,676 |
|
Total Non-Current Liabilities |
|
|
| 123,336,519 |
| 117,895,083 |
|
|
|
|
|
|
|
|
|
Equity: |
| 19 |
|
|
|
|
|
Issued capital |
|
|
| 230,892,178 |
| 230,892,178 |
|
Retained earnings |
|
|
| 208,102,068 |
| 180,110,975 |
|
Accumulated other comprehensive income and capital reserves |
|
|
| (17,024,341 | ) | (16,146,887 | ) |
Equity attributable to equity holders of the parent |
|
|
| 421,969,905 |
| 394,856,266 |
|
Non-controlling interests |
|
|
| 9,015 |
| 8,330 |
|
Total Equity |
|
|
| 421,978,920 |
| 394,864,596 |
|
Total Liabilities and Equity |
|
|
| 741,959,343 |
| 688,314,095 |
|
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Income Statements by Function
for the years ended at December 31, 2011, 2010 and 2009
(Translation of consolidated financial statements originally issued in Spanish – See Note 2.3)
|
|
|
| 01.01.2011 |
| 01.01.2010 |
| 01.01.2009 |
|
CONSOLIDATED INCOME STATEMENTS BY FUNCTION |
| NOTE |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
| 982,864,417 |
| 888,713,882 |
| 785,845,050 |
|
Cost of sales |
|
|
| (578,581,184 | ) | (506,882,144 | ) | (455,300,000 | ) |
Gross Profit |
|
|
| 404,283,233 |
| 381,831,738 |
| 330,545,050 |
|
Other operating income |
| 23 |
| 2,909,445 |
| 1,117,879 |
| 697,813 |
|
Distribution expenses |
|
|
| (98,807,574 | ) | (85,717,173 | ) | (73,560,939 | ) |
Administrative and sales expenses |
|
|
| (163,051,423 | ) | (146,880,980 | ) | (123,861,292 | ) |
Other expenses by function |
| 24 |
| (11,915,003 | ) | (7,775,824 | ) | (4,794,151 | ) |
Other income (expenses) |
| 26 |
| 1,494,918 |
| (484,641 | ) | 674,173 |
|
Finance income |
| 25 |
| 3,182,434 |
| 3,376,138 |
| 3,951,779 |
|
Finance costs |
| 25 |
| (7,235,176 | ) | (7,401,831 | ) | (8,123,504 | ) |
Share in profit (loss) of equity method investees |
| 13.2 |
| 2,026,158 |
| 2,314,935 |
| 1,603,898 |
|
Foreign exchange difference |
| 27 |
| 2,731 |
| (222,168 | ) | (620,596 | ) |
Profit from units of adjustment |
|
|
| (1,177,658 | ) | (217,769 | ) | 639,672 |
|
Net income before taxes |
|
|
| 131,712,085 |
| 139,940,304 |
| 127,151,903 |
|
Income tax expense |
| 9.3 |
| (34,684,661 | ) | (36,340,240 | ) | (29,166,425 | ) |
Net income |
|
|
| 97,027,424 |
| 103,600,064 |
| 97,985,478 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable |
|
|
|
|
|
|
|
|
|
Net income attributable to equity holders of the parent |
|
|
| 97,024,405 |
| 103,597,372 |
| 97,982,730 |
|
Net income attributable to non-controlling interests |
|
|
| 3,019 |
| 2,692 |
| 2,748 |
|
Net income |
|
|
| 97,027,424 |
| 103,600,064 |
| 97,985,478 |
|
Earnings per Share |
|
|
| Ch$ |
| Ch$ |
| Ch$ |
|
Earnings per Series A Share |
|
|
| 121.54 |
| 129.78 |
| 122.74 |
|
Earnings per Series B Share |
|
|
| 133.69 |
| 142.75 |
| 135.01 |
|
ASSETS |
| NOTE |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
| 4 |
| 55,522,255 |
| 31,297,922 |
|
Other financial assets |
| 5 |
| 128,581 |
| 15,661,183 |
|
Other non-financial assets |
| 6.1 |
| 18,202,838 |
| 14,760,858 |
|
Trade and other accounts receivable, net |
| 7 |
| 152,816,916 |
| 107,443,039 |
|
Accounts receivable from related companies |
| 11.1 |
| 5,324,389 |
| 6,418,993 |
|
Inventory |
| 8 |
| 89,319,826 |
| 57,486,658 |
|
Current tax assets |
| 9.1 |
| 2,879,393 |
| 2,463,566 |
|
Assets classified as available for sale |
|
|
| 2,977,969 |
| — |
|
Total Current Assets |
|
|
| 327,172,167 |
| 235,532,219 |
|
|
|
|
|
|
|
|
|
Non-Current Assets:: |
|
|
|
|
|
|
|
Other non-financial, non-current assets |
| 6.2 |
| 26,927,090 |
| 30,193,809 |
|
Trade and other accounts receivable, net |
| 7 |
| 6,724,077 |
| 7,175,660 |
|
Accounts receivable from related companies, net |
| 11.1 |
| 7,197 |
| 11,187 |
|
Equity method investments |
| 13.1 |
| 73,080,061 |
| 60,290,966 |
|
Intangible assets others than goodwill, net |
| 14.1 |
| 464,582,273 |
| 1,138,857 |
|
Goodwill |
| 14.2 |
| 64,792,741 |
| 57,552,178 |
|
Property, plant and equipment, net |
| 10.1 |
| 576,550,725 |
| 350,064,467 |
|
Total Non-Current Assets |
|
|
| 1,212,664,164 |
| 506,427,124 |
|
Total Assets |
|
|
| 1,539,836,331 |
| 741,959,343 |
|
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
ConsolidatesConsolidated Statements of Comprehensive IncomeFinancial Position
for the years endedat December 31, 2011, 20102012 and 20092011
(Translation of consolidated financial statements originally issued in Spanish –— See Note 2.3)2.2)
|
|
|
| 01.01.2011 |
| 01.01.2010 |
| 01.01.2009 |
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
| NOTE |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Net income |
|
|
| 97,027,424 |
| 103,600,064 |
| 97,985,478 |
|
Foreign exchange translation adjustment, before taxes |
| 19.3.2 |
| 601,269 |
| (11,883,798 | ) | (14,745,854 | ) |
Income tax effect related to losses from foreign exchange rate translation differences included within other comprehensive income |
|
|
| (1,481,057 | ) | 585,028 |
| 4,454,252 |
|
Comprehensive income |
|
|
| 96,147,636 |
| 92,301,294 |
| 87,693,876 |
|
Comprehensive income attributable to: |
|
|
|
|
|
|
|
|
|
Controlling shareholders |
|
|
| 96,146,951 |
| 92,302,105 |
| 87,695,572 |
|
Non-controlling interests |
|
|
| 685 |
| (811 | ) | (1,696 | ) |
Total comprehensive income |
|
|
| 96,147,636 |
| 92,301,294 |
| 87,693,876 |
|
LIABILITIES AND NET EQUITY |
| NOTE |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
| ThCh$ |
| ThCh$ |
|
LIABILITIES |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
Other financial liabilities |
| 15 |
| 106,248,019 |
| 23,093,402 |
|
Trade and other accounts payable |
| 16 |
| 184,317,773 |
| 127,940,772 |
|
Accounts payable to related companies |
| 11.2 |
| 32,727,212 |
| 11,359,038 |
|
Provisions |
| 17 |
| 593,457 |
| 87,966 |
|
Income tax payable |
| 9.2 |
| 1,114,810 |
| 3,821,247 |
|
Other non-financial liabilities |
| 18 |
| 20,369,549 |
| 30,341,479 |
|
Total Current Liabilities |
|
|
| 345,370,820 |
| 196,643,904 |
|
|
|
|
|
|
|
|
|
Non-Current Liabilities: |
|
|
|
|
|
|
|
Other long - term-current financial liabilities |
| 15 |
| 173,880,195 |
| 74,641,403 |
|
Trade and other accounts payable, long-term |
|
|
| 1,930,233 |
| 163,738 |
|
Provisions |
| 17 |
| 6,422,811 |
| 7,882,869 |
|
Deferred tax liabilities |
| 9.4 |
| 111,414,626 |
| 35,245,490 |
|
Post-employment benefit liabilities |
| 12.2 |
| 7,037,122 |
| 5,130,015 |
|
Other non-current liabilities |
| 18 |
| 175,603 |
| 273,004 |
|
Total Non-Current Liabilities |
|
|
| 300,860,590 |
| 123,336,519 |
|
|
|
|
|
|
|
|
|
Equity: |
| 19 |
|
|
|
|
|
Issued capital |
|
|
| 270,759,299 |
| 230,892,178 |
|
Treasury stock |
|
|
| (21,725 | ) | — |
|
Retained earnings |
|
|
| 239,844,662 |
| 208,102,068 |
|
Accumulated other comprehensive income and capital reserves |
|
|
| 363,581,513 |
| (17,024,341 | ) |
Equity attributable to equity holders of the parent |
|
|
| 874,163,749 |
| 421,969,905 |
|
Non-controlling interests |
|
|
| 19,441,172 |
| 9,015 |
|
Total Equity |
|
|
| 893,604,921 |
| 421,978,920 |
|
Total Liabilities and Equity |
|
|
| 1,539,836,331 |
| 741,959,343 |
|
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Income Statements of Changes in Equiby Functionty
for the years ended at December 31, 2011,20102012, 2011 and 20092010
(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)
|
|
|
| Other reserves |
|
|
|
|
|
|
|
|
| ||||
|
| Issued capital |
| Translation |
| Other reserves |
| Total |
| Retained earnings |
| Controlling Equity |
| Non-Controlling |
| Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance at 01.01.2011 |
| 230,892,178 |
| (21,582,425 | ) | 5,435,538 |
| (16,146,887 | ) | 180,110,975 |
| 394,856,266 |
| 8,330 |
| 394,864,596 |
|
Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| — |
| — |
| — |
| — |
| 97,024,405 |
| 97,024,405 |
| 3,019 |
| 97,027,424 |
|
Other comprehensive income |
| — |
| (877,454 | ) | — |
| (877,454 | ) | — |
| (877,454 | ) | (2,334 | ) | (879,788 | ) |
Comprehensive income |
| — |
| (877,454 | ) | — |
| (877,454 | ) | 97,024,405 |
| 96,146,951 |
| 685 |
| 96,147,636 |
|
Dividends |
| — |
| — |
| — |
| — |
| (69,033,312 | ) | (69,033,312 | ) | — |
| (69,033,312 | ) |
Total changes in equity |
| — |
| (877,454 | ) | — |
| (877,454 | ) | 27,991,093 |
| 27,113,639 |
| 685 |
| 27,114,324 |
|
Ending balance at 12.31.2011 |
| 230,892,178 |
| (22,459,879 | ) | 5,435,538 |
| (17,024,341 | ) | 208,102,068 |
| 421,969,905 |
| 9,015 |
| 421,978,920 |
|
|
|
|
| Other reserves |
|
|
|
|
|
|
|
|
| ||||
|
| Issued capital |
| Translation |
| Other reserves |
| Total |
| Retained earnings |
| Controlling Equity |
| Non-Controlling |
| Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance at 01.01.2010 |
| 230,892,178 |
| (10,287,158 | ) | 5,435,538 |
| (4,851,620 | ) | 147,508,036 |
| 373,548,594 |
| 9,141 |
| 373,557,735 |
|
Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| — |
| — |
| — |
| — |
| 103,597,372 |
| 103,597,372 |
| 2,692 |
| 103,600,064 |
|
Other comprehensive income |
| — |
| (11,295,267 | ) | — |
| (11,295,267 | ) | — |
| (11,295,267 | ) | (3,503 | ) | (11,298,770 | ) |
Comprehensive income |
| — |
| (11,295,267 | ) |
|
| (11,295,267 | ) | 103,597,372 |
| 92,302,105 |
| (811 | ) | 92,301,294 |
|
Dividends |
| — |
| — |
| — |
| — |
| (70,994,433 | ) | (70,994,433 | ) | — |
| (70,994,433 | ) |
Total changes in equity |
|
|
| (11,295,267 | ) | — |
| (11,295,267 | ) | 32,602,939 |
| 21,307,672 |
| (811 | ) | 21,306,861 |
|
Ending balance at 12.31.2010 |
| 230,892,178 |
| (21,582,425 | ) | 5,435,538 |
| (16,146,887 | ) | 180,110,975 |
| 394,856,266 |
| 8,330 |
| 394,864,596 |
|
|
|
|
| Other reserves |
|
|
|
|
|
|
|
|
| ||||
|
| Issued capital |
| Translation |
| Other reserves |
| Total |
| Retained earnings |
| Controlling Equity |
| Non-Controlling |
| Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance at 01.01.2009 |
| 236,327,716 |
| — |
| — |
| — |
| 109,955,729 |
| 346,283,445 |
| 10,837 |
| 346,294,282 |
|
Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| — |
| — |
| — |
| — |
| 97,982,730 |
| 97,982,730 |
| 2,748 |
| 97,985,478 |
|
Other comprehensive income |
| — |
| (10,287,158 | ) | — |
| (10,287,158 | ) | — |
| (10,287,158 | ) | (4,444 | ) | (10,291,602 | ) |
Comprehensive income |
| — |
| (10,287,158 | ) | — |
| (10,287,158 | ) | 97,982,730 |
| 87,695,572 |
| (1,696 | ) | 87,693,876 |
|
Dividends |
| — |
| — |
| — |
| — |
| (60,430,423 | ) | (60,430,423 | ) | — |
| (60,430,423 | ) |
Increase (decrease) due to transfers and other changes |
| (5,435,538 | ) | — |
| 5,435,538 |
| 5,435,538 |
| — |
| — |
| — |
| — |
|
Total changes in Equity |
| (5,435,538 | ) | (10,287,158 | ) | 5,435,538 |
| (4,851,620 | ) | 37,552,307 |
| 27,265,149 |
| (1,696 | ) | 27,263,453 |
|
Ending balance at 12.31.2009 |
| 230,892,178 |
| (10,287,158 | ) | 5,435,538 |
| (4,851,620 | ) | 147,508,036 |
| 373,548,594 |
| 9,141 |
| 373,557,735 |
|
|
|
|
| 01.01.2012 |
| 01.01.2011 |
| 01.01.2010 |
|
|
| NOTE |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
|
| 1,172,292,817 |
| 982,864,417 |
| 888,713,882 |
|
Cost of sales |
|
|
| (698,955,215 | ) | (578,581,184 | ) | (506,882,144 | ) |
Gross Profit |
|
|
| 473,337,602 |
| 404,283,233 |
| 381,831,738 |
|
Other income |
| 23 |
| 3,265,998 |
| 2,909,445 |
| 1,117,879 |
|
Distribution expenses |
|
|
| (122,818,941 | ) | (98,807,574 | ) | (85,717,173 | ) |
Administrative and sales expenses |
|
|
| (196,355,000 | ) | (163,051,423 | ) | (146,880,980 | ) |
Other expenses |
| 24 |
| (15,420,008 | ) | (11,915,003 | ) | (7,775,824 | ) |
Other income (expenses) |
| 26 |
| (2,336,215 | ) | 1,494,918 |
| (484,641 | ) |
Finance income |
| 25 |
| 2,728,059 |
| 3,182,434 |
| 3,376,138 |
|
Finance costs |
| 25 |
| (11,172,753 | ) | (7,235,176 | ) | (7,401,831 | ) |
Share in profit of equity method investees |
| 13.3 |
| 1,769,898 |
| 2,026,158 |
| 2,314,935 |
|
Foreign exchange difference |
|
|
| (4,471,031 | ) | 2,731 |
| (222,168 | ) |
Loss from indexed financial assets and liabilities |
|
|
| (1,753,801 | ) | (1,177,658 | ) | (217,769 | ) |
Net income before taxes |
|
|
| 126,773,808 |
| 131,712,085 |
| 139,940,304 |
|
Income tax expense |
| 9.3 |
| (38,504,636 | ) | (34,684,661 | ) | (36,340,240 | ) |
Net income |
|
|
| 88,269,172 |
| 97,027,424 |
| 103,600,064 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to equity holders of the parent |
|
|
| 87,636,961 |
| 97,024,405 |
| 103,597,372 |
|
Net income attributable to non-controlling interests |
|
|
| 632,211 |
| 3,019 |
| 2,692 |
|
Net income |
|
|
| 88,269,172 |
| 97,027,424 |
| 103,600,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ch$ |
| Ch$ |
| Ch$ |
|
Earnings per Share, basic and diluted |
|
|
|
|
|
|
|
|
|
Earnings per Series A Share |
| 19.5 |
| 104.12 |
| 121.54 |
| 129.78 |
|
Earnings per Series B Share |
| 19.5 |
| 114.53 |
| 133.69 |
| 142.75 |
|
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Cash FlowsComprehensive Income
for the years ended December 31, 2012, 2011 2010 and 20092010
(Translation of Reportconsolidated financial statements originally issued in Spanish — See Note 2.3)2.2)
|
|
|
| 01.01.2011 |
| 01.01.2010 |
| 01.01.2009 |
|
|
| NOTE |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Cash flows provided by (used in) Operating Activities |
|
|
|
|
|
|
|
|
|
Types of cash flows provided by Operating Activities |
|
|
|
|
|
|
|
|
|
Receipts from customers |
|
|
| 1,383,987,572 |
| 1,197,298,500 |
| 1,070,940,290 |
|
Charges for premiums, services, annual fees and other policy benefits |
|
|
| 162,979 |
| 1,490,134 |
| 85,684 |
|
Types of cash flows used in Operating Activities |
|
|
|
|
|
|
|
|
|
Supplier payments |
|
|
| (960,961,322 | ) | (819,753,947 | ) | (701,721,831 | ) |
Payroll |
|
|
| (88,025,877 | ) | (81,670,428 | ) | (64,228,027 | ) |
Other payments for operating activities (value-added taxes on purchases and sales and others) |
|
|
| (159,030,469 | ) | (134,723,290 | ) | (138,340,498 | ) |
Dividends received |
|
|
| 2,061,957 |
| 1,379,837 |
| 2,009,793 |
|
Interest payments classified as from operations |
|
|
| (6,472,220 | ) | (5,876,763 | ) | (11,616,256 | ) |
Interest received classified as from operations |
|
|
| 2,139,339 |
| 2,406,821 |
| 5,704,250 |
|
Income tax payments |
|
|
| (31,682,397 | ) | (32,304,059 | ) | (26,492,827 | ) |
Cash flows used in other operating activities |
|
|
| (3,229,066 | ) | (2,399,096 | ) | (5,214,158 | ) |
Net cash flows provided by Operating Activities |
|
|
| 138,950,496 |
| 125,847,709 |
| 131,126,420 |
|
Cash flows provided by (used in) Investing Activities |
|
|
|
|
|
|
|
|
|
Sale of 43% interest in Vital S.A., net of cash previously held |
|
|
| 5,355,930 |
| — |
| — |
|
Capital contribution in Vital Jugos S.A. before proportional sale |
|
|
| (1,278,000 | ) | — |
| — |
|
Capital contribution to the associateVital Jugos S.A. |
|
|
| (3,249,000 | ) | — |
| — |
|
Other capital contributions to equity method investments |
|
|
| — |
| (15,229,291 | ) | (937,607 | ) |
Proceeds from sale of property, plant and equipment |
|
|
| 2,187,364 |
| 590,074 |
| 435,013 |
|
Purchase of property, plant and equipment |
|
|
| (126,930,944 | ) | (95,461,555 | ) | (49,482,837 | ) |
Proceeds from the maturity of marketable securities |
|
|
| 75,422,008 |
| 72,746,562 |
| 68,999,577 |
|
Purchase of marketable securities |
|
|
| (39,484,304 | ) | (47,156,718 | ) | (102,760,277 | ) |
Payments on forward, term, option and financial exchange agreements |
|
|
| (451,825 | ) | (2,368,356 | ) | (342,213 | ) |
Collections from forward, term, option and swap agreements |
|
|
| 1,180,132 |
| 5,336,646 |
| 1,039,841 |
|
Cash flows (used in) provided by other investing activities |
|
|
| (2,372,559 | ) | 1,038,460 |
| (1,270,238 | ) |
Net cash flows used in Investing Activities |
|
|
| (89,621,198 | ) | (80,504,178 | ) | (84,318,741 | ) |
Cash Flows provided by (used in) Financing Activities |
|
|
|
|
|
|
|
|
|
Short-term loans obtained |
|
|
| 118,456,093 |
| 30,023,277 |
| 18,075,837 |
|
Loan payments |
|
|
| (111,722,342 | ) | (23,328,736 | ) | (22,159,302 | ) |
Dividend payments by the reporting entity |
|
|
| (70,905,803 | ) | (66,524,747 | ) | (62,348,379 | ) |
Cash flows used in other financing activities |
|
|
| (2,987,333 | ) | (2,717,533 | ) | (1,324,466 | ) |
Net cash flows used in Financing Activities |
|
|
| (67,159,385 | ) | (62,547,739 | ) | (67,756,310 | ) |
Decrease in Cash and cash equivalents, before effects of variations in Foreign Exchange Rates |
|
|
| (17,830,087 | ) | (17,204,208 | ) | (20,948,631 | ) |
Effects of variations in foreign exchange rates on cash and cash equivalents |
|
|
| 864,929 |
| 2,676,067 |
| (5,966,129 | ) |
Net decrease in cash and cash equivalents |
|
|
| (16,965,158 | ) | (14,528,141 | ) | (26,914,760 | ) |
Cash and cash equivalents — beginning of year |
| 4 |
| 48,263,080 |
| 62,791,221 |
| 89,705,981 |
|
Cash and cash equivalents - end of year |
| 4 |
| 31,297,922 |
| 48,263,080 |
| 62,791,221 |
|
|
| 01.01.2012 |
| 01.01.2011 |
| 01.01.2010 |
|
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Net income |
| 88,269,172 |
| 97,027,424 |
| 103,600,064 |
|
Foreign exchange translation adjustment, before taxes |
| (42,186,310 | ) | 601,269 |
| (11,883,798 | ) |
Income tax effect related to losses from foreign exchange rate translation differences included within other comprehensive income |
| 1,089,225 |
| (1,481,057 | ) | 585,028 |
|
Comprehensive income |
| 47,172,087 |
| 96,147,636 |
| 92,301,294 |
|
Comprehensive income attributable to: |
|
|
|
|
|
|
|
Equity holders of the parent |
| 46,541,295 |
| 96,146,951 |
| 92,302,105 |
|
Non-controlling interests |
| 630,792 |
| 685 |
| (811 | ) |
Total comprehensive income |
| 47,172,087 |
| 96,147,636 |
| 92,301,294 |
|
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2012, 2011 and 2010
(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)
|
|
|
|
|
| Other reserves |
|
|
|
|
|
|
|
|
| ||||
|
| Issued capital |
| Treasury |
| Translation reserves |
| Other reserves |
| Total |
| Retained earnings |
| Controlling Equity |
| Non-Controlling |
| Total Equity |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance at 01.01.2012 |
| 230,892,178 |
| — |
| (22,459,879 | ) | 5,435,538 |
| (17,024,341 | ) | 208,102,068 |
| 421,969,905 |
| 9,015 |
| 421,978,920 |
|
Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| — |
| — |
| — |
| — |
|
|
| 87,636,961 |
| 87,636,961 |
| 632,211 |
| 88,269,172 |
|
Other comprehensive income |
| — |
| — |
| (41,095,666 | ) | — |
| (41,095,666 | ) | — |
| (41,095,666 | ) | (1,419 | ) | (41,097,085 | ) |
Comprehensive income |
| — |
|
|
| (41,095,666 | ) | — |
| (41,095,666 | ) | 87,636,961 |
| 46,541,295 |
| 630,792 |
| 47,172,087 |
|
Equity Issuance —Polar acquisition |
| 39,867,121 |
| — |
| — |
| 421,701,520 |
| 421,701,520 |
| — |
| 461,568,641 |
| 18,801,365 |
| 480,370,006 |
|
Dividends |
| — |
| — |
| — |
| — |
| — |
| (55,894,367 | ) | (55,894,367 | ) | — |
| (55,894,367 | ) |
Purchase of treasury-stock |
| — |
| (21,725 | ) | — |
| — |
| — |
| — |
| (21,725 | ) | — |
| (21,725 | ) |
Total changes in equity |
| 39,867,121 |
| (21,725 | ) | (41,095,666 | ) | 421,701,520 |
| 380,605,854 |
| 31,742,594 |
| 452,193,844 |
| 19,432,157 |
| 471,626,001 |
|
Ending balance at 12.31.2012 |
| 270,759,299 |
| (21,725 | ) | (63,555,545 | ) | 427,137,058 |
| 363,581,513 |
| 239,844,662 |
| 874,163,749 |
| 19,441,172 |
| 893,604,921 |
|
|
|
|
|
|
| Other reserves |
|
|
|
|
|
|
|
|
| ||||
|
| Issued capital |
| Treasury |
| Translation reserves |
| Other reserves |
| Total |
| Retained earnings |
| Controlling Equity |
| Non-Controlling |
| Total Equity |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance at 01.01.2011 |
| 230,892,178 |
| — |
| (21,582,425 | ) | 5,435,538 |
| (16,146,887 | ) | 180,110,975 |
| 394,856,266 |
| 8,330 |
| 394,864,596 |
|
Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| — |
| — |
| — |
| — |
| — |
| 97,024,405 |
| 97,024,405 |
| 3,019 |
| 97,027,424 |
|
Other comprehensive income |
| — |
| — |
| (877,454 | ) | — |
| (877,454 | ) | — |
| (877,454 | ) | (2,334 | ) | (879,788 | ) |
Comprehensive income |
| — |
| — |
| (877,454 | ) | — |
| (877,454 | ) | 97,024,405 |
| 96,146,951 |
| 685 |
| 96,147,636 |
|
Dividends |
| — |
| — |
| — |
| — |
| — |
| (69,033,312 | ) | (69,033,312 | ) | — |
| (69,033,312 | ) |
Total changes in equity |
| — |
| — |
| (877,454 | ) | — |
| (877,454 | ) | 27,991,093 |
| 27,113,639 |
| 685 |
| 27,114,324 |
|
Ending balance at 12.31.2011 |
| 230,892,178 |
| — |
| (22,459,879 | ) | 5,435,538 |
| (17,024,341 | ) | 208,102,068 |
| 421,969,905 |
| 9,015 |
| 421,978,920 |
|
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
at December 31, 2012, 2011 and 2010
(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)
|
|
|
| Other reserves |
|
|
|
|
|
|
|
|
| ||||
|
| Issued capital |
| Translation |
| Other reserves |
| Total |
| Retained earnings |
| Controlling Equity |
| Non-Controlling |
| Total Equity |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance at 01.01.2010 |
| 230,892,178 |
| (10,287,158 | ) | 5,435,538 |
| (4,851,620 | ) | 147,508,036 |
| 373,548,594 |
| 9,141 |
| 373,557,735 |
|
Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| — |
| — |
| — |
| — |
| 103,597,372 |
| 103,597,372 |
| 2,692 |
| 103,600,064 |
|
Other comprehensive income |
| — |
| (11,295,267 | ) | — |
| (11,295,267 | ) | — |
| (11,295,267 | ) | (3,503 | ) | (11,298,770 | ) |
Comprehensive income |
| — |
| (11,295,267 | ) | — |
| (11,295,267 | ) | 103,597,372 |
| 92,302,105 |
| (811 | ) | 92,301,294 |
|
Dividends |
| — |
| — |
| — |
| — |
| (70,994,433 | ) | (70,994,433 | ) | — |
| (70,994,433 | ) |
Total changes in equity |
| — |
| (11,295,267 | ) | — |
| (11,295,267 | ) | 32,602,939 |
| 21,307,672 |
| (811 | ) | 21,306,861 |
|
Ending balance at 12.31.2010 |
| 230,892,178 |
| (21,582,425 | ) | 5,435,538 |
| (16,146,887 | ) | 180,110,975 |
| 394,856,266 |
| 8,330 |
| 394,864,596 |
|
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
for the years ended December 31, 2012, 2011 and 2010
(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)
|
|
|
| 01.01.2012 |
| 01.01.2011 |
| 01.01.2010 |
|
|
| NOTE |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Cash flows provided by (used in) Operating Activities |
|
|
|
|
|
|
|
|
|
Cash flows provided by Operating Activities |
|
|
|
|
|
|
|
|
|
Receipts from customers (including taxes) |
|
|
| 1,557,595,968 |
| 1,383,987,572 |
| 1,197,298,500 |
|
Charges for premiums, services, annual fees and other policy benefits |
|
|
| — |
| 162,979 |
| 1,490,134 |
|
Cash flows used in Operating Activities |
|
|
|
|
|
|
|
|
|
Supplier payments (including taxes) |
|
|
| (1,038,437,026 | ) | (960,961,322 | ) | (819,753,947 | ) |
Payroll |
|
|
| (109,386,885 | ) | (88,025,877 | ) | (81,670,428 | ) |
Other payments for operating activities (value-added taxes on purchases and sales and others) |
|
|
| (188,266,514 | ) | (159,030,469 | ) | (134,723,290 | ) |
Dividends received |
|
|
| 725,000 |
| 2,061,957 |
| 1,379,837 |
|
Interest payments classified as from operations |
|
|
| (7,608,496 | ) | (6,472,220 | ) | (5,876,763 | ) |
Interest received classified as from operations |
|
|
| 1,874,032 |
| 2,139,339 |
| 2,406,821 |
|
Income tax payments |
|
|
| (23,229,558 | ) | (31,682,397 | ) | (32,304,059 | ) |
Cash flows used in other operating activities |
|
|
| (4,409,721 | ) | (3,229,066 | ) | (2,399,096 | ) |
Net cash flows provided by Operating Activities |
|
|
| 188,856,800 |
| 138,950,496 |
| 125,847,709 |
|
Cash flows provided by (used in) Investing Activities |
|
|
|
|
|
|
|
|
|
Capital decrease in Envases CMF S.A. and Sale of 43% interest in Vital S.A., net of cash previously held |
|
|
| — |
| 5,355,930 |
| — |
|
Capital contribution to the associate Vital Jugos S.A. |
|
|
| — |
| (1,278,000 | ) | — |
|
Cash flows used in the purchase of non-controlling ownership interest (purchase o Sorocaba Refrescos S.A. and capital contribution in Vital Jugos S.A. after its proportional sale) |
|
|
| (35,877,240 | ) | (3,249,000 | ) | — |
|
Other capital contributions to equity method investments |
|
|
| — |
| — |
| (15,229,291 | ) |
Other collections from the sale of equity or debt instruments of other entities |
|
|
| 1,150,000 |
| — |
| — |
|
Proceeds from sale of property, plant and equipment |
|
|
| 611,634 |
| 2,187,364 |
| 590,074 |
|
Purchase of property, plant and equipment |
|
|
| (143,763,670 | ) | (126,930,944 | ) | (95,461,555 | ) |
Proceeds from the maturity of marketable securities |
|
|
| 14,864,854 |
| 75,422,008 |
| 72,746,562 |
|
Purchase of marketable securities |
|
|
| (1,455,348 | ) | (39,484,304 | ) | (47,156,718 | ) |
Payments on forward, term, option and financial exchange agreements |
|
|
| (1,360,880 | ) | (451,825 | ) | (2,368,356 | ) |
Collections from forward, term, option and financial exchange agreements |
|
|
| 881,832 |
| 1,180,132 |
| 5,336,646 |
|
Other cash inputs (outputs) (1) |
|
|
| 8,778,615 |
| (2,372,559 | ) | 1,038,460 |
|
Net cash flows used in Investing Activities |
|
|
| (156,170,203 | ) | (89,621,198 | ) | (80,504,178 | ) |
|
|
|
|
|
|
|
|
|
|
Cash Flows provided by (used in) Financing Activities |
|
|
|
|
|
|
|
|
|
Long-term loans obtained |
|
|
| 61,053,312 |
| — |
| — |
|
Short-term loans obtained |
|
|
| 197,968,578 |
| 118,456,093 |
| 30,023,277 |
|
Loan payments |
|
|
| (188,693,538 | ) | (111,722,342 | ) | (23,328,736 | ) |
Purchase of treasury shares |
|
|
| (21,725 | ) | — |
| — |
|
Financial lease liability payments |
|
|
| (16,438 | ) | — |
| — |
|
Dividend payments by the reporting entity |
|
|
| (69,766,002 | ) | (70,905,803 | ) | (66,524,747 | ) |
Other cash inputs (outputs) |
|
|
| (4,075,171 | ) | (2,987,333 | ) | (2,717,533 | ) |
Net cash flows used in Financing Activities |
|
|
| (3,550,984 | ) | (67,159,385 | ) | (62,547,739 | ) |
Increase (Decrease) in Cash and cash equivalents, before effects of variations in foreign exchange rates |
|
|
| 29,135,613 |
| (17,830,087 | ) | (17,204,208 | ) |
Effects of variations in foreign exchange rates on cash and cash equivalents |
|
|
| (4,911,280 | ) | 864,929 |
| 2,676,067 |
|
Net decrease in cash and cash equivalents |
|
|
| 24,224,333 |
| (16,965,158 | ) | (14,528,141 | ) |
Cash and cash equivalents — beginning of year |
| 4 |
| 31,297,922 |
| 48,263,080 |
| 62,791,221 |
|
Cash and cash equivalents - end of year |
| 4 |
| 55,522,255 |
| 31,297,922 |
| 48,263,080 |
|
Includes ThCh$4,760,888 in cash and cash equivalent contributed by companies incorporated as a result of the 2012 merger as described in note 1b) and ThCh$2,112,582 of the sale of 7% of Vital Jugos S.A. and 7.1% of Vital Aguas S.A. during 2012 as described in note 13.
The accompanying notes 1 to 28 form an integral part of these financial statements
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Translation of consolidated financial statements originally issued in Spanish — See Note 2.3)
NOTE 1 - CORPORATE INFORMATION
a)Securities Registration and description of business
Embotelladora Andina S.A. is registered under No. 00124 of the Securities Registry and is regulated by the Chilean SuperintendencySuperintendence of Securities and Insurance (SVS) pursuant to Law 18,046.
Embotelladora Andina S.A. (hereafter “Andina,” and together with its subsidiaries, the “Company”) engages mainly in the production and sale of Coca-Cola products and other Coca-Cola beverages. The Company has operations in Chile, Brazil, Argentina and Argentina.Paraguay. In Chile, the geographic areas in which itthe Company has distribution franchises are the cities of Santiago,regions II, III, IV, XI, XII, Metropolitan Region, Rancagua and San Antonio and Rancagua.Antonio. In Brazil, itthe Company has distribution franchises in the states of Rio de Janeiro, Espírito Santo, Niteroi, Vitoria, and Nova Iguaçu. In Argentina, itthe Company has distribution franchises in the provinces of Mendoza, Córdoba, San Luis, Entre Ríos, Santa Fe, Rosario, Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro, La Pampa and Rosario. the western zone of the Province of Buenos Aires. In Paraguay the franchised territory is the whole country.
The Company holds a licenseseparate distribution licenses from The Coca-Cola Company infor all of its territories, Chile, Brazil, and Argentina. Licensesterritories. The licenses for the territories in Chile expire in 2012. Licenses for the territories2013 and 2018; in Argentina they expire in 2012, however,2013 and 2017; in February 2012,Brazil they were extended for a period of 5 years. The license for Brazilexpire in 2017; while in Paraguay it expires in 2013.2014. All these licenses are issued atrenewable on similar terms, unless either the discretion ofCompany or The Coca-Cola Company. It is expectedCompany choose not to do so. The Company currently expect that the licenses will be renewed upon expiration based on similar terms and conditions.
AtAs of December 31, 2011,2012 the Freire Group and related companies controlled the company with 54.97%hold 55.35% of the outstanding shares with voting rights corresponding to the Series A shares.
The main offices of Embotelladora Andina S.A. are located at AvenidaAvenue El Golf 40, 4th floor, municipality of Las Condes, Santiago, Chile. Its taxpayer identification number is 91,144,000-8.91.144.000-8.
NOTAb)Merger with Embotelladoras Coca-Cola Polar S.A.
On March 30, 2012, after completion of due-diligence procedures, the Company signed a Promissory Merger Agreement with Embotelladoras Coca-Cola Polar S.A. (“Polar”). Polar is also a Coca-Cola bottler with operations in: Chile, servicing territories in the II, III, IV, XI and XII regions; Argentina, servicing territories in Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro La Pampa and the western zone of the province of Buenos Aires; and Paraguay, servicing the whole country. The merger was made in order to reinforce the Company’s leadership position among Coca-Cola bottlers in South America.
NOTE 1 - CORPORATE INFORMATION (Continued)
The merger is being accounted for as the acquisition of Polar by the Company. Prior to closing, the merger was approved by the shareholders of both of the companies, as well as the Chilean Superintendence of Securities and Insurance, and the Coca-Cola Company. The terms of the merger prescribed the exchange of newly issued Company shares at a rate of 0.33269 Series A shares and 0.33269 Series B shares, for each outstanding share of Polar.
The physical exchange of shares took place on October 16, 2012, with which former shareholders of Polar then having a 19.68% ownership interest in the merged Company. Based upon the terms of the executed agreements, the actual control over day-to-day operations of Polar transferred to the Company as of October 1, 2012, and the Company began consolidating Polar’s operations from that date forward. Additionally and as a result of Embotelladora Andina becoming the legal successor of Polar’s rights and obligations, the Company indirectly acquired additional ownership interest in Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. that added to its previous ownership interest in those entities. The Company’s current ownership enables it to exercise control over these entities, and thus incorporate them into the consolidation of the consolidated financial statements beginning October 1, 2012.
Under IFRS 3, because the acquisition of control over Vital Jugos S.A. and Vital Aguas S.A, and Envases Central S.A. was made in stages, the preexisting equity method investment must be valued at fair value at the time of de-recognition, with the differences between fair value and book value being recognized in the result of the period in which control is obtained. The Company has not recognized a gain (or loss) in its 2012 results, because book values of the equity method investments approximated their fair values at the date of de-recognition.
A total of 93,152,097 Series A shares and 93,152,097 Series B shares were issued at closing in exchange for 100% of Polar’s outstanding shares. The total purchase price was ThCh$461,568,641 based on a share price of Ch$2,220 per Series A share and Ch$2,735 per Series B share on October 1, 2012. There are no contingent purchase price provisions. Transaction related costs of Ch$4,517,661 were expensed as incurred, and recorded as a component of other expenses by function in the Company’s accompanying consolidated income statement..
NOTE 1 - CORPORATE INFORMATION (Continued)
The fair value of Polar’s net assets acquired is as follows:
ThCh$ | |||
Total current assets acquired, including cash amounting to ThCh$4,760,888 | 66,536,012 | ||
Property, plant and equipment | 153,012,024 | ||
Other non-current assets | 15,221,922 | ||
Contractual rights to distribute Coca-Cola products (“Distribution Rights”) | 459,393,920 | ||
Total Assets | 694,163,878 | ||
Indebtedness | (99,924,279 | ) | |
Other liabilities (includes deferred taxes of ThCh$81,672,940) | (149,131,026 | ) | |
Total liabilities | (249,055,305 | ) | |
Net Assets AcquiredAmounts attributed to non-controlling interests | 445,108,573 | ||
Goodwill | 16,460,068 | ||
Total consideration excluding non-controlling interests | 461,568,641 |
Additionally, the Company allocated ThCh$18,801,365 to non-controlling interests resulting in total consideration (an aggregate purchase price) for the net assets acquired from Polar of ThCh$480,370,006.
The Company carried out the fair value of distribution rights, property, plant and equipment with the assistance of third-party valuations. Distribution rights are expected to be tax deductible for income tax purposes.
The Company expects to recover goodwill through related synergies with the available distribution capacity. Goodwill has been assigned to the cash generating unit of the Company in Chile (ThCh$8,503,023), Argentina (ThCh$1,041,633), and Paraguay (ThCh$6,915,412). Goodwill is not expected to be tax deductible for income tax purposes.
Included in the summary of net assets acquired above is ThCh$ 7,364,780 of other non-current assets related to the 15.0% equity investment in Vital previously owned by Polar. Upon Vital’s ultimate consolidation by the Company, the current and non-current assets of the Company did not change significantly.
Condensed financial information of Polar for the period between October 1, 2012 and December 31, 2012 is as follows:
ThCh$ | |||
Net sales | 93,918,209 | ||
Income before taxes | 5,465,844 | ||
Net income | 4,648,021 |
Condensed financial information of Andina as if Polar were consolidated beginning January 1, 2012 is as follows (amounts are unaudited in nature):
(UNAUDITED) | |||
Net sales | 1,429,981,711 | ||
Income before taxes | 133,211,027 | ||
Net income | 95,050,027 |
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Periods covered
These Consolidated Financial Statements encompass the following periods:
Consolidated statements of financial position: At December 31, 20112012 and 2010.2011.
Consolidated income statements by function:function and comprehensive income: TheFor the years from January 1 toended December 31, 2011,20102012, 2011 and 2009.2010.
Consolidated statements of comprehensive income: cash flows:The For the years from January 1 toended December 31, 2012, 2011 and 2010, and 2009.using the “direct method”.
Consolidated statements of changes in equity: Balances and activity between January 1 andFor the years ended December 31, 2011,20102012, 2011 and 2009.2010.
Consolidated statements of cash flows Rounding: The years from January 1consolidated financial statements are presented in thousands of Chilean pesos and all values are rounded to December 31, 2011, 2010 and 2009 , using the “direct method”.
Table of Contentsnearest thousand, except where otherwise indicated.
2.2 Basis of preparation
The Company’s Consolidated Financial Statements for the years ended December 31, 2011, 2010 and 2009accompany consolidated financial statements were prepared according toin accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (hereinafter “IASB”(“IASB”).
TheseThe Company’s 2012 Spanish language IFRS consolidated financial statements comprisewere approved by the Company’s Board of Directors on February 28, 2013, with subsequent events first being considered through that date. Those Spanish language IFRS consolidated financial positionstatements consisted of Embotelladora Andina S.A. and its subsidiariesconsoliated statements of financial position as of December, 31 20112012 and 20102011 along with consolidated income statementstatements by function, consolidated statements of comprehensive income, consolidated statementstatements of changes in equity, and consolidated statements of cash flows (and related disclosures), each for the two years ended December 31, 2011, 2010 and 2009. Thethen ended. Those Spanish language IFRS consolidated financial statements for the years ended December 31, 2011 and 2010 were then subsequently approved by the Board of DirectorsCompany’s shareholders during session held on January 31, 2012.its April 25, 2013 meeting.
Included in thesethis 2012 English language translation IFRS consolidated financial statements are consolidated balance sheetsstatements of financial position as of December 31, 20112012 and 2010,2011, along with consolidated income statements by function, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows (and the related disclosures) for each of the three years ended December 31, 2011.2012. This three year presentation of operations, changes in equity and cash flows is required by the rules of the United States Securities and Exchange Commission. TheseOther than such three year presentation and disclosure, the accompanying English language IFRS consolidated financial statements are consistent with the previously issued Spanish language IFRS consolidated financial statements. This three year English language translation IFRS consolidated financial statements were approved for issuances by the Board of
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Directors during a session held on April 26, 2012,30, 2013, with subsequent events considered through this later date.
These Consolidated Financial Statements have been prepared based on accounting records kept by the Embotelladora Andina S.A. (“Parent CompanyCompany”) and by other entities forming part thereof. Each entity prepares its financial statements following the accounting principles and standards applicable in each country, adjustmentscountry. Adjustments and reclassifications have been made, as necessary, in the consolidation process to align such principles and standards and then adapt them to IFRS.
For the convenience of the reader, these consolidated financial statements have been translated from Spanish to English.
Table of ContentsEnglish, as explained above.
2.3 Basis of consolidation
2.3.1 Subsidiaries
The Consolidated Financial Statements include the Financial Statements of the Parent Company and the companies it controls (its subsidiaries). The Company has control when it has the power to direct the financial and operating policies of a company so as to obtain benefits from its activities. They include assets and liabilities as of December 31, 20112012 and 2010;2011 and results of operations and cash flows for the years ended December 31, 2012, 2011 2010 and 2009.2010. Income or losses from subsidiaries acquired or sold are included in the consolidated financial statements from the effective date of acquisition through the effective date of sale, as applicable.
The acquisition method is used to account for the acquisition of subsidiaries. The acquisition cost is the fair value of assets, of equity securities and of liabilities incurred or assumed on the date of exchange, plus the cost directly attributable to the acquisition.that control is obtained. Identifiable assets acquired and identifiable liabilities and contingencies assumed in a business combination are accounted for initially at their fair value as of the acquisition date. The excess acquisition cost plus non-controlling interest above the fair value of the Group’s share in identifiable net assets acquired is recognized as goodwill. If the acquisition cost is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in income.
Intra-group transactions, balances, and unrealized gains in intra-group transactions are eliminated. Unrealizedand losses, are also eliminated. Whenever necessary, the accounting policies of subsidiaries are modified to assureensure uniformity with the policies adopted by the Group.Company.
The value of non-controlling interest in equity and the results of the consolidated subsidiaries is presented in Equity; non-controlling interests, in the Consolidated Statement of Financial Position and in “net income attributable to non-controlling interests,” in the Consolidated Income Statements by Function.
The consolidated financial statements include all assets, liabilities, income, expenses, and cash flows of the company and its subsidiaries after eliminating intra-group balances and transactions.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The list of subsidiaries included in the consolidation is detailed as follows:
|
|
|
| Percentage Interest |
|
|
|
| Percentage Interest |
| ||||||||||||||||||||
|
|
|
| 12.31.2011 |
| 12.31.2010 |
|
|
|
| 12-31-2012 |
| 12-31-2011 |
| ||||||||||||||||
Taxpayer ID |
| Name of the Company |
| Direct |
| Indirect |
| Total |
| Direct |
| Indirect |
| Total |
|
| Name of the Company |
| Direct |
| Indirect |
| Total |
| Direct |
| Indirect |
| Total |
|
59.144.140-K |
| Abisa Corp S.A. |
| — |
| 99.99 |
| 99.99 |
| — |
| 99.99 |
| 99.99 |
|
| Abisa Corp S.A. |
| — |
| 99.99 |
| 99.99 |
| — |
| 99.99 |
| 99.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Foreign |
| Aconcagua Investing Ltda.(2) |
| 0.71 |
| 99.28 |
| 99.99 |
| — |
| — |
| — |
| |||||||||||||||
96.842.970-1 |
| Andina Bottling Investments S.A. |
| 99.90 |
| 0.09 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
|
| Andina Bottling Investments S.A. |
| 99.90 |
| 0.09 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
96.972.760-9 |
| Andina Bottling Investments Dos S.A. |
| 99.90 |
| 0.09 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
| |||||||||||||||
Foreign |
| Andina Empaques Argentina S.A. (1) |
| — |
| 99.98 |
| 99.98 |
| — |
| — |
| — |
| |||||||||||||||
96.836.750-1 |
| Andina Inversiones Societarias S.A. |
| 99.99 |
| — |
| 99.99 |
| 99.99 |
| — |
| 99.99 |
|
| Andina Inversiones Societarias S.A. |
| 99.99 |
| — |
| 99.99 |
| 99.99 |
| — |
| 99.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
96.972.760-9 |
| Andina Bottling Investments Dos S.A. |
| 99.90 |
| 0.09 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Foerign |
| Embotelladora del Atlántico S.A. |
| — |
| 99.98 |
| 99.98 |
| — |
| 99.98 |
| 99.98 |
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
76.070.406-7 |
| Embotelladora Andina Chile S.A. |
| 99.99 |
| — |
| 99.99 |
| 99.99 |
| — |
| 99.99 |
| |||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| — |
| 99.99 |
| 99.99 |
| — |
| 99.99 |
| 99.99 |
|
| Embotelladora del Atlántico S.A. |
| — |
| 99.98 |
| 99.98 |
| — |
| 99.98 |
| 99.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Foreign |
| Coca-Cola Polar Argentina S.A. |
| 5.00 |
| 95.00 |
| 99.99 |
| — |
| — |
| — |
| |||||||||||||||
96.705.990-0 |
| Envases Central S. A. (2) |
| 59.27 |
| — |
| 59.27 |
| 49.91 |
| — |
| 49.91 |
| |||||||||||||||
96.971.280-6 |
| Inversiones Los Andes Ltda.(2) |
| 99.99 |
| — |
| 99.99 |
| — |
| — |
| — |
| |||||||||||||||
Foreign |
| Paraguay Refrescos S. A. (2) |
| 0.08 |
| 97.75 |
| 97.83 |
| — |
| — |
| — |
| |||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| — |
| 99.99 |
| 99.99 |
| — |
| 99.99 |
| 99.99 |
| |||||||||||||||
78.536.950-5 |
| Servicios Multivending Ltda. |
| 99.90 |
| 0.09 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
|
| Servicios Multivending Ltda. |
| 99.90 |
| 0.09 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
78.861.790-9 |
| Transportes Andina Refrescos Ltda. |
| 99.90 |
| 0.09 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
|
| Transportes Andina Refrescos Ltda. |
| 99.90 |
| 0.09 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
76.070.406-7 |
| Embotelladora Andina Chile S.A. |
| 99.99 |
| 0.00 |
| 99.99 |
| 99.90 |
| 0.09 |
| 99.99 |
| |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
93.899.000-K |
| Vital S.A. |
| — |
| — |
| — |
| — |
| 99.99 |
| 99.99 |
| |||||||||||||||
96.928.520-7 |
| Transportes Polar S. A.(2) |
| 99.99 |
| — |
| 99.99 |
| — |
| — |
| — |
| |||||||||||||||
76.389.720-6 |
| Vital Aguas S. A. (2) |
| 66.50 |
| — |
| 66.50 |
| 56.50 |
| — |
| 56.50 |
| |||||||||||||||
96.845.500-0 |
| Vital Jugos S. A. (2) |
| 15.00 |
| 50.00 |
| 65.00 |
| — |
| 57.00 |
| 57.00 |
|
(1)At a Special General Shareholders’ Meeting held November 1st 2011, Embotelladora del Atlántico S.A. decided to divide part of its equity to form a new company, Andina Empaques Argentina S.A., for the purpose of developing the design, manufacture and sale of plastic products or products derived from the industry for plastics, primarily in the packaging division. The transaction became effective January1, 2012 from an accounting and tax perspective.
(2)Companies incorporated to the consolidation as of October 1, 2012 as a result of the merger with Embotelladoras Coca-Cola Polar S.A. explained in note 1 b).
NOTE 2 -BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.3.2 Equity method investments
Associates are all entities over which the GroupCompany exercises significant influence but does not have control. Investments in associates are accounted for using the equity method and are initially recognized at cost.
The Group’sCompany’s share in income and losses subsequent to the acquisition of associates is recognized in income.
Unrealized gains in transactions between the GroupCompany and its associates are eliminated to the extent of the interest the GroupCompany holds in those associates. Unrealized losses are also eliminated unless there is evidence in the transaction of an impairment loss on the asset being transferred. Whenever necessary, the accounting policies of associates are adjusted for reporting purposes to assure uniformity with the policies adopted by the Group.
Table of ContentsCompany.
2.4 Financial reporting by operating segment
IFRS 8 requires that entities disclose information on the revenues of operating segments. In general, this is information that Management and the Board of Directors use internally to evaluate the profitability of segments and decide how to allocate resources to them. Therefore, the following operating segments have been determined bybased on geographic location:
· Chile operationChilean operations
· Brazil operationBrazilian operations
· Argentina operationArgentine operations
·Paraguayan operations
2.5 Foreign currency translation
2.5.1 Functional currency and currency of presentation
The items included in the financial statements of each of the entities in the GroupCompany are valued using the currency of the main economic environment in which the entity does business (“functional currency”). The consolidated financial statements are presented in Chilean pesos, which is the Company’sparent company’s functional currency and presentation currency.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.5.2 Balances and transactions
Foreign currency transactions are converted to the functional currency using the foreign exchange rate prevailing on the date of each transaction. TranslationThe gains and losses and gains inresulting from the settlement of these transactions and in the conversion of the foreign currency—denominated assets and liabilities at the closing foreign exchange rates are recognized in the income account by function.
The foreign exchange rates and values prevailing at the close of each fiscal yearof the periods presented were:
|
| Exchange rate to the Chilean peso |
| ||||||||
Date |
| US$ |
| Brazilian |
| Argentine |
| Unidad de |
| € |
|
12.31.2011 |
| 519.20 |
| 276.79 |
| 120.63 |
| 22,294.03 |
| 672.97 |
|
12.31.2010 |
| 468.01 |
| 280.89 |
| 117.71 |
| 21,455.55 |
| 621.53 |
|
12.31.2009 |
| 507.10 |
| 291.24 |
| 133.45 |
| 20,942.88 |
| 726.82 |
|
|
| Exchange rate to the Chilean peso |
| ||||||||||
Date |
| US$ |
| R$ Brazilian |
| A$ Argentine |
| UF ¨Unidad |
| Paraguayan |
| € |
|
12.31.2012 |
| 479.96 |
| 234.87 |
| 97.59 |
| 22,840.75 |
| 0.11 |
| 634.45 |
|
12.31.2011 |
| 519.20 |
| 276.79 |
| 120.63 |
| 22,294.03 |
| 0.12 |
| 672.97 |
|
12.31.2010 |
| 468.01 |
| 280.89 |
| 117.71 |
| 21,455.55 |
| 0.10 |
| 621.53 |
|
2.5.3 Companies in the groupTranslation of foreign subsidiaries
The financial position and results of operations of all companiesentities in the GroupCompany (none of which usesuse the currency of a hyperinflationary economy) that useoperating under a functional currency other than the presentation currency are translated to the presentation currency in the following way:as follows:
(i) Assets and liabilities in each statement of financial position are translated at the closing foreign exchange rate atas of the reporting date;
(ii) Income and expenses of each income statement account are translated at the average foreign exchange rate;rate for the period; and
(iii) All resulting translation differences are recognized as other comprehensive income.
The Companiescompanies that use a functional currency different from the presentation currency of the parent company are:
Company |
| Functional currency | |
Rio de Janeiro Refrescos Ltda. (Brazil |
| R$ Brazilian Real | |
Embotelladora del Atlántico S.A. (Argentina |
| A$ Argentine Peso | |
Andina Empaques Argentina S. A. (Argentina Segment) |
| A$ Argentine Peso | |
Paraguay Refrescos S. A. (Paraguay Segment) | G$ Paraguayan Guaraní |
In the consolidation, the translation differences arising from the conversion of a net investment in foreign entities are recognized in other comprehensive income. Exchange rate differences from accounts receivable which are considered to be part of an equity investment, have been recognized as comprehensive income net of deferred taxes, if applicable. On disposal of the investment, those translation differences are recognized in the income statement as part of the lossgain or gainloss on the disposal of the investment.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.6 Property, plant, and equipment
The assets included in property, plant and equipment are recognized at their historical cost or the cost given as of the date of application of IFRS, less depreciation and cumulative impairment losses.
The cost of property, plant and equipment includes expenses directly attributable to the acquisition of the items andless government subsidies originatingresulting from the difference between the market interest rates of the financial liabilities and the preferential government credit rates. The historical cost also includes revaluations and price-level restatement of opening balances (attributed cost) at January 1, 2009, due to first-time exemptions in IFRS.
Subsequent costs are included in the value of the original asset or recognized as a separate asset only when it is likely that the future economic benefit associated with the elements of property, plant and equipment will flow to the GroupCompany and the cost of the element can be determined reliably.dependably determined. The value of the component that is substituted is derecognized. The remaining repairs and maintenance are charged to the income statement in the fiscal yearperiod in which they incurred.
Land is not depreciated. Other assets, net of residual value, are depreciated by distributing the cost of the different components on a straight line basis over the estimated useful life, which is the period during which the companies expectCompany expects to use them.
The estimated years of useful lifelives by asset category are:
Assets |
| Range in years |
|
Buildings |
| 30-50 |
|
Plant and equipment |
| 10-20 |
|
Warehouse installations and accessories |
| 10-30 |
|
Other accessories |
| 4-5 |
|
Motor vehicles |
| 5-7 |
|
Other property, plant and equipment |
| 3-8 |
|
Bottles and containers |
| 2-8 |
|
The residual value and useful lives of assets are revised and adjusted if necessary, at each reporting date.date, if necessary,
When the value of an asset is higher than its estimated recoverable amount, the value is reduced immediately to the recoverable amount.
LossesGains and gainslosses on the disposal of property, plant, and equipment are calculated by comparing the disposal proceeds to the carrying amount, and are charged to the income statement.
Items available for sale and that fulfill the conditions under IFRS 5 “Non-Current Assets Available for Sale” are separate from property, plant and equipment are presented under current assets as the lower value between book value and fair value less costs of sale
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.7 Intangible assets and Goodwill
2.7.1 Goodwill
Goodwill represents the excess cost of the acquisition costand non-controlling interest over the fair value of the Group’sCompany’s share in identifiable net assets of the subsidiary on the acquisition date. The goodwill is recognized separately isand tested annually for impairment andimpairment. Goodwill is carried at cost, less accumulated impairment losses.
Gains and losses on the sale of an entity include the carrying amount of the goodwill related to that entity.
The goodwill is allocated to cash-generating units (CGU) in order to test for impairment losses. The allocation is made to CGUs that are expected to benefit from the business combination that generated the goodwill.
Distribution rights correspond to contractual rights to produce and distribute products under the Coca-Cola brand in certain territories in Argentina, Chile and Paraguay acquired during the Polar merger discussed in Note 1 b). Distribution rights have an indefinite useful life and are not amortized, given that that the Company believes that the bottling agreements will be indefinitely renewed by the Coca-Cola Company upon similar terms and conditions. They are subject to impairment tests on a yearly basis.
2.7.22.7.3 Water rights
Water rights that have been paid for are included in the group of intangible assets, carried at acquisition cost. They are not amortized since they have no expiration date, but are annually tested for impairment.
2.8 Impairment losses
Assets that have an indefinite useful life, such as land,intangibles related to distribution rights and goodwill, are not amortized and are annually tested annually for impairment.impairment loss. Amortizable assets and property, plant and equipment are tested for impairment whenever there is an event or change in circumstances indicating that the carrying amount might not be recoverable. An excessThe carrying value of the asset aboveexceeding its recoverable amount is recognized as an impairment loss. The recoverable amount is the higher of an asset’s fair value less costs to sell andor its value in use.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In order to evaluate impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash generating units). Non-financial assets other than goodwill that were impaired are reviewed at each reporting date to determine if the impairment loss should be reversed.
2.9 Financial assets
The Company classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and accounts receivable, and assets holdheld until their maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at the time of initial recognition.
2.9.1 Financial assets at fair value through profit or loss.loss
Financial assets at fair value through profit or loss are financial assets available for sale. A financial asset is classified in this category if it is acquired mainly for the purpose of being sold in the short term. Assets in this category are classified as current assets.
Losses or gains from changes in fair value of financial assets at fair value through profit and loss are recognized in the income statement under finance income or expenses during the year in which they occur.
2.9.2 Loans and accounts receivable
Loans and accounts receivable are not quoted onin an active market. They are recorded in current assets, unless they are due more than 12 months from the reporting date, in which case they are classified as non-current assets. Loans and accounts receivable are included in trade and other accounts receivable in the consolidated statement of financial position.position and they are presented at their amortized cost.
2.9.3 Other financialFinancial assets held to maturity
Other Financial Assetsfinancial assets corresponds to bank deposits that the Group’sCompany’s management has the positive intention and ability to hold until their maturity. They are recorded in current assets because they mature in less than 12 months from the reporting date.date and are presented at their amortized cost, less impairment.
Accrued interests areinterest is recognized in the consolidated income statement under finance income during the year in which they occur.it occurs.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.10 Derivatives and hedginghedging
The derivatives held by the Company correspond to transactions hedged against foreign currency exchange rate risk and the price of raw materials, property, plant and thusequipment, loan obligations and materially offset the risks that are hedged.
The method to recognize the resulting loss or gain, as well as its classification within the balance, depends on if the derivative has been appointed as a hedging instrument and of the item being hedged.
2.10.1Hedging derivative instruments
Hedging derivative instruments are recorded at fair value and the effect is recorded under assets, liabilities, income and expenses, along with any change in the reasonable value of the hedged asset or liability attributable to the risk covered.
2.10.2Non-hedging derivative instruments
The derivatives are accounted for at fair value. If positive, they are recorded under “other current financial assets”. If negative, they are recorded under “other current financial liabilities.”
The Company’s derivatives agreements do not qualify as hedges pursuant to IFRS requirements. Therefore, the changes in fair value are immediately recognized in the income statement under “foreign exchange difference”.“other income and losses”
The Company does not use hedge accounting for its foreign investments.
The Company has also evaluated the derivatives implicit in financial contracts and instruments to determine whether their characteristics and risks are closely related to the master agreement, as stipulated by IAS 39.
Fair value hierarchy
The Company hadhas recorded a total liability related to itsas of December 31, 2012 and 2011 foreign exchange derivatives contracts of ThCh$163,718 at December 31, 2011 and ThCh$917,219 at December 31, 2010, which are classified within the other current financial liabilities and(current financial liabilities). These contracts are carried at fair value in the statement of financial position. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilitiesliabilities.
Level 2: Assumptions different to quoted prices included in levelLevel 1 and that are applicable to assets and liabilities, be it directly (as price) or indirectly (i.e. derived from a price).
Level 3: Assumptions for assets and liabilities that are not based on information observed directly in the market.
During the years ended December 31, 2012, 2011 2010 and 2009,2010, there were no transfers of items between fair value measurements categories all of which were valued during the period using levelLevel 2.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.11 Inventory
Inventories are valued at the lower of cost and net realizable value. Cost is determined by using the weighted average cost method. The cost of finished products and of work in progress includes raw materials, direct labor, other direct costs and manufacturing overhead(basedoverhead (based on a operating capacity) to bring the goods to marketable condition, but it excludes interest expense. The net realizable value is the estimated selling price in the ordinary course of business, less any variable cost of sale.
Estimates are also made for obsolescence of raw materials and finished products based on turnover and ageing of the items involved.
2.12 Trade receivable
Trade accounts receivable are recognized initially at their nominal value,amortized cost, given the short term in which they are recovered, less any impairment loss. A provision is made for impairment losses on trade accounts receivable when there is objective evidence that the Company will be incapable of collecting all sums owed according to the original terms of the receivable, based either on individual analyses or on global aging analyses. The carrying amount of the asset is reduced as the provision is used and the loss is recognized in administrative and sales expenses in the consolidated income statement by function.
2.13 Cash and cash equivalents
Cash and cash equivalents include cash at banks and on hand, time deposits in banks and other short-term, highly liquid investments and low risk of change in value with purchased original maturities of three months or less.
2.14 Bank and debt security debtOther financial liabilities
Bank funding such as debt securities issued are initially recognized at fair value, net of transaction costs. Liabilities with third parties are later valued at amortized cost. Any difference between the funding obtained (net of the costs required to obtain it) and the reimbursement amount is recognized in the income statement during the term of the debt using the effective interest rate method.
2.15 Government subsidies
Government subsidies are recognized at their fair value when it is sure that the subsidy will be received and that the GroupCompany will meet all the established conditions.
OfficialOperating cost-related subsidies are deferred and recognized on the income statement in the income account forperiod of the period required to correlate them to the costs to be offset.corresponding operating cost.
Official subsidiesSubsidies for the purchase of property, plant and equipment are shown by deductingdeducted from the item fromcost of the related asset in property, plant and equipment and creditingrecognized on the income accountsstatement, on a straight-line basis during the estimated useful liveslife of those assets.the related asset.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.16 Income tax and deferred taxes
The Company and its subsidiaries in Chile account for income tax according to the net taxable income calculated by the rules in the Income Tax Law. Its subsidiariesSubsidiaries abroad do soaccount for income taxes according to the rulesregulations of the respective countries.country in which they operate.
Deferred taxes are calculated using the balance sheet - liability method on the temporary differences between the tax basis of assets and liabilities and their carrying amounts in the annual consolidated accounts.financial statements, using the tax rate in the year of reversal of the difference.
Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be offset.
DeferredThe Company does not recognize deferred taxes for temporary differences deriving from investments in subsidiaries and associates are recognized except whenin which the Company can control the timing when the temporary differences will be reversedof reversal and it is likely that they will not be reversed in the foreseeable future.
2.17 Employee benefits
The Company has established a provision for post-retirement compensation according to cover employee indemnitiesyears of service that will be paid to its employees according to the individual and collective contracts in place. This provision is accounted for at the actuarial value in accordance with IAS 19. The positive or negative effect on indemnitiescompensation because of changes in estimates (turnover, mortality, retirement, and other rates) is recorded directly in income.
The Company also has an executive retention plan. It is accounted for as a liability according to the directivesguidelines of thisthe plan. This plan grants certain executives the right to receive a fixed cash payment on a pre-set date once they have completed the required years of employment.
The Company and its subsidiaries have made a provision account for the cost of vacation and other employee benefits on an accrual basis. This liability is recorded under accrued liabilities
2.18 Provisions
Provisions for litigation and other contingencies are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
2.19 Leases
a)Operating
Operating lease payments are recognized as an expense on a straight-line basis over the term of the lease.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b)Financial
Property, plant and equipment assets where the Company substantially maintains all the risks and benefits derived from them are classified as financial leases. Financial leases are capitalized at the inception of the lease at the lesser of the fair value of property plant and equipment asset leased and the present value of the minimum lease payments.
2.20Deposits for returnable containers
This is a liability comprised of cash collateral received from customers for bottles and other returnable containers made available to them.
ThisThe liability pertains to the deposit amount that is reimbursed if the customer or distributor returns the bottles and cases in good condition, together with the original invoice. Estimation of thisthe liability is based on anthe inventory of bottles given as a loan to clients and distributors, at their premises, the estimated amount of bottles in circulation, and a historical average weighted value per bottle or case.
Deposits for returnable containers are presented as a current liability because the Company does not have a legal abilityright to defer settlement for a period in excess of one year. However, the Company does not anticipate any material cash settlements for such amounts during the upcoming year.year.
2.202.21 Revenue recognition
Revenue is measured at fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Company’s business. Revenue is presented net of value-added tax, returns, rebates, and discounts and net of sales between the companies that are consolidated.
The Company recognizes revenue when earned and the amount of revenue can be reliably measured and it is probable that the future economic benefits will flow to the Company.
Revenues are recognized once the products are physically delivered to clients.
2.212.22Contributions of The Coca-Cola Company
The Company receives certain discretionary contributions from The Coca-Cola Company, related to the financing of advertising and promotional programs for its products in the territories where it has distribution licensing. The resources received are recorded as a reduction in marketing expenses in the consolidated income statement. Given its discretionary nature, the portion of contributions received in one period does not imply it will be repeated in the following period.
In certain limited situations there is a legally binding agreement with The Coca-Cola Company through which the Company receives contributions for the building and acquisition of specific elements of property, plant and equipment. In those situations, payments received pursuant to these agreements are recorded as a reduction of the cost of the respective assets acquired.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.23 Dividend payments
Dividend payments to the Company’s shareholders are recognized as a liability in the consolidated financial statements of the Company, based on the obligatory 30% minimum in accordance with the Corporations Law.
2.222.24 Critical accounting estimates and judgments
The Company makes estimates and judgments about the future. Actual results may differ from previously estimated amounts. The estimates and judgments that might have a material impact on future financial statements are explained below:below:
2.24.1Impairment of goodwill and intangible assets of indefinite useful life
The Company tests if goodwill and intangible assets of indefinite useful life (such as distribution rights) have suffered impairment loss on an annual basis or whenever there are indicators of impairment. The recoverable amounts of cash generating units are determined based on calculations of the value in use. The key variables that management calculates include the volume of sales, prices, marketing expenses and other economic factors. The estimation of these variables requires a material administrative judgment as those variables imply inherent uncertainties. However, the assumptions are consistent with our internal planning. Therefore, management evaluates and updates estimates according to the conditions affecting the variables. If these assets are deemed to have become impaired, they will be written off at their estimated fair value or future recovery value according to discounted cash flows.
2.24.2Fair Value of Assets and Liabilities
IFRS requires in certain cases that assets and liabilities be recorded at their fair value. Fair value is the amount at which an asset can be purchased or sold or the amount at which a liability can be incurred or liquidated in an actual transaction among parties duly informed under conditions of mutual independence, different from a forced liquidation.
The basis for measuring assets and liabilities at fair value are the current prices in the active market. Lacking such an active market, the Company estimates said values based on the best information available, including the use of models or other valuation techniques.
The Company estimated the fair value of the intangible assets acquired as a result of the Polar merger based on the multiple period excess earning method, which implies the estimation of future cash flows generated by the intangible asset, adjusted by cash flows that do not come from the intangible asset, but from other assets. For this, the Company estimated the time during which the intangible asset will generate cash flows, the cash flows themselves, cash flows from other assets and a discount rate.
Other assets acquired and implicit liabilities in the business combination are carried at fair value using valuation methods that are considered appropriate under the circumstances including the cost of depreciated recovery and recent transaction values for comparable assets, among others. These methodologies require certain inputs to be estimated, including the estimation of future cash flows.
2.22.1NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.24.3 Estimated impairment loss on goodwill
The Group test annually whether goodwill has undergone any impairment. The recoverable amounts of cash generating units have been determined on the basis of value in use calculations. The key variables that management must calculate include the sales volume, prices, marketing expense, and other economic factors. Estimating these variables requires considerable judgment by the management, as those variables imply inherent uncertainties. However, the assumptions used are consistent with the Company’s internal planning. Therefore, the management evaluates and updates estimates from time to time according to the conditions affecting these variables. If these assets are deemed to have become impaired, the estimated fair value will be written off, as applicable. Should these assets deteriorate, they will be written off to the estimated fair value or future recoverable value, in accordance with discounted cash flows. Estimated future free cash flows in Brazil and Argentina were discounted at a discount rate which reflects the time value of money and the risks specific to the asset or group of assets, for which future cash flows were not adjusted. . The so calculated recoverable amount was higher than the respective assets, including the surplus value of the Brazilian and Argentine subsidiaries.
2.22.2ProvisionAllowances for doubtful receivablesaccounts
The Company evaluates the possibility of collecting trade accounts receivable using several factors. When the Company becomes aware of a specific inability of a customer to fulfill its financial commitments, a specific provision for doubtful accounts is estimated and recorded, which reduces the recognized receivable to the amount that the Company estimateestimates will ultimately be collected. In addition to specifically identifying potential uncollectible customer accounts, debitsallowances for doubtful accounts are accounted fordetermined based on the recenthistorical collection history of prior losses and a general assessment of trade accounts receivable, both outstanding and past due, among other factors. The balance of the Company’s trade accounts receivable was ThCh$159,540,993 at December 31, 2012 (ThCh$114,618,699 at December 31, 2011 (ThCh$105,059,078 in 2010)2011), net of an allowance for doubtful accounts provision of ThCh$1,486,749 at December 31, 2012 (ThCh$1,544,574 (ThCh$1,225,556in 2010)at December 31, 2011). Historically, doubtful accounts have represented an average of less than 1% of consolidated net sales.
2.22.32.24.4 Property,Useful life, residual value and impairment of property, plant, and equipment
Property, plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of those assets. Changes in circumstances, such as technological advances, changes to the Company’s business model, or changes in its capital strategy might modify the effective useful lives as compared to our estimates. Whenever the Company determines that the useful life of property, plant and equipment might be shortened, it depreciates the excess between the net book value and the estimated recoverable amount according to the revised remaining useful life. Factors such as changes in the planned use of manufacturing equipment, dispensers, and transportation equipment or computer software could make the useful lives of assets shorter. The Company reviews the impairment of long-lived assets each time events or changes in circumstances indicate that the book value of any of those assets might not be recovered. The estimate of future cash flows is based, among other things, on certain assumptions about the expected operating profits in the future. Company estimates of non-discounted cash flows may differ from real cash flows because of, among other reasons, technological changes, economic conditions, changes in the business model, or changes in the operating profit. If the sum of non-discounted cash flows that have been projected (excluding interest) is less than the carrying value of the asset, the asset will be written down to its estimated fair value.
2.22.42.24.5 Liabilities for returnable container collateral
The Company records a liability represented byfor deposits received in exchange for bottles and cases provided to its customers and distributors. This liability represents the amount of the deposit that must be returned if the client or distributor returns the bottles and cases in good condition, together with the original invoice. This liability is estimated on the basis of an inventory of bottles given as aon loan to customers and distributors, estimates of bottles in circulation and athe weighted average historical cost per bottle or case. Management must make several assumptions in relation to this liability in order to estimate the number of bottles in circulation, the amount of the deposit that must be reimbursed and the synchronizationtiming of disbursements.
2.23NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.25 New IFRS and interpretations of the IFRS Interpretations Committee (IFRSIC)
The following IFRS and Interpretations of the IFRSIC have been published:
New Standards |
| Mandatory | |
|
| ||
IFRS 9 Financial instruments: Classification and measurement |
| January 1, 2015 | |
IFRS 10 Consolidated Financial Statements |
| January 1, 2013 | |
IFRS 11 Joint Arrangements |
| January 1, 2013 | |
IFRS 12 Disclosure of Interests in Other Entities |
| January 1, 2013 | |
IFRS 13 Fair Value Measurement |
| January 1, 2013 |
IFRS 7 “Financial Instruments: Disclosures. Enhanced Derecognition Disclosure Requirements”
The amendment requires additional disclosure about financial assets that have been transferred but not derecognized to enable the user of the Company´s financial statements to understand the relationship with those assets that have not been derecognized and their associated liabilities. In addition, the amendment requires disclosures about continuing involvement in derecognized assets to enable the user to evaluate the nature of, and risks associated with, the entity’s continuing involvement in those derecognized assets. The amendment becomes effective for annual periods beginning on or after July 1, 2011. The amendment affects disclosure only and has no impact on the Company’s financial position or performance.
IFRS 9 “Financial Instruments”
This Standard introduces new requirements for the classification and measurement of financial assets and early application is permitted. All financial assets must be classified in their entirety on the basis of the company’sCompany’s business model for financial asset management and the characteristics of contractual cash flows of financial assets. Under this standard, financial assets are measured at the amortized cost or fair value. Only financial assets classified as measured at the amortized cost must be impairment-tested. This standard applies to years beginning on or after January 1, 2015, and it can be adopted earlier.
IFRS 10 “Consolidated Financial Statements” / NICIAS 27 “Separate Financial Statements”
This Standard supersedes the part of IAS 27 on Separate and Consolidated Financial Statements that spoke of accounting for consolidated financial statements. It also includes matters in SIC-12, Special-Purpose Entities. IFRS 10 establishes one single control model that applies to all entities (including special purpose or structured entities). The changes made by IFRS 10 will require that management exercise significant professional judgment in determining which entity is controlled and which must be consolidated.
IFRS 11 “Joint Arrangements”/ NICIAS 28 “Investments in Associates and Joint Ventures”
IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities — Non-Monetary Contributions by Joint Venturers.Ventures. IFRS 11 uses some of the terms used in IAS 31, but with different meanings. IAS 31 identifies 3three types of joint ventures, but IFRS 11 only considers of 2two types (joint ventures and joint operations) when there is a joint control. Since IFRS 11 uses the IFRS 10 principle of control to identify control, determining whether there is a joint control can change. Moreover, IFRS 11 takes away the alternative of accounting for jointly controlled entities (JCEs) using a proportional consolidation. Instead, JCEs meeting the definition of joint ventures must be accounted for using the equity method. An entity must recognize the assets, liabilities, income and expenses, if any, of joint operations, which include jointly controlled assets, former jointly controlled operations and former JCEs.
NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
IFRS 12 “Disclosure of Interests in Other Entities”
IFRS 12 includes all consolidation-related disclosures that were previously in IAS 27 as well as all disclosures previously included in IAS 31 and IAS 28. These disclosures relate to the interests in related companies, joint arrangements, associates and structured entities. A number of new disclosures are also required.
IFRS 13 “Fair Value Measurement”
IFRS 13 establishes a new guide on how to measure fair value, when required or permitted by IFRS. When an entity must use the fair value remains the same. The standard changes the definition of fair value—Fair Value: The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Some new disclosures are also added.
The Company is still evaluating the impact that the aforementioned IFRS may have on the consolidated financial statements.Additionally it incorporates some new disclosures
Improvements and amendments |
| Mandatory | |
IFRS 7 Financial Instruments: Disclosure | January 1, 2013 | ||
IFRS 10 Consolidated Financial Statements | January 1, 2013 | ||
IFRS 11 Joint Arrangements | January 1, 2013 | ||
IFRS 12 Disclosure of Interests in Other Entities | January 1, 2013 | ||
IAS 1 Presentation of Financial Statements |
| ||
|
| ||
|
| January 1, 2013 | |
IAS 16 Property, Plant and Equipment |
| January 1, 2013 | |
IAS 19 Employee Benefits | January 1, 2013 | ||
IAS 27 Consolidated and Separate Financial Statements | January 1, 2013 | ||
IAS 28 Investments in Associates and Joint Ventures | January 1, 2013 | ||
IAS 32 Financial Instruments — Presentation |
| January 1, | |
IAS 34 Interim Financial Reporting |
| January 1, 2013 |
F-24IFRS 7 Financial Instruments: Disclosure
An amendment to IAS 7 was issued in December 2011 that requires entities to disclose under financial information the effects or possible effects of the compensation agreements of the financial instruments over the entity’s financial position. The rule is applicable beginning January 1, 2013.
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities
June 28, 2012 the IASB issued amendments to clarify the transition guidance to IFRS 10 Consolidated Financial Statements. The amendments also provide additional transition exceptions in the application of IFRS 10, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in other Entities, limiting the requirement to provide restated comparative information only for the preceding comparative period. On the other hand, for the first year that IFRS 12 is applied, the requirement to present comparative information for the disclosures related to unconsolidated structured entities is removed. Effective date for the amendments are the annual periods beginning on or after January 1, 2013, also aligned with the effective date of IFRS 10, 11 and 12.
IAS 1 Presentation of Financial StatementsNOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The amendments to IAS 1 change“Presentation of Financial Statements”
Annual Improvements 2009-2011 Cycle issued in May 2012, amended paragraphs 10, 38 and 41, eliminated paragraphs 39-40 and added paragraphs 38A-38D and 40A-40D, clarifying the groupingdifference between voluntary additional comparative information and the minimum required comparative information. Generally the minimum comparative period required is the previous period. An entity must include comparative information in the notes related to the financial statements when the entity voluntarily supplies comparative information beyond the minimum comparative period required. The additional comparative period does not need to contain a complete set of itemsfinancial statements. Also, opening balances of the financial statements (known as the third balance sheet) must be presented in OCI. Itemsthe following circumstances: when the entity changes its accounting policies; carries out retroactive restatements or reclassifications, and that could be reclassified (or recycled) to profit or loss atthis change has a future point in time (for example, upon derecognition or settlement)material effect on the financial statement. The initial balance of the financial statement would be presented separately from items thatas of the previous period. However, contrary to voluntary comparative information, the related notes are not required to accompany the third balance sheet. An entity will never be reclassified. The amendment affects presentation onlyapply these amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and has no impact on the Company´s financial position or performance. The amendment becomes effectiveErrors for annual periods beginning on or after JulyJanuary 1, 2012. These amendments must be incorporated obligatorily for years beginning on or after July 1, 2012. They can be applied early, which must be2013. Early adoption is permitted as long as it is disclosed.
IAS 12 “Income Taxes”16 “Property, Plant and Equipment”
Annual Improvements 2009-2011 Cycle issued in May 2012, amended paragraph 8. The amendment clarifies that spare parts and auxiliary equipment that fulfill the definition of property, plant and equipment are not considered inventory. An entity will apply this amendment retrospectively in accordance with IAS 12 introduces a refutable presumption that deferred taxes8 Accounting Policies, Changes in Accounting Estimates and Errors for annual periods beginning on investment properties, measured using a fair value model, will be recognized on a sale presumption basis unless the entity has a business model that can show that the investment properties will be consumed through the business throughout its economic cycle. IfJanuary 1, 2013. Early adoption is permitted as long as it is consumed, a consumption basis must be adopted. The improvement also introduces the requirement that deferred taxes on non-depreciable assets measured using the revaluation model of IAS 16 must also be measured on a sales basis. It must be applied for years starting on or after January 1, 2012.disclosed.
IAS 19 — “Employee Benefits”
On June 16 2011, the IASB published changes toan amended IAS 19 — Employee Benefits which changed thethat change accounting offor defined benefit plans and termination benefits. The changesamendments require recognizingrecognition of changes in the defined benefit liability (asset) plan, eliminating the use of the corridor approach and accelerating the recognition of past service costs. Changes in the defined benefit liability (asset) plan are separated in three components: service cost, net interest on liability (asset) for defined benefits and in the assetsre-measurements of the plan when those changes occur. The recognition of costs of past services is accelerated. The changes in the liability (asset) for defined benefits and the assets in the plan are disaggregated into three components: service costs, net interest on net (assets) liabilities for defined benefits and re-measurement of net (assets) liabilities for defined benefits. The net
Net interest is calculated using athe rate of return on high qualityfor high-quality corporate bonds. This could be lower than the rate actuallycurrently used to calculate the expected return on the plan’sover plan assets, and resultresulting in a reduction in fiscal year profit.decrease of earnings for the period. The changes take effectamendments are effective for years startingannual periods beginning on or after January 1, 2013, and they can be applied early. A retroactiveearly adoption is permitted. Retrospective application is required with certain exceptions.
F-25IAS 27 — Consolidated and Separate Financial Statements
In May 2011, IASB issued a revised IAS 27 with an amended title — Separate Financial Statements. IFRS 10 Consolidated Financial Statements establishes a single control model that applies to all entities and the requirements relating the preparation of consolidated financial statements.
IAS 32 “Financial Instruments Presentation”NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The changesIAS 28 – Investments in Associates and Joint Ventures
Issued in May 2011, IAS 28 Investments in Associates and Joint Ventures, prescribes accounting of investments in associates and establishes the requirements of application on the equity method to investments in associates and joint ventures.
IAS 32 “Financial Instruments — Presentation”
Annual Improvements 2009-2011 Cycle issued in May 2012, amended paragraphs 35, 37 and 39 and added paragraph 35A, that clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes. The amendment removes existing income tax requirements from IAS 32 and requires entities to apply the requirements in IAS 12 to any income tax arising from distributions to equity holders. An entity will apply these amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and applies to annual periods beginning on January 1, 2013. Early adoption is permitted as long as it disclosed.
IAS 32 amendments issued in December 2011 are intended to clarify the differences in how it applies tothe application regarding compensation and to reduce the level of diversity in actual practice.the current application. The standard applies effectiverule is applicable beginning January 1, 2014 and it can be adopted early. application is permitted.
IAS 34 “Interim Financial Reporting”
Annual Improvements 2009-2011 Cycle issued in May 2012, amended paragraph 16A. The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating Segments. Amended paragraph 16A establishes that total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual financial statements for that reportable segment.
An entity will apply this amendment retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and applies to annual periods beginning on January 1, 2013. Early adoption is permitted as long as it disclosed.
Management of the Company is still evaluatingand its subsidiaries have studied the impact that the aforementioned IFRS mayof these new standards and have on theasserted they do not materially impact these consolidated financial statements.
NOTE 3 — REPORTING BY SEGMENT
The Company provides information by segments according to IFRS 8 “Operating Segments”, thatSegments,” which establishes standards for reporting by operating segment and related disclosures for products, services, and geographic areas.
The Company’s Board of Directors and Management measures and evaluates performance of segments according to the operating income of each of the countries where there are franchises.
The operating segments are disclosed coherently withdetermined based on the presentation of internal reports to the senior officer in charge of operating decisions. That officer has been identified as the Company Board of Directors whichas the board makes strategic decisions.
The segments defined by the Company for strategic decision-making are geographic. Therefore, the reporting segments correspond to:
· Chilean operations
· Brazilian operations
· Argentine operations
·Paraguayan operations
The threefour operating segments conduct their business through the production and sale of soft drinks, other beverages, and packaging.
The expensesincome and income associated withexpense related to corporate management wereare assigned to the Chilean operation in the operating segments soft drinks.segment.
The total income by segment includes sales to unrelated customers and inter-segment sales, as indicated in the Company’s consolidated statement of income.
A summary of the operations by segment of the Company is detailed as follows, according to IFRS:
|
| Chile |
| Argentina |
| Brazil |
|
|
| Consolidated |
|
For the year ended December 31, 2011 |
| Operation |
| Operation |
| Operation |
| Eliminations |
| Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue from external customers, total |
| 304,948,177 |
| 232,222,929 |
| 445,693,311 |
| — |
| 982,864,417 |
|
Interest income, total for segments |
| 1,490,143 |
| 140,622 |
| 1,551,669 |
| — |
| 3,182,434 |
|
Interest expense, total for segments |
| (5,513,503 | ) | (1,063,755 | ) | (657,918 | ) | — |
| (7,235,176 | ) |
Interest income, net, total for segments |
| (4,023,360 | ) | (923,133 | ) | 893,751 |
| — |
| (4,052,742 | ) |
Depreciation and amortization, total for segments |
| (15,894,245 | ) | (7,780,619 | ) | (15,822,662 | ) | — |
| (39,497,526 | ) |
Sums of significant income items, total |
| 4,001,479 |
| 497,269 |
| 2,239,588 |
| — |
| 6,738,336 |
|
Sums of significant expense items, total |
| (249,291,504 | ) | (209,576,210 | ) | (390,157,347 | ) |
|
| (849,025,061 | ) |
Net income of the segment reported, total |
| 39,740,547 |
| 14,440,236 |
| 42,846,641 |
| — |
| 97,027,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of the entity in income of associates accounted for using the equity method, total |
| 2,663,439 |
| — |
| (637,281 | ) | — |
| 2,026,158 |
|
Income tax expense (income), total |
| (7,539,223 | ) | (7,766,215 | ) | (19,379,223 | ) | — |
| (34,684,661 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets, total |
| 320,036,934 |
| 121,366,676 |
| 300,555,733 |
| — |
| 741,959,343 |
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
| 36,568,610 |
| — |
| 23,722,356 |
| — |
| 60,290,966 |
|
Capital expenditures and other |
| 77,195,636 |
| 25,311,303 |
| 28,951,005 |
| — |
| 131,457,944 |
|
Liabilities of the segments, total |
| 146,195,277 |
| 78,344,985 |
| 95,440,161 |
| — |
| 319,980,423 |
|
For the year ended December 31, 2010 |
| Chile |
| Argentina |
| Brazil |
| Eliminations |
| Consolidated |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue from external customers, total |
| 295,658,591 |
| 185,273,657 |
| 407,781,634 |
| — |
| 888,713,882 |
|
Interest income, total for segments |
| 1,176,029 |
| 253,667 |
| 1,946,442 |
| — |
| 3,376,138 |
|
Interest expense, total for segments |
| (5,256,730 | ) | (1,069,665 | ) | (1,075,436 | ) | — |
| (7,401,831 | ) |
Interest income, net, total for segments |
| (4,080,701 | ) | (815,998 | ) | 871,006 |
| — |
| (4,025,693 | ) |
Depreciation and amortization, total for segments |
| (15,958,801 | ) | (7,204,876 | ) | (13,850,832 | ) | — |
| (37,014,509 | ) |
Sums of significant income items, total |
| 868,878 |
| 81,927 |
| 2,539,815 |
| — |
| 3,490,620 |
|
Sums of significant expense items, total |
| (236,598,062 | ) | (164,453,198 | ) | (346,512,976 | ) |
|
| (747,564,236 | ) |
Net income of the segment reported, total |
| 39,889,905 |
| 12,881,512 |
| 50,828,647 |
| — |
| 103,600,064 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of the entity in income of associates accounted for using the equity method, total |
| 519,441 |
| — |
| 1,795,494 |
| — |
| 2,314,935 |
|
Income tax expense (income), total |
| (7,632,006 | ) | (6,963,258 | ) | (21,744,976 | ) | — |
| (36,340,240 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets, total |
| 323,554,334 |
| 83,040,700 |
| 281,719,061 |
| — |
| 688,314,095 |
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
| 25,772,670 |
| — |
| 24,981,498 |
| — |
| 50,754,168 |
|
Capital expenditures and other |
| 49,987,257 |
| 9,867,356 |
| 50,836,233 |
| — |
| 110,690,846 |
|
Liabilities of the segments, total |
| 126,524,439 |
| 43,281,287 |
| 123,643,773 |
| — |
| 293,449,499 |
|
NOTE 3 — REPORTING BY SEGMENT (Continued)
For the fiscal year ending December 31, 2009 |
| Chile |
| Argentina |
| Brazil |
| Eliminations |
| Consolidated |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue from external customers, total |
| 273,098,100 |
| 173,200,576 |
| 339,546,374 |
| — |
| 785,845,050 |
|
Interest income, total for segments |
| — |
| 1,237,173 |
| — |
| (1,237,173 | ) | — |
|
Interest expense, total for segments |
| 2,957,370 |
| 60,876 |
| 933,533 |
| — |
| 3,951,779 |
|
Interest income, net, total for segments |
| (5,423,157 | ) | (684,661 | ) | (2,015,686 | ) | — |
| (8,123,504 | ) |
Depreciation and amortization, total for segments |
| (2,465,787 | ) | (623,785 | ) | (1,082,153 | ) | — |
| (4,171,725 | ) |
Sums of significant income items, total |
| (16,629,416 | ) | (8,126,684 | ) | (12,050,568 | ) | — |
| (36,806,668 | ) |
Sums of significant expense items, total |
| 1,235,517 |
| 121,055 |
| 3,953,014 |
| — |
| 5,309,586 |
|
Sums of significant expense items, total |
| (215,071,827 | ) | (152,654,007 | ) | (285,702,104 | ) | 1,237,173 |
| (652,190,765 | ) |
Gain (loss) of the segment reported, total |
| 40,166,587 |
| 13,154,328 |
| 44,664,563 |
| — |
| 97,985,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of the entity in income of associates accounted for by the equity method, total |
| 366,146 |
| — |
| 1,237,752 |
| — |
| 1,603,898 |
|
Income tax expense (income), total |
| (4,859,074 | ) | (7,299,694 | ) | (17,007,657 | ) | — |
| (29,166,425 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets, total |
| 320,672,468 |
| 80,379,168 |
| 241,640,804 |
| — |
| 642,692,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
| 26,149,730 |
| — |
| 8,581,488 |
| — |
| 34,731,218 |
|
Capital expenditures |
| 23,654,231 |
| 7,656,260 |
| 19,109,953 |
| — |
| 50,420,444 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities of the segments, total |
| 120,468,154 |
| 36,721,752 |
| 111,944,799 |
| — |
| 269,134,705 |
|
A summary of the Company’s segment operations in accordance to IFRS is as follows:
For the year ended December 31, |
| Chile |
| Argentina |
| Brazil |
| Paraguay |
| Consolidated Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue from external customers |
| 373,744,135 |
| 314,923,641 |
| 451,596,741 |
| 32,028,300 |
| 1,172,292,817 |
|
Interest income |
| 803,029 |
| 301,025 |
| 1,602,098 |
| 21,907 |
| 2,728,059 |
|
Interest expense |
| (7,540,887 | ) | (2,277,362 | ) | (1,231,153 | ) | (123,351 | ) | (11,172,753 | ) |
Interest income, net |
| (6,737,858 | ) | (1,976,337 | ) | 370,945 |
| (101,444 | ) | (8,444,694 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
| (24,290,171 | ) | (11,201,323 | ) | (16,064,773 | ) | (2,267,871 | ) | (53,824,138 | ) |
Total significant expenses items |
| (319,517,173 | ) | (284,142,437 | ) | (392,538,658 | ) | (25,556,545 | ) | (1,021,754,813 | ) |
Net income of the segment reported |
| 23,198,933 |
| 17,603,544 |
| 43,364,255 |
| 4,102,440 |
| 88,269,172 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of the entity in income of associates accounted for using the equity method, total |
| 1,120,893 |
| — |
| 649,005 |
| — |
| 1,769,898 |
|
Income tax expense (income) |
| (7,378,459 | ) | (10,204,847 | ) | (20,365,279 | ) | (556,051 | ) | (38,504,636 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets, total |
| 756,203,625 |
| 200,769,953 |
| 324,432,040 |
| 258,430,713 |
| 1,539,836,331 |
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
| 17,848,009 |
| — |
| 55,232,052 |
| — |
| 73,080,061 |
|
Capital expenditures and other |
| 57,115,820 |
| 46,833,922 |
| 69,605,956 |
| 6,085,212 |
| 179,640,910 |
|
Liabilities of the segments, total |
| 367,012,519 |
| 108,896,064 |
| 130,102,661 |
| 40,220,166 |
| 646,231,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by in Operating Activities |
| 62,059,810 |
| 42,711,789 |
| 74,224,089 |
| 9,861,112 |
| 188,856,800 |
|
Cash flows used in Investing Activities |
| (39,707,483 | ) | (43,996,852 | ) | (69,604,445 | ) | (2,861,423 | ) | (156,170,203 | ) |
Cash flows used in Financing Activities |
| (38,808,788 | ) | 2,720,303 |
| 32,537,501 |
| - |
| (3,550,984 | ) |
NOTE 3 — REPORTING BY SEGMENT (Continued)
For the year ended December 31, 2011 |
| Chile |
| Argentina |
| Brazil |
| Consolidated |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
Operating revenue from external customers |
| 304,948,177 |
| 232,222,929 |
| 445,693,311 |
| 982,864,417 |
|
Interest income |
| 1,490,143 |
| 140,622 |
| 1,551,669 |
| 3,182,434 |
|
Interest expense |
| (5,513,503 | ) | (1,063,755 | ) | (657,918 | ) | (7,235,176 | ) |
Interest income, net |
| (4,023,360 | ) | (923,133 | ) | 893,751 |
| (4,052,742 | ) |
Depreciation and amortization |
| (15,894,245 | ) | (7,780,619 | ) | (15,822,662 | ) | (39,497,526 | ) |
Total significant expenses items |
| (245,290,025 | ) | (209,078,941 | ) | (387,917,759 | ) | (842,286,725 | ) |
Net income of the segment reported |
| 39,740,547 |
| 14,440,236 |
| 42,846,641 |
| 97,027,424 |
|
|
|
|
|
|
|
|
|
|
|
Share of the entity in income of associates accounted for using the equity method, total |
| 2,663,439 |
| — |
| (637,281 | ) | 2,026,158 |
|
Income tax expense (income) |
| (7,539,223 | ) | (7,766,215 | ) | (19,379,223 | ) | (34,684,661 | ) |
|
|
|
|
|
|
|
|
|
|
Segment assets, total |
| 320,036,934 |
| 121,366,676 |
| 300,555,733 |
| 741,959,343 |
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
| 36,568,610 |
| — |
| 23,722,356 |
| 60,290,966 |
|
Capital expenditures and other |
| 77,195,636 |
| 25,311,303 |
| 28,951,005 |
| 131,457,944 |
|
Liabilities of the segments, total |
| 146,195,277 |
| 78,344,985 |
| 95,440,161 |
| 319,980,423 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by in Operating Activities |
| 60,517,314 |
| 23,655,598 |
| 54,777,584 |
| 138,950,496 |
|
Cash flows used in Investing Activities |
| (35,007,230 | ) | (25,668,834 | ) | (28,945,134 | ) | (89,621,198 | ) |
Cash flows used in Financing Activities |
| (71,802,207 | ) | 4,925,725 |
| (282,903 | ) | (67,159,385 | ) |
NOTE 3 — REPORTING BY SEGMENT (Continued)
For the year ended December 31, 2010 |
| Chile |
| Argentina |
| Brazil |
| Consolidated |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
Operating revenue from external customers, total |
| 295,658,591 |
| 185,273,657 |
| 407,781,634 |
| 888,713,882 |
|
Interest income, total for segments |
| 1,176,029 |
| 253,667 |
| 1,946,442 |
| 3,376,138 |
|
Interest expense, total for segments |
| (5,256,730 | ) | (1,069,665 | ) | (1,075,436 | ) | (7,401,831 | ) |
Interest income, net, total for segments |
| (4,080,701 | ) | (815,998 | ) | 871,006 |
| (4,025,693 | ) |
Depreciation and amortization, total for segments |
| (15,958,801 | ) | (7,204,876 | ) | (13,850,832 | ) | (37,014,509 | ) |
Total significant expense items, total |
| (235,729,184 | ) | (164,371,271 | ) | (343,973,161 | ) | (744,073,616 | ) |
Net income of the segment reported, total |
| 39,889,905 |
| 12,881,512 |
| 50,828,647 |
| 103,600,064 |
|
|
|
|
|
|
|
|
|
|
|
Share of the entity in income of associates accounted for using the equity method, total |
| 519,441 |
| — |
| 1,795,494 |
| 2,314,935 |
|
Income tax expense (income), total |
| (7,632,006 | ) | (6,963,258 | ) | (21,744,976 | ) | (36,340,240 | ) |
|
|
|
|
|
|
|
|
|
|
Segment assets, total |
| 323,554,334 |
| 83,040,700 |
| 281,719,061 |
| 688,314,095 |
|
Carrying amount in associates and joint ventures accounted for using the equity method, total |
| 25,772,670 |
| — |
| 24,981,498 |
| 50,754,168 |
|
Capital expenditures and other |
| 49,987,257 |
| 9,867,356 |
| 50,836,233 |
| 110,690,846 |
|
Liabilities of the segments, total |
| 126,524,439 |
| 43,281,287 |
| 123,643,773 |
| 293,449,499 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by in Operating Activities |
| 78,434,713 |
| 5,015,778 |
| 42,397,218 |
| 125,847,709 |
|
Cash flows used in Investing Activities |
| (22,799,185 | ) | (9,647,402 | ) | (48,057,591 | ) | (80,504,178 | ) |
Cash flows used in Financing Activities |
| (69,108,280 | ) | 6,149,280 |
| 411,261 |
| (62,547,739 | ) |
NOTE 4 — CASH AND CASH EQUIVALENTS
Cash and cash equivalents are detailed as follows as of December 31, 20112012 and 2010:2011
Description |
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
By item |
|
|
|
|
|
Cash |
| 871,173 |
| 138,410 |
|
Bank balances |
| 24,171,486 |
| 16,326,710 |
|
Time deposits |
| 783,223 |
| 243,991 |
|
Money market funds |
| 29,696,373 |
| 14,588,811 |
|
Cash and cash equivalents |
| 55,522,255 |
| 31,297,922 |
|
Description |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
|
By item |
|
|
|
|
|
Cash |
| 138,410 |
| 1,039,952 |
|
Bank balances |
| 16,326,710 |
| 13,267,099 |
|
Time deposits |
| 243,991 |
| 28,394,995 |
|
Money market funds |
| 14,588,811 |
| 5,561,034 |
|
Cash and cash equivalents |
| 31,297,922 |
| 48,263,080 |
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
By currency |
|
|
|
|
|
Dollar |
| 2,724,252 |
| 2,962,900 |
|
Euro |
| 243,991 |
| 345,623 |
|
Argentine Peso |
| 5,020,278 |
| 1,705,533 |
|
Chilean Peso |
| 6,340,907 |
| 25,646,505 |
|
Real |
| 16,968,494 |
| 17,602,519 |
|
Cash and cash equivalents |
| 31,297,922 |
| 48,263,080 |
|
|
| M$ |
| ThCh$ |
|
By currency |
|
|
|
|
|
Dollar |
| 5,067,208 |
| 2,724,252 |
|
Euro |
| — |
| 243,991 |
|
Argentine Peso |
| 5,181,955 |
| 5,020,278 |
|
Chilean Peso |
| 14,089,380 |
| 6,340,907 |
|
Paraguayan Guaraní |
| 6,112,524 |
| — |
|
Brazilian Real |
| 25,071,188 |
| 16,968,494 |
|
Cash and cash equivalents |
| 55,522,255 |
| 31,297,922 |
|
4.1Time deposits
Time deposits defined as Cash and cash equivalents are detailed as follows at December 31, 20112012 and 2010:2011:
Placement |
| Entity |
| Currency |
| Principal |
| Annual |
| Balance at |
|
|
|
|
|
|
| ThCh$ |
| % |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
12.29.2011 |
| Banco BBVA |
| Euro |
| 243,449 |
| 0.350 |
| 243,991 |
|
Total |
|
|
|
|
|
|
|
|
| 243.991 |
|
|
|
|
|
|
|
|
| Annual |
| Balance at |
|
Placement |
| Entity |
| Currency |
| Principal |
| Rate |
| 12.31.2010 |
|
|
|
|
|
|
| ThCh$ |
| % |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
12.17.2010 |
| Banco Santander |
| Chilean peso |
| 7,000,000 |
| 3.720 | % | 7,004,005 |
|
01.13.2010 |
| Banco de Chile |
| Unidad de fomento |
| 4,410,633 |
| 1.700 | % | 4,602,188 |
|
01.13.2010 |
| Banco Estado |
| Unidad de fomento |
| 4,410,633 |
| 1.650 | % | 4,599,975 |
|
12.02.2010 |
| Banco BBVA |
| Euros |
| 354,271 |
| 0.210 | % | 345,623 |
|
12.13.2010 |
| Banco BBVA |
| Argentine peso |
| 14,392 |
| 10.000 | % | 14,192 |
|
03.29.2010 |
| Banco Votorantim |
| Real |
| 31,383 |
| 8.820 | % | 33,230 |
|
09.30.2010 |
| Banco Itaú |
| Real |
| 2,846,938 |
| 8.830 | % | 2,859,355 |
|
11.23.2010 |
| Banco Itaú |
| Real |
| 2,814,206 |
| 8.830 | % | 2,828,751 |
|
04.14.2010 |
| Banco Itaú |
| Real |
| 397,500 |
| 8.830 | % | 398,609 |
|
07.27.2010 |
| Banco Itaú |
| Real |
| 2,891,489 |
| 8.830 | % | 2,900,221 |
|
12.30.2010 |
| Banco Itaú |
| Real |
| 2,808,846 |
| 8.830 | % | 2,808,846 |
|
Total |
|
|
|
|
|
|
|
|
| 28,394,995 |
|
Issuance |
| Entity |
| Currency |
| Capital |
| Annual |
| 12.31.2012 |
|
|
|
|
|
|
| THCH$ |
| % |
| THCH$ |
|
12.28.2012 |
| Banco Regional SAECA – Paraguay |
| Paraguayan Guaraní |
| 783,223 |
| 3.50 |
| 783,223 |
|
|
|
|
| Total |
|
|
|
|
| 783,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance |
| Entity |
| Currency |
| Capital |
| Annual |
| 12.31.2011 |
|
|
|
|
|
|
| THCH$ |
| % |
| THCH$ |
|
12.29.2011 |
| Banco BBVA – Chile |
| Euros |
| 243,449 |
| 0.35 |
| 243,991 |
|
|
|
|
| Total |
|
|
|
|
| 243,991 |
|
4.2 NOTE 4 — CASH AND CASH EQUIVALENTS (Continued)
4.2Money Market
Money market mutual fund shares are valued at the share value at the close of each fiscal year.period. Below is a description for the end of each period:
Institution |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
Itaú money market fund |
| 6,281,070 |
| — |
|
BBVA money market fund |
| 770,000 |
| — |
|
Western Assets Institutional Cash |
| 2,877,501 |
| 1,417,175 |
|
BCI money market fund |
| — |
| 163,000 |
|
Corporate money market fund |
| 2,093,339 |
| 37,384 |
|
Galicia money market fund |
| 2,566,901 |
| — |
|
Banchile money market fund |
| — |
| 3,943,475 |
|
Total mutual funds |
| 14,588,811 |
| 5,561,034 |
|
Institution |
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
Mutual fund Select Banco Itaú — Chile |
| 1,989,833 |
| 2,093,339 |
|
Mutual fund Soberano Banco Itaú — Brasil |
| 18,235,213 |
| 6,281,070 |
|
Mutual fund Corporativo Banco BBVA — Chile |
| 2,081,666 |
| 770,000 |
|
Western Assets Institutional Cash |
| 3,472,196 |
| 2,877,501 |
|
Mutual fund Banco Galicia |
| 946,885 |
| 2,566,901 |
|
Mutual fund Patrimonio Banco Caixa Económica Federal - Brasil |
| 2,833,080 |
| — |
|
Mutual fund Wells Fargo Bank |
| 137,500 |
| — |
|
|
|
|
|
|
|
Total mutual fund |
| 29,696,373 |
| 14,588,811 |
|
NOTE 5 — OTHER CURRENT FINANCIAL ASSETS
Below are the financial instruments held by the Company at December 31, 20112012 and 2010,2011, other than cash and cash equivalents. They consist of time deposits expiring in the short term (more than 90 days) andthree months), restricted mutual funds.funds and derivative contracts. The detail of financial instruments is detailed as follows:
Time deposits
Placement |
| Maturity |
| Maturity |
|
|
|
|
| Annual |
|
|
|
date |
| date |
| date |
| Currency |
| Principal |
| Rate |
| 12.31.2012 |
|
|
|
|
|
|
|
|
| ThCh$ |
| % |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
03.25.2012 |
| 03.20.2013 |
| Banco Votorantim - Brasil |
| R$ |
| 16,480 |
| 8.82 |
| 17,280 |
|
Total |
|
|
|
|
|
|
|
|
|
|
| 17,280 |
|
Mutual Funds
Placement |
| Maturity |
|
|
|
|
|
|
| Annual |
| Balance at |
|
date |
| date |
| Entity |
| Currency |
| Principal |
| Rate |
| 12.31.2011 |
|
|
|
|
|
|
|
|
| ThCh$ |
| % |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
08.04.2011 |
| 01.18.2012 |
| Banco BBVA |
| Unidad de fomento |
| 4,000,000 |
| 3.44 |
| 4,119,995 |
|
08.04.2011 |
| 01.18.2012 |
| Banco Estado |
| Unidad de fomento |
| 4,000,000 |
| 3.48 |
| 4,138,046 |
|
12.21.2011 |
| 05.09.2012 |
| Banco Corpbanca |
| Unidad de fomento |
| 2,500,000 |
| 5.00 |
| 2,505,892 |
|
12.21.2011 |
| 05.09.2012 |
| Banco Chile |
| Unidad de fomento |
| 2,500,000 |
| 4.70 |
| 2,505,684 |
|
12.16.2011 |
| 02.20.2012 | (1) | Banco Galicia |
| Ar$ |
| 711,717 |
| 20.00 |
| 716,403 |
|
03.25.2011 |
| 03.20.2012 |
| Banco Votorantin |
| R$ |
| 17,759 |
| 8.82 |
| 19,007 |
|
|
|
|
|
|
|
|
| Total |
|
|
| 14,005,027 |
|
|
|
|
|
|
|
|
| ||||||
Mutual Funds |
|
|
|
|
|
|
| ||||||
Banco Galicia money market fund (1) |
|
|
|
|
| 1,656,156 |
| ||||||
|
| Total |
|
|
| 1,656,156 |
| ||||||
|
|
|
|
|
|
|
| ||||||
Total other current financial assets 2011 |
|
|
|
|
| 15,661,183 |
|
ThCh$ | |||
Institution | |||
Mutual Fund Banco Galicia (1) | 111,301 | ||
Subtotal | 111,301 | ||
Total other current financial assets | 128,581 |
NOTE 5 — OTHER CURRENT FINANCIAL ASSETS (Continued)
Time deposits
Placement |
| Maturity |
|
|
|
|
|
|
| Annual |
|
|
|
date |
| date |
| Entity |
| Currency |
| Principal |
| Rate |
| 12.31.2011 |
|
|
|
|
|
|
|
|
| ThCh$ |
| % |
| ThCh$ |
|
08.04.2011 |
| 01.18.2012 |
| Banco BBVA- Chile |
| UF |
| 4,000,000 |
| 3.44 |
| 4,119,995 |
|
08.04.2011 |
| 01.18.2012 |
| Banco Estado — Chile |
| UF |
| 4,000,000 |
| 3.48 |
| 4,138,046 |
|
12.21.2011 |
| 05.09.2012 |
| Banco Corpbanca — Chile |
| UF |
| 2,500,000 |
| 5.00 |
| 2,505,892 |
|
12.21.2011 |
| 05.09.2012 |
| Banco Chile — Chile |
| UF |
| 2,500,000 |
| 4.70 |
| 2,505,684 |
|
12.16.2011 |
| 02.20.2012 | (1) | Banco Galicia - Argentina |
| Ar$ |
| 711,717 |
| 20.00 |
| 716,403 |
|
03.25.2011 |
| 03.20.2012 |
| Banco Votorantin - Brasil |
| R$ |
| 17,759 |
| 8.82 |
| 19,007 |
|
|
|
|
|
|
|
|
| Subtotal |
|
|
| 14,005,027 |
|
Mutual Funds
ThCh$ | |||||||
Institution | |||||||
Mutual Fund Banco Galicia (1) | 1,656,156 | ||||||
Subtotal | 1,656,156 | ||||||
Total other current financial assets | Total | 15,661,183 |
(1) These are financial investments the use of which is restricted because they were made to comply with the guarantees of derivatives transactions performed by the Company.
Time deposits
Placement |
| Maturity |
|
|
|
|
|
|
| Annual |
| Balance at |
|
date |
| date |
| Entity |
| Currency |
| Principal |
| rate |
| 12.31.2010 |
|
|
|
|
|
|
|
|
| ThCh$ |
| % |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
05.12.10 |
| 04.29.11 |
| Banco BBVA |
| Unidad de fomento |
| 456,766 |
| 0.57 |
| 467,322 |
|
05.12.10 |
| 09.30.11 |
| Banco BBVA |
| Unidad de fomento |
| 228,383 |
| 1.37 |
| 234,861 |
|
05.12.10 |
| 12.29.11 |
| Banco BBVA |
| Unidad de fomento |
| 228,383 |
| 1.37 |
| 256,423 |
|
04.23.10 |
| 05.30.11 |
| Banco BBVA |
| Unidad de fomento |
| 12,114,877 |
| 0.00 |
| 12,362,024 |
|
05.03.10 |
| 05.09.11 |
| Banco BCI |
| Unidad de fomento |
| 11,914,000 |
| 0.00 |
| 12,153,007 |
|
06.14.10 |
| 05.09.11 |
| Banco Itaú |
| Unidad de fomento |
| 4,770,768 |
| 0.40 |
| 4,848,825 |
|
07.01.10 |
| 05.09.11 |
| Banco Itaú |
| Unidad de fomento |
| 2,713,000 |
| 0.70 |
| 2,754,825 |
|
08.03.10 |
| 08.09.11 |
| Banco Itaú |
| Unidad de fomento |
| 1,000,000 |
| 0.52 |
| 1,012,928 |
|
10.28.10 |
| 05.09.11 |
| Banco Itaú |
| Unidad de fomento |
| 4,000,000 |
| 2.86 |
| 4,033,440 |
|
10.28.10 |
| 05.09.11 |
| Banco de Chile |
| Unidad de fomento |
| 4,000,000 |
| 2.45 |
| 4,030,516 |
|
04.12.10 |
| 04.12.11 |
| Banco BBVA |
| Peso Chileno |
| 6,644,069 |
| 2.40 |
| 6,760,563 |
|
Total other current financial assets 2011 |
|
|
|
|
|
|
| 48,914,734 |
|
NOTE 6 — CURRENT AND NON-CURRENT NON-FINANCIAL ASSETS
Note 6.1 Other current non-financial assets
Description |
| 12.31.2011 |
| 12.31.2010 |
| |||||
|
| ThCh$ |
| ThCh$ |
| |||||
Descrption |
| 12.31.2012 |
| 12.31.2011 |
| |||||
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
Prepaid insurance |
| 77,228 |
| 288,588 |
|
| 182,015 |
| 77,228 |
|
Prepaid expenses |
| 2,933,946 |
| 1,897,584 |
|
| 3,513,515 |
| 2,933,946 |
|
Fiscal credit remaining |
| 11,704,342 |
| 4,257,271 |
| |||||
Fiscal credits |
| 14,118,736 |
| 11,704,342 |
| |||||
Other current assets |
| 45,342 |
| 492,374 |
|
| 388,572 |
| 45,342 |
|
Total |
| 14,760,858 |
| 6,935,817 |
|
| 18,202,838 |
| 14,760,858 |
|
Note 6.2 Other non-current, non-financial assets
Description |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
|
Prepaid expenses |
| 2,275,128 |
| 2,180,033 |
|
| 2,515,235 |
| 2,275,128 |
|
Fiscal credit |
| 6,529,944 |
| 5,681,851 |
| |||||
Judicial deposits(1) |
| 19,989,604 |
| 12,720,300 |
| |||||
Fiscal credits |
| 5,880,191 |
| 6,529,944 |
| |||||
Judicial deposits (1) |
| 18,002,490 |
| 19,989,604 |
| |||||
Others |
| 1,399,133 |
| 925,570 |
|
| 529,174 |
| 1,399,133 |
|
Total |
| 30,193,809 |
| 21,507,754 |
|
| 26,927,090 |
| 30,193,809 |
|
(1)See note 21.1 2)
NOTE 7 — TRADE AND OTHER ACCOUNTS RECEIVABLE
The composition of trade and other accounts receivable is detailed as follows:
|
| 12.31.2011 |
| 12.31.2010 |
| ||||
Description |
| Current |
| Non- |
| Current |
| Non- |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Trade accounts receivable |
| 71,818,536 |
| — |
| 64,317,502 |
| — |
|
Notes receivables |
| 14,932,418 |
| 7,175,660 |
| 16,325,466 |
| 7,585,983 |
|
Other accounts receivable |
| 22,236,659 |
| — |
| 17,837,185 |
| 218,498 |
|
Allowance for doubtful accounts |
| (1,544,574 | ) | — |
| (1,225,556 | ) | — |
|
Total |
| 107,443,039 |
| 7,175,660 |
| 97,254,597 |
| 7,804,481 |
|
|
| 12.31.2012 |
| 12.31.2011 |
| ||||||||
Trade and other accounts receivable |
| Assets before |
| Allowance |
| Commercial |
| Assets |
| Allowance |
| Commercial |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Current commercial debtors |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade debtors |
| 115,998,388 |
| (1,458,801 | ) | 114,539,587 |
| 86,732,234 |
| (1,516,817 | ) | 85,215,417 |
|
Other current debtors |
| 15,782,069 |
| — |
| 15,782,069 |
| 11,711,426 |
| — |
| 11,711,426 |
|
Current commercial debtors |
| 131,780,457 |
| (1,458,801 | ) | 130,321,656 |
| 98,443,660 |
| (1,516,817 | ) | 96,926,843 |
|
Prepayments suppliers |
| 4,021,021 |
| — |
| 4,021,021 |
| 1,641,953 |
| — |
| 1,641,953 |
|
Other current accounts receivable |
| 18,502,187 |
| (27,948 | ) | 18,474,239 |
| 8,902,000 |
| (27,757 | ) | 8,874,243 |
|
Commercial debtors and other current accounts receivable |
| 154,303,665 |
| (1,486,749 | ) | 152,816,916 |
| 108,987,613 |
| (1,544,574 | ) | 107,443,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current accounts receivable |
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade debtors |
| 6,599,310 |
| — |
| 6,599,310 |
| 7,175,559 |
| — |
| 7,175,559 |
|
Other non-current debtors |
| 124,767 |
| — |
| 124,767 |
| 101 |
| — |
| 101 |
|
Non-current accounts receivable |
| 6,724,077 |
| — |
| 6,724,077 |
| 7,175,660 |
| — |
| 7,175,660 |
|
Trade and other accounts receivable |
| 161,027,742 |
| (1,486,749 | ) | 159,540,993 |
| 116,163,273 |
| (1,544,574 | ) | 114,618,699 |
|
The change in the allowance for doubtful accounts between January 1 and December 31, 2011, 2010 and 2009 is presented below:
Aging of debtor portfolio |
| Number of |
| 12.31.2012 |
| N° |
| 12.31.2011 |
|
|
|
|
| ThCh$ |
|
|
| ThCh$ |
|
Up to date non-securitized portfolio |
| 8,514 |
| 59,686,698 |
| 1,518 |
| 24,710,250 |
|
1 and 30 days |
| 30,523 |
| 51,451,804 |
| 35,875 |
| 58,528,014 |
|
31 and 60 days |
| 484 |
| 784,192 |
| 390 |
| 344,270 |
|
61 and 90 days |
| 346 |
| 951,083 |
| 336 |
| 526,403 |
|
91 and 120 days |
| 273 |
| 316,787 |
| 242 |
| 429,241 |
|
121 and 150 days |
| 282 |
| 34,370 |
| 226 |
| 360,202 |
|
151 and 180 days |
| 264 |
| 307,727 |
| 192 |
| 149,929 |
|
181 and 210 days |
| 280 |
| 176,493 |
| 141 |
| 141,115 |
|
211 and 250 days |
| 276 |
| 251,247 |
| 206 |
| 148,033 |
|
More than 250 days |
| 1,362 |
| 8,637,297 |
| 527 |
| 8,570,336 |
|
Total |
| 42,604 |
| 122,597,698 |
| 39,653 |
| 93,907,793 |
|
Item |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance |
| 1,225,556 |
| 1,688,988 |
| 1,559,981 |
|
Bad debt expense |
| 1,610,540 |
| 629,409 |
| 367,460 |
|
Use of allowance |
| (1,368,084 | ) | (970,352 | ) | (197,559 | ) |
Increase (decrease) because of foreign exchange |
| 76,562 |
| (122,489 | ) | (40,894 | ) |
Movement |
| 319,018 |
| (463,432 | ) | 129,007 |
|
Ending balance |
| 1,544,574 |
| 1,225,556 |
| 1,688,988 |
|
|
|
|
| 12.31.2012 |
|
|
| 12.31.2011 |
|
|
|
|
| ThCh$ |
|
|
| ThCh$ |
|
Current comercial debtors |
|
|
| 115,998,388 |
|
|
| 86,732,234 |
|
Non-current comercial debtors |
|
|
| 6,599,310 |
|
|
| 7,175,559 |
|
Total |
|
|
| 122,597,698 |
|
|
| 93,907,793 |
|
NOTE 7 — TRADE AND OTHER ACCOUNTS RECEIVABLE (Continued)
The change in the allowance for uncollectible receivables between January 1 and December 31, 2012, 2011 and 2010 is presented below:
Item |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance |
| 1,544,574 |
| 1,225,556 |
| 1,688,988 |
|
Bad debt expense |
| 976,331 |
| 1,610,540 |
| 629,409 |
|
Write-off of accounts receivable |
| (843,766 | ) | (1,368,084 | ) | (970,352 | ) |
Increase (decrease) because of foreign exchange |
| (190,390 | ) | 76,562 |
| (122,489 | ) |
Movement |
| (57,825 | ) | 319,018 |
| (463,432 | ) |
Ending balance |
| 1,486,749 |
| 1,544,574 |
| 1,225,556 |
|
NOTE 8 — INVENTORY
The composition of inventory balances is detailed as follows:
Description |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
| |||||
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
Raw materials |
| 29,518,840 |
| 23,117,229 |
|
| 41,942,176 |
| 29,518,840 |
|
Merchandise |
| 6,949,830 |
| 7,061,966 |
|
| 8,797,194 |
| 6,949,830 |
|
Production inputs |
| 1,386,122 |
| 853,130 |
|
| 1,125,276 |
| 1,386,122 |
|
Products in progress |
| 256,273 |
| 97,467 |
|
| 705,637 |
| 256,273 |
|
Finished goods |
| 11,215,868 |
| 13,922,337 |
|
| 22,792,255 |
| 11,215,868 |
|
Spare parts |
| 8,136,491 |
| 8,704,152 |
|
| 14,479,488 |
| 8,136,491 |
|
Other inventory |
| 765,020 |
| 643,091 |
|
| 1,504,926 |
| 765,020 |
|
Obsolescence allowance |
| (741,786 | ) | (683,863 | ) | |||||
Balance |
| 57,486,658 |
| 53,715,509 |
| |||||
Obsolescence provision (1) |
| (2,027,126 | ) | (741,786 | ) | |||||
Total |
| 89,319,826 |
| 57,486,658 |
|
The cost of inventory recognized as a cost of sales totaled ThCh$698,955,215, ThCh$578,581,184 ThCh$506,882,144 and ThCh$455,300,000506,882,144 at December 31, 2012, 2011 and 2010 respectively.
(1)The provision for obsolescence is primarily related to the obsolescence of parts classified as inventories and 2009, respectively.less finished goods and raw materials.
NOTE 9 — INCOME TAX AND DEFERRED TAXES
9.1 Current taxes receivabletax assets
The current taxes receivable consisted of the following items:Current tax receivables break down as follows:
Description |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
| |||||
Monthly income tax installments |
| 1,646,502 |
| 1,091,997 |
| |||||
Monthly provisional payments |
| 2,319,627 |
| 1,646,502 |
| |||||
Tax credits (1) |
| 817,064 |
| 1,196,728 |
|
| 559,766 |
| 817,064 |
|
Balance |
| 2,463,566 |
| 2,288,725 |
| |||||
Total |
| 2,879,393 |
| 2,463,566 |
|
(1) That item corresponds to income tax credits on account of training expenses, purchase of property, plant and equipment and donations.
F-349.2Current tax liabilities
Current tax payables correspond to the following items:
Description |
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
Income tax |
| 355,363 |
| 3,459,329 |
|
Other |
| 759,447 |
| 361,918 |
|
Balance |
| 1,114,810 |
| 3,821,247 |
|
9.2Current taxes payableNOTE 9 — INCOME TAX AND DEFERRED TAXES (Continued)
Current taxes payable are detailed as follows:
Description |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
|
Income tax |
| 3,459,329 |
| 3,877,563 |
|
Other |
| 361,918 |
| 131,826 |
|
Balance |
| 3,821,247 |
| 4,009,389 |
|
9.3 Tax expense
The current and deferred income tax expenses for the yearsperiods ended December 31, 2011,20102012,2011 and 20092010 are detailed as follows:
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
| |||||||
Item |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
| |||||||
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Current tax expense |
| 31,384,666 |
| 31,847,824 |
| 26,558,767 |
|
| 31,849,744 |
| 31,384,666 |
| 31,847,824 |
|
Adjustment to current tax from previous year |
| 371,547 |
| 114,521 |
| 733,312 |
|
| 172,055 |
| 371,547 |
| 114,521 |
|
Other current tax expenses |
| 396,319 |
| 10,276 |
| 111,287 |
|
| 823,616 |
| 396,319 |
| 10,276 |
|
Total net current tax expense |
| 32,152,532 |
| 31,972,621 |
| 27,403,366 |
|
| 32,845,415 |
| 32,152,532 |
| 31,972,621 |
|
|
|
|
|
|
|
|
| |||||||
Deferred tax expenses |
| 2,532,129 |
| 4,367,619 |
| 1,763,059 |
|
| 5,659,221 |
| 2,532,129 |
| 4,367,619 |
|
Total deferred tax expenses |
| 2,532,129 |
| 4,367,619 |
| 1,763,059 |
|
| 5,659,221 |
| 2,532,129 |
| 4,367,619 |
|
Total income tax expense |
| 34,684,661 |
| 36,340,240 |
| 29,166,425 |
| |||||||
Income tax expense |
| 38,504,636 |
| 34,684,661 |
| 36,340,240 |
|
NOTE 9 — INCOME TAX AND DEFERRED TAXES (Continued)
9.4 Deferred taxes
The net cumulative balances of temporary differences originating increated deferred tax assets and liabilities, which are detailedshown below:
|
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
| ||||||||
Temporary differences |
| Assets |
| Liabilities |
| Assets |
| Liabilities |
|
| Assets |
| Liabilities |
| Assets |
| Liabilities |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
| 897,101 |
| 22,769,301 |
| — |
| 22,702,343 |
|
| 432,181 |
| 29,494,188 |
| 897,101 |
| 22,769,301 |
|
Impairment accrual |
| 865,769 |
| — |
| 1,302,801 |
| — |
| |||||||||
Obsolescence provision |
| 637,675 |
| — |
| 865,769 |
| — |
| |||||||||
Employee benefits |
| 1,462,239 |
| — |
| 2,386,307 |
| — |
|
| 1,807,163 |
| — |
| 1,462,239 |
| — |
|
Post-employment benefits |
| — |
| 510,613 |
| 9,550 |
| 82,143 |
|
| — |
| 277,510 |
| — |
| 510,613 |
|
Tax losses |
| 705,861 |
| — |
| — |
| — |
| |||||||||
Tax loss carry-forwards (1) and (2) |
| 9,026,314 |
| — |
| 705,861 |
| — |
| |||||||||
Contingency provision |
| 2,215,553 |
| — |
| 1,620,901 |
| — |
|
| 2,020,821 |
| — |
| 2,215,553 |
| — |
|
Foreign exchange rate difference (Brazilian debt) |
| — |
| 11,698,815 |
| — |
| 13,506,899 |
| |||||||||
Foreign exchange rate difference (Foreign Subsidiaries) (4) |
| — |
| 9,145,349 |
| — |
| 11,698,815 |
| |||||||||
Allowance for doubtful accounts |
| 368,947 |
| — |
| 446,516 |
| — |
|
| 350,319 |
| — |
| 368,947 |
| — |
|
Tax income for inventory holding (Argentina) |
| 1,066,527 |
| — |
| 663,663 |
| — |
| |||||||||
Derivatives |
| — |
| — |
| 183,444 |
| — |
| |||||||||
Tax incentives |
| — |
| 7,900,864 |
| — |
| 5,335,199 |
| |||||||||
Tax incentives (Brazil) (3) |
| — |
| 10,930,694 |
| — |
| 7,900,864 |
| |||||||||
Assets and liabilities for placement of bonds |
| 370,245 |
| 77,316 |
| — |
| — |
| |||||||||
Leasing liabilities |
| 430,476 |
| — |
| — |
| — |
| |||||||||
Inventories |
| 150,486 |
| 127,550 |
| 1,066,527 |
| — |
| |||||||||
Distribution rights |
| — |
| 76,559,423 |
| — |
| — |
| |||||||||
Other |
| 478,230 |
| 426,124 |
| 278,427 |
| 865,764 |
|
| 997,372 |
| 1,025,648 |
| 478,230 |
| 426,124 |
|
Subtotal |
| 8,060,227 |
| 43,305,717 |
| 6,891,609 |
| 42,492,348 |
|
| 16,223,052 |
| 127,637,678 |
| 8,060,227 |
| 43,305,717 |
|
Net Liabilities |
| — |
| 35,245,490 |
| — |
| 35,600,739 |
|
| — |
| 111,414,626 |
| — |
| 35,245,490 |
|
(1)Corresponding to our subsidiary in Chile, Embotelladora Andina Chile S.A., that is in the start-up process of its manufacturing and commercial operations. Tax losses in Chile do not have an expiration date.
(2)Tax losses related to Coca-Cola Polar Argentina S.A. amount of ThCh$5,280,865. The following table breaks down the expiration dates of these tax loss carryforwards:
Year of expiration |
| Amount |
|
2014 |
| 241,128 |
|
2015 |
| 2,191,633 |
|
2016 |
| 1,111,720 |
|
2017 |
| 1,735,784 |
|
Total tax loss carryforwards |
| 5,280,265 |
|
(3)Corresponds to tax incentives in Brazil that consist of a tax withholding reduction that are financially recorded under results, but under tax rules they must be controlled in equity accounts, and cannot be distributed as dividends.
(4)Deferred tax generated by exchange rate difference upon translation of intercompany accounts with the Brazilian subsidiary Rio de Janeiro Refrescos Ltda. that financially are carried to comprehensive results, but under tax rules they are taxable in Brazil at the moment they are received.
NOTE 9 — INCOME TAX AND DEFERRED TAXES (Continued)
9.5 Deferred tax liability movement
Movement in deferred liability accounts is detailed as follows:
Item |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
Initial Balance |
| 35,600,739 |
| 33,182,644 |
| 28,196,054 |
|
Increase in deferred tax liabilities |
| 2,309,907 |
| 3,724,526 |
| 6,217,311 |
|
Sale of ownership interest in Vital S.A. |
| (947,445 | ) | — |
| — |
|
Decrease due to foreign currency translation |
| (1,717,711 | ) | (1,306,431 | ) | (1,230,721 | ) |
Movements |
| (355,249 | ) | 2,418,095 |
| 4,986,590 |
|
Ending balance |
| 35,245,490 |
| 35,600,739 |
| 33,182,644 |
|
Item |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
Initial Balance |
| 35,245,490 |
| 35,600,739 |
| 33,182,644 |
|
Increase due to merger |
| 76,544,806 |
| — |
| — |
|
Increase in deferred tax liabilities |
| 4,453,994 |
| 2,309,907 |
| 3,724,526 |
|
Sale of ownership interest in Vital S.A. |
| — |
| (947,445 | ) | — |
|
Decrease due to foreign currency translation |
| (4,829,664 | ) | (1,717,711 | ) | (1,306,431 | ) |
Movements |
| 76,169,136 |
| (355,249 | ) | 2,418,095 |
|
Ending balance |
| 111,414,626 |
| 35,245,490 |
| 35,600,739 |
|
9.6 Distribution of domestic and foreign tax expenses
As of December 31, 2012, 2011 2010 and 2009,2010, domestic and foreign tax expenses are detailed as followsfollows:
Income tax |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
| |||||||
|
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| |||||||
Income tax |
|
|
|
|
|
|
| |||||||
Current taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign |
| (24,138,759 | ) | (26,000,138 | ) | (20,758,996 | ) |
| (25,054,795 | ) | (24,138,759 | ) | (26,000,138 | ) |
Domestic |
| (8,013,773 | ) | (5,972,483 | ) | (6,644,370 | ) |
| (7,790,620 | ) | (8,013,773 | ) | (5,972,483 | ) |
Current tax expense |
| (32,152,532 | ) | (31,972,621 | ) | (27,403,366 | ) |
| (32,845,415 | ) | (32,152,532 | ) | (31,972,621 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign |
| (3,006,679 | ) | (3,293,124 | ) | (2,437,295 | ) |
| (6,071,382 | ) | (3,006,679 | ) | (3,293,124 | ) |
Domestic |
| 474,550 |
| (1,074,495 | ) | 674,236 |
|
| 412,161 |
| 474,550 |
| (1,074,495 | ) |
Deferred tax expense |
| (2,532,129 | ) | (4,367,619 | ) | (1,763,059 | ) |
| (5,659,221 | ) | (2,532,129 | ) | (4,367,619 | ) |
Income tax expense |
| (34,684,661 | ) | (36,340,240 | ) | (29,166,425 | ) |
| (38,504,636 | ) | (34,684,661 | ) | (36,340,240 | ) |
NOTE 9 — INCOME TAX AND DEFERRED TAXES (Continued)
9.7 Reconciliation of effective rate
Below is the reconciliation of tax expenses at the legal rate and tax expenses at the effective rate:
Reconciliation of effective rate |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Income before taxes |
| 131,712,085 |
| 139,940,304 |
| 127,151,903 |
|
| 126,773,808 |
| 131,712,085 |
| 139,940,304 |
|
Tax expense at legal rate (20%) |
| (26,342,417 | ) | — |
|
|
|
| (25,354,762 | ) | (26,342,417 | ) | — |
|
Tax expense at legal rate (17%) |
| — |
| (23,789,852 | ) | (21,615,823 | ) |
| — |
| — |
| (23,789,852 | ) |
Effect of tax rate in other jurisdictions |
| (11,459,545 | ) | (15,161,635 | ) | (13,421,632 | ) | |||||||
Effect of a different tax rate in other jurisdictions |
| (12,034,351 | ) | (11,459,545 | ) | (15,161,635 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Permanent differences: |
|
|
|
|
|
|
| |||||||
Income frm investees and subsidiaries not subject to taxation |
| 4,190,331 |
| 4,754,092 |
| 5,993,880 |
| |||||||
Non-tax-deductible expenses |
| (868,025 | ) | (213,192 | ) | (591,384 | ) | |||||||
Other |
| (205,005 | ) | (1,929,653 | ) | 468,534 |
| |||||||
Tax expense adjustment |
| 3,117,301 |
| 2,611,247 |
| 5,871,030 |
| |||||||
Permanent differences: |
|
|
|
|
|
|
| |||||||
Non-taxable revenues |
| 3,302,249 |
| 4,190,331 |
| 4,754,092 |
| |||||||
Non-deductible expenses |
| (3,154,544 | ) | (868,025 | ) | (213,192 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax expense at effective rate |
| (34,684,661 | ) | (36,340,240 | ) | (29,166,425 | ) | |||||||
Tax effect over changes in the tax rate in Chile |
| (826,898 | ) | — |
| — |
| |||||||
Tax provision in excess of preceding periods |
| (227,343 | ) | — |
| — |
| |||||||
Other increases (decreases) in charge for legal taxes |
| (208,987 | ) | (205,005 | ) | (1,929,653 | ) | |||||||
Adjustments to tax expenses |
| (1,115,523 | ) | 3,117,301 |
| 2,611,247 |
| |||||||
|
|
|
|
|
|
|
| |||||||
Tax expense at the effective rate |
| (38,504,636 | ) | (34,684,661 | ) | (36,340,240 | ) | |||||||
Effective rate |
| 26.3 | % | 26.0 | % | 22.9 | % |
| 30.4 | % | 26.3 | % | 26.0 | % |
TheBelow are the income tax rates applicable in each of the jurisdictionsjurisdiction where the companyCompany does business are detailed as follows:business:
|
| ||
|
|
| |
|
|
| |
|
|
|
|
| Rate |
| ||||
País |
| 2012 |
| 2011 |
| 2010 |
|
Chile |
| 20 | % | 20 | % | 17 | % |
Brasil |
| 34 | % | 34 | % | 34 | % |
Argentina |
| 35 | % | 35 | % | 35 | % |
Paraguay |
| 10 | % | — |
| — |
|
NOTE 10 — PROPERTY, PLANT AND EQUIPMENT
10.1 Balances
Property, plant and equipment atare itemized below for the endclose of each year are detailed below:fiscal period:
|
| Gross property, plant and |
| Cumulative depreciation and |
| Net property, plant and equipment |
|
| Property, plant and equipment, |
| Cumulative depreciation and |
| Property, plant and equipment, net |
| ||||||||||||
Item |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Construction in progress |
| 47,924,160 |
| 23,506,510 |
| — |
| — |
| 47,924,160 |
| 23,506,510 |
|
| 61,735,710 |
| 47,924,160 |
| — |
| — |
| 61,735,710 |
| 47,924,160 |
|
Land |
| 34,838,977 |
| 36,523,803 |
| — |
| — |
| 34,838,977 |
| 36,523,803 |
|
| 57,134,715 |
| 34,838,977 |
| — |
| — |
| 57,134,715 |
| 34,838,977 |
|
Buildings |
| 93,603,989 |
| 92,227,198 |
| (28,249,427 | ) | (29,245,272 | ) | 65,354,562 |
| 62,981,926 |
|
| 163,759,761 |
| 93,603,989 |
| (31,980,362 | ) | (28,249,427 | ) | 131,779,399 |
| 65,354,562 |
|
Plant and equipment |
| 264,342,629 |
| 232,604,986 |
| (155,026,259 | ) | (154,729,140 | ) | 109,316,370 |
| 77,875,846 |
|
| 346,179,261 |
| 264,342,629 |
| (169,999,912 | ) | (155,026,259 | ) | 176,179,349 |
| 109,316,370 |
|
Information technology equipment |
| 11,416,373 |
| 10,825,556 |
| (9,273,033 | ) | (8,756,221 | ) | 2,143,340 |
| 2,069,335 |
| |||||||||||||
Fixed installations and accessories |
| 29,878,815 |
| 30,603,706 |
| (14,428,606 | ) | (14,319,552 | ) | 15,450,209 |
| 16,284,154 |
| |||||||||||||
Motor vehicles |
| 4,871,319 |
| 5,627,463 |
| (2,932,515 | ) | (3,757,415 | ) | 1,938,804 |
| 1,870,048 |
| |||||||||||||
Information technology |
| 12,429,618 |
| 11,416,373 |
| (6,629,395 | ) | (9,273,033 | ) | 5,800,223 |
| 2,143,340 |
| |||||||||||||
Fixed facilities and accessories |
| 40.282.483 |
| 29,878,815 |
| (15,443,891 | ) | (14,428,606 | ) | 24,838,592 |
| 15,450,209 |
| |||||||||||||
Vehicles |
| 11,134,161 |
| 4,871,319 |
| (3,298,464 | ) | (2,932,515 | ) | 7,835,697 |
| 1,938,804 |
| |||||||||||||
Improvements to leased property |
| 153,483 |
| 155,755 |
| (129,503 | ) | (110,832 | ) | 23,980 |
| 44,923 |
|
| 130,240 |
| 153,483 |
| (120,818 | ) | (129,503 | ) | 9,422 |
| 23,980 |
|
Other property, plant and equipment (1) |
| 250,672,995 |
| 286,065,161 |
| (177,598,930 | ) | (215,739,526 | ) | 73,074,065 |
| 70,325,635 |
|
| 294.974.382 |
| 250,672,995 |
| (183,736,764 | ) | (177,598,930 | ) | 111,237,618 |
| 73,074,065 |
|
Total |
| 737,702,740 |
| 718,140,138 |
| (387,638,273 | ) | (426,657,958 | ) | 350,064,467 |
| 291,482,180 |
| |||||||||||||
Item |
| 987,760,331 |
| 737,702,740 |
| (411,209,606 | ) | (387,638,273 | ) | 576,550,725 |
| 350,064,467 |
|
(1) Other property, plant and equipment is composed of bottles, market assets, furniture and other minor goods.
(2)As of December 31, 2012 there were financial lease agreements for the purchase of vehicles in the subsidiary Rio de Janeiro Refrescos Ltda., and Tetrapak equipment in Argentina
The net balance of each of these categories at December 31, 20112012 and 2010December 31, 2011 is detailed as follows:
Other property, plant and equipment |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
|
Bottles |
| 36,737,104 |
| 38,230,257 |
|
| 59,983,147 |
| 43,138,347 |
|
Marketing and promotional assets |
| 19,478,303 |
| 18,153,012 |
|
| 40,251,550 |
| 23,218,456 |
|
Other property, plant and equipment |
| 16,858,658 |
| 13,942,366 |
|
| 11,002,921 |
| 6,717,262 |
|
Total |
| 73,074,065 |
| 70,325,635 |
|
| 111,237,618 |
| 73,074,065 |
|
The Company has an insurance to protect its property, plant and equipment and its inventory from potential losses.Thelosses. The geographic distribution of those assets is detailed as follows:
Chile: Santiago, Puente Alto, Maipú, Renca, Rancagua and San Antonio
Argentina: Buenos Aires, Mendoza, Córdoba and Rosario
Brazil: Río de Janeiro, Niteroi, Campos, Cabo Frío, Nova Iguaçu, Espírito Santo and Vitoria
Chile | : Santiago, Puente Alto, Maipú, Renca, Rancagua y San Antonio, Antofagasta, Coquimbo y Punta Arenas. | |
Argentina | : Buenos Aires, Mendoza, Córdoba y Rosario, Bahía Blanca, Chacabuco, La Pampa, Neuqén, Comodoro Rivadavia, Trelew, Tierra del Fuego | |
Brazil | : Río de Janeiro, Niteroi, Campos, Cabo Frío, Nova Iguazú, Espirito Santo and Vitoria. | |
Paraguay: | Asunción, Coronel Oviedo, Ciudad del Este and Encarnación. |
NOTE 10 — PROPERTY, PLANT AND EQUIPMENT (Continued)
10.2 Movements
Movements in property, plant and equipment are detailed as follows between January 1 and December 31, 2012, 2011 2010 and 2009:2010
For the year ended 12.31.2011 |
| Construction in |
| Land |
| Buildings, |
| Plant and |
| IT Equipment, |
| Fixed |
| Motor |
| Improvements |
| Other |
| Property, |
| |||||||||||||||||||||
For the year ended 12.31.2012 |
| Construction in |
| Land |
| Buildings, net |
| Plant and |
| IT Equipment, net |
| Fixed facilities and |
| Vehicles, net |
| Improvements |
| Other property, |
| Property, plant |
| |||||||||||||||||||||
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial balance |
| 23,506,510 |
| 36,523,803 |
| 62,981,926 |
| 77,875,846 |
| 2,069,335 |
| 16,284,154 |
| 1,870,048 |
| 44,923 |
| 70,325,635 |
| 291,482,180 |
|
| 47,924,160 |
| 34,838,977 |
| 65,354,562 |
| 109,316,370 |
| 2,143,340 |
| 15,450,209 |
| 1,938,804 |
| 23,980 |
| 73,074,065 |
| 350,064,467 |
|
Deconsolidation of Vital S.A. because control was lost |
| — |
| (1,789,538 | ) | (5,234,227 | ) | (6,749,334 | ) | — |
| — |
| — |
| — |
| (732,167 | ) | (14,505,266 | ) | |||||||||||||||||||||
Additions |
| 52,845,762 |
| (973 | ) | 2,076,108 |
| 30,838,285 |
| 601,044 |
| 45,516 |
| 499,615 |
| — |
| 31,524,654 |
| 118,430,011 |
|
| 59,622,568 |
| — |
| 163,015 |
| 16,253,430 |
| 590,141 |
| 33,027 |
| 1,623,662 |
| — |
| 50,800,843 |
| 129,086,686 |
|
Disposals |
| (13,506 | ) | (120,727 | ) | (762,174 | ) | (17,571 | ) | (185 | ) | (30,395 | ) | — |
| — |
| (49,852 | ) | (994,410 | ) |
| — |
| — |
| — |
| (425,844 | ) | (32,575 | ) | — |
| — |
| — |
| (712,471 | ) | (1,170,890 | ) |
Transfers between items of property, plant and equipment |
| (28,409,020 | ) | 283,495 |
| 8,785,405 |
| 21,589,748 |
| 398,449 |
| 1,810,434 |
| 14,956 |
| — |
| (4,473,467 | ) | — |
|
| (62,379,694 | ) | (263,320 | ) | 33,207,590 |
| 20,739,334 |
| 2,326,639 |
| 11,403,778 |
| 4,676,401 |
| — |
| (9,710,728 | ) | — |
|
Transfers to assets held for sale, current |
| — |
| — |
| (2,977,969 | ) | — |
| — |
| — |
| — |
| — |
| — |
| (2,977,969 | ) | |||||||||||||||||||||
Additions due to merger(1) |
| 18,267,801 |
| 25,288,317 |
| 46,717,142 |
| 58,602,133 |
| 2,068,712 |
| 24,765 |
| 591,579 |
| — |
| 40,370,384 |
| 191,930,833 |
| |||||||||||||||||||||
Depreciation expense |
| — |
| — |
| (2,022,571 | ) | (13,713,542 | ) | (931,282 | ) | (1,117,400 | ) | (379,172 | ) | (21,250 | ) | (20,650,320 | ) | (38,835,537 | ) |
| — |
| — |
| (2,958,099 | ) | (20,058,072 | ) | (1,043,395 | ) | (1,645,825 | ) | (728,228 | ) | (11,624 | ) | (26,831,414 | ) | (53,276,657 | ) |
Increase (decrease) in foreign currency translation |
| (24,574 | ) | (67,205 | ) | (179,705 | ) | (542,938 | ) | 6,023 |
| 26,995 |
| (1,980 | ) | 307 |
| (280,024 | ) | (1,063,101 | ) |
| (1,699,125 | ) | (2,729,259 | ) | (7,833,909 | ) | (8,547,363 | ) | (236,756 | ) | (422,406 | ) | (133,634 | ) | (2,934 | ) | (13,619,288 | ) | (35,224,674 | ) |
Other increases (decreases) |
| 18,988 |
| 10,122 |
| (290,200 | ) | 35,876 |
| (44 | ) | (1,569,095 | ) | (64,663 | ) | — |
| (2,590,394 | ) | (4,449,410 | ) |
| — |
| — |
| 107,067 |
| 299,361 |
| (15,883 | ) | (4,956 | ) | (132,887 | ) | — |
| (2,133,773 | ) | (1,881,071 | ) |
Total movements |
| 24,417,650 |
| (1,684,826 | ) | 2,372,636 |
| 31,440,524 |
| 74,005 |
| (833,945 | ) | 68,756 |
| (20,943 | ) | 2,748,430 |
| 58,582,287 |
|
| 13,811,550 |
| 22,295,738 |
| 66,424,837 |
| 66,862,979 |
| 3,656,883 |
| 9,388,383 |
| 5,896,893 |
| (14,558 | ) | 38,163,553 |
| 226,486,258 |
|
Ending balance |
| 47,924,160 |
| 34,838,977 |
| 65,354,562 |
| 109,316,370 |
| 2,143,340 |
| 15,450,209 |
| 1,938,804 |
| 23,980 |
| 73,074,065 |
| 350,064,467 |
|
| 61,735,710 |
| 57,134,715 |
| 131,779,399 |
| 176,179,349 |
| 5,800,223 |
| 24,838,592 |
| 7,835,697 |
| 9,422 |
| 111,237,618 |
| 576,550,725 |
|
(1)Corresponds to balances incorporated as of October 1, 2012 as a result of the consolidation of Embotellaoras Coca-Cola Polar S.A. and certain other companies explained in note 1 b).
For the year ended 12.31.2010 |
| Construction in |
| Land |
| Buildings, |
| Plant and |
| IT Equipment, |
| Fixed |
| Motor |
| Improvements |
| Other |
| Property, plant |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial balance |
| 5,487,011 |
| 37,046,146 |
| 61,570,532 |
| 72,648,457 |
| 2,139,891 |
| 16,664,567 |
| 1,416,740 |
| 79,336 |
| 50,816,411 |
| 247,869,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
| 32,097,391 |
| 501,788 |
| 1,834,762 |
| 21,923,605 |
| 669,553 |
| 60,376 |
| 895,781 |
| — |
| 32,592,914 |
| 90,576,170 |
|
Disposals |
| — |
| (10,039 | ) | (71,333 | ) | (225,383 | ) | (350 | ) | — |
| (4,342 | ) | — |
| (206,873 | ) | (518,320 | ) |
Transfers between items of property, plant and equipment |
| (13,807,070 | ) | — |
| 3,515,683 |
| 2,022,179 |
| 258,089 |
| 661,830 |
| 1,324 |
| — |
| 7,347,965 |
| — |
|
Depreciation expense |
| — |
| — |
| (1,829,939 | ) | (13,445,509 | ) | (938,545 | ) | (985,366 | ) | (355,283 | ) | (32,584 | ) | (18,519,806 | ) | (36,107,032 | ) |
Increase (decrease) in foreign currency translation |
| (270,822 | ) | (1,014,092 | ) | (2,048,206 | ) | (4,838,392 | ) | (58,043 | ) | (119,494 | ) | (60,895 | ) | (1,829 | ) | (606,776 | ) | (9,018,549 | ) |
Other increases (decreases) |
| — |
| — |
| 10,427 |
| (209,111 | ) | (1,260 | ) | 2,241 |
| (23,277 | ) | — |
| (1,098,200 | ) | (1,319,180 | ) |
Total movements |
| 18,019,499 |
| (522,343 | ) | 1,411,394 |
| 5,227,389 |
| (70,556 | ) | (380,413 | ) | 453,308 |
| (34,413 | ) | 19,509,224 |
| 43,613,089 |
|
Ending balance |
| 23,506,510 |
| 36,523,803 |
| 62,981,926 |
| 77,875,846 |
| 2,069,335 |
| 16,284,154 |
| 1,870,048 |
| 44,923 |
| 70,325,635 |
| 291,482,180 |
|
NOTE 10 — PROPERTY, PLANT AND EQUIPMENT (Continued)
For the period ended 12.31.2011 |
| Construction in |
| Land |
| Buildings, |
| Plant and |
| IT |
| Fixed |
| Motor |
| Improvements |
| Other |
| Property, plant |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial balance |
| 23,506,510 |
| 36,523,803 |
| 62,981,926 |
| 77,875,846 |
| 2,069,335 |
| 16,284,154 |
| 1,870,048 |
| 44,923 |
| 70,325,635 |
| 291,482,180 |
|
Deconsolidation of Vital S.A. because control was lost |
| — |
| (1,789,538 | ) | (5,234,227 | ) | (6,749,334 | ) | — |
| — |
| — |
| — |
| (732,167 | ) | (14,505,266 | ) |
Additions |
| 52,845,762 |
| (973 | ) | 2,076,108 |
| 30,838,285 |
| 601,044 |
| 45,516 |
| 499,615 |
| — |
| 31,524,654 |
| 118,430,011 |
|
Disposals |
| (13,506 | ) | (120,727 | ) | (762,174 | ) | (17,571 | ) | (185 | ) | (30,395 | ) | — |
| — |
| (49,852 | ) | (994,410 | ) |
Transfers between items of property, plant and equipment |
| (28,409,020 | ) | 283,495 |
| 8,785,405 |
| 21,589,748 |
| 398,449 |
| 1,810,434 |
| 14,956 |
| — |
| (4,473,467 | ) | — |
|
Depreciation expense |
| — |
| — |
| (2,022,571 | ) | (13,713,542 | ) | (931,282 | ) | (1,117,400 | ) | (379,172 | ) | (21,250 | ) | (20,650,320 | ) | (38,835,537 | ) |
Increase (decrease) in foreign currency translation |
| (24,574 | ) | (67,205 | ) | (179,705 | ) | (542,938 | ) | 6,023 |
| 26,995 |
| (1,980 | ) | 307 |
| (280,024 | ) | (1,063,101 | ) |
Other increases (decreases) |
| 18,988 |
| 10,122 |
| (290,200 | ) | 35,876 |
| (44 | ) | (1,569,095 | ) | (64,663 | ) | — |
| (2,590,394 | ) | (4,449,410 | ) |
Total movements |
| 24,417,650 |
| (1,684,826 | ) | 2,372,636 |
| 31,440,524 |
| 74,005 |
| (833,945 | ) | 68,756 |
| (20,943 | ) | 2,748,430 |
| 58,582,287 |
|
Ending balance |
| 47,924,160 |
| 34,838,977 |
| 65,354,562 |
| 109,316,370 |
| 2,143,340 |
| 15,450,209 |
| 1,938,804 |
| 23,980 |
| 73,074,065 |
| 350,064,467 |
|
For the fiscal year |
| Construction |
| Land |
| Buildings, |
| Plant and |
| IT |
| Fixed |
| Motor |
| Improvements to |
| Other property, |
| Property, plant |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial balance |
| 4,942,367 |
| 38,121,541 |
| 59,456,026 |
| 74,144,934 |
| 2,687,932 |
| 16,436,484 |
| 830,402 |
| 78,800 |
| 52,049,278 |
| 248,747,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
| 12,246,515 |
| — |
| 363,270 |
| 11,068,846 |
| 353,965 |
| 17,120 |
| 961,803 |
| 23,676 |
| 21,109,718 |
| 46,144,913 |
|
Disposals |
| (18 | ) | — |
| — |
| (29,640 | ) | (398 | ) | — |
| — |
| — |
| (145,417 | ) | (175,473 | ) |
Transfers between items of property, plant and equipment |
| (9,920,144 | ) | — |
| 2,165,884 |
| 3,580,304 |
| 151,751 |
| 802,833 |
| 46,651 |
| — |
| 3,172,721 |
| — |
|
Depreciation expense |
| — |
| — |
| (1,752,611 | ) | (14,514,062 | ) | (1,350,230 | ) | (1,106,466 | ) | (249,014 | ) | (30,670 | ) | (17,059,331 | ) | (36,062,384 | ) |
Increase (decrease) in foreign currency translation |
| (521,521 | ) | (1,075,395 | ) | 978,600 |
| (1,675,935 | ) | 268,779 |
| (204,152 | ) | (80,852 | ) | 7,530 |
| (5,749,157 | ) | (8,052,103 | ) |
Other increases (decreases) |
| (1,260,188 | ) | — |
| 359,363 |
| 74,010 |
| 28,092 |
| 718,748 |
| (92,250 | ) | — |
| (2,561,401 | ) | (2,733,626 | ) |
Total movements |
| 544,644 |
| (1,075,395 | ) | 2,114,506 |
| (1,496,477 | ) | (548,041 | ) | 228,083 |
| 586,338 |
| 536 |
| (1,232,867 | ) | (878,673 | ) |
Final balance |
| 5,487,011 |
| 37,046,146 |
| 61,570,532 |
| 72,648,457 |
| 2,139,891 |
| 16,664,567 |
| 1,416,740 |
| 79,336 |
| 50,816,411 |
| 247,869,091 |
|
NOTE 10 — PROPERTY, PLANT AND EQUIPMENT (Continued)
For the year ended 12.31.2010 |
| Construction in |
| Land |
| Buildings, |
| Plant and |
| IT Equipment, |
| Fixed |
| Motor |
| Improvements |
| Other |
| Property, plant |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial balance |
| 5,487,011 |
| 37,046,146 |
| 61,570,532 |
| 72,648,457 |
| 2,139,891 |
| 16,664,567 |
| 1,416,740 |
| 79,336 |
| 50,816,411 |
| 247,869,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions |
| 32,097,391 |
| 501,788 |
| 1,834,762 |
| 21,923,605 |
| 669,553 |
| 60,376 |
| 895,781 |
| — |
| 32,592,914 |
| 90,576,170 |
|
Disposals |
| — |
| (10,039 | ) | (71,333 | ) | (225,383 | ) | (350 | ) | — |
| (4,342 | ) | — |
| (206,873 | ) | (518,320 | ) |
Transfers between items of property, plant and equipment |
| (13,807,070 | ) | — |
| 3,515,683 |
| 2,022,179 |
| 258,089 |
| 661,830 |
| 1,324 |
| — |
| 7,347,965 |
| — |
|
Depreciation expense |
| — |
| — |
| (1,829,939 | ) | (13,445,509 | ) | (938,545 | ) | (985,366 | ) | (355,283 | ) | (32,584 | ) | (18,519,806 | ) | (36,107,032 | ) |
Increase (decrease) in foreign currency translation |
| (270,822 | ) | (1,014,092 | ) | (2,048,206 | ) | (4,838,392 | ) | (58,043 | ) | (119,494 | ) | (60,895 | ) | (1,829 | ) | (606,776 | ) | (9,018,549 | ) |
Other increases (decreases) |
| — |
| — |
| 10,427 |
| (209,111 | ) | (1,260 | ) | 2,241 |
| (23,277 | ) | — |
| (1,098,200 | ) | (1,319,180 | ) |
Total movements |
| 18,019,499 |
| (522,343 | ) | 1,411,394 |
| 5,227,389 |
| (70,556 | ) | (380,413 | ) | 453,308 |
| (34,413 | ) | 19,509,224 |
| 43,613,089 |
|
Ending balance |
| 23,506,510 |
| 36,523,803 |
| 62,981,926 |
| 77,875,846 |
| 2,069,335 |
| 16,284,154 |
| 1,870,048 |
| 44,923 |
| 70,325,635 |
| 291,482,180 |
|
NOTE 11 – — RELATED PARTY DISCLOSURES
Balances and transactions with related parties as of December 31, 2011and 20102012 and December 31, 2011 are detailed as follows:
11.1 Accounts receivable:receivable:
11.1.1 Current:Current:
Taxpayer ID |
| Company |
| Relationship |
| Country |
| Currency |
| 12.31.2011 |
| 12.31.2010 |
|
| Company |
| Relationship |
| Country |
| Currency |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
96.891.720-K |
| Embonor S.A. |
| Shareholder |
| Chile |
| Chilean pesos |
| 4,893,956 |
| — |
| |||||||||||||
96.714.870-9 |
| Coca-Cola de Chile S. A. |
| Shareholder |
| Chile |
| Chilean peso |
| 6,014,176 |
| — |
|
| Coca-Cola de Chile S. A. |
| Shareholder |
| Chile |
| Chilean pesos |
| — |
| 6,014,176 |
|
86.881.400-4 |
| Envases CMF S. A. |
| Associate |
| Chile |
| Chilean peso |
| 338,765 |
| — |
|
| Envases CMF S. A. |
| Associate |
| Chile |
| Chilean pesos |
| — |
| 338,765 |
|
96.517.210-2 |
| Embotelladora Iquique S.A. |
| Shareholder |
| Chile |
| Chilean pesos |
| 358,859 |
| — |
| |||||||||||||
Foreign |
| Montevideo Refrescos S.A. |
| Shareholder |
| Uruguay |
| Dollars |
| 51,215 |
| — |
| |||||||||||||
96.919.980-7 |
| Cervecería Austral S.A. |
| Related to director |
| Chile |
| Dollars |
| 20,058 |
|
|
| |||||||||||||
77.755.610-k |
| Comercial Patagona Ltda. |
| Related to director |
| Chile |
| Chilean pesos |
| 301 |
| — |
| |||||||||||||
93.473.000-3 |
| Embotelladoras Coca-Cola Polar S.A. |
| Related to shareholder |
| Chile |
| Chilean peso |
| 66,052 |
| 248,273 |
|
| Embotelladoras Coca-Cola Polar S.A. |
| Shareholder |
| Chile |
| Chilean pesos |
| — |
| 66,052 |
|
Total |
|
|
|
|
|
|
|
|
| 6,418,993 |
| 248,273 |
| |||||||||||||
|
|
|
| Total |
|
|
|
|
| 5,324,389 |
| 6,418,993 |
|
11.1.2 Non-current:Non current:
Taxpayer ID |
| Company |
| Relationship |
| Country of |
| Currency |
| 12.31.2011 |
| 12.31.2010 |
|
| Company |
| Relationship |
| Country |
| Currency |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
96.714.870-9 |
| Coca-Cola de Chile S.A. |
| Shareholder |
| Chile |
| Chilean peso |
| 11,187 |
| 8,847 |
|
| Coca-Cola de Chile S.A. |
| Shareholder |
| Chile |
| Chilean pesos |
| 7,197 |
| 11,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
| 11,187 |
| 8,847 |
| |||||||||||||
|
|
|
| Total |
|
|
|
|
| 7,197 |
| 11,187 |
|
NOTE 11 — RELATED PARTY DISCLOSURES (Continued)
11.2 Accounts Payable :Payable:
11.2.1 Current:Current:
Taxpayer ID |
| Company |
| Relationship |
| Country of |
| Currency |
| 12.31.2011 |
| 12.31.2010 |
|
| Company |
| Relationship |
| Country |
| Currency |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| |||||||||||||
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96.714.870-9 |
| Coca-Cola de Chile S.A. |
| Shareholder |
| Chile |
| Chilean peso |
| — |
| 3,959,060 |
|
| Coca Cola de Chile S.A. |
| Shareholder |
| Chile |
| Chilean pesos |
| 8,680,945 |
| — |
|
Foreign |
| Servicio y Productos para Bebidas Refrescantes S.R.L. |
| Related to shareholder |
| Argentina |
| Argentine peso |
| 962,725 |
| 2,725,508 |
|
| Servicio y Productos para Bebidas Refrescantes S.R.L. |
| Shareholder |
| Argentina |
| Argentine peso |
| 11,624,070 |
| 962,725 |
|
Foreign |
| Recofarma do Indústrias Amazonas Ltda. |
| Related to shareholder |
| Brazil |
| Real |
| 6,287,520 |
| 3,834,762 |
|
| Recofarma do Industrias Amazonas Ltda. |
| Related to Shareholder |
| Brazil |
| Brazilian Reais |
| 6,721,378 |
| 6,287,520 |
|
96.705.990-0 |
| Envases Central S.A. |
| Associate |
| Chile |
| Chilean peso |
| 2,200,977 |
| 1,005,828 |
|
| Envases Central S.A. (1) |
| Equity Investee |
| Chile |
| Chilean pesos |
| — |
| 2,200,977 |
|
86.881.400-4 |
| Envases CMF S.A. |
| Associate |
| Chile |
| Chilean peso |
| — |
| 1,216,955 |
|
| Envases CMF S.A. |
| Associate |
| Chile |
| Chilean pesos |
| 5,441,206 |
| — |
|
76.389.720-6 |
| Vital Aguas S.A. |
| Associate |
| Chile |
| Chilean peso |
| 732,249 |
| 630,927 |
|
| Vital Aguas S.A. (1) |
| Associate |
| Chile |
| Chilean pesos |
| — |
| 732,249 |
|
93.899.000-K |
| Vital Jugos S.A. (1) |
| Associate |
| Chile |
| Chilean pesos |
| — |
| 1,175,567 |
| |||||||||||||
89.996.200-1 |
| Envases del Pacífico S.A. |
| Director común |
| Chile |
| Chilean peso |
| — |
| 173,850 |
|
| Envases del Pacifico S.A. |
| Related to director |
| Chile |
| Chilean pesos |
| 259,613 |
| — |
|
93.891.720-k |
| Coca-Cola Embonor S.A. |
| Related to shareholder |
| Chile |
| Chilean peso |
| — |
| 776,583 |
| |||||||||||||
96.648.500-0 |
| Vital Jugos S.A. |
| Associate |
| Chile |
| Chilean peso |
| 1,175,567 |
| — |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| 32,727,212 |
| 11,359,038 |
|
Total |
|
|
|
|
|
|
|
|
| 11,359,038 |
| 14,323,473 |
|
(1)As of December 31, 2012 they do not present balances, given they have been incorporated to the consolidation as of October 1, 2012, as a result of the merger with Embotellaoras Coca-Cola Polar S.A. explained in note 1 b).
11.3 Transactions:NOTE 11 — RELATED PARTY DISCLOSURES (Continued)
11.3 Transactions:
Taxpayer ID |
| Company | Relationship | Country | Description of transaction | Currency | Cumulative | ||||||
ThCh$ | |||||||||||||
96.714.870-9 | Coca Cola de Chile S.A. | Shareholder | Chile | Concentrate purchase | Chilean pesos | 76,756,589 | |||||||
96.714.870-9 | Coca Cola de Chile S.A. | Shareholder | Chile | Purchase of advertising services | Chilean pesos | 3,184,671 | |||||||
96.714.870-9 | Coca Cola de Chile S.A. | Shareholder | Chile | Lease of water fountain | Chilean pesos | 2,731,636 | |||||||
96.714.870-9 | Coca Cola de Chile S.A. | Shareholder | Chile | Sale of finished products | Chilean pesos | 1,245,309 | |||||||
96.714.870-9 | Coca Cola de Chile S.A. | Shareholder | Chile | Sale of services and others | Chilean pesos | 1,016,520 | |||||||
96.714.870-9 | Coca Cola de Chile S.A. | Shareholder | Chile | Sale of raw materials and others | Chilean pesos | 3,686,498 | |||||||
86.881.400-4 | Envases CMF S.A. | Associate | Chile | Purchase of bottles | Chilean pesos | 28,986,747 | |||||||
86.881.400-4 | Envases CMF S.A. | Associate | Chile | Sale of packaging materials | Chilean pesos | 2,722,611 | |||||||
96.891.720-K | Embonor S.A. | Related to shareholder | Chile | Sale of finished products | Chilean pesos | 10,293,435 | |||||||
96.517.310-2 | Embotelladora Iquique S.A. | Related to shareholder | Chile | Sale of finished products dos | Chilean pesos | 2,244,302 | |||||||
Foreign | Recofarma do Industrias Amazonas Ltda. | Related to shareholder | Brasil | Concentrate purchase | Brazilian Reais | 78,524,183 | |||||||
Foreign | Recofarma do Industrias Amazonas Ltda. | Related to shareholder | Brasil | Reimbursement and other purchases | Brazilian Reais | 1,335,869 | |||||||
Foreign | Recofarma do Industrias Amazonas Ltda. | Related to shareholder | Brasil | Advertising participation payment | Brazilian Reais | 14,502,915 | |||||||
Foreign | Servicio y Productos para Bebidas Refrescantes S.R.L. | Shareholder | Argentina | Concentrate purchase | Argentine pesos | 68,569,280 | |||||||
Foreign | Servicio y Productos para Bebidas Refrescantes S.R.L. | Shareholder | Argentina | Advertising rights, rewards and others | Argentine pesos | 2,624,656 | |||||||
Foreign | Servicio y Productos para Bebidas Refrescantes S.R.L. | Shareholder | Argentina | Collection of advertising participation | Argentine pesos | 5,419,055 | |||||||
89.996.200-1 | Envases del Pacífico S.A. | Related to director | Chile | Raw materials purchased | Chilean pesos | 1,873,336 | |||||||
97.032.000-8 | BBVA Administradora General de Fondos | Related to director | Chile | Investment in mutual funds | Chilean pesos | 61,042,686 | |||||||
97.032.000-8 | BBVA Administradora General de Fondos | Related to director | Chile | Redemption of mutual funds | Chilean pesos | 59,455,046 | |||||||
97.032.000-8 | BBVA Administradora General de Fondos | Related to director | Chile | Redemption of time deposits | Chilean pesos | 223,027 | |||||||
84.505.800-8 | Vendomatica S.A. | Related to director | Chile | Sale of finished products | Chilean pesos | 1,358,380 | |||||||
79.753.810-8 | Claro y Cía. | Related to partner | Chile | Legal Counseling | Chilean pesos | 349,211 | |||||||
93.899.000-K | Vital Jugos S.A. (1) | Associate | Chile | Sale of raw material and materials | Chilean pesos | 4,697,898 | |||||||
93.899.000-K | Vital Jugos S.A.(1) | Associate | Chile | Purchase of finished products | Chilean pesos | 18,656,191 | |||||||
96.705.990-0 | Envases Central S.A. (1) | Associate | Chile | Purchase of finished products | Chilean pesos | 14,618,933 | |||||||
96.705.990-0 | Envases Central S.A. (1) | Associate | Chile | Sale of raw materials and materials | Chilean pesos | 2,479,381 | |||||||
76.389.720-6 | Vital Aguas S.A. (1) | Associate | Chile | Purchase of finished products | Chilean pesos | 4,065,125 |
(1)Corresponds to transactions generated with Vital Aguas S.A:, Vital Jugos S.A. and Envases Central S.A. up until before taking control over those companies as a result of what has been described in Note 1b)
NOTE 11 — RELATED PARTY DISCLOSURES (Continued)
Taxpayer ID |
| Company |
| Relationship |
| Country |
| Description of transaction |
| Currency |
| Cumulative | |
ThCh$ |
| ||||||||||||
|
| Vital Jugos S.A. |
| Associate |
| Chile |
| Sale of raw materials |
| Chilean |
| 5,589,681 |
|
|
| Vital Jugos S.A. |
| Associate |
| Chile |
| Collection of loans |
| Chilean |
| 3,102,400 |
|
|
| Vital Jugos S.A. |
| Associate |
| Chile |
| Purchase of finished products |
| Chilean |
| 21,687,373 |
|
|
| Vital Jugos S.A. |
| Associate |
| Chile |
| Loan granted |
| Chilean |
| 2,600,000 |
|
96.705.990-0 |
| Envases Central |
| Associate |
| Chile |
| Purchase of finished products |
| Chilean |
| 19,170,427 |
|
96.705.990-0 |
| Envases Central S. A. |
| Associate |
| Chile |
| Sale of raw materials |
| Chilean |
| 3,345,527 |
|
96.714.870-9 |
| Coca Cola de Chile S.A. |
| Shareholder |
| Chile |
| Concentrate purchase |
| Chilean |
| 66,279,629 |
|
96.714.870-9 |
| Coca Cola de Chile S.A. |
| Shareholder |
| Chile |
| Purchase of advertising services |
| Chilean |
| 2,300,351 |
|
96.714.870-9 |
| Coca Cola de Chile S.A. |
| Shareholder |
| Chile |
| Sale of marketing services |
| Chilean |
| 791,098 |
|
96.714.870-9 |
| Coca Cola de Chile S.A. |
| Shareholder |
| Chile |
| Sale of raw materials and others |
| Chilean |
| 6,147,836 |
|
86.881.400-4 |
| Envases CMF S.A. |
| Associate |
| Chile |
| Purchase of bottles |
| Chilean |
| 10,574,791 |
|
86.881.400-4 |
| Envases CMF S.A. |
| Associate |
| Chile |
| Purchase of packaging materials |
| Chilean |
| 1,294,064 |
|
76.389.720-6 |
| Vital Aguas S.A. |
| Associate |
| Chile |
| Purchase of finished products |
| Chilean |
| 6,191,936 |
|
Foreign |
| Recofarma do Industrias Amazonas |
| Related to shareholder |
|
|
| Concentrate purchase |
|
|
| 83,833,396 |
|
Foreign |
| Recofarma do Industrias Amazonas Ltda. |
| Related to shareholder |
|
|
| Reimbursement and other purchases |
|
|
| 1,371,278 |
|
Foreign |
| Recofarma do Industrias Amazonas Ltda. |
| Related to shareholder |
|
|
| Advertising participation payment |
|
|
| 18,489,621 |
|
Foreign |
| Servicio y Productos para Bebidas Refrescantes S.R.L. |
|
|
| Argentina |
| Concentrate purchase |
| Argentine |
| 50,482,708 |
|
Foreign |
| Servicio y Productos para Bebidas Refrescantes S.R.L. |
|
|
| Argentina |
| Advertising rights, rewards and others |
| Argentine |
| 2,099,957 |
|
Foreign |
| Servicio y Productos para Bebidas Refrescantes S.R.L. |
|
|
| Argentina |
| Collection of advertising participation |
| Argentine |
| 5,078,692 |
|
96.815.680-2 |
| BBVA Administradora General de Fondos |
| Related to director |
| Chile |
| Investment in mutual funds |
| Chilean |
| 33,625,000 |
|
96.815.680-2 |
| BBVA Administradora General de Fondos |
| Related to director |
| Chile |
| Redemption of mutual funds |
| Chilean |
| 33,625,000 |
|
96.815.680-2 |
| BBVA Administradora General de Fondos |
| Related to director |
| Chile |
| Investments in time deposits |
| Chilean |
| 723,921 |
|
96.815.680-2 |
| BBVA Administradora General de Fondos |
| Related to director |
| Chile |
| Bank loans |
| Chilean |
| 3,498,249 |
|
96.815.680-2 |
| BBVA Administradora General de Fondos |
| Related to director |
| Chile |
| Redemption of time deposits |
| Chilean |
| 1,434,234 |
|
96.815.680-2 |
| BBVA Administradora General de Fondos |
| Related to director |
| Chile |
| Payment of bank loans |
| Chilean |
| 3,498,249 |
|
84.505.800-8 |
| Vendomática |
| Related to director |
| Chile |
| Sale of finished products |
| Chilean |
| 1,330,544 |
|
79.753.810-8 |
| Claro y |
| Related to |
| Chile |
| Legal |
| Chilean |
| 246,548 |
|
89.996.200-1 |
| Envases del Pacífico S.A. |
| Related to director |
| Chile |
| Raw materials purchased |
| Chilean |
| 355,460 |
|
NOTE 11 — RELATED PARTY DISCLOSURES (Continued)
Taxpayer ID |
| Company |
| Relationship |
| Country |
| Description of transaction |
| Currency |
| Cumulative | |
| |||||||||||||
96.705.990-0 |
| Envases Central S.A. |
| Associate |
| Chile |
| Purchase of finished products |
| Chilean peso |
| 17,810,345 |
|
96.705.990-0 |
| Envases Central S.A. |
| Associate |
| Chile |
| Sale of raw materials |
| Chilean peso |
| 2,542,071 |
|
96.714.870-9 |
| Coca Cola de Chile S.A. |
| Associate |
| Chile |
| Concentrate purchase |
| Chilean peso |
| 64,448,337 |
|
96.714.870-9 |
| Coca Cola de Chile S.A. |
| Associate |
| Chile |
| Advertising payment |
| Chilean peso |
| 1,857,135 |
|
96.714.870-9 |
| Coca Cola de Chile S.A. |
| Associate |
| Chile |
| Services rendered |
| Chilean peso |
| 3,292,507 |
|
96.714.870-9 |
| Coca Cola de Chile S.A. |
| Associate |
| Chile |
| Advertising collection |
| Chilean peso |
| 989,554 |
|
Foreign |
| Recofarma do Industrias Amazonas Ltda. |
| Related to shareholder |
| Brazil |
| Concentrate purchase |
| Real |
| 61,827,392 |
|
Foreign |
| Recofarma do Industrias Amazonas Ltda. |
| Related to shareholder |
| Brazil |
| Reimbursement and other purchases |
| Real |
| 1,188,468 |
|
Foreign |
| Recofarma do Industrias Amazonas Ltda. |
| Related to shareholder |
| Brazil |
| Advertising participation payment |
| Real |
| 13,851,240 |
|
86.881.400-4 |
| Envases CMF S.A. |
| Associate |
| Chile |
| Purchase of bottles |
| Chilean peso |
| 7,636,480 |
|
86.881.400-4 |
| Envases CMF S.A. |
| Associate |
| Chile |
| Purchase of packaging materials |
| Chilean peso |
| 409,929 |
|
84.505.800-8 |
| Vendomática S.A |
| Related to director |
| Chile |
| Sale of finished products |
| Chilean peso |
| 1,401,691 |
|
84.505.800-8 |
| Vendomática S.A |
| Related to director |
| Chile |
| Supply and advertising agreement |
| Chilean peso |
| 250,000 |
|
96.815.680-2 |
| BBVA Administración General de Fondos |
| Related to director |
| Chile |
| Investment in mutual funds |
| Chilean peso |
| 34,148,000 |
|
96.815.680-2 |
| BBVA Administración General de Fondos |
| Related to director |
| Chile |
| Redemption of mutual funds |
| Chilean peso |
| 36,992,000 |
|
76.389.720-6 |
| Vital Aguas S.A. |
| Associate |
| Chile |
| Purchase of finished products |
| Chilean peso |
| 5,676,978 |
|
76.389.720-6 |
| Vital Aguas S.A. |
| Associate |
| Chile |
| Services rendered |
| Chilean peso |
| 254,909 |
|
Foreign |
| Servicio y Productos para Bebidas Refrescantes S.R.L. |
| Related to shareholder |
| Argentina |
| Concentrate purchase |
| Argentine peso |
| 39,404,175 |
|
Foreign |
| Servicio y Productos para Bebidas Refrescantes S.R.L. |
| Related to shareholder |
| Argentina |
| Advertising rights, rewards and others |
| Argentine peso |
| 1,587,201 |
|
Foreign |
| Servicio y Productos para Bebidas Refrescantes S.R.L. |
| Related to shareholder |
| Argentina |
| Collection of advertising participation |
| Argentine peso |
| 6,218,762 |
|
96.891.720-K |
| Coca-Cola Embonor S. A. |
| Related to shareholder |
| Chile |
| Sale of finished products |
| Chilean peso |
| 8,236,127 |
|
96.517.310-2 |
| Embotelladora Iquique S.A. |
| Related to shareholder |
| Chile |
| Sale of finished products |
| Chilean peso |
| 689,551 |
|
93.473.000-3 |
| Embotelladora Coca-Cola Polar S.A. |
| Related to shareholder |
| Chile |
| Sale of finished products |
| Chilean peso |
| 5,243,772 |
|
89.996.200-1 |
| Envases del Pacífico S.A. |
| Related to shareholder |
| Chile |
| Raw materials purchased |
| Chilean peso |
| 481,592 |
|
NOTE 11 — RELATED PARTY DISCLOSURES (Continued) |
|
|
|
|
|
| |||||||
| |||||||||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
11.4 Payroll and benefits of the Company’s key employees
Salary and benefits paid to the Company’s key employees, corresponding to directors and managers, are detailed as follows:
Full description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Executive wages, salaries and benefits |
| 4,324,205 |
| 4,198,174 |
| 4,422,304 |
|
Director allowances |
| 1,104,000 |
| 1,016,124 |
| 742,956 |
|
Termination benefits |
| 2,289,610 |
| 1,643,749 |
| 153,924 |
|
Accrued benefits in the last five years and paid during the period (1) |
| 1,338,675 |
| 981,635 |
| — |
|
Total |
| 9,056,490 |
| 7,839,682 |
| 5,319,184 |
|
(1)The Company has an executive retention plan. This plan grants certain executives the right to receive a fixed cash payment on a pre-set date once they have completed the required years of employment.
Full description |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Executive wages, salaries and benefits |
| 4,511,609 |
| 4,324,205 |
| 4,198,174 |
|
Director allowances |
| 1,302,000 |
| 1,104,000 |
| 1,016,124 |
|
Termination benefits |
| — |
| 2,289,610 |
| 1,643,749 |
|
Accrued benefits in the last five years and paid during the period |
| 723,298 |
| 1,338,675 |
| 981,635 |
|
Total |
| 6,536,907 |
| 9,056,490 |
| 7,839,682 |
|
NOTE 12 — EMPLOYEE BENEFITS
As of December 31, 20112012 and 2010,2011, the Company had recorded reserves for profit sharing and for bonuses totaling ThCh$6,354,817ThCh 8,240,460 and ThCh$6,635,6796,354,816, respectively.
This liability is shown in accrued other non-current non-financial liabilities in the statement of financial position.
The charge against income in the statement of comprehensive income is allocated between the cost of sales, the cost of marketing, distribution costs and administrative expenses.
12.1 Personnel expenses
Personnel expenses included in the statement of consolidated comprehensive income statement were:
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wages and salaries |
| 85,266,348 |
| 78,616,848 |
| 61,841,332 |
|
| 116,549,091 |
| 85,266,348 |
| 78,616,848 |
|
Employee benefits |
| 19,336,845 |
| 20,084,397 |
| 17,806,789 |
|
| 29,023,263 |
| 19,336,845 |
| 20,084,397 |
|
Severance and post-employment benefits |
| 2,307,187 |
| 1,580,085 |
| 8,479,218 |
|
| 2,474,611 |
| 2,307,187 |
| 1,580,085 |
|
Other personnel expenses |
| 5,135,492 |
| 4,549,669 |
| 4,159,121 |
|
| 7,218,448 |
| 5,135,492 |
| 4,549,669 |
|
Total |
| 112,045,872 |
| 104,830,999 |
| 92,286,460 |
|
| 155,265,413 |
| 112,045,872 |
| 104,830,999 |
|
NOTE 12 — EMPLOYEE BENEFITS (Continued)
12.2 Post-employment benefits
This item represents the employee severance indemnitiespost employment benefits valued pursuant to Note 2.17. The composition of balances at December 31, 2011 and 2010 is detailed as follows
Post-employment benefits |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current provision |
| 5,130,015 |
| 7,256,590 |
|
| 7,037,122 |
| 5,130,015 |
|
Total |
| 5,130,015 |
| 7,256,590 |
|
| 7,037,122 |
| 5,130,015 |
|
12.3 Post-employment benefit movement
The movements of post-employment benefits for the year ended December 31, 2012, 2011 and 2010 are detailed as follows:
Movements |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
| |||||||
Initial balance |
| 7,256,590 |
| 8,401,791 |
| 8,034,813 |
|
| 5,130,015 |
| 7,256,590 |
| 8,401,791 |
|
Increase due to merger |
| 189,921 |
| — |
| — |
| |||||||
Service costs |
| 288,386 |
| 359,798 |
| 114,293 |
|
| 1,500,412 |
| 288,386 |
| 359,798 |
|
Interest costs |
| 471,678 |
| 213,927 |
| 325,872 |
|
| 158,235 |
| 471,678 |
| 213,927 |
|
Net actuarial losses |
| 1,310,764 |
| 569,707 |
| 540,943 |
|
| 1,010,136 |
| 1,310,764 |
| 569,707 |
|
Benefits paid |
| (4,197,403 | ) | (2,288,633 | ) | (614,130 | ) |
| (951,597 | ) | (4,197,403 | ) | (2,288,633 | ) |
Ending balance |
| 5,130,015 |
| 7,256,590 |
| 8,401,791 |
| |||||||
Total |
| 7,037,122 |
| 5,130,015 |
| 7,256,590 |
|
12.4 Assumptions
The actuarial assumptions used at December 31, 2012, 2011 and 2010 were::
Assumption |
| 2011 |
| 2010 |
| 2009 |
|
| 2012 |
| 2011 |
| 2010 |
|
|
|
|
|
|
|
|
| |||||||
Discount rate (1) |
| 6.5% |
| 6.7% |
| 6,5% |
|
| 5.1% |
| 6.5% |
| 6.7% |
|
Expected salary increase rate (1) |
| 5.0% |
| 4.7% |
| 4.5% |
|
| 4.4% |
| 5.0% |
| 4.7% |
|
Turnover rate |
| 6.6% |
| 6.6% |
| 6,6% |
|
| 5.4% |
| 6.6% |
| 6.6% |
|
Mortality rate (2) |
| RV-2009 |
| RV-2004 |
| RV-2004 |
|
| RV-2009 |
| RV-2009 |
| RV-2004 |
|
Retirement age of women |
| 60 years |
| 60 years |
| 60 años |
|
| 60 years |
| 60 years |
| 60 years |
|
Retirement age of men |
| 65 years |
| 65 years |
| 65 años |
|
| 65 years |
| 65 years |
| 65 years |
|
(1) The discount rate and the expected salary increase rate are calculated in real terms, which do not include an inflation adjustment. The rates shown above are presented in nominal terms to facilitate a better understanding by the reader.reader.
(2) Mortality assumption tables prescribed for use by the Chilean SuperintendencySuperintendence of Securities and Insurance.
NOTE 13 — INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD
13.1 Balances
Investments in associates recorded using the equity method are detailed as follows:
|
|
|
| Country of |
| Functional |
| Investment Cost |
| Percentage interest |
|
|
|
| Country of |
| Functional |
| Carrying Value |
| Percentage interest |
| ||||||||
Taxpayer ID |
| Name |
| Incorporation |
| Currency |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2011 |
| 12.31.2010 |
|
| Name |
| Incorporation |
| Currency |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| % |
| % |
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| % |
| % |
|
86.881.400-4 |
| Envases CMF S.A. |
| Chile |
| Chilean peso |
| 16,824,399 |
| 19,070,517 |
| 50.00 | % | 50.00 | % |
| Envases CMF S.A. (1) |
| Chile |
| Pesos |
| 17,848,010 |
| 16,824,399 |
| 50.00 | % | 50.00 | % |
96.845.500-0 |
| Vital Jugos S.A. |
| Chile |
| Chilean peso |
| 12,568,269 |
| — |
| 57.00 | % | — |
| |||||||||||||||
93.899.000-K |
| Vital Jugos S.A. (1) and (2) |
| Chile |
| Pesos |
| — |
| 12,568,269 |
| — |
| 57.00 | % | |||||||||||||||
76.389.720-6 |
| Vital Aguas S.A. |
| Chile |
| Chilean peso |
| 2,952,050 |
| 2,718,443 |
| 56.50 | % | 56.50 | % |
| Vital Aguas S.A. (1) and (2) |
| Chile |
| Pesos |
| — |
| 2,952,050 |
| — |
| 56.50 | % |
96.705.990-0 |
| Envases Central S.A. |
| Chile |
| Chilean peso |
| 4,223,890 |
| 3,983,711 |
| 49.91 | % | 49.91 | % |
| Envases Central S.A. (1) and (2) |
| Chile |
| Pesos |
| — |
| 4,223,890 |
| — |
| 49.91 | % |
Foreign |
| Mais Indústria de Alimentos S.A. |
| Brazil |
| Real |
| — |
| 5,517,687 |
| — |
| 6.16 | % |
| Kaik Participacoes Ltda. (3) |
| Brasil |
| Brazilian Real |
| 1,172,641 |
| 1,304,027 |
| 11.31 | % | 11.31 | % |
Foreign |
| Sucos Del Valle do Brasil Ltda. |
| Brazil |
| Real |
| — |
| 3,881,452 |
| — |
| 6.16 | % |
| Sistema de Alimentos de Bebidas Do Brasil Ltda. (3) |
| Brasil |
| Brazilian Real |
| 9,587,589 |
| 9,766,182 |
| 5.74 | % | 5.74 | % |
Foreign |
| Kaik Participações Ltda. |
| Brazil |
| Real |
| 1,304,027 |
| 1,223,538 |
| 11.31 | % | 11.31 | % |
| Sorocaba Refrescos S.A.(4) |
| Brasil |
| Brazilian Real |
| 34,709,914 |
| — |
| 40.00 | % | — |
|
Foreign |
| Sistema de Alimentos e Bebidas do Brasil Ltda. |
| Brazil |
| Real |
| 9,766,182 |
| — |
| 5.74 | % | — |
|
| Holdfab2 Participacoes Societarias Ltda. |
| Brasil |
| Brazilian Real |
| 9,761,907 |
| 12,652,149 |
| 36.40 | % | 36.40 | % |
Foreign |
| Holdfab2 Participações Societarias Ltda. |
| Brazil |
| Real |
| 12,652,149 |
| 14,358,820 |
| 36.40 | % | 36.40 | % | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| 60,290,966 |
| 50,754,168 |
|
|
|
|
|
| Total |
|
|
|
|
| 73,080,061 |
| 60,290,966 |
|
|
|
|
|
(1)In these companies, regardless of the percentage of ownership interest held in 2011, was determined that no controlling interest was held, only a significant influence, given that there was not a majority vote of the Board of Directors to make strategic business decisions.
(2)The mentioned companies do not present balances as of December 31, 2012, as a result of the merger with Embotellaoras Coca-Cola Polar S.A. explained in note 1 b)
(3)In these companies, regardless of the percentage of ownership interest held,it has been determined that no controlling interest was held, only a significant influence, given that there was not a majority vote of the Board of Directors to make strategic business decisions.
(4)Corresponds to the purchase of a 40% ownership interest in the Brazilian company for an amount of ThCh33,496,920 during the last quarter of 2012.
13.2NOTE 13 — INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
13.2 Movement
The movement of investments in associates recorded using the equity method is shown below, for to the year ended December 31, 2012, 2011 and 2010:
Details |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial Balance |
| 50,754,168 |
| 34,731,218 |
| 32,822,541 |
|
| 60,290,966 |
| 50,754,168 |
| 34,731,218 |
|
|
|
|
|
|
|
|
| |||||||
Incorporation of Vital Jugos S.A. |
| — |
| 13,114,268 |
| — |
| |||||||
Capital increases in equity investees |
| 4,527,000 |
| 15,229,291 |
| 937,607 |
|
| 2,380,320 |
| 4,527,000 |
| 15,229,291 |
|
Acquisition of Sorocaba Refrescos S.A. (40%) |
| 34,513,444 |
| — |
| — |
| |||||||
Sale of 43% ownership interest in Vital Jugos S.A. |
| (6,188,675 | ) | — |
| — |
|
| — |
| (6,188,675 | ) | — |
|
Incorporation of Vital Jugos S.A. |
| 13,114,268 |
| — |
| — |
| |||||||
Dividends received |
| (2,786,957 | ) | (1,379,837 | ) | (2,000,000 | ) |
| (402,148 | ) | (2,786,957 | ) | (1,379,837 | ) |
Share in operating income |
| 2,541,186 |
| 2,984,544 |
| 2,506,119 |
|
| 2,409,110 |
| 2,541,186 |
| 2,984,544 |
|
Goodwill in sale of property plant and equipment to Envases CMF |
| 85,266 |
| 85,266 |
| 85,266 |
|
| 85,266 |
| 85,266 |
| 85,266 |
|
Amortization Fair Value Vital Jugos S. A. (a) |
| (77,475 | ) | — |
| — |
| |||||||
Decrease in foreign currency translation |
| (621,861 | ) | (624,004 | ) | 527,922 |
|
| (3,652,740 | ) | (621,861 | ) | (624,004 | ) |
Capital decrease (return of capital) in Envases CMF S.A. |
| (1,150,000 | ) | — |
| — |
|
| — |
| (1,150,000 | ) | — |
|
Deconsolidation of certain equity method investments due to Polar merger |
| (22,466,682 | ) | — |
| — |
| |||||||
Other, nets |
| 16,571 |
| (272,310 | ) | (148,237 | ) |
| — |
| 16,571 |
| (272,310 | ) |
Ending balance |
| 60,290,966 |
| 50,754,168 |
| 34,731,218 |
|
| 73,080,061 |
| 60,290,966 |
| 50,754,168 |
|
(a)Refer to table below for a reconciliation of these amounts to those recorded in the accompanying consolidated income statement.
NOTE 13 — INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
The main movements for the yearsperiods ended 2012, 2011 and 2010 are detailed as follows:
· A special shareholders meeting of Vital S.A., oura Company subsidiary, held on January 5, 2011, approved a capital increase of ThCh$1,278,000, which was paid in full on January 7, 2011. It also approved changing the name of the company to Vital Jugos S.A.
· On January 21, 2011, our subsidiaries Andina Bottling Investments S.A. and Andina Inversions Societarias S.A. together sold a 43% ownership interest in Vital Jugos S.A. to Embotelladoras Coca-Cola Polar S.A., (15%) and Coca-Cola Embonor S.A. (28%), for an amount of ThCh$6,841,889. The fair value of the 43% sold was ThCh$6,188,6756,841,889, resulting in a gain of ThCh$ 653,214 which is presented as Otherother gains (losses) in the income statement.
·As a result of the transactions, the Andina groupCompany lost control of Vital Jugos S.A., given that despite maintaining 57% owneship,ownership, substantive participating rights existexisted on behalf of the other shareholders (in the then shareholders agreement) in that at least one vote is required from the rest of the bottlers of Coca-Cola system for decision-making of financial policies and operation of the business. Accordingly, beginning on January 21, 2011, Vital Jugos S.A., iswas thus treated as investments accounted for using the equity method, being excluded from the consolidation. The fair value of the 57% of Vital Jugos S.A. retained amounts to ThCh$13,144,268.
Additionally, because of the loss of control of Vital Jugos S.A., according to the guidelines of IAS 27 “Consolidated and Separate Financial Statements”, the difference between the estimated fair value and the book value of the investment remaining in the Company’s possession (amounting to ThCh$867,414) was recognized as of a component of “Share in profit (loss) of equity method investees” within the income statement, at December 31, 2011.
· During the year ended December 31,months of March and April 2011, capital contributioncontributions were made to Vital Jugos S.A., for a total amount of ThCh$3,249,000. These amounts are included as a component of the “capital increases in equity investees” disclosed above.
·On February 12, 2009, our Brazilian subsidiary Rio de Janeiro Refrescos Ltda, made a capital contribution to Holdfab Participações Ltda, in which it holds an interest of 14.732% in the amount of ThCh$217,637. These amounts are included as a component of the “capital increases in equity investees” disclosed above.
· Holdfab2 Participacoes Societarias Ltda. was established in Brazil on March 23, 2010, along with the Coca-Cola bottlers for the purpose of concentrating their investments in the company Leon Junior S.A., in which our subsidiary Rio de Janeiro Refrescos Ltda. has a 36.40% ownership interest, capital contributions amounted to ThCh$15,229,291 and were carried out on August 23, 2010. These amounts are included as a component of the “capital increases in equity investees” disclosed above. In turn, Holdfab 2 Participações Societárias Ltda. holds a 50% ownership interest in Leão Junior, hence the Company indirectly controls 18.2% of the latter.
· During 2011, Sucos del Valle do Brasil Ltda. changed its name to Sistema de Alimentos de Bebidas do Brasil Ltda. and merged with Mais Industrias de Alimentos S.A. that same year. Rio de Janeiro Refrescos Ltda. held an interest of 6.16% in both companies, but after the corporate restructuring, basically to capitalize income, that share fell to 5.74%.
· During the yearsperiod ended December 31, 2011 2010 and 2009,2010, the Company has received dividends from its associateequity investee, Envases CMF S.A. which amounted toin the amount of ThCh$2,061,957 and ThCh$1,379,837 andrespectively . During the year 2012 said Company has not distributed dividends, however, the minimum dividend established by IFRS has been recognized in the amount of ThCh$2,000,000 respectively.402,148.
·A special shareholders meeting of Envases CMF S.A. approved a capital decrease of ThCh$2,300,000. The Company received ThCh$1,150,000 of that amount, which is shown as an accounts receivable from an affiliate.
Reconciliation of Income by Investment in Associates:
Details |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Equity in income of associates |
| 2,541,186 |
| 2,984,544 |
| 2,506,119 |
|
|
|
|
|
|
|
|
|
Non-realized earnings in inventory acquired from associates and not sold at the end of period, presented as a discount in the respective asset account (containers and/or inventories) |
| (600,294 | ) | (754,875 | ) | (987,487 | ) |
|
|
|
|
|
|
|
|
Amortization of gain sale of property plant and equipment Envases CMF |
| 85,266 |
| 85,266 |
| 85,266 |
|
|
|
|
|
|
|
|
|
Income Statement Balance |
| 2,026,158 |
| 2,314,935 |
| 1,603,898 |
|
NOTE 13 — INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
·In accordance with the Special Shareholders’ Meeting of Envases CMF S.A., held during December 2011, a capital reduction was agreed in the amount of ThCh$2,300,000, of which the Company shall receive ThCh$1,150,000, which was paid during the month of January 2012.
·In accordance with the Special Shareholders’ Meeting of our equity investee, Vital Jugos S.A., held April 10, 2012, a capital increase was agreed in the amount of ThCh$6,960,000, with 60% of the increase being paid on May 15, 2012 and the balance thereof will be paid during the course of the year. The Andina Company met that capital increase in the percentage of the outstanding ownership at that date of 57% contributing ThCh$2,380,320.
·After the merger with Embotelladoras Coca-Cola Polar, identified in Note 1b) the Andina Company acquired control in Vital Jugos S.A., Vital Aguas S.A. and Envases Central as of October 1, 2012, since it now holds an ownership interest of 72.0%, 73.6% and 59.27% respectively, and the substantive participating rights of other shareholders that previously existed are no longer in effect.
·In November of 2012 and exercising the faculties given by the Shareholders’ Agreements, Coca-Cola Embonor S.A., purchased at book value 7.1% ownership interest in Vital Aguas S.A. and 7.0% ownership interest in Vital Jugos S.A. The disbursements received for these transactions amounted to ThCh$2,112,582.
·On August 30, 2012, Rio de Janeiro Refrescos Ltda. (“RJR”), a subsidiary of Embotelladora Andina S.A. in Brazil, on one part; and, on the other, Renosa Industria Brasileira de Bebidas S.A. have signed a promissory purchase agreement containing the conditions leading to the acquisition by RJR of 100% of the equity interest held by Renosa in Sorocaba Refrescos S.A. which is equivalent to 40% of the total shares of Sorocaba. The promissory agreement should be fulfilled within a period of 180 days. The agreement was materialized during the month of October with a payment of 146.9 million reais. The Company is still in the process of completing its equity method purchase price allocation for this transaction. Specifically, it is in the process of finalizing amounts to be assigned to non-monetary assets at the investee level.
13.3 Reconciliation of Income by Investment in Associates:
Details |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Equity in income of associates |
| 2,409,110 |
| 2,541,186 |
| 2,984,544 |
|
|
|
|
|
|
|
|
|
Non-realized earnings in inventory acquired from associates and not sold at the end of period, presented as a discount in the respective asset account (containers and/or inventories) |
| (647,003 | ) | (600,294 | ) | (754,875 | ) |
Amortization of gain sale of property plant and equipment Envases CMF |
| 85,266 |
| 85,266 |
| 85,266 |
|
Amortization of fair value adjustments related to Vital acquisition |
| (77,475 | ) | — |
| — |
|
Income Statement Balance |
| 1,769,898 |
| 2,026,158 |
| 2,314,935 |
|
NOTE 13 — INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD (Continued)
13.4Summary financial information of associates:
The attached table presents summarized information regarding the Company´s equity investees as of December 31, 2012:
|
| Envases CMF |
| Sorocaba |
| Kaik |
| Sistema de |
| Holdfab 2 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Total assets |
| 58,188,207 |
| 42,451,865 |
| 10,359,341 |
| 272,181,209 |
| 27,343,843 |
|
Total liabilities |
| 21,042,658 |
| 22,140,900 |
| 318 |
| 105,150,047 |
| 522,262 |
|
Total revenue |
| 44,520,824 |
| 5,908,245 |
| — |
| 235,093,886 |
| — |
|
Net income (loss) of associate |
| 2,680,985 |
| 491,176 |
| 543,050 |
| 18,486,920 |
| (2,605,025 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
Reporting date |
| 12/31/2012 |
| 11/30/2012 |
| 11/30/2012 |
| 11/30/2012 |
| 11/30/2012 |
|
NOTE 14 — INTANGIBLE ASSETS AND GOODWILL
14.1Intangible assets not considered as goodwill
Intangible assets not considered as goodwill as of the end of each period are detailed as follows:
|
| December 31, 2011 |
| December 31, 2010 |
|
| December 31, 2012 |
| December 31, 2011 |
| ||||||||||||||||
|
| Gross |
| Cumulative |
| Net |
| Gross |
| Cumulative |
| Net |
|
| Gross |
| Cumulative |
| Net |
| Gross |
| Cumulative |
| Net |
|
Description |
| Amount |
| Amortization |
| Amount |
| Amount |
| Amortization |
| Amount |
|
| Amount |
| Amortization |
| Amount |
| Amount |
| Amortization |
| Amount |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Water rights |
| 526,342 |
| (103,879 | ) | 422,463 |
| 522,750 |
| (94,124 | ) | 428,626 |
|
| 497,998 |
| (90,041 | ) | 407,957 |
| 526,342 |
| (103,879 | ) | 422,463 |
|
Distribution rights |
| 459,320,270 |
| — |
| 459,320,270 |
| — |
| — |
| — |
| |||||||||||||
Software |
| 8,974,534 |
| (8,258,140 | ) | 716,394 |
| 8,718,483 |
| (7,781,514 | ) | 936,969 |
|
| 13,597,796 |
| (8,743,750 | ) | 4,854,046 |
| 8,974,534 |
| (8,258,140 | ) | 716,394 |
|
Total |
| 9,500,876 |
| (8,362,019 | ) | 1,138,857 |
| 9,241,233 |
| (7,875,638 | ) | 1,365,595 |
|
| 473,416,064 |
| (8,833,791 | ) | 464,582,273 |
| 9,500,876 |
| (8,362,019 | ) | 1,138,857 |
|
NOTE 14 — INTANGIBLE ASSETS AND GOODWILL (Continued)
The movement and balances of identifiable intangible assets are detailed as follows for the period January 1 to December 31, 2012, 2011 2010 and 2009:2010:
|
| December 31, 2011 |
| December 31, 2010 |
| December 31, 2009 |
|
| December 31, 2012 |
| December 31, 2011 |
| December 31, 2010 |
| ||||||||||||||||||||||||||
|
| Water |
|
|
|
|
| Water |
|
|
|
|
| Water |
|
|
|
|
|
| Distribution |
| Water |
|
|
|
|
| Water |
|
|
|
|
| Water |
|
|
|
|
|
Description |
| rights |
| Software |
| Total |
| rights |
| Software |
| Total |
| rights |
| Software |
| Total |
|
| Rights |
| rights |
| Software |
| Total |
| rights |
| Software |
| Total |
| rights |
| Software |
| Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial balance |
| 428,626 |
| 936,969 |
| 1,365,595 |
| 426,902 |
| 1,690,431 |
| 2,117,333 |
| 119,605 |
| 2,336,157 |
| 2,455,762 |
|
| — |
| 422,463 |
| 716,394 |
| 1,138,857 |
| 428,626 |
| 936,969 |
| 1,365,595 |
| 426,902 |
| 1,690,431 |
| 2,117,333 |
|
Additions |
| — |
| 418,182 |
| 418,182 |
| 16,710 |
| 181,123 |
| 197,833 |
| 405,798 |
| 66,746 |
| 472,544 |
|
| — |
| — |
| 3,506,266 |
| 3,506,266 |
| — |
| 418,182 |
| 418,182 |
| 16,710 |
| 181,123 |
| 197,833 |
|
Increase due to merger (1) |
| 459,393,920 |
| — |
| 1,083,184 |
| 460,477,104 |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||
Amortization |
| (7,207 | ) | (661,989 | ) | (669,196 | ) | (8,024 | ) | (907,477 | ) | (915,501 | ) | (98,501 | ) | (744,284 | ) | (842,785 | ) |
| — |
| (6,585 | ) | (547,481 | ) | (554,066 | ) | (7,207 | ) | (661,989 | ) | (669,196 | ) | (8,024 | ) | (907,477 | ) | (915,501 | ) |
Other increases (decreases) |
| 1,044 |
| 23,232 |
| 24,276 |
| (6,962 | ) | (27,108 | ) | (34,070 | ) | — |
| 31,812 |
| 31,812 |
|
| (73,650 | ) | (7,921 | ) | 95,683 |
| 14,112 |
| 1,044 |
| 23,232 |
| 24,276 |
| (6,962 | ) | (27,108 | ) | (34,070 | ) |
Final balance |
| 422,463 |
| 716,394 |
| 1,138,857 |
| 428,626 |
| 936,969 |
| 1,365,595 |
| 426,902 |
| 1,690,431 |
| 2,117,333 |
|
| 459,728,227 |
| 407,957 |
| 4,854,046 |
| 464,582,273 |
| 422,463 |
| 716,394 |
| 1,138,857 |
| 428,626 |
| 936,969 |
| 1,365,595 |
|
(1)In accordance with what has been described in note 1b) corresponds to the rights to produce and distribute products under the Brand of Coca-Cola in the franchise territories maintained by Embotelladoras Coca-Cola Polar S.A. in Chile, Argentina and Paraguay. Said distribution rights are not subject to amortization and are composed as follows:
M$ | |||
Chile | 300,305,727 | ||
Paraguay | 156,627,248 | ||
Argentina | 2,387,295 | ||
Total | 459,320,270 |
NOTE 14 — INTANGIBLE ASSETS AND GOODWILL (Continued)
14.2 Goodwill
Movement in goodwill during the years 2011, 2010 and 2009 is detailed as follows:
Year ended December 31, 2012
Cash generating unit |
| 01.01.2012 |
| Additions |
| Disposals or |
| Foreign currency |
| 12.31.2012 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Chile operation |
| — |
| 8,503,023 |
| — |
| — |
| 8,503,023 |
|
Brazilian operation |
| 41,697,004 |
| — |
| — |
| (6,160,037 | ) | 35,536,967 |
|
Argentine operation |
| 15,855,174 |
| 1,041,633 |
| — |
| (3,059,468 | ) | 13,837,339 |
|
Paraguayan operation |
| — |
| 6,915,412 |
| — |
| — |
| 6,915,412 |
|
Total |
| 57,552,178 |
| 16,460,068 |
| — |
| (9,219,505 | ) | 64,792,741 |
|
(1)As explained in note 1b), corresponds to goodwill generated in the fair value valuation of assets and liabilities stemming from the merger with Embotelladoras Coca-Cola Polar S.A.
Year ended December 31, 2011
Cash generating unit |
| 01.01.2011 |
| Additions |
| Disposals or |
| Foreign currency translation |
| 12.31.2011 |
|
| 01.01.2011 |
| Additions |
| Disposals or |
| Foreign currency |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Brazilian operation |
| 42,298,955 |
| — |
| — |
| (601,951 | ) | 41,697,004 |
|
| 42,298,955 |
| — |
| — |
| (601,951 | ) | 41,697,004 |
|
Argentine operation |
| 15,471,380 |
| — |
| — |
| 383,794 |
| 15,855,174 |
|
| 15,471,380 |
| — |
| — |
| 383,794 |
| 15,855,174 |
|
Total |
| 57,770,335 |
| — |
| — |
| (218,157 | ) | 57,552,178 |
|
| 57,770,335 |
| — |
| — |
| (218,157 | ) | 57,552,178 |
|
Year ended December 31, 2010
Cash generating unit |
| 01.01.2010 |
| Additions |
| Disposals or |
| Foreign currency |
| 12.31.2010 |
| |||||||||||
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Brazilian operation |
| 43,820,310 |
| — |
| — |
| (1,521,355 | ) | 42,298,955 |
|
| 43,820,310 |
| — |
| — |
| (1,521,355 | ) | 42,298,955 |
|
Argentine operation |
| 17,540,035 |
| — |
| — |
| (2,068,655 | ) | 15,471,380 |
|
| 17,540,035 |
| — |
| — |
| (2,068,655 | ) | 15,471,380 |
|
Total |
| 61,360,345 |
| — |
| — |
| (3,590,010 | ) | 57,770,335 |
|
| 61,360,345 |
| — |
| — |
| (3,590,010 | ) | 57,770,335 |
|
Year January — December, 2009F-65
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Brazilian operation |
| 41,042,712 |
| — |
| — |
| 2,777,598 |
| 43,820,310 |
|
Argentine operation |
| 24,226,359 |
| — |
| — |
| (6,686,324 | ) | 17,540,035 |
|
Total |
| 65,269,071 |
| — |
| — |
| (3,908,726 | ) | 61,360,345 |
|
NOTE 15 — OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES
Liabilities are detailed as follows:
Current |
| 12.31.2012 |
| 12.31.2011 |
| |||||
|
| 12.31.2011 |
| 12.31.2010 |
|
| ThCh$ |
| ThCh$ |
|
|
| ThCh$ |
| ThCh$ |
| |||||
Current |
|
|
|
|
| |||||
Bank loans |
| 8,689,670 |
| 6,941,133 |
|
| 87,278,613 |
| 8,689,670 |
|
Bonds payable |
| 3,426,922 |
| 3,120,737 |
|
| 4,376,648 |
| 3,426,922 |
|
Forward contract obligations |
| 163,718 |
| 917,219 |
| |||||
Deposits in guarantee |
| 10,813,092 |
| 8,002,105 |
|
| 13,851,410 |
| 10,813,092 |
|
CPMF(1) |
| — |
| 1,934,529 |
| |||||
Forward contract obligations (see note 20) |
| 394,652 |
| 163,718 |
| |||||
Leasing agreements |
| 346,696 |
| — |
| |||||
Total |
| 23,093,402 |
| 20,915,723 |
|
| 106,248,019 |
| 23,093,402 |
|
|
|
|
|
|
| |||||
Non-current |
|
|
|
|
| |||||
Bank loans |
| 5,081,986 |
| 593,726 |
| |||||
Bonds payable |
| 69,559,417 |
| 69,855,733 |
| |||||
Total |
| 74,641,403 |
| 70,449,459 |
|
(1)In 1999, the Company’s subsidiary Rio Janeiro Refrescos Ltda. filed a tax lawsuit against the Brazilian Treasury for alleged unconstitutionality in the collection of the tax called CPMF (Contribuição Provisória sobre Movimentação Financeira) on the debits and credits to bank current accounts. While the subsidiary obtained a provisional suspension of said payments from the Courts of Justice, the corresponding tax obligation was still provisioned. In November 2006, the Courts of Justice ruled the constitutionality of the referred tax and Refrescos came to an agreement with the Brazilian Treasury to divide payments in 60 installments.
Non-current |
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
Bank loans |
| 46,353,758 |
| 5,081,986 |
|
Bonds payable |
| 126,356,040 |
| 69,559,417 |
|
Leasing agreements |
| 1,170,397 |
| — |
|
Total |
| 173,880,195 |
| 74,641,403 |
|
NOTE 15 — OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)
15.1.1 Bank loans, current
|
|
|
|
|
|
|
|
|
|
|
|
| Maturity |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maturity |
| Total |
| |||||||||||||||
Indebted Entity | Indebted Entity |
| Creditor Entity |
|
|
| Amortization |
| Effective |
| Nominal |
| Up to |
| 90 days |
| At |
| At |
| Indebted Entity |
| Creditor Entity |
|
|
| Amortization |
| Effective |
| Nominal |
| Up to |
| 90 days |
| At |
| At |
| ||||||||||||||
Tax ID, |
| Name |
| Country |
| Tax ID, |
| Name |
| Country |
| Currency |
| Year |
| Rate |
| Rate |
| 90 days |
| year |
| 12.31.2011 |
| 12.31.2010 |
|
| Name |
| Country |
| Tax ID, |
| Name |
| Country |
| Currency |
| Year |
| Rate |
| Rate |
| 90 days |
| up to 1 year |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
Foreign |
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Nación Bicentenario (1) |
| Argentina |
| Argentine peso |
| At maturity |
| 14.80 | % | 9.90 | % | — |
| 739,966 |
| 739,966 |
| — |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Nación Bicentenario |
| Argentina |
| Argentine Peso |
| Monthly |
| 14.80 | % | 9.90 | % | 243,782 |
| 705,763 |
| 949,545 |
| 739,966 |
|
Foreign |
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Nación |
| Argentina |
| Argentine peso |
| At maturity |
| 11.85 | % | 11.85 | % | 1,516,442 |
| 4,021,000 |
| 5,537,442 |
| — |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Santa Fe |
| Argentina |
| Argentine Peso |
| Monthly |
| 15.00 | % | 15.00 | % | — |
| 96,370 |
| 96,370 |
| — |
|
Foreign |
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco de Galicia |
| Argentina |
| Argentine peso |
| At maturity |
| 12.50 | % | 12.50 | % | — |
| — |
| — |
| 9,220 |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Galicia |
| Argentina |
| Argentine Peso |
| Monthly |
| 15.00 | % | 15.00 | % | — |
| 27,447 |
| 27,447 |
| — |
|
Foreign |
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco BBVA Francés |
| Argentina |
| Argentine peso |
| At maturity |
| 13.22 | % | 13.22 | % | — |
| — |
| — |
| 6,545,691 |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Santa Fe |
| Argentina |
| Argentine Peso |
| At maturity |
| 12.85 | % | 12.85 | % | 6,500,755 |
| — |
| 6,500,755 |
| — |
|
Foreign |
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Nuevo Santa Fe |
| Argentina |
| Argentine peso |
| At maturity |
| 10.25 | % | 10.25 | % | — |
| — |
| — |
| 5,032 |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Galicia |
| Argentina |
| Argentine Peso |
| At maturity |
| 14.50 | % | 14.50 | % | 645,870 |
| — |
| 645,870 |
| — |
|
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brazil |
| Foreign |
| Banco Votorantim |
| Brazil |
| Real |
| Monthly |
| 9,40 | % | 9.40 | % | 28,430 |
| 158,904 |
| 187,334 |
| 197,880 |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Nación |
| Argentina |
| Argentine Peso |
| Monthly |
| 18.85 | % | 18.85 | % | — |
| — |
| — |
| 5,537,442 |
|
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brazil |
| Foreign |
| Banco alfa |
| Brazil |
| Real |
| Monthly |
| 11.07 | % | 11.07 | % | — |
| — |
| — |
| 49,310 |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Patagonia |
| Argentina |
| Argentine Peso |
| At maturity |
| 12.50 | % | 12.50 | % | 3,896,499 |
| — |
| 3,896,499 |
| — |
|
Foreign |
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Standard Bank |
| Argentina |
| Argentine Peso |
| At maturity |
| 15.50 | % | 15.50 | % | 913 |
| — |
| 913 |
| — |
| |||||||||||||||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Votorantim |
| Brasil |
| Brazilian Real |
| Monthly |
| 9.40 | % | 9.40 | % | 134,864 |
| — |
| 134,864 |
| 187,334 |
| |||||||||||||||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Itaú |
| Brasil |
| Brazilian Real |
| Monthly |
| 6.63 | % | 6.63 | % | 941,997 |
| — |
| 941,997 |
| — |
| |||||||||||||||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Santander |
| Brasil |
| Brazilian Real |
| Monthly |
| 7.15 | % | 7.15 | % | 328,872 |
| — |
| 328,872 |
| — |
| |||||||||||||||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Santander |
| Brasil |
| Brazilian Real |
| Monthly |
| 2.99 | % | 3.52 | % | 525,091 |
| — |
| 525,091 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco BBVA |
| Chile |
| Chilean peso |
| At maturity |
| 6.50 | % | 6.50 | % | 1,827,000 |
| — |
| 1,827,000 |
| — |
|
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 6.84 | % | 6.84 | % | — |
| 2,828,742 |
| 2,828,742 |
| — |
|
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco BBVA |
| Chile |
| Chilean peso |
| At maturity |
| 8.88 | % | 8.88 | % | 397,928 |
| — |
| 397,928 |
| — |
|
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| Semiannually |
| 5.76 | % | 5.76 | % | — |
| 671,827 |
| 671,827 |
| — |
|
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco de Chile |
| Chile |
| Chilean peso |
| At maturity |
| 4.50 | % | 4.50 | % | — |
| — |
| — |
| 134,000 |
|
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 6.60 | % | 6.60 | % | — |
| 9,171,557 |
| 9,171,557 |
| — |
|
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 6.82 | % | 6.82 | % | — |
| 2,323,515 |
| 2,323,515 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 6.84 | % | 6.84 | % | — |
| 2,695,242 |
| 2,695,242 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 6.39 | % | 6.39 | % | 32,069 |
| — |
| 32,069 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Dollars |
| At maturity |
| 3.36 | % | 3.36 | % | — |
| 1,452,145 |
| 1,452,145 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.036.000-k |
| Banco Santander |
| Chile |
| Dollars |
| At maturity |
| 2.20 | % | 2.20 | % | 32,661 |
| 4,799,600 |
| 4,832,261 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.036.000-k |
| Banco Santander |
| Chile |
| Chilean pesos |
| At maturity |
| 6.80 | % | 6.80 | % | — |
| 7,018,620 |
| 7,018,620 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 6.49 | % | 6.49 | % | 384,618 |
| — |
| 384,618 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.032.000-8 |
| Banco BBVA |
| Chile |
| Chilean pesos |
| At maturity |
| 6.25 | % | 6.25 | % | 7,521,185 |
| — |
| 7,521,185 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 6.83 | % | 6.83 | % | — |
| 10,335,540 |
| 10,335,540 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.951.000-4 |
| Banco HSBC |
| Chile |
| Chilean pesos |
| At maturity |
| 6.80 | % | 6.80 | % | — |
| 7,562,333 |
| 7,562,333 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.036.000-k |
| Banco Santander |
| Chile |
| Chilean pesos |
| At maturity |
| 6.85 | % | 6.85 | % | — |
| 10,694,653 |
| 10,694,653 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.036.000-k |
| Banco Santander |
| Chile |
| Chilean pesos |
| At maturity |
| 4.30 | % | 4.30 | % | — |
| 5,031,567 |
| 5,031,567 |
| — |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.036.000-k |
| Banco BBVA |
| Chile |
| Chilean pesos |
| At maturity |
| 6.25 | % | 6.25 | % | — |
| — |
| — |
| 1,827,000 |
| |||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.036.000-k |
| Banco BBVA |
| Chile |
| Chilean pesos |
| At maturity |
| 8.88 | % | 8.88 | % | — |
| — |
| — |
| 397,928 |
| |||||||||||||||||||||||||||
96.705.990-0 |
| Envases Central S.A. |
| Chile |
| 97.080.000-K |
| Banco Bice |
| Chile |
| Chilean pesos |
| At maturity |
| 4.680 | % | 4.68 | % | — |
| 674,516 |
| 674,516 |
| — |
| |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
| 8,689,670 |
| 6,941,133 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
| 87,278,613 |
| 8,689,670 |
|
NOTE 15 — OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)
15.1.2 Bank loans, non current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maturity |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maturity |
| Total |
| ||||||||||||
Indebted Entity | Indebted Entity |
| Creditor Entity |
|
|
| Amortization |
| Effective |
| Nominal |
| 1 year |
| 3 years |
| More than |
| At |
| At |
| Indebted Entity |
| Creditor Entity |
|
|
| Amortization |
| Effective |
| Nominal |
| 1 year |
| 3 years |
| More |
| at |
| at |
| ||||||||||||||
Tax ID, |
| Name |
| Country |
| Tax ID, |
| Name |
| Country |
| Currency |
| Year |
| Rate |
| Rate |
| up to 3 years |
| up to 5 years |
| 5 years |
| 12.31.2011 |
| 12.31.2010 |
|
| Name |
| Country |
| Tax ID, |
| Name |
| Country |
| Currency |
| Year |
| Rate |
| Rate |
| up to 3 years |
| up to 5 years |
| 5 years |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brazil |
| Foreign |
| Banco Votorantim |
| Brazil |
| Real |
| Monthly |
| 9.40 | % | 9.40 | % | 159,105 |
| 145,756 |
| 92,717 |
| 397,578 |
| 593,726 |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Nación Bicentenario(1) |
| Argentina |
| Argentine Peso |
| At maturity |
| 14.80 | % | 9.90 | % | 2,044,208 |
| 851,753 |
| — |
| 2,895,961 |
| 4,684,408 |
|
Foreign |
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Nación Bicentenario(1) |
| Argentina |
| Argentine pesos |
| At maturity |
| 14.80 | % | 9.90 | % | 1,222,020 |
| 3,462,388 |
| — |
| 4,684,408 |
| — |
|
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Nuevo Banco Santa Fe |
| Argentina |
| Argentine Peso |
| At maturity |
| 15.00 | % | 15.00 | % | 674,591 |
| — |
| — |
| 674,591 |
| — |
|
Foreign |
| Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Banco Galicia |
| Argentina |
| Argentine Peso |
| At maturity |
| 15.00 | % | 15.00 | % | 192,130 |
| — |
| — |
| 192,130 |
| — |
| |||||||||||||||||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Votorantim |
| Brasil |
| Brazilian Real |
| Monthly |
| 9.40 | % | 9.40 | % | 202,358 |
| — |
| — |
| 202,358 |
| 397,578 |
| |||||||||||||||||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Itaú |
| Brasil |
| Brazilian Real |
| Monthly |
| 6.63 | % | 6.63 | % | 3,629,576 |
| 440,001 |
| — |
| 4,069,577 |
| — |
| |||||||||||||||||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Santander |
| Brasil |
| Brazilian Real |
| Monthly |
| 7.15 | % | 7.15 | % | 1,005,420 |
| 128,612 |
| — |
| 1,134,032 |
| — |
| |||||||||||||||||||||||||||||
Foreign |
| Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Itaú |
| Brasil |
| Brazilian Real |
| Monthly |
| 2.99 | % | 3.52 | % | 17,028,187 |
| 17,028,187 |
| — |
| 34,056,374 |
| — |
| |||||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 5.76 | % | 5.76 | % | 660,000 |
| — |
| — |
| 660,000 |
| — |
| |||||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.004.000-5 |
| Banco Chile |
| Chile |
| Chilean pesos |
| At maturity |
| 6.39 | % | 6.39 | % | 1,900,000 |
| — |
| — |
| 1,900,000 |
| — |
| |||||||||||||||||||||||||||||
91.144.000-8 |
| Embotelladora Andina S.A. |
| Chile |
| 97.080.000-K |
| Banco BICE |
| Chile |
| Chilean pesos |
| At maturity |
| 4.29 | % | 4.29 | % | 568,735 |
| — |
| — |
| 568,735 |
| — |
| |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
| 5,081,986 |
| 593,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
| 46,353,758 |
| 5,081,986 |
|
(1) The Bicentennial loan granted at a prime rate by Banco de la Nacion Argentina to Embotelladora del AtlanticoAtlántico S.A. is a benefit from the Argentine government to encourage investment projects. Embotelladora del AtlanticoAtlántico S.A. registered investment projects and received this loan at a prime rate of 9.9% annually. The loan has been recorded in the financial statements at the fair value, i.e. using the market rate of 14.8% per annum. The interest differential of ThCh$ 639,844382,028 is recorded as a component of the fixed asset balance and depreciated over its estimated useful life.
NOTE 15 — OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)
15.2.1 Bonds payable
|
| Current |
| Non-Current |
| Total |
|
| Current |
| Non-Current |
| Total |
| ||||||||||||
Composition of bonds payable |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Bonds (face rate interest) |
| 3,674,408 |
| 3,359,692 |
| 71,877,478 |
| 72,324,782 |
| 75,551,886 |
| 75,684,474 |
|
| 4,728,582 |
| 3,674,408 |
| 127,169,976 |
| 71,877,478 |
| 131,898,558 |
| 75,551,886 |
|
Expenses of bond issuance and discounts on placement |
| (247,486 | ) | (238,955 | ) | (2,318,061 | ) | (2,469,049 | ) | (2,565,547 | ) | (2,708,004 | ) |
| (351,934 | ) | (247,486 | ) | (813,936 | ) | (2,318,061 | ) | (1,165,870 | ) | (2,565,547 | ) |
Net balance presented in statement of financial position |
| 3,426,922 |
| 3,120,737 |
| 69,559,417 |
| 69,855,733 |
| 72,986,339 |
| 72,976,470 |
|
| 4,376,648 |
| 3,426,922 |
| 126,356,040 |
| 69,559,417 |
| 130,732,688 |
| 72,986,339 |
|
15.2.2 Current and non-current balances
The bonds correspond to Series A, B and C UF bonds issued on the Chilean market. These instruments are further described below:
|
|
|
|
|
|
|
|
|
|
|
|
|
| Next |
|
|
|
|
| |||||||||||||||||||
Bond registration or |
|
|
| Face |
| Unit of |
| Interest |
| Final |
| Interest |
| amortization |
| Par value |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Next |
|
|
|
|
| ||
identification number |
| Serie |
| amount |
| adjustment |
| rate |
| maturity |
| payment |
| of capital |
| 12.31.2011 |
| 12.31.2010 |
|
|
|
| Face |
| Unit of |
| Interest |
| Final |
| Interest |
| amortization |
| Par value |
| ||
Bond registration or |
| Series |
| amount |
| adjustment |
| rate |
| maturity |
| payment |
| of capital |
| 12.31.2012 |
| 12.31.2011 |
| |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
|
Bonds, current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SVS Registration No, 640, 8/23/2010 |
| A |
| 1,000,000 |
| UF |
| 3.0 | % | 08.15.2017 |
| Semi- annually |
| 02/15/2014 |
| 255,057 |
| — |
| |||||||||||||||||||
SVS Registration No, 254, 6/13/2001 |
| B |
| 3,370,913 |
| UF |
| 6.5 |
| 06.01.2026 |
| Semestral |
| 12.01.2012 |
| 3,674,408 |
| 3,359,692 |
|
| B |
| 3,298,646 |
| UF |
| 6.5 | % | 06.01.2026 |
| Semi- annually |
| 12/01/2013 |
| 3,964,645 |
| 3,674,408 |
|
SVS Registration No, 641, 8/23/2010 |
| C |
| 1,500,000 |
| UF |
| 4.0 | % | 08.15.2031 |
| Semi- annually |
| 02/15/2021 |
| 508,880 |
| — |
| |||||||||||||||||||
Total current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3,674,408 |
| 3,359,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,728,582 |
| 3,674,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonds, non-current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Bonds non-current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
SVS Registration No, 640, 8/23/2010 |
| A |
| 1,000,000 |
| UF |
| 3.0 | % | 08.15.2017 |
| Semi- annually |
| 02/15/2014 |
| 22,840,750 |
| — |
| |||||||||||||||||||
SVS Registration No, 254, 6/13/2001 |
| B |
| 3,370,913 |
| UF |
| 6.5 |
| 06.01.2026 |
| Semestral |
| 12.01.2013 |
| 71,877,478 |
| 72,324,782 |
|
| B |
| 3,298,646 |
| UF |
| 6.5 | % | 06.01.2026 |
| Semi- annually |
| 12/01/2013 |
| 70,068,101 |
| 71,877,478 |
|
Total, non-current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 71,877,478 |
| 72,324,782 |
| |||||||||||||||||||
SVS Registration No, 641, 8/23/2010 |
| C |
| 1,500,000 |
| UF |
| 4.0 | % | 08.15.2031 |
| Semi- annually |
| 02/15/2021 |
| 34,261,125 |
| — |
| |||||||||||||||||||
Total non-current portion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 127,169,976 |
| 71,877,478 |
|
Accrued interest included in the current portion of bonds totaled ThCh$ 400,6611,156,542 and ThCh$421,282400,661 at December 31, 2012 and 2011, and 2010, respectively.respectively
NOTE 15 — OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)
15.2.3Non-current maturities
|
|
|
| Year of maturity |
| Total |
| ||||||||
|
| Series |
| 2013 |
| 2014 |
| 2015 |
| 2016 |
| Después |
| 12.31.2011 |
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
SVS Registration 254, 6/13/2001 |
| B |
| 3,486,539 |
| 3,713,164 |
| 3,954,523 |
| 4,211,566 |
| 56,511,686 |
| 71,877,478 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
| Year of maturity |
| non-current |
| ||||||||
|
| Series |
| 2014 |
| 2015 |
| 2016 |
| 2017 |
| After |
| 12.31.2012 |
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
SVS Registration 640, 8/23/2010 |
| A |
| 5,710,188 |
| 5,710,188 |
| 5,710,188 |
| 5,710,186 |
| — |
| 22,840,750 |
|
SVS Registration 254, 6/13/2001 |
| B |
| 3,804,223 |
| 4,051,500 |
| 4,314,846 |
| 4,595,310 |
| 53,302,222 |
| 70,068,101 |
|
SVS Registration 641,08/23/2010 |
| C |
| — |
| — |
| — |
| — |
| 34,261,125 |
| 34,261,125 |
|
Total |
|
|
| 9,514,411 |
| 9,761,688 |
| 10,025,034 |
| 10,305,496 |
| 87,563,347 |
| 127,169,976 |
|
15.2.4Market rating
The bonds issued on the Chilean market had the following rating at December 31, 2011:
AA + : Rating assigned by Fitch Chile
AA + : Rating assigned by Feller & Rate
15.2.5 Restrictions
The following restrictions apply to the issuance and placement of the Company’s Series B bonds on the Chilean market in 2001, as well as Series A and C bonds, for a total of UF 3,700,000. 6,200,000. Of that amount, UF3,370,912.55UF 5,798,646.34 is outstanding:
· Embotelladora Andina S.A. must maintain a debt level in which consolidated financial liabilities do not exceed 1.20 times the consolidated equity.equity in the case of Series B bonds. As defined in the debt agreements, consolidated financial liabilities will be considered to be current interest-accruing liabilities, namely: (i) Other financial liabilities, plus (ii) Other non-current financial liabilities. Total equity plus non-controlling interests will be considered consolidated Equity.
· For Series A and C bonds, Embotelladora Andina S.A. must maintain a net financial indebtedness that does not exceed 1.5 times in its quarterly financial statements, measured against its consolidated financial statements. For these effects, financial indebtedness level shall be defined as the ratio between net financial debt and total equity of the issuer (equity attributable to controlling shareholders plus non controlling interest). On the other hand, net financial debt is the difference between financial debt and cash balance of the issuer.
·Consolidated assets must be kept free of any pledge, mortgage or lien for an amount at least equal to 1.30 times the consolidated unsecured current liabilities of the issuer.
As of December 31, 2012 the amounts included in this restriction are the following: | ThCh$ | ||
Consolidated Assets free from pledges, mortgages and other taxes: | 1,521,286,596 | ||
Non-guaranteed outstanding liabilities | 280,128,213 |
Based on these figures Consolidated Assets free from pledges, mortgages and other taxes are equal to 5.4 times of non consolidated outstanding liabilities.
NOTE 15 — OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)
· TheFor Series B bonds the franchise of The Coca-Cola Company in Chile, called Metropolitan Region, must be maintained and in no way forfeited, sold, assigned or transferred to a third party. This franchise is for the elaboration, production, sale and distribution of Coca-Cola products and brands according to the bottlers’ agreement or periodically renewable licenses.
· TheFor Series B bonds, the territory now under franchise to the Company by The Coca-Cola Company in Argentina or Brazil, which is used for the preparation, production, sale and distribution of Coca-Cola products and brands, must not be forfeited, sold, assigned or transferred to a third party, provided such territory represents more than 40% of the adjusted consolidated operating flow of the Company.
·For A and C lines, not invest in instruments issued by related parties, nor engage in other activities with these parties that are not related to their general purpose, in conditions that are less favorable to the Issuer than those existing in the market.
·For A and C lines, maintain in quarterly financial statement, a Net Financial Hedging higher than 3 must be maintained. Net Financial Hedging shall be the ratio between EBITDA of the issuer for the last 12 months and the net financial expenses (financial income less financial expenses) of the issuer for the last 12 months. However, this restriction will be deemed to be not in compliance when the mentioned net financial hedging level is lower than the lever before mentioned for two consecutive quarters.
The Company was in compliance with all financial covenants at December 31, 20112012 and 2010.
Table of Contents2011.
15.2.6 15.2.5Repurchased bondsbond
In addition to UF bonds, the Company holds bonds issued by itself that it has repurchased in full through companies that are integrated in the consolidation:
Through its subsidiaries, Abisa Corp S.A. (formerly Pacific Sterling), Embotelladora Andina S.A. repurchased its Yankee Bonds issued on the U.S. Market during the years 2000, 2001, 2002, 2007 and 2008. The entire placement amounted to US$350 million, of which US$200 million are outstanding and are presented after deducting the long-term liability from the other financial liabilities item.
Rio de Janeiro Refrescos Ltda. holds a liability corresponding to a US$75 million bond issue expiring in December 2012,2020, with semi-annual interest payments. At December 31, 20112012 and 2010,December 31, 2011, those bonds were held in full by Abisa Corp S.A., (formerly Pacific Sterling). Consequently, the assets and liabilities relating to that transaction have been eliminated from these consolidated financial statements. Furthermore, that transaction has been treated as an investment by the groupCompany in the Brazilian subsidiary, so the effects of foreign exchange differences between the dollar and the functional currency of each of the entities have been charged to other comprehensive income.
15.2.7 Liability for Banking fees (CPMF)15.2.6Fair value of financial liabilities
These amounts areThe fair value of financial liabilities is similar to its book value, except for banking fees onthe bonds owed by our subsidiary, Rio de Janeiro Refrescos Ltda.:outstanding, which had a fair value of $176.4 million and $89.5 million as of December 31. 2012 and 2011, respectively.
|
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
|
Current |
| — |
| 1,934,529 |
|
Total |
| — |
| 1,934,529 |
|
15.2.8 15.3.1Forward contract obligations
Please see the explanation in Note 20.
NOTE 15 — OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)
15.4.1 Current liabilities for leasing agreements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maturity |
| Total |
| ||||
Indebted Entity |
| Creditor Entity |
|
|
| Amortization |
| Effective |
| Nominal |
| Up to |
| 90 days |
| at |
| at |
| ||||||
Name |
| Country |
| Tax ID, |
| Year |
| Country |
| Currency |
| Year |
| Rate |
| Rate |
| 90 days |
| 1 year |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Itaú |
| Brasil |
| Brazilian Real |
| Monthly |
| 10.21 | % | 10.22 | % | 63,469 |
| 191,653 |
| 255,122 |
| — |
|
Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Alfa |
| Brasil |
| Brazilian Real |
| Monthly |
| 9.65 | % | 9.47 | % | 6,866 |
| 38,627 |
| 45,493 |
| — |
|
Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Tetra Pak SRL |
| Argentina |
| Dollars |
| Monthly |
| 12.00 | % | 12.00 | % | 11,009 |
| 35,072 |
| 46,081 |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
| 346,696 |
| — |
|
15.4.2 Noncurrent liabilities for leasing agreements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maturity |
| Total |
| ||||||
Indebted Entity |
| Creditor Entity |
|
|
| Amortization |
| Effective |
| Nominal |
| 1 years to |
| 3 years to |
| More |
| at |
| at |
| ||||||
Name |
| Country |
| Tax ID, |
| Year |
| Year |
| Currency |
| Year |
| Rate |
| Rate |
| 3 years |
| 5 years |
| 5 years |
| 12.31.2012 |
| 12.31.2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Itaú |
| Brasil |
| Brazilian Real |
| Monthly |
| 10.21 | % | 10.22 | % | 599,593 |
| — |
| — |
| 599,593 |
| — |
|
Rio de Janeiro Refrescos Ltda. |
| Brasil |
| Foreign |
| Banco Alfa |
| Brasil |
| Brazilian Real |
| Monthly |
| 9.65 | % | 9.47 | % | 63,561 |
| — |
| — |
| 63,561 |
| — |
|
Embotelladora del Atlántico S.A. |
| Argentina |
| Foreign |
| Tetra Pak SRL |
| Argentina |
| Dollars |
| Monthly |
| 12.00 | % | 12.00 | % | 171,758 |
| 335,485 |
| — |
| 507,243 |
| — |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
| 1,170,397 |
| — |
|
NOTE 16 — TRADE AND OTHER CURRENT ACCOUNTS PAYABLE
a)Trade and other current accounts payable are detailed as follows:
Item |
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
Trade accounts payable |
| 159,211,448 |
| 112,963,542 |
|
Withholdings |
| 23,529,819 |
| 14,977,133 |
|
Others |
| 1,576,506 |
| 97 |
|
Total |
| 184,317,773 |
| 127,940,772 |
|
b)The Company maintains commercial lease agreements for forklifts, vehicles, properties and machinery. These lease agreements have an average duration of one to five years excluding the renewal option of the agreements. No restrictions exist regarding the lessee by virtue of these lease agreements.
Item |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
|
Trade accounts payable |
| 112,963,542 |
| 94,824,152 |
|
Withholdings |
| 14,977,133 |
| 10,434,297 |
|
Others |
| 97 |
| 23,886 |
|
Total |
| 127,940,772 |
| 105,282,335 |
|
Future payments of the Company´s operating leases are the following:
12.31.2012 | |||
ThCh$ | |||
Maturity within one year term | 4,322,954 | ||
Maturity after a term of one year to less than five years | 2,301,651 | ||
Total | 6,624,605 |
Total expenses related to operating leases maintained by the Company as of December 31, 2012 and 2011 amounted to ThCh$7,467,380 and ThCh$7,319,745, respectively.
NOTE 17 — CURRENT AND NON-CURRENT PROVISIONS
17.1Balances
The balances of provisions recorded by the Company at December 31, 20112012 and 2010December 31, 2011 are detailed as follows:
Description |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
|
Litigation (1) |
| 7,970,835 |
| 4,328,367 |
|
| 6,821,165 |
| 7,970,835 |
|
Others |
| 195,103 |
| — |
| |||||
Total |
| 7,970,835 |
| 4,328,367 |
|
| 7,016,268 |
| 7,970,835 |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
| 87,966 |
| 60,748 |
|
| 593,457 |
| 87,966 |
|
Non-current |
| 7,882,869 |
| 4,267,619 |
|
| 6,422,811 |
| 7,882,869 |
|
Total |
| 7,970,835 |
| 4,328,367 |
|
| 7,016,268 |
| 7,970,835 |
|
(1) These provisions correspond mainly to provisions for probable losses due to fiscal, labor and trade contingencies based on the opinion of management after consultation with its legal counsel.
17.2Movements
Movement in the main items included under provisions is detailed as follows:
|
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
| ||||||||||||||||||||||||
Description |
| Litigation |
| Others |
| Total |
| Litigation |
| Others |
| Total |
| Litigation |
| Others |
| Total |
|
| Litigation |
| Others |
| Total |
| Litigation |
| Others |
| Total |
| Litigation |
| Others |
| Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Initial Balance at January 1 |
| 4,328,367 |
| — |
| 4,328,367 |
| 4,461,153 |
| 34,833 |
| 4,495,986 |
| 2,901,205 |
| 30,012 |
| 2,931,217 |
|
| 7,970,835 |
| — |
| 7,970,835 |
| 4,328,367 |
| — |
| 4,328,367 |
| 4,461,153 |
| 34,833 |
| 4,495,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Increase due to mergen |
| 325,174 |
| 136,826 |
| 462,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| |||||||||||||||||||
Additional provisions |
| — |
| — |
| — |
| 875,703 |
| — |
| 875,703 |
| 2,752,562 |
| 9,821 |
| 2,762,383 |
|
| 65,745 |
| 62,372 |
| 128,117 |
| — |
| — |
| — |
| 875,703 |
| — |
| 875,703 |
|
Increase (decrease) in existing provisions |
| 4,370,851 |
| — |
| 4,370,851 |
| 381,875 |
| — |
| 381,875 |
| 29,318 |
| — |
| 29,318 |
|
| 851,150 |
| — |
| 851,150 |
| 4,370,851 |
| — |
| 4,370,851 |
| 381,875 |
| — |
| 381,875 |
|
Provision used (payment made) on account of the provision) |
| (702,552 | ) | — |
| (702,552 | ) | (1,146,574 | ) | (34,833 | ) | (1,181,407 | ) | (871,587 | ) | — |
| (871,587 | ) | |||||||||||||||||||
Reversal of unused provision |
|
|
|
|
|
|
|
|
|
|
|
|
| (1,213 | ) | (5,000 | ) | (6,213 | ) | |||||||||||||||||||
Payments |
| (1,168,725 | ) | — |
| (1,168,725 | ) | (702,552 | ) | — |
| (702,552 | ) | (1,146,574 | ) | (34,833 | ) | (1,181,407 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Increase (decrease) foreign exchange rate difference |
| (25,831 | ) | — |
| (25,831 | ) | (243,790 | ) | — |
| (243,790 | ) | (349,132 | ) | — |
| (349,132 | ) |
| (1,223,014 | ) | (4,095 | ) | (1,227,109 | ) | (25,831 | ) | — |
| (25,831 | ) | (243,790 | ) | — |
| (243,790 | ) |
Ending Balance |
| 7,970,835 |
| — |
| 7,970,835 |
| 4,328,367 |
| — |
| 4,328,367 |
| 4,461,153 |
| 34,833 |
| 4,495,986 |
|
| 6,821,165 |
| 195,103 |
| 7,016,268 |
| 7,970,835 |
| — |
| 7,970,835 |
| 4,328,367 |
| — |
| 4,328,367 |
|
NOTE 18 — OTHER CURRENT AND NON-CURRENT NON-FINANCIAL LIABILITIES
Other current and non-current liabilities at each year end are detailed as follows:follows:
Description |
| 12.31.2011 |
| 12.31.2010 |
|
| 12.31.2012 |
| 12.31.2011 |
|
|
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
|
Minimum dividend liability (30%) |
| 8,766,572 |
| 10,723,669 |
| |||||
Minimum dividend liability - 30% (1) |
| — |
| 8,766,572 |
| |||||
Dividend payable |
| 6,876,934 |
| 6,925,621 |
|
| 99,427 |
| 6,876,934 |
|
Employee remuneration payable |
| 6,354,817 |
| 6,635,679 |
|
| 8,240,460 |
| 6,354,816 |
|
Accrued vacations |
| 7,723,738 |
| 6,635,265 |
|
| 11,392,231 |
| 7,723,738 |
|
Other |
| 1,056,160 |
| 363,190 |
|
| 813,034 |
| 892,423 |
|
Total |
| 30,778,221 |
| 31,283,424 |
|
| 20,545,152 |
| 30,614,483 |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
| 30,341,479 |
| 30,962,748 |
|
| 20,369,549 |
| 30,341,479 |
|
Non-current |
| 436,742 |
| 320,676 |
|
| 175,603 |
| 273,004 |
|
Total |
| 30,778,221 |
| 31,283,424 |
|
| 20,545,152 |
| 30,614,483 |
|
(1)During the year 2012, there was no minimum dividend recognized because the interim dividends distributed during October and December 2012, exceed 30% of net income for the period.
NOTE 19 — EQUITYEQUITY
As a result of the merger agreement with Embotelladoras Coca-Cola Polar S.A described in note 1b), during 2012, 93,152,097 Series A shares and 93,152,097 Series B shares were issued and exchanged for 100% of the outstanding shares of Embotelladoras Coca-Cola Polar S.A. The value in legal terms of this new issuance amounted to ThCh$39,867,121.
19.1 Paid-in Capital
The paid-in capital of the Company totaled ThCh$230,892,178270,759,299 as of December 31, 2011,2012, divided into 760,274,542946,578,736 Series A and B shares. The distribution and differentiationclassification of these is detailed as follows:
19.1.1 Number of shares:
Series |
| Number of |
| Number of |
| Number of |
|
| Number of |
| Number of |
| Number of |
|
A |
| 380,137,271 |
| 380,137,271 |
| 380,137,271 |
|
| 473,289,368 |
| 473,289,368 |
| 473,289,368 |
|
B |
| 380,137,271 |
| 380,137,271 |
| 380,137,271 |
|
| 473,289,368 |
| 473,289,368 |
| 473,289,368 |
|
19.1.2Capital:Capital:
Series |
| Subscribed |
| Paid-in |
|
| Subscribed |
| Paid-in |
|
|
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
|
A |
| 115,446,089 |
| 115,446,089 |
|
| 135,379,649.5 |
| 135,379,649.5 |
|
B |
| 115,446,089 |
| 115,446,089 |
|
| 135,379,649.5 |
| 135,379,649.5 |
|
Total |
| 230,892,178 |
| 230,892,178 |
|
| 270,759,299.0 |
| 270,759,299.0 |
|
19.1.3Rights of each series:series:
· Series A: Election of 6Elect 12 of the 714 directors and their respective alternates.
· Series B: Receipt ofReceives an additional 10% more of dividends than what is received by holders ofdistributed to Series A shares, and electionelects 2 of 1 of 7the 14 directors and the respective alternate..
NOTE 19 — EQUITY (Continued)
19.2Dividend policy
According to Chilean law, cash dividends must be paid equal to at least 30% of annual net profits, barring a unanimous vote by shareholders to the contrary. If there is no net profit in a given year, the Company will not be legally obligated to pay dividends from retained earnings. At the April, 20112012 Annual Shareholders Meeting, the shareholders authorized the Board of Directors to pay interim dividends during July and October 20112012 and January 2012,2013, at its discretion.
During 2011,2012, the Shareholders’ Meeting approved an extraordinary dividend payment against the retained earnings fund. It is not guaranteed that those payments will be repeated in the future.
Regarding Circular Letter N°1945 of the Chilean SuperintendencySuperintendence of Securities and Insurance, the Company does not present any adjustments to be made in order to determine distributable net earnings to comply with minimum legal amounts.
Pursuant to Circular Letter N° 1,945 of the Chilean SuperintendencySuperintendence of Securities and Insurance dated September 29, 2009, the Company’s Board of Directors decided to maintain the initial adjustments of adopting IFRS as retained earnings for future distribution.distribution.
Retained earnings at the date of IFRS adoption amounted to ThCh$19,260,703, of which ThCh$3,621,9233,564,500 have been realized at December 31, 20112012 and are available for distribution as dividends in accordance with the following:
Concept |
| Event when amount is |
| Amount of |
| Realized at |
| Amount of |
|
| Event when amount is |
| Amount of |
| Realized at |
| Amount of |
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Revaluation of assets |
| Sale or impairment |
| 12,538,123 |
| (2,984,075 | ) | 9,554,048 |
|
| Sale or impairment |
| 12,538,123 |
| (3,127,627 | ) | 9,410,496 |
|
Foreign currency translation differences of investments in related companies |
| Sale or impairment |
| 6,393,518 |
| — |
| 6,393,518 |
|
| Sale or impairment |
| 6,393,518 |
| — |
| 6,393,518 |
|
Full absorption cost accounting |
| Sale of products |
| 813,885 |
| (813,885 | ) | — |
|
| Sale of products |
| 813,885 |
| (813,885 | ) | — |
|
Post-employment benefits actuarial calculation |
| Termination of employees |
| 929,560 |
| (395,016 | ) | 534,544 |
|
| Termination of employees |
| 929,560 |
| (385,192 | ) | 544,368 |
|
Deferred taxes complementary accounts |
| Amortization |
| (1,414,383 | ) | 571,053 |
| (843,330 | ) |
| Amortization |
| (1,414,383 | ) | 762,204 |
| (652,179 | ) |
Total |
|
|
| 19,260,703 |
| (3,621,923 | ) | 15,638,780 |
|
|
|
| 19,260,703 |
| (3,564,500 | ) | 15,696,203 |
|
NOTE 19 — EQUITY (Continued)
The dividends declared and paid during 2012, 2011 and 2010 are presented below:
Dividend payment date | Dividend payment date |
| Dividend type |
| Profits imputable to |
| Ch$ per |
| Ch$ per |
| Dividend payment date |
| Dividend type |
| Profits imputable to dividends |
| Ch$ per |
| Ch$ per |
| ||
2010 |
| January |
| Interim |
| 2009 |
| 7.00 |
| 7.70 |
| |||||||||||
2010 |
| April |
| Final |
| 2009 |
| 11.70 |
| 12.87 |
| |||||||||||
2010 |
| May |
| Additional |
| Retained Earnings |
| 50.00 |
| 55.00 |
| |||||||||||
2010 |
| July |
| Interim |
| 2010 |
| 8.50 |
| 9.35 |
| |||||||||||
2010 |
| October |
| Interim |
| 2010 |
| 8.50 |
| 9.35 |
| |||||||||||
2011 |
| January |
| Interim |
| 2010 |
| 8.50 |
| 9.35 |
|
| January |
| Interim |
| 2010 |
| 8.50 |
| 9.35 |
|
2011 |
| May |
| Final |
| 2010 |
| 13.44 |
| 14.784 |
|
| May |
| Final |
| 2010 |
| 13.44 |
| 14.784 |
|
2011 |
| July |
| Additional |
| Retained Earnings |
| 50.00 |
| 55.00 |
|
| July |
| Additional |
| Retained Earnings |
| 50.00 |
| 55.00 |
|
2011 |
| July |
| Interim |
| 2011 |
| 8.50 |
| 9.35 |
|
| July |
| Interim |
| 2011 |
| 8.50 |
| 9.35 |
|
2011 |
| October |
| Interim |
| 2011 |
| 8.50 |
| 9.35 |
|
| October |
| Interim |
| 2011 |
| 8.50 |
| 9.35 |
|
2010 |
| January |
| Interim |
| 2009 |
| 7.00 |
| 7.70 |
| |||||||||||
2010 |
| April |
| Final |
| 2009 |
| 11.70 |
| 12.87 |
| |||||||||||
2010 |
| May |
| Additional |
| Retained Earnings |
| 50.00 |
| 55.00 |
| |||||||||||
2010 |
| July |
| Interim |
| 2010 |
| 8.50 |
| 9.35 |
| |||||||||||
2010 |
| October |
| Interim |
| 2010 |
| 8.50 |
| 9.35 |
| |||||||||||
2009 |
| January |
| Interim |
| 2009 |
| 7.00 |
| 7.70 |
| |||||||||||
2009 |
| April |
| Final |
| 2009 |
| 14.13 |
| 15.543 |
| |||||||||||
2009 |
| May |
| Additional |
| Retained Earnings |
| 43.00 |
| 47.30 |
| |||||||||||
2009 |
| July |
| Interim |
| 2010 |
| 7.00 |
| 7.75 |
| |||||||||||
2009 |
| October |
| Interim |
| 2010 |
| 7.00 |
| 7.75 |
| |||||||||||
2012 |
| January |
| Interim |
| 2011 |
| 8.50 |
| 9.35 |
| |||||||||||
2012 |
| May |
| Final |
| 2011 |
| 10.97 |
| 12.067 |
| |||||||||||
2012 |
| May |
| Additional |
| Retained Earnings |
| 24.30 |
| 26.73 |
| |||||||||||
2012 |
| October |
| Interim |
| 2012 |
| 12.24 |
| 13.46 |
| |||||||||||
2012 |
| December |
| Interim |
| 2012 |
| 24.48 |
| 26.93 |
|
19.3Reserves
Reserves |
| 2012 |
| 2011 |
|
|
| ThCh$ |
| ThCh$ |
|
Polar acquisition |
| 421,701,520 |
| — |
|
Foreign currency translation reserves |
| (63,555,545 | ) | (22,459,879 | ) |
Legal and statutory reserves |
| 5,435,538 |
| 5,435,538 |
|
Total |
| 363,581,513 |
| (17,024,341 | ) |
19.3.1Polar acquisition
This amount corresponds to the the fair value of the issuance of shares of Embotelladora Andina S.A. used to acquire Embotelladoras Coca-Cola Polar S.A.,.
19.3.1 19.3.2Legal and statutory reserves
In accordance with Official Circular No. 456 issued by the Chilean SuperintendencySuperintendence of Securities and Insurance, the legally required price-level restatement of paid-in capital for 2009 is presented as part of other equity reserves and was accounted for as a capitalization from Other Reserves with no impact on net income or retained earnings under IFRS. This amount totaled ThCh$5,435,538 at December 31, 2009.
19.3.2 19.3.3Foreign currency translation reserves
This corresponds to the conversion of the financial statements of foreign subsidiaries whose functional currency is different from the presentation currency of the consolidated financial statements. Foreign currency translation differences between the receivable held by Abisa Corp S.A. and owed by Rio de Janeiro Refrescos Ltda. are also shown in this account, which has been treated as an investment in Equity Investees (associates and joint ventures). Foreign currency translation reserves are detailed as follows:follows:
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Rio de Janeiro Refrescos Ltda. |
| (1,274,857 | ) | 1,324,710 |
| 6,495,746 |
|
Embotelladora del Atlántico S.A. |
| (19,072,195 | ) | (19,706,911 | ) | (15,428,107 | ) |
Foreign currency translation differences Abisa Corp.- Rio de Janeiro Refrescos Ltda. |
| (2,112,827 | ) | (3,200,224 | ) | (1,354,797 | ) |
Total |
| (22,459,879 | ) | (21,582,425 | ) | (10,287,158 | ) |
NOTE 19 —EQUITY (Continued)
Description |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Rio de Janeiro Refrescos Ltda. |
| (26,905,052 | ) | (1,274,857 | ) | 1,324,710 |
|
Embotelladora del Atlántico S.A |
| (29,448,998 | ) | (19,072,195 | ) | (19,706,911 | ) |
Paraguay Refrescos S.A. |
| 24,248 |
| — |
| — |
|
Exchange rate differences in related companies |
| (7,225,743 | ) | (2,112,827 | ) | (3,200,224 | ) |
Total |
| (63,555,545 | ) | (22,459,879 | ) | (21,582,425 | ) |
The movement of this reserve for the fiscal periods ended December 31, 2010, 20102012 and 20092011 respectively is detailed as follows:
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Rio de Janeiro Refrescos Ltda. |
| (2,599,567 | ) | (5,171,036 | ) | 6,495,746 |
|
| (25,630,195 | ) | (2,599,567 | ) | (5,171,036 | ) |
Embotelladora del Atlántico S.A. |
| 634,716 |
| (4,278,804 | ) | (15,428,107 | ) | |||||||
Foreign exchange Rate Differences Abisa Corp. - Rio de Janeiro Refrescos Ltda. |
| 1,087,397 |
| (1,845,427 | ) | (1,354,797 | ) | |||||||
Embotelladora del Atlántico S.A |
| (10,376,803 | ) | 634,716 |
| (4,278,804 | ) | |||||||
Paraguay Refrescos S.A. |
| 24,248 |
| — |
| — |
| |||||||
Exchange rate differences in related companies |
| (5,112,916 | ) | 1,087,397 |
| (1,845,427 | ) | |||||||
Total |
| (877,454 | ) | (11,295,267 | ) | (10,287,158 | ) |
| (41,095,666 | ) | (877,454 | ) | (11,295,267 | ) |
19.4Non-controlling interests
This is the recognition of the portion of Equity and income from subsidiaries that are owned by third parties, The detail of this account at December 31, 20112012 is as follows:
|
| Non-controlling Interests |
| |||||||||||
|
| Non-controlling Interests |
|
| Percentage |
| Shareholders |
|
|
| ||||
Description |
| Percentage |
| Shareholders’ |
| Income |
|
| % |
| Equity y |
| Income |
|
|
|
|
| ThCh$ |
| ThCh$ |
|
|
|
| ThCh$ |
| ThCh$ |
|
Embotelladora del Atlántico S.A. |
| 0.0209 |
| 8,981 |
| 3,015 |
|
| 0.0243 |
| 10,763 |
| 3,468 |
|
Andina Empaques Argentina S.A. |
| 0.0244 |
| 1,977 |
| 439 |
| |||||||
Paraguay Refrescos S.A. |
| 2.1697 |
| 4,697,403 |
| 89,012 |
| |||||||
Inversiones Los Andes Ltda. |
| 0.0001 |
| 53 |
| 1 |
| |||||||
Transportes Polar S.A. |
| 0.0001 |
| 6 |
| — |
| |||||||
Vital S.A. |
| 35.0000 |
| 8,811,764 |
| 130,874 |
| |||||||
Vital Aguas S.A. |
| 33.5000 |
| 1,807,913 |
| 81,651 |
| |||||||
Envases Central S.A. |
| 40.7300 |
| 4,111,258 |
| 326,764 |
| |||||||
Andina Inversiones Societarias S.A. |
| 0.0001 |
| 34 |
| 4 |
|
| 0.0001 |
| 35 |
| 2 |
|
Total |
|
|
| 9,015 |
| 3,019 |
|
|
|
| 19,441,172 |
| 632,211 |
|
NOTE 19 — EQUITY (Continued)
19.5Earnings per share
The basic earnings per share presented in the statement of comprehensive income are calculated as the quotient between income for the year and the average number of shares outstanding during the same period.
The earnings per share used to calculate basic and diluted earnings per share at December 31, 2011 and 2010, respectively, is detailed as follows:
|
|
|
| 12.31.2011 |
|
|
|
| 12.31.2012 |
| ||||
Earnings per share |
| SERIES A |
| SERIES B |
| TOTAL |
|
| SERIES A |
| SERIES B |
| TOTAL |
|
|
|
|
|
|
|
|
| |||||||
Earnings attributable to shareholders (ThCh$) |
| 46,203,022 |
| 50,821,383 |
| 97,024,405 |
|
| 41,732,721 |
| 45,904,240 |
| 87,636,961 |
|
Average weighted number of shares |
| 380,137,271 |
| 380,137,271 |
| 760,274,542 |
|
| 400,809,380 |
| 400,809,380 |
| 801,618,760 |
|
Earnings per basic and diluted share (in pesos) |
| 121,54 |
| 133,69 |
| 127,62 |
|
| 104.12 |
| 114.53 |
| 109.32 |
|
|
| 12.31.2011 |
| ||||
Earnings per share |
| SERIES A |
| SERIES B |
| TOTAL |
|
Earnings attributable to shareholders (ThCh$) |
| 46,203,022 |
| 50,821,383 |
| 97,024,405 |
|
Average weighted number of shares |
| 380,137,271 |
| 380,137,271 |
| 760,274,542 |
|
Earnings per basic and diluted share (in pesos) |
| 121.54 |
| 133.69 |
| 127.62 |
|
|
| 12.31.2010 |
| ||||
Earnings per share |
| SERIES A |
| SERIES B |
| TOTAL |
|
Earnings attributable to shareholders (ThCh$) |
| 49,333,069 |
| 54,264,303 |
| 103,597,372 |
|
Average weighted number of shares |
| 380,137,271 |
| 380,137,271 |
| 760,274,542 |
|
Earnings per basic and diluted share (in pesos) |
| 129.78 |
| 142.75 |
| 136.26 |
|
|
| 12.31.2012 |
| ||||
Movement of shares |
| SERIES A |
| SERIES B |
| TOTAL |
|
Starting balance at Jaunary 1, 2012 |
| 380,137,271 |
| 380,137,271 |
| 760,274,542 |
|
Issuance of shares due to merger October 1, 2012 |
| 93,152,097 |
| 93,152,097 |
| 186,304,194 |
|
Ending balance at December 31, 2012 |
| 473,289,368 |
| 473,289,368 |
| 946,578,736 |
|
Compounded average number of shares (in Chilean pesos) |
| 400,809,380 |
| 400,809,380 |
| 801,618,760 |
|
During year 2011, there were no movements in the number of shares.
|
| 12.31.2010 |
| ||||
Earnings per share |
| SERIES A |
| SERIES B |
| TOTAL |
|
|
|
|
|
|
|
|
|
Earnings attributable to shareholders (ThCh$) |
| 49,333,069 |
| 54,264,303 |
| 103,597,372 |
|
Average weighted number of shares |
| 380,137,271 |
| 380,137,271 |
| 760,274,542 |
|
Earnings per basic and diluted share (in pesos) |
| 129.78 |
| 142.75 |
| 136.26 |
|
|
| 12.31.2009 |
| ||||
Earnings per share |
| SERIES A |
| SERIES B |
| TOTAL |
|
|
|
|
|
|
|
|
|
Earnings attributable to shareholders (ThCh$) |
| 46,658,396 |
| 51,324,334 |
| 97,982,730 |
|
Average weighted number of shares |
| 380,137,271 |
| 380,137,271 |
| 760,274,542 |
|
Earnings per basic and diluted share (in pesos) |
| 122.74 |
| 135.01 |
| 128.88 |
|
NOTE 20 — DERIVATIVE ASSETS AND LIABILITIES
The companyCompany held the following derivative liabilities at December 31, 20112012 and 2010:2011:
20.1Currency forwards of items recognized for accounting purposes:
As of December 31, 2012, the Company had agreements to guaranty bank liabilities in Brazil denominated in US dollars for an amount of ThUS$71.429, to convert them to reais at a different tax rate. The valuation of said agreements was at fair value with a net loss of ThCh$333,427. The effect of these agreements have been recognized as current financial liabilities and financial costs within the statement of income as of December 31, 2012.
20.2Currency forwards for highly probable expected transactions:
During 2010, the Company made agreements to hedge the exchange rate in the purchases of fixed assets in a foreign currency during 2011. Those agreements were appraisedrecorded at the fair value, resulting in a net profit of ThCh$134,572 for 2011 (net loss of ThCh$913,378the year ended at December 31, 2010).2011. No such agreements were outstanding at December 31, 2012 and 2011. Since these agreements did not meet the documentation requirements of IFRS to be considered hedges, they were accounted for as investment contracts and the effects recorded directly in income.
In 2010, 2011 (there was a derivative liabilityand 2012, the Company made agreements to hedge the exchange rate in the purchases of raw materials and future flows in 2011, 2012 and 2013. The outstanding for ThCh$431,236agreements totaled ThUS$140,000 at December 31, 2010)2012 (ThUS$42,500 at December 31, 2011). Those agreements were recorded at fair value, resulting in a net loss of ThCh$1,102,412 for the year ended at December 31, 2012 (net gain of ThCh$1,347,277 at December 31, 2011), and liabilities for derivative contracts of ThCh$394,652 were recognized at December 31, 2012 (liabilities of ThCh$163,718 at December 31, 2011). Since these agreements did not meet the documentation requirements of IFRS to be considered hedges, they were accounted for as investment contracts and the effects recorded directly in income.
In 2011 and 2010, the Company made agreements to hedge the exchange rate in the purchases of raw materials and future flows in 2011 and 2012. The outstanding agreements totaled ThUS$42,500 at December 31, 2011. They were appraised at the fair value, which resulted in a net profit of ThCh$1,347,277 for 2011 (a net loss of ThCh$485,983 at December 31, 2010). Liabilities of ThCh$163,718 were recognized at December 31, 2011 and of ThCh$485,983 at December 31, 2010. The agreements oustanding at December 31, 2011 also required leaving financial instruments as collateral against performance, which totaled ThCh$2,372,559 on the closing date. Since these agreements did not meet the documentation requirements of IFRS to be considered hedges, they were accounted for as investment contracts and the effects recorded directly in income.
20.2 Foreign currency forward of items recognized in the accounting:
At December 31, 2010, the Company had sugar sales contracts with the London Exchange to hedge a variable price in the supply of sugar during 2010. These contracts expired during 2010, and were accounted for at fair value. At December 31, 2010 these contracts generated net earnings amounting to ThCh$2,121,469. Since these contracts do not meet the documentation requirements of IFRS to be treated as hedging, they have been treated as investment contracts and the effects have been charged directly to income.
Fair value hierarchy
The Company had a total liabilitiesassets related to its foreign exchange forward contracts of ThCh$394,652 and liabilities to ThCh$163,718 at December 31, 2012 and 2011, respectively, which are classified within the other current non-financial liabilities and are carried at fair value on the statement of financial position. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: | quoted (unadjusted) prices in active markets for identical assets or liabilities |
Level 2: | Assumptions different to quoted prices included in level 1 and that are applicable to assets and liabilities, be it directly (as Price) or indirectly (i.e. derived from a Price) |
Level 3: | Assumptions for assets and liabilities that are not based on information observed directly in the market. |
NOTE 20 — DERIVATIVE ASSETS AND LIABILITIES (Continued)
During the reporting periodyear ended December 31, 2012 and 2011, there were no transfers of items between fair value measurements categories all of which were valued during the period using level 2.
|
| Fair Value Measurements at December 31, 2011 |
|
|
| |||||||||||||
|
| Quoted prices in |
| Significant |
|
|
|
|
|
| Fair Value Measurements at December 31, 2012 |
|
|
| ||||
|
| actives markets |
| other |
| Significant |
|
|
|
| Quoted prices in |
| Significant |
|
|
|
|
|
|
| for Identical |
| observable |
| unobservable |
|
|
|
| actives markets |
| other |
| Significant |
|
|
|
|
| Assets |
| inputs |
| Inputs |
|
|
|
| for Identical |
| observable |
| unobservable |
|
|
|
|
| (Level 1) |
| (Level 2) |
| (Level 3) |
| Total |
|
| Asset |
| Inputs |
| Inputs |
| Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial current liabilitiess |
| — |
| 163,718 |
| — |
| 163,718 |
| |||||||||
Current financial liabilities |
| — |
| 394,652 |
| — |
| 394,652 |
| |||||||||
Total liabilities |
| — |
| 163,718 |
| — |
| 163,718 |
|
| — |
| 394,652 |
| — |
| 394,652 |
|
|
| Fair Value Measurements at December 31, 2011 |
|
|
| ||||
|
| Quoted prices in |
| Significant |
|
|
|
|
|
|
| actives markets |
| other |
| Significant |
|
|
|
|
| for Identical |
| observable |
| unobservable |
|
|
|
|
| Asset |
| Inputs |
| Inputs |
| Total |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Current financial liabilities |
| — |
| 163,718 |
| — |
| 163,718 |
|
Total liabilities |
| — |
| 163,718 |
| — |
| 163,718 |
|
NOTE 21 — CONTINGENCIES AND COMMITMENTS
21.1Lawsuits and other legal actions:
The Parent Company and its Subsidiaries face litigation or potential litigation, in and out of court, that might result in material or significant losses or gains, in the opinion of the Company’s legal counsel, detailed as follows:
1) Embotelladora del Atlántico S.A. is a party to labor and other lawsuits: Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling ThCh$1,042,324.1,600,326. Management considers it unlikely that non-provisioned contingencies will affect the Company’s income and Equity,equity, based on the opinion of its legal counsel.
2) Rio de Janeiro Refrescos Ltda. is involved in current lawsuits and probable lawsuits regarding labor, tax and other matters. The accounting provisions to cover contingencies of a probable loss total ThCh$6,870,999.5,097,582. Management considers it unlikely that non-provisioned contingencies will affect income and Equityequity of the Company, based on the opinion of its legal counsel. As it is customary in Brazil, the Company has been required by the tax authorities to guarantyguarantee contingencies in the amounts of ThCh$19,898,604 in 201118,002,490 at December 31, 2012 and ThCh$12,720,301 in 2010 although occurrence possibility of these contingencies are remote, probable or possible.
Table of Contents19,989,604 at December 31, 2011.
3) Embotelladora Andina S. A. is involved in tax, commercial, labor and other lawsuits. The accounting provisions to cover contingencies for probable losses because of these lawsuits total ThCh$57,512.123,257. Management considers it unlikely that non-provisioned contingencies will affect income and Equityequity of the company, in the opinion of its legal advisors.
NOTE 21 — CONTINGENCIES AND COMMITMENTS
On April 28, 2011 the Company was legally informed of an anti-competition lawsuit filed by the Chilean Fiscalía Nacional Económica (“Chilean National Economic Prosecutor”, the FNE) before the Tribunal de Defensa de la Libre Competencia (“Chilean Anti-Competition Court”, the TDLC) against Embotelladora Andina S.A. and Coca-Cola Embonor S.A. This lawsuit indicates that said companies would have violated the regulation of free competition by establishing a system of granting incentives in the traditional distribution channel since these points of sale do not advertise, exhibit and/or commercialize, in any manner, the so called “B-brands” or alternative soft drink beverages. This lawsuit ended on November 22, 2011, by approval of the Anti-competition Court of the terms of reconciliation proposed November 15, 2011 by the National Economic Prosecutor, Embotelladora Latinoamericana S.A., Embotelladora Castel Ltda., Industrial y Comercial Lampa S.A., Sociedad Comercial Antillanca Ltda., Coca-Cola Embonor S.A. and Embotelladora Andina S.A..
As a result of this agreement, the Company assumed certain commitments that included allowing 20% of space to be available to other brands in refrigerators provided by Embotelladora Andina S.A. at certain points of sale in the traditional channel where there are no other refrigerators, for a period of five years.
The reconciliation agreement did not impose fines nor constitute an acknowledgement of liability in the anti-competition offenses.
21.2Direct guarantees and restricted assets:
Guarantees and restricted assets as of December 31, 2011 and 20102012 are detailed as follows:
Guarantee in |
| Provided by |
| Committed assets |
| Carrying |
| Balance pending payment |
| Date of guarantee |
| ||||||||
favor of |
| Name |
| Relationship |
| Carrying amount |
| Type |
| amount |
| 2011 |
| 2010 |
| 2012 |
| 2014 |
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Aduana de EZEIZA |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Guarantee insurance |
| Export |
| 21,894 |
| — |
| — |
| — |
| — |
|
Aduana de EZEIZA |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Guarantee insurance |
| Import |
| 6,657 |
| — |
| — |
| — |
| — |
|
Aduana de EZEIZA |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Guarantee insurance |
| Substitution for collateral |
| 483 |
|
|
|
|
|
|
|
|
|
Poder Judiciario |
| Rio de Janeiro Refrescos Ltda. |
| Subsidiary |
| Judicial deposit |
| Long term asset |
| 19,989,604 |
| — |
| — |
| — |
| — |
|
Serviu Región Metropolitana |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| — |
| 2,907 |
| 2,778 |
| — |
| — |
|
Hospital San Jose |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| — |
| 512 |
| — |
| 512 |
| — |
|
Director Regional De Validad Metropolitana |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| — |
| 1,116 |
| — |
| 1,116 |
| — |
|
Tesorero Municipal de Renca |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| — |
| 89,306 |
|
|
| 89,306 |
| — |
|
Linde Gas Chile S.A. |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| — |
| 155,760 |
|
|
| — |
| 155,760 |
|
AGA |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Contract |
| — |
| — |
| 145,569 |
| — |
| — |
|
Rofex |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Financial instruments |
| Derivatives transactions |
| 2,372,559 |
| 163,718 |
| — |
| — |
| — |
|
Guarantee in favor |
| Provided by |
| Committed assets |
| Carrying |
| Balance pending payment |
| Date of guarantee |
| ||||||||
of |
| Name |
| Relationship |
| Guarantee |
| Type |
| amount |
| 2012 |
| 2011 |
| 2013 |
| 2014 |
|
|
|
|
|
|
|
|
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Aduana de Ezeiza |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Guaranty insurance |
| Import |
| 35,132 |
| — |
| — |
| — |
| — |
|
Aduana de Ezeiza |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Cash deposit |
| Import |
| 208,348 |
| — |
| — |
| — |
| — |
|
Polar Argentina S.A. |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Cash deposit |
| Import |
| 3,601 |
|
|
|
|
|
|
|
|
|
Distribuidora Baraldo S.H. |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Cash |
| Judicial embargo |
| 1,952 |
| — |
| — |
| — |
| — |
|
Acuña Gomez |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Cash |
| Judicial embargo |
| 2,928 |
| — |
| — |
| — |
| — |
|
Municipalidad Gral. Alvear |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Cash |
| Judicial embargo |
| 19,993 |
| — |
| — |
| — |
| — |
|
Municipalidad San Martín |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Cash |
| Judicial embargo |
| 35,132 |
| — |
| — |
| — |
| — |
|
Nicanor López |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Cash |
| Judicial embargo |
| 2,094 |
| — |
| — |
| — |
| — |
|
Labarda |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Cash |
| Judicial embargo |
| 35 |
| — |
| — |
| — |
| — |
|
Aduana de Ezeiza |
| Embotelladora del Atlántico S.A. |
| Subsidiary |
| Guaranty insurance |
| Mold Import |
| 7,199 |
| — |
| — |
| — |
| — |
|
Poder Judiciario |
| Rio de Janeiro Refrescos Ltda. |
| Subsidiary |
| Judicial deposit |
| Long term asset |
| 18,002,490 |
| — |
| — |
| — |
| — |
|
Inter Material S.A. |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| 101,700 |
| — |
| — |
| 101,700 |
| — |
|
Linde Gas Chile S.A. |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| 143,988 |
| — |
| — |
| — |
| 143,988 |
|
Linde Gas Chile S.A. |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| 287,976 |
| — |
| — |
| — |
| 287,976 |
|
Echeverría Izquierdo Ingeniería y Construcción |
| Embotelladora Andina S.A. |
| Parent Company |
| Guarantee receipt |
| Guarantee receipt |
| 1,019,190 |
| — |
| — |
| 1,019,190 |
| 287,976 |
|
NOTE 22 — FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’sCompany’s businesses are exposed to diverse financial risks:and market riskrisks (including foreign exchange rate risk, fair value interest rate risk and price risk). The Group’sCompany’s global risk management program concentrates on the uncertainty of financial markets and tries to minimize potentially adverse effects on the financial returns of the Group.Company. The GroupCompany uses derivatives to hedge certain risks. Below is a description of the primary policies established by the GroupCompany to manage financial risks.
Interest rate risk
As of December 31, 2011,2012, the Company carried all of its debt at a fixed rate. Consequently, the risk of fluctuations in market interest rates as compared to the Company’s cash flows is low.
Notwithstanding the above, the Company’s most significant indebtedness comes for the issuance of Bonds that are denominated in Unidades de Fomento, which is indexed to the inflation in Chile). If the inflation in Chile had reached 4% (instead of 2.5%) for the period January 01 to December 31, 2012, the Company’s results would have decreased by ThCh$2,008,527.
Foreign currency risk
Sales revenues earned by the Company are linked to the local currencies of countries in which it does business, the detail of which is detailed as follows:
CHILEAN PESO |
| BRAZILIAN |
| ARGENTINE |
|
31 | % | 45 | % | 24 | % |
Chilean Peso |
| Brazilean Real |
| Argentine Peso |
| Paraguayan |
|
33 | % | 31 | % | 28 | % | 8 | % |
Since the Company’s income is not tied to the US dollar, the policy of managing that risk, meaning the gap between assets and liabilities denominated in that currency, has been to hold financial investments in dollar—denominated instruments for at least the equivalent of the liabilities denominated in that currency.currency (if US dollar liabilities exist).
Additionally and depending on market conditions, the Company’s policy is also to make foreign currency hedge contracts to reduce the foreign exchange rate impact on cash outflows expressed in US dollars, corresponding mainly to payments made to raw material suppliers. In accordance with the percentage at of raw material purchases that are indexed to the US dollar, if the currencies were to devalue by 5% in the three countries where the Company operates and remaining everything constant, it would generate a cumulative decrease cummulative atin income December 31, 20112012 of ThCh$6,877,441. Currently, the Company holds derivative contracts to cover this effect in incomeChile and Argentina, which do not qualify for hedge accounting according to IAS 39
Table of ThCh$5,367,802Contents
NOTE 22 — FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
The exposure to foreign currency exchange conversion differences of subsidiaries abroad (Brazil, Argentina and Argentina)Paraguay), because of the difference between monetary assets and liabilities i.e.(i.e., those denominated in a local currency and consequently exposed to foreign currency translation risk from translation from their functional currency to the presentation currency of the consolidated statements,statements) is only hedged when it is predicted that material adverse differences could occur and when the cost associated with such hedging is deemed reasonable by management. Currently the management. ForCompany does not have these kinds of hedge agreements.
During the period January throughyear ended December 2011,31, 2012, the Brazilian real Argentine Peso and Argentine peso recorded average devaluations of 0.18%the Paraguayan Guarani have devalued 13.6%, 8.6% and 10.19%,4.3% respectively regarding the presentation currency offor the same period of 2011.
Currently in 2010.Argentina there are foreign exchange restrictions and there is a parallel currency market with an exchange rate which is higher than the official rate.- If the Brazilian real and the Argentine peso regardingwere to devalue an additional 25% with respect to the presentation currencyChilean peso, the effects upon results for the concept of translation from foreign subsidiaries would have devalued 3.0% and 12.0% respectively, the income account would have recorded lower earnings in the amount to a higher loss of ThCh$1,352,195.5,102,723. On the other hand, at equity level, this same scenario would causeresult that the restremainder of the conversiontranslation of assetsasset and liabilitiesliability accounts would lead to a decrease in equity byof ThCh$1,830,574.10,723,836.
TableIf the Brazilian real devalued at least 3.6% with respect to the Chilean peso, the effect upon results for the concept of Contentstranslation from foreign subsidiaries would amount to a higher gain of thCh$1,917,060. On the other hand, at equity level, this would result that the remainder of the translation of asset and liability accounts would lead to a smaller decrease in equity of ThCh$4,619,049.
If the Paraguayan Guarani appreciated 2.8% with respect to the Chilean peso, the effect upon results for the concept of translation from foreign subsidiaries would amount to a higher gain of thCh$317,385. On the other hand, at equity level, this would result that the remainder of the translation of asset and liability accounts would lead to an increase in equity of ThCh$16,648,642.
Commodities risk
The Company faces a risk of price fluctuations in the international markets for sugar, aluminum and PET resin, which are inputs required to produce beverages and, as a whole, account for 35% to 40% of operating costs. Procurement and anticipated purchase contracts are made frequently to minimize and/or stabilize this risk whenrisk. When warranted by market conditions warrant. Commoditycommodity hedges have also been used. The possible effects that exist in the present consolidated integral statements of a 5% eventual rise in prices of its main raw materials, would be an approximatea reduction in our accumulated results as offor the year ended December 31, 20112012 of aroundapproximately ThCh$7,795,246. In order to7,879,432. To minimize and/or stabilize thissaid risk, we frequently enter into anticipated purchase and supply agreements are frequently obtained when market conditions are favorable. WeDerivative instruments for commodities have also used commodity hedge agreements.been used.
NOTE 22 — FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
Liquidity risk
The products we sell are mainly paid for in cash and short term credit, therefore our main source of financing comes from the cash flow of our operations. This cash flow has historically been sufficient to cover the investments necessary for the normal course of our business, as well as the distribution of dividends approved by the General Shareholders’ Meeting. Should additional funding be required for future geographic expansion or other needs, the main sources of financing to consider are: (i) debt offerings in the Chilean and foreign capital markets (ii) borrowings from commercial banks, both internationally and in the local markets where we have operations; and (iii) public equity offerings.
The following table presents our contractual and commercial obligations as of December 31, 2012:
|
| Year of maturity |
| ||||||||
Item |
| 2013 |
| 2014 |
| 2015 |
| 2016 |
| 2017 and |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Bank debt |
| 95,602,503 |
| 18,246,000 |
| 14,281,607 |
| 12,696,487 |
| 10,102,925 |
|
Bonds payable |
| 10,264,230 |
| 15,931,909 |
| 15,761,871 |
| 15,591,833 |
| 131,486,846 |
|
Purchase obligations |
| 42,450,378 |
| 5,415,240 |
| 4,423,912 |
| 4,343,418 |
| 552,729 |
|
Operating lease obligations |
| 4,697,482 |
| 1,386,046 |
| 975,917 |
| 570,311 |
| — |
|
Total |
| 153,014,593 |
| 40,979,195 |
| 35,443,307 |
| 33,202,049 |
| 142,142,500 |
|
NOTE 23 — OTHER OPERATING INCOME
Other operating income is detailed as follows:follows
|
| 01.01.2011 |
| 01.01.2010 |
| 01.01.2009 |
|
| 01.01.2012 |
| 01.01.2011 |
| 01.01.2010 |
|
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Gain on disposal of property, plant and equipment |
| 673,669 |
| 548,111 |
| 241,429 |
|
| 2,304,613 |
| 673,669 |
| 548,111 |
|
Adjustment judicial deposit (Brazil) |
| 784,856 |
| 450,299 |
| 442,683 |
|
| 748,299 |
| 784,856 |
| 450,299 |
|
Guaxupé tax credits |
| 1,313,212 |
| — |
| — |
| |||||||
Guaxupé fiscal credits (Brazil) |
| — |
| 1,313,212 |
| — |
| |||||||
Other |
| 137,708 |
| 119,469 |
| 13,701 |
|
| 213,086 |
| 137,708 |
| 119,469 |
|
Total |
| 2,909,445 |
| 1,117,879 |
| 697,813 |
|
| 3,265,998 |
| 2,909,445 |
| 1,117,879 |
|
NOTE 24 — OTHER MISCELLANEOUS OPERATING EXPENSES
Other miscellaneous operating expenses are detailed as follows:
|
| 01.01.2011 |
| 01.01.2010 |
| 01.01.2009 |
|
| 01.01.2012 |
| 01.01.2011 |
| 01.01.2010 |
|
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
| |||||||
Item |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
| |||||||
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Tax on bank debits |
| 3,074,333 |
| 2,966,852 |
| 2,459,110 |
|
| 4,487,209 |
| 3,074,333 |
| 2,966,852 |
|
Write-off of property, plant and equipment |
| 2,452,231 |
| — |
| — |
|
| 1,314,528 |
| 2,452,231 |
| — |
|
Contingencies |
| 4,370,851 |
| 1,257,579 |
| 831,048 |
|
| 2,012,879 |
| 4,370,851 |
| 1,257,579 |
|
Professional service fees |
| 1,101,482 |
| 1,656,515 |
| 823,649 |
|
| 650,912 |
| 1,101,482 |
| 1,656,515 |
|
Loss on the sale of property, plant and equipment |
| 415,823 |
| 470,459 |
| 52,215 |
|
| 804,751 |
| 415,823 |
| 470,459 |
|
Merger Andina-Polar (see note 13.2) |
| 4,517,661 |
| — |
| — |
| |||||||
Donations |
| — |
| 862,307 |
| — |
|
| 815,945 |
| — |
| 862,307 |
|
Others |
| 500,283 |
| 562,112 |
| 628,129 |
| |||||||
Other |
| 816,123 |
| 500,283 |
| 562,112 |
| |||||||
Total |
| 11,915,003 |
| 7,775,824 |
| 4,794,151 |
|
| 15,420,008 |
| 11,915,003 |
| 7,775,824 |
|
NOTE 25 — FINANCEFINANCIAL INCOME AND COSTS
FinanceFinancial income and costs break down as follows:
a) Finance income
|
| 01.01.2011 |
| 01.01.2010 |
| 01.01.2009 |
|
| 01.01.2012 |
| 01.01.2011 |
| 01.01.2010 |
|
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Interest income |
| 2,846,728 |
| 2,451,808 |
| 3,235,543 |
|
| 2,487,739 |
| 2,846,728 |
| 2,451,808 |
|
Other interest income |
| 335,706 |
| 924,330 |
| 716,236 |
|
| 240,320 |
| 335,706 |
| 924,330 |
|
Total |
| 3,182,434 |
| 3,376,138 |
| 3,951,779 |
|
| 2,728,059 |
| 3,182,434 |
| 3,376,138 |
|
b)a) Finance costs
|
| 01.01.2011 |
| 01.01.2010 |
| 01.01.2009 |
|
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Bond interest |
| 5,092,403 |
| 5,022,931 |
| 5,272,873 |
|
Bank loan interest |
| 1,098,757 |
| 1,079,806 |
| 565,953 |
|
Other interest costs |
| 1,044,016 |
| 1,299,094 |
| 2,284,678 |
|
Total |
| 7,235,176 |
| 7,401,831 |
| 8,123,504 |
|
NOTE 26 — OTHER INCOME/ EXPENSES AND ADJUSTMENTS
Other gains and losses are detailed as follows:
|
| 01.01.2011 |
| 01.01.2010 |
| 01.01.2009 |
|
Description |
| 12.31.2011 |
| 12.31.2010 |
| 12.31.2009 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Profit on the sale of shares in Vital S.A. |
| 653,214 |
| — |
| — |
|
Derivatives transactions |
| 1,481,849 |
| 722,108 |
| (1,368,800 | ) |
Adjustment of judicial deposits (Brazil) |
| — |
| — |
| 2,435,639 |
|
Expenses at new Renca Plant |
| (304,629 | ) | (416,618 | ) | — |
|
Insurance deductible and donations due to earthquake |
| — |
| (620,512 | ) | — |
|
Other income and outlays |
| (335,516 | ) | (169,619 | ) | (392,666 | ) |
Total |
| 1,494,918 |
| (484,641 | ) | 674,173 |
|
|
| 01.01.2012 |
| 01.01.2011 |
| 01.01.2010 |
|
Description |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Bond interest |
| 5,473,534 |
| 5,092,403 |
| 5,022,931 |
|
Bank loan interest |
| 4,594,167 |
| 1,098,757 |
| 1,079,806 |
|
Other interest costs |
| 1,105,052 |
| 1,044,016 |
| 1,299,094 |
|
Total |
| 11,172,753 |
| 7,235,176 |
| 7,401,831 |
|
NOTE 26 — OTHER INCOME AND EXPENSES
Other gains and losses are detailed as follows:
|
| 01.01.2012 |
| 01.01.2011 |
| 01.01.2010 |
|
Description |
| 12.31.2012 |
| 12.31.2011 |
| 12.31.2010 |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
Restructuring of operations (new Renca plant) |
| (1,212,579 | ) | (304,629 | ) | (416,618 | ) |
Gain (loss) derivatives transactions |
| (1,102,412 | ) | 1,481,849 |
| 722,108 |
|
Insurance deductible and donations due to earthquake |
| — |
| — |
| (620,512 | ) |
Profit on the sale of shares in Vital S.A. |
| — |
| 653,214 |
|
|
|
Other income and outlays |
| (21,224 | ) | (335,516 | ) | (169,619 | ) |
Total |
| (2,336,215 | ) | 1,494,918 |
| (484,641 | ) |
NOTE 27 — ENVIRONMENT (UNAUDITED)THE ENVIRONMENT
The Company has made disbursements totaling ThCh$3,198,1103,333,058 for improvements in industrial processes, equipment to measure industrial waste flows, laboratory analyses, consulting on environmental impacts and other, studies.
These disbursements by country are detailed as follows:
|
| Year 2011 |
| Future commitments |
|
| Year ended December 31, 2012 |
| Future commitments |
| ||||||||
Country |
| Recorded as |
| Capitalized to |
| Recorded |
| Capitalized to |
|
| Recorded as |
| Capitalized to |
| Recorded |
| Capitalized to |
|
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chile |
| 106,980 |
| 110,582 |
| 1,260 |
| 121,195 |
|
| 674,893 |
| 124,388 |
| — |
| — |
|
Argentina |
| 512,814 |
| 6,402 |
| 977,802 |
| 532,893 |
|
| 742,213 |
| 71,596 |
| 311,598 |
| 1,963,658 |
|
Brasil |
| 1,789,748 |
| 671,584 |
| 1,450,428 |
| 1,701,988 |
| |||||||||
Brazil |
| 1,004,181 |
| 678,887 |
| 1,308,374 |
| 3,979,832 |
| |||||||||
Paraguay |
| 26,628 |
| 10,272 |
| — |
| 5,740 |
| |||||||||
Total |
| 2,409,542 |
| 788,568 |
| 2,429,490 |
| 2,356,076 |
|
| 2,447,915 |
| 885,143 |
| 1,619,972 |
| 5,949,230 |
|
NOTE 28 — SUBSEQUENT EVENTS
On March 30, 2012, after completion of due-diligence procedures, the Company signed a Promissory Merger Agreement with Embotelladoras Coca-Cola Polar S.A. (“Polar”). Polar is also a Coca-Cola bottler, with its operations in Chile and Paraguay.
The terms of the merger prescribe the exchange of newly issued Company shares at a rate of 0.33269 Series A shares and 0.33269 Series B shares, for each outstanding share of Polar. This exchange rate implies that the current shareholders of Polar will acquire a 19.68% interest in the Company.
PriorApril 25, 2013, final additional dividend number N° 184 was agreed to closing the merger, and subject to the approval by of each of the respective shareholders’ meetings, Andina and Polar will each distribute dividends to their shareholders, in addition to those already declared and distributed to date. Company dividends will amount to Ch$28,155,862,307 and Ch$29,565,609,857, respectively, which represents Ch$35.27 per Series A share and Ch$38.80 per Series B share.
Closing of the merger first requires the approval of the Chilean Superintendence of Securities and Insurance, the Boards of Directors and shareholders of both companies, and the Coca-Cola Company. It also requires registration of new shares to be issued in the exchange. The merger is scheduled to close before August 31, 2012.pay from retained earnings as follows:
F-73a)Ch$12.3 for each series A share; and
Table of Contentsb)Ch$13.53 for each series B share.
Based on the historical results for the year ended December 31, 2011, the merged entity would have a pro-forma net revenues of approximately US$2.643 million, becoming one of the largest Coca-Cola bottlers in Latin America with operations in Argentina, Brazil, Chile and Paraguay.On April 25, 2013, final additional dividend number 185 was agreed to pay from retained earnings as follows:
Except as noted above, there are no financial ora)Ch$47.0 for each series A share; and
b)Ch$51.7 for each series B share.
No other matterssignificant events have occurred between the end of the yearDecember 31, 2012 and the issuance date of preparation of these financial statements that could significantly affect the assets, liabilities, and/or resultspresentation of the Company.these financial statements.
The exhibits filed with or incorporated by reference in this annual report are listed in the exhibit index below.
EXHIBIT INDEX
Item |
| Description | |
|
|
| |
| 1.1 |
| English translation of our Bylaws (filed herewith and also available on our website www.embotelladoraandina.com) |
|
|
|
|
| 1.2 |
| English translation of |
1.2.1 | Argentina’s Bottler’s Agreement EDASA (filed herewith) | ||
1.2.2 | Argentina’s Bottler’s Agreement EDASA (Schweppes) (filed herewith) | ||
1.2.3 | Argentina’s Bottler’s Agreement Ex — Polar (filed herewith) | ||
1.2.4 | Argentina’s Bottler’s Agreement Ex — Polar (other) (filed herewith) | ||
1.2.5 | Brasil’s Bottler’s Agreement RJR (filed herewith) | ||
1.2.6 | Brasil’s Bottler’s Agreement RJR (Exhibit) (filed herewith) | ||
1.2.7 | Chile’s Bottler’s Agreement Ex — Polar (filed herewith) | ||
1.2.8 | Chile’s Bottler’s Agreement Andina (filed herewith) | ||
1.2.9 | Chile’s Bottler’s Agreement Andina (Exhibit) (filed herewith) | ||
1.2.10 | Paraguay’s Bottler’s Agreement PARESA (filed herewith) | ||
|
|
|
|
| 1.3 |
| Depositary Agreement with The Bank of New York Mellon (filed herewith) |
|
|
|
|
| 1.4 |
| Shareholders’ Agreement (filed herewith) |
|
|
|
|
| 1.5 |
| English Translation of the Stock Purchase Agreement and Amendment to the Stock Purchase Agreement (filed herewith) |
|
|
|
|
| 1.6 |
| Indenture dated as of September 30, 1997 among Embotelladora Andina S.A., Credit Suisse First Boston Corporation, and J.P. Morgan Securities Inc. (incorporated herein by reference and filed with the SEC on September 30, 1997 and also available on our website www.embotelladoraandina.com) |
|
|
|
|
| 8.1 |
| List of our subsidiaries (filed herewith). |
| 8.2 | Letter addressed to SEC ref: dismissal of previous auditors (filed herewith). | |
|
|
| |
| 12.1 |
| Certification of Miguel Ángel Peirano, Chief Executive Officer, pursuant to Rule 13-a14(a) (17 CFR 240.13a-12(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)) (filed herewith). |
|
|
|
|
| 12.2 |
| Certification of Andrés Wainer, Chief Financial Officer pursuant to Rule 13-a14(a) (17 CFR 240.13a-12(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)) (filed herewith). |
|
|
|
|
| 13.1 |
| Certification of Miguel Ángel Peirano, Chief Executive Officer, pursuant to 18 U.S.C. Chapter 63, Section 1350, (filed herewith). |
|
|
|
|
| 13.2 |
| Certification of Andrés Wainer, Chief Financial Officer, pursuant to 18 U.S.C. Chapter 63, Section 1350, (filed herewith). |
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report on Form 20-F to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Santiago, Chile on April 30, 2012.2013.
| EMBOTELLADORA ANDINA S.A. |
| |
|
|
| /s/ André |
| Andrés Wainer Andrés Wainer |
| Chief Financial Officer |
Date: April 30, 20122013