UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 6-K
__________________________
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
June 2007
Date of Report (Date of Earliest Event Reported)
__________________________
Embotelladora Andina S.A.
(Exact name of registrant as specified in its charter)
Andina Bottling Company, Inc.
(Translation of Registrant´s name into English)
Avda. El Golf 40, Piso 4
Las Condes
Santiago, Chile
(Address of principal executive office)
__________________________
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F ___X___ Form 40-F _______
Indicate by check mark if the Registrant is submitting this Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
Yes _______ No ___X____
Indicate by check mark if the Registrant is submitting this Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
Yes _______ No ___X____
Indicate by check mark whether the registrant by furnishing the information contained in this Form 6-K is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes _______ No ___X____
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
Consolidated financial statements
June 30, 2007
(Translation of original in Spanish)
CONTENTS
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Report of Independent Auditors
Ch$
-
Chilean pesos
ThCh$
-
Thousands of Chilean pesos
US$
-
United States dollars
ThUS$
-
Thousands of United States dollars
R$
-
Brazilian Reais
ThR$
-
Thousands of Brazilian Reais
AR$
-
Argentine pesos
ThAR$
-
Thousands of Argentine pesos
UF
-
Unidades de Fomento (Chilean government inflation-indexed monetary units)
€
-
Euros
Th€
-
Thousands of Euros
REPORT OF INDEPENDENT AUDITORS
(Translation of original in Spanish)
Santiago, July 25, 2007
To the Shareholders and Directors
Embotelladora Andina S.A.
We have reviewed the accompanying Consolidated Balance Sheets of Embotelladora Andina S.A. and its subsidiaries (the “Company”) as of June 30, 2007 and 2006, and the related Consolidated Statements of Income and of Cash Flows for each of the six-month periods then ended. These interim financial statements (including the corresponding notes thereto) are the responsibility of the Company’s management. The analysis of results and relevant facts attached are not part of these financial statements and therefore, this report is not related to them.
We conducted our review in accordance with auditing standards established in Chile for the review of interim financial information. A review of interim financial information consists principally of applying analytical procedures to the financial statements and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, the interim consolidated financial statements as of June 30, 2007 and 2006 have not been audited and therefore, we cannot, nor do we express, such an opinion.
Based on our review, we are not aware of any significant adjustments that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in Chile.
Juan Carlos Pitta De C.
Id No. 14.709.125-7
2
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| For the periods ended | |
| June 30 | |
| 2007 | 2006 |
| ThCh$ | ThCh$ |
TOTAL CURRENT ASSETS | 172,375,972 | 151,770,543 |
Cash | 31,180,534 | 5,546,519 |
Time deposits | 19,476,949 | 35,590,423 |
Marketable securities (net) | 26,918,058 | 24,695,996 |
Trade accounts receivable (net) | 23,065,362 | 21,267,924 |
Notes receivable (net) | 7,161,199 | 5,700,671 |
Other receivables (net) | 7,715,557 | 16,142,810 |
Notes and accounts receivable from related companies | 927,840 | 1,117,164 |
Inventories (net) | 23,261,022 | 21,323,205 |
Recoverable taxes | 4,598,125 | 9,244,139 |
Prepaid expenses | 2,301,610 | 2,184,225 |
Deferred income taxes | 506,128 | 0 |
Other current assets | 25,263,588 | 8,957,467 |
TOTAL PROPERTY, PLANT & EQUIPMENT | 148,836,776 | 145,429,172 |
Land | 16,430,796 | 13,407,281 |
Buildings & improvements | 89,154,266 | 83,741,263 |
Machinery and equipment | 218,501,783 | 221,813,286 |
Other property, plant & equipment | 216,983,428 | 212,054,094 |
Technical reappraisal of property, plant & equipment | 2,095,208 | 2,095,144 |
Depreciation | (394,328,705) | (387,681,896) |
TOTAL OTHER ASSETS | 180,786,020 | 227,110,983 |
Investments in related companies | 20,541,339 | 21,785,524 |
Investments in other companies | 56,616 | 58,050 |
Goodwill | 63,537,374 | 74,159,149 |
Long-term receivables | 64,991 | 129,479 |
Long-term notes and accounts receivable from related companies | 36,176 | 35,492 |
Long-term deferred income taxes | 0 | 178,728 |
Intangibles | 420,521 | 443,047 |
Amortization | (262,341) | (260,522) |
Others | 96,391,344 | 130,582,036 |
TOTAL ASSETS | 501,998,768 | 524,310,698 |
The accompanying Notes 1 to 41 are an integral part of these consolidated financial statements.
3
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| For the periods ended | |
| June 30 | |
| 2007 | 2006 |
| ThCh$ | ThCh$ |
TOTAL CURRENT LIABILITIES | 147,077,631 | 134,010,112 |
Short-term bank liabilities | 338,615 | 49,248,897 |
Current portion of long-term bank liabilities | 0 | 528,159 |
Current portion of bonds payable | 29,957,382 | 13,175,161 |
Dividends payable | 57,844,398 | 5,028,307 |
Accounts payable | 29,844,351 | 31,382,651 |
Other creditors | 4,268,369 | 3,010,099 |
Notes and accounts payable to related companies | 3,889,660 | 7,033,728 |
Provisions | 3,223,700 | 769,740 |
Withholdings | 9,528,909 | 13,342,371 |
Income taxes payable | 3,300,640 | 5,418,310 |
Unearned income | 546,382 | 497,216 |
Deferred income taxes | 0 | 867,777 |
Other current liabilities | 4,335,225 | 3,707,696 |
TOTAL LONG-TERM LIABILITIES | 109,660,494 | 140,715,235 |
Long-term bank liabilities | 778,427 | 334,005 |
Bonds payable | 71,016,869 | 101,460,384 |
Other creditors | 134,311 | 191,198 |
Long-term notes and accounts payable to related companies | 3,403,981 | 3,808,476 |
Provisions | 17,174,207 | 25,734,840 |
Deferred income taxes | 7,059,723 | 0 |
Other long-term liabilities | 10,092,976 | 9,186,332 |
MINORITY INTEREST | 1,231,492 | 1,203,545 |
TOTAL SHAREHOLDERS’ EQUITY | 244,029,151 | 248,381,806 |
Paid-in capital | 202,060,999 | 203,644,239 |
Revalued capital reserves | 3,839,159 | 2,240,087 |
Other reserves | (1,918,627) | 5,055,152 |
Retained earnings | 40,047,620 | 37,442,328 |
Accumulated earnings | 10,621,196 | 10,195,578 |
Net income for the period | 35,014,442 | 31,846,806 |
Interim dividends | (5,588,018) | (4,600,056) |
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY | 501,998,768 | 524,310,698 |
The accompanying Notes 1 to 41 are an integral part of these consolidated financial statements.
4
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| June 30, | |
| 2007 | 2006 |
| ThCh$ | ThCh$ |
OPERATING INCOME | 48,813,272 | 41,524,815 |
Gross margin | 127,874,169 | 108,812,000 |
Net sales | 296,863,697 | 263,066,430 |
Cost of sales | (168,989,528) | (154,254,430) |
Administrative and selling expenses | (79,060,897) | (67,287,185) |
NON OPERATING INCOME AND EXPENSE | (4,135,990) | (3,285,164) |
Financial income | 7,774,134 | 5,261,030 |
Equity in earnings of equity investments | 514,540 | 354,053 |
Other non-operating income | 4,295,626 | 457,337 |
Equity in losses of equity investments | (327,131) | 0 |
Amortization of goodwill | (3,228,863) | (3,353,002) |
Financial expenses | (7,972,975) | (10,610,227) |
Other non-operating expenses | (2,081,737) | (974,139) |
Price level restatement | 83,609 | (587,431) |
Foreign exchange gains | (3,193,193) | 6,167,215 |
Income before income taxes and extraordinary items | 44,677,282 | 38,239,651 |
Income tax expense | (9,623,890) | (6,352,637) |
Income before minority interest | 35,053,392 | 31,887,014 |
Minority interest | (38,950) | (40,208) |
NET INCOME FOR THE PERIOD | 35,014,442 | 31,846,806 |
The accompanying Notes 1 to 41 are an integral part of these consolidated financial statements.
5
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
| For the periods ended | |
| June 30 | |
| 2007 | 2006 |
| ThCh$ | ThCh$ |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 53,893,933 | 62,157,390 |
Collection of trade receivables | 421,495,135 | 398,892,644 |
Financial income received | 6,805,549 | 6,676,047 |
Dividend & other distributions received | 2,436,292 | 1,509,007 |
Other income received | 47,297 | 38,541 |
Payments to suppliers and personnel | (303,474,699) | (281,582,490) |
Interest paid | (6,460,687) | (5,980,693) |
Income taxes paid | (10,273,798) | (6,158,996) |
VAT and other tax payments | (56,681,156) | (51,236,670) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (22,516,968) | (51,764,482) |
Borrowings | 424,343 | 34,212,518 |
Dividend distribution | (13,983,854) | (63,409,332) |
Loan payments | (2,870,146) | (16,463,962) |
Bond payments | (6,087,311) | (6,103,706) |
NET CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES | (590,527) | (5,197,192) |
Proceeds from sales of property, plant and equipment | 441,475 | 1,194,385 |
Proceeds from sales of permanent investments | 0 | 5,214,223 |
Proceeds from sales of other investments | 22,171,673 | 3,120,061 |
Additions to property, plant & equipment | (22,999,666) | (14,643,266) |
Permanent investments | 0 | (918) |
Investments in financial instruments | (204,009) | (81,677) |
TOTAL NET CASH FOR THE PERIOD | 30,786,438 | 5,195,716 |
EFFECT OF INFLATION ON CASH AND CASH EQUIVALENTS | 599,264 | (1,028,620) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | 31,385,702 | 4,167,096 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 41,808,130 | 22,598,391 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 73,193,832 | 26,765,487 |
The accompanying Notes 1 to 41 are an integral part of these consolidated financial statements.
6
EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
RECONCILIATION BETWEEN NET INCOME AND NET CASH FLOWS
PROVIDED BY OPERATING ACTIVITIES
| For the periods ended | |
| June 30, | |
| 2007 | 2006 |
| ThCh$ | ThCh$ |
NET INCOME | 35,014,442 | 31,846,806 |
Income on sale of assets: | 213,810 | (253,049) |
Loss (gain) on sale of property, plant and equipment | 226,850 | (253,049) |
Loss on sale of other assets | (13,040) | 0 |
ADJUSTMENTS TO NET INCOME THAT DO NOT REPRESENT MOVEMENTS OF CASH | 20,274,701 | 12,513,071 |
Depreciation | 14,522,514 | 15,574,241 |
Amortization of intangibles | 116,572 | 150,386 |
Write-offs and provisions | 709,126 | (773,610) |
Equity in earnings of equity investments | (514,540) | (354,053) |
Equity in losses of equity investments | 327,131 | 0 |
Amortization of goodwill | 3,228,863 | 3,353,002 |
Price level restatement | (83,609) | 587,431 |
Foreign exchange losses (gains), net | 3,193,193 | (6,167,215) |
Other credits to income that do not represent cash flows | 514,754 | (17,396) |
Other charges to income that do not represent cash flows | (1,739,303) | 160,285 |
CHANGES IN OPERATING ASSETS | 16,657,969 | 23,731,013 |
(Increase) decrease in trade accounts receivable | 24,345,359 | 27,268,475 |
(Increase) decrease in inventories | (674,510) | 602,902 |
(Increase) decrease in other assets | (7,012,880) | (4,140,364) |
CHANGES IN OPERATING LIABILITIES | (18,305,939) | (5,720,659) |
Increase (decrease) in accounts payable related to operating income | (24,194,890) | (10,462,053) |
Increase (decrease) in interest payable | 6,792,436 | 9,571,192 |
Increase (decrease) in income taxes payable | 1,134,540 | (1,147,081) |
Increase (decrease) in other accounts payable related to non-operating income | 3,836,439 | (266,893) |
Increase (decrease) in valued added tax and other similar items | (5,874,464) | (3,415,824) |
Minority interest | 38,950 | 40,208 |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 53,893,933 | 62,157,390 |
The accompanying Notes 1 to 41 are an integral part of these consolidated financial statements.
7
NOTE 1 - INCORPORATION IN THE SECURITIES REGISTER
Embotelladora Andina S.A. was incorporated in the Securities Register under No. 00124 and, in conformity with Law 18,046. is subject to the supervision of the Chilean Superintendence of Securities and Insurance Companies (the “SVS”).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
a)
Accounting period
The consolidated financial statements cover the period January 1 to June 30, 2007 and are compared to the same period in 2006.
b)
Basis of preparation
The consolidated financial statements have been prepared in conformity with generally accepted accounting principles issued by the Chilean Institute of Accountants, as well as rules and regulations of the SVS. In the event of discrepancy, the SVS regulations will prevail.
c)
Basis of presentation
For comparison purposes, the figures in the prior-year financial statements have been restated by 2.9 % according to CPI and minor reclassifications have been made.
d)
Basis of consolidation
The accompanying financial statements include assets, liabilities, income and cash flows of the Parent Company and its subsidiaries. The equity and income accounts of the Parent Company and its subsidiaries have been combined, eliminating investments and current accounts between consolidated companies, transactions between them and the unrealized income from inter-company transactions.
In addition, for proper presentation of consolidated net income, the participation in income by minority shareholders is shown in the consolidated statements of income under Minority interest.
Holding percentages
The subsidiaries included in the consolidated financial statements and Andina’s direct and indirect holding percentages are as follows:
Company Name | Ownership Interest | |||
| June 30, 2007 | June 30, 2006 | ||
| Direct | Indirect | Total | Total |
ABISA CORP S.A. | 0.00 | 99.99 | 99.99 | 99.99 |
ANDINA BOTTLING INVESTMENTS S.A. | 99.90 | 0.09 | 99.99 | 99.99 |
ANDINA INVERSIONES SOCIETARIAS S.A. | 99.99 | 0.00 | 99.99 | 99.99 |
ANDINA BOTTLING INVESTMENTS DOS S.A. | 99.90 | 0.09 | 99.99 | 99.99 |
EMBOTELLADORA DEL ATLANTICO S.A. | 0.00 | 99.99 | 99.99 | 99.99 |
ENVASES MULTIPACK LTDA. | 0.00 | 0.00 | 0.00 | 99.99 |
RIO DE JANEIRO REFRESCOS LTDA. | 0.00 | 99.99 | 99.99 | 99.99 |
SERVICIOS MULTIVENDING LTDA. | 99.90 | 0.09 | 99.99 | 99.99 |
TRANSPORTES ANDINA REFRESCOS LTDA. | 99.90 | 0.09 | 99.99 | 99.99 |
VITAL S.A. | 0.00 | 99.99 | 99.99 | 99.99 |
RJR INVESTMENTS CORP S.A. | 0.00 | 99.99 | 99.99 | 99.99 |
VITAL AGUAS S.A. | 56.50 | 0.00 | 56.50 | 56.50 |
8
e)
Price-level restatement
The financial statements have been restated to reflect the effect of price-level changes on the purchasing power of the Chilean peso during the respective periods. Restatements have been determined on the basis of the percentage variation of the official Chilean Consumer Price Index, “CPI”, issued by the Chilean National Institute of Statistics, which amounted to 1.9% for the period December 1, 2006 to May 31, 2007 (1.1% for the same period of the previous year).
f)
Currency translation
Balances in foreign currency are considered as non-monetary items and are translated at the exchange rate prevailing at year-end. Regarding balances subject to restatement, these have been restated by the corresponding restatement index or by the agreed upon rate.
Assets and liabilities in foreign currency and Unidades de Fomento have been translated into local currency at the following end of period exchange rates:
|
| 2007 | 2006 |
|
| Ch$ | Ch$ |
Unidades de Fomento | (UF) | 18,624.17 | 18,151.40 |
United States dollars | (US$) | 526.86 | 539.44 |
Argentine pesos | (AR$) | 171.11 | 174.80 |
Brazilian Real | (R$) | 273.52 | 249.24 |
Euro | (€$) | 713.03 | 689.91 |
g)
Marketable securities
Marketable securities include investments in mutual funds and investment fund shares, valued at the redemption value for each year end.
Investments in bonds with pre-established value are valued at the lesser value between the price value restatement cost and the market price.
h)
Inventories
The cost of raw materials includes all disbursements made in the acquisition process and deemed necessary for them to be readily available at the Company’s or it’s subsidiaries’ warehouse. The costs of finished products include all manufacturing costs. Raw materials and finished products are valued at the average weighted cost. Provisions are made for obsolescence on the basis of turnover of raw materials and finished products. The stated values of inventories do not exceed their estimated net realizable value.
i)
Allowance for doubtful accounts
The allowance for doubtful accounts consists of a general provision determined on the basis of the aging of accounts receivable and on a case-by-case analysis where collection is doubtful. In the opinion of the Company’s management, the allowances are reasonable and the net balances are recoverable.
j)
Property, plant and equipment
For companies incorporated in Chile, Property, plant and equipment is carried at restated cost plus price-level restatements. For companies incorporated abroad it has been restated in terms of the variation of the U.S. dollar according to the details described in Note 2 m). Technical reappraisal of property, plant and equipment, authorized by the SVS on December 31, 1979, is shown at restated value under the heading “Technical reappraisal of property, plant and equipment”.
Fixed assets to be disposed of for sale are valued at the lower of the net realizable value and book value. Unrealized losses are reflected in the consolidated statement of income under Other non-operating expenses.
k)
Depreciation
Depreciation of property, plant and equipment is determined by the straight-line method based on the estimated useful lives of the valued assets.
9
l)
Containers
Inventories of containers, bottles and plastic containers at plants, warehouses, and with third parties are stated at cost plus price-level restatements and are included in Other property, plant and equipment. Broken or damaged containers at plants and warehouses are expensed in each accounting period.
m)
Investments in related companies
Investments in shares or rights in companies in which the Company has a significant holding in the investee are accounted for using the equity method. The Company’s proportionate share of net income and losses of related companies is recognized in the consolidated statements of income, after eliminating any unrealized profits or losses from transactions between related companies.
Investments in foreign companies are valued in conformity with Technical Bulletin No. 64 issued by the Chilean Institute of Accountants. The United States (“US”) dollar is the currency used to control investments and to translate financial statements of foreign companies. Assets and liabilities from these investments are translated into Chilean pesos at year end exchange rate, except that non-monetary assets and liabilities and shareholders’ equity are first expressed at their equivalent value in historical US dollars. Income and expense items are first translated into US dollars at the average exchange rate during the month.
n)
Intangibles
Intangibles include franchise rights and licenses that are amortized over the terms of the contracts, not in excess of 20 years.
o)
Goodwill
Goodwill represents the difference between purchase cost of the shares acquired and the proportional equity value of investment on the purchase date. These differences are amortized based on the expected period of return of the investment, estimated at 20 years.
p)
Bonds payable
Bonds payable includes the placement of Yankee Bonds on the US markets and placement of bonds in UF in Chile, which are carried at the issue rate. The difference in valuation as compared to the effective placement rate is recorded as a deferred asset. This asset is amortized using the straight-line method over the term of the respective obligations.
q)
Income taxes and deferred income taxes
The companies have recognized its current tax obligations in conformity with current legislation. The effects of deferred income taxes arising from temporary differences between the basis of assets and liabilities for tax and financial statement purposes are recorded on the basis of the enacted tax rate that will be in effect at the estimated date of reversal, in conformity with Technical Bulletin No. 60 issued by the Chilean Institute of Accountants. The effects of deferred income taxes existing at the time of the enforcement of the aforesaid Bulletin, i.e. January 1, 2000, and not previously recognized, are recorded as gain or loss according to their estimated reversal period.
r)
Staff severance indemnities
The Company has recorded a liability for long-term service indemnities in accordance with the collective agreements entered into with its employees. The provision is stated at present value of the projected cost of the benefit, which is discounted at a 7.0% annual rate and a capitalization period using the staff’s expected length of service to their retirement date.
Since the year 2005, the Company maintains a withholding plan for some officers. A liability is recorded according to the guidelines of this plan. The plan entitles certain officers of the Company to receive a fixed payment in cash at a predetermined date once he has fulfilled years of service.
10
s)
Deposits for containers
Corresponds to the liabilities constituted by cash guarantees received from clients for lending bottles to them.
For those loans for placement subsequent to January 31, 2001, an expiration date of five years as from the invoice date was established. In the event the client has not returned all or a portion of the containers and/or cases, the Company may, without delay, enforce the guarantee, in whole or in part, in cash and record that effect in operating income of the Company.
This liability is presented in Other long-term liabilities, considering that the number of new containers in circulation in the market during the year is historically greater than the number of containers returned by clients during the same period.
t)
Revenue recognition
Given the nature of its operations, the Company records revenue based on the physical delivery of finished products to its clients, based on the realization principle and in accordance with Technical Bulletin No. 70 issued by the Chilean Institute of Accountants.
u)
Derivative contracts
Derivative contracts include hedging derivative contracts used to cover the risk of exposure to exchange rate differences as follows:
These hedge instruments are recorded at their market values for existing items. Unrealized losses are recognized as a charge to income and gains are deferred and included in Other liabilities (current or long-term), depending on whether the difference is a loss or gain. In the case that the hedge instruments are not totally efficient, the impact is recognized as an income charge or credit.
Hedge contracts for forecasted transactions are recorded at market value and their changes in value are accounted for as unrealized gains or losses. Upon contract expiration, the deferred gains and losses are recorded in income.
v)
Computer software
Software currently in use corresponds to computer packages purchased from third parties, and programs developed internally. Software purchased from third parties is capitalized and amortized over a maximum period of four years. Disbursements incurred for internally developed programs are expensed.
w)
Research and development costs
Costs incurred by the Company in research and development are immaterial given the nature of the business and the strong support from The Coca-Cola Company to its bottlers.
x)
Consolidated statement of cash flows
For purposes of preparation of the statement of cash flows, in accordance with Technical Bulletin N°50 of the Chilean Institute of Accountants and circular N°1,501 of the Superintendencia de Valores y Seguros (Chilean Superintendence of Securities and Insurance) the Company has considered cash equivalent to be investments in fixed-income, mutual funds, time deposits and operations with sale-back agreements maturing within 90 days.
Cash flows from operating activities include all business-related cash flows as well as interest paid, financial income and, in general, all cash flows not defined as from financial or investment activities. The operating concept used for this statement is broader than that in the statement of income.
NOTE 3 - ACCOUNTING CHANGES
There are no changes in the application of generally accepted accounting principles in Chile in relation to the previous year that could significantly affect the comparability of these financial statements.
11
NOTE 4 - MARKETABLE SECURITIES
Type of Instrument | Accounting value for the periods ended June 30, |
|
|
|
|
| |
| 2007 | 2006 |
|
|
|
|
|
| ThCh$ | ThCh$ |
|
|
|
|
|
Bonds | 2,181,727 | 4,635,594 |
|
|
|
|
|
Mutual funds | 2,270,088 | 7,003,951 |
|
|
|
|
|
Investment funds | 22,466,243 | 13,056,451 |
|
|
|
|
|
Total Marketable Securities | 26,918,058 | 24,695,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Income | Date | Par Value | Accounting value | Market Value | Provision | ||
| Purchase | Maturity | Amount | Rate | |||
|
|
| ThCh$ | ThCh$ | % | ThCh$ | ThCh$ |
|
|
|
|
|
|
|
|
UNITED STATES TREASURY NOTES | 26-Jul-06 | 30-Jun-08 | 1,098,665 | 1,098,665 | 5.125 | 1,094,815 | 3,850 |
PEMEX | 13-Sep-04 | 15-Sep-07 | 1,053,720 | 1,091,237 | 8.850 | 1,086,912 | 4,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual Funds | Balance as of June 30, 2007 |
|
|
|
|
|
|
| ThCh$ |
|
|
|
|
|
|
Fondos Fima - Argentina | 1,397,088 |
|
|
|
|
|
|
Scotia Sud Americano Fondo Mutuo Clipper - Chile | 845,000 |
|
|
|
|
|
|
Fondos Mutuos BBVA Excelencia - Chile | 28,000 |
|
|
|
|
|
|
Total Mutual Funds | 2,270,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment Funds | Balance as of June 30, 2007 |
|
|
|
|
|
|
| ThCh$ |
|
|
|
|
|
|
Citi Institutional Liquid Reserves Limited - USA | 22,462,429 |
|
|
|
|
|
|
Fondo Mutuo Wachovia Securities - USA | 3,814 |
|
|
|
|
|
|
Total Investment Funds | 22,466,243 |
|
|
|
|
|
|
12
NOTE 5 - SHORT-AND LONG-TERM RECEIVABLES
Almost all of said accounts correspond to the soft drinks category. The balance of other accounts receivable mainly corresponds to prepayment to our sugar suppliers.
| Current | More than 90 days | Long Term |
| |||||||
| Up to 90 days | up to 1 year | Subtotal | Total Current (net) |
| ||||||
| June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, | June 30, 2007 | June 30, | June 30, 2006 | June 30, 2007 | June 30, 2006 | ||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||
Trade receivables | 23,348,652 | 21,351,512 | 824,061 | 1,259,385 | 24,172,713 | 23,065,362 | 21,267,924 | 0 | 0 | ||
Allowance for doubtful accounts |
|
| (1,107,351) |
|
|
|
| ||||
Notes receivable | 7,206,774 | 5,867,267 | 409,764 | 391,758 | 7,616,538 | 7,161,199 | 5,700,671 | 0 | 48,298 | ||
Allowance for doubtful accounts |
|
| (455,339) |
|
|
|
| ||||
Other receivables | 7,321,880 | 15,713,974 | 432,888 | 515,095 | 7,754,768 | 7,715,557 | 16,142,810 | 64,991 | 81,181 | ||
Allowance for doubtful accounts |
|
| (39,211) |
|
|
|
| ||||
|
|
| Total long term receivables | 64,991 | 129,479 |
13
NOTE 6 - BALANCES AND TRANSACTIONS WITH RELATED COMPANIES
Receivable and payable balances with related companies correspond to the following concepts:
1) Notes and accounts receivable.
Embonor S.A.: Sale of products
Embotelladora Coca-Cola Polar S.A.: Sale of products
Coca-Cola de Chile S.A.: Advertising agreements
Company | Short Term | Long Term | ||
| June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
EMBONOR S.A. | 478,185 | 305,035 | 0 | 0 |
EMBOTELLADORA COCA-COLA POLAR S.A. | 449,655 | 352,484 | 0 | 0 |
COCA-COLA DE CHILE S.A. | 0 | 459,645 | 36,176 | 35,492 |
TOTAL | 927,840 | 1,117,164 | 36,176 | 35,492 |
2) Notes and accounts payable:
Recofarma Industrias Do Amazonas Ltda.: Concentrate purchases
Envases CMF S.A.: Raw material purchases
Servicios y Productos para Bebidas Refrescantes: Concentrate purchases
Envases Central S.A.: Net balance corresponds to raw materials and finished products transactions.
Envases del Pacífico S.A.: Raw material purchases
Cican S.A.: Net balance corresponds to raw materials and finished products transactions.
Embonor S.A. and Embotelladora Coca-Cola Polar S.A.: Corresponds to unearned income due to commitments of sale of products of Vital S.A. to those companies, which will be realized in accordance with future deliveries.
Company | Short Term | Long Term | ||
| June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
RECOFARMA INDUSTRIAS DO AMAZONAS LTDA. | 1,485,606 | 2,199,094 | 0 | 0 |
SPBR S.R.L. | 1,247,443 | 1,491,729 | 0 | 0 |
ENVASES CMF S.A. | 632,666 | 2,137,066 | 0 | 0 |
ENVASES CENTRAL S.A. | 228,398 | 847,573 | 0 | 0 |
COCA-COLA DE CHILE S.A. | 167,307 | 0 | 0 | 0 |
CICAN S.A. | 112,008 | 151,745 | 0 | 0 |
ENVASES DEL PACIFICO S.A. | 16,232 | 206,521 | 0 | 0 |
EMBONOR S.A. | 0 | 0 | 2,708,746 | 3,032,939 |
EMBOTELLADORA COCA COLA POLAR S.A. | 0 | 0 | 695,235 | 775,537 |
TOTAL | 3,889,660 | 7,033,728 | 3,403,981 | 3,808,476 |
14
3) Transactions with related companies
The following table includes the transactions with related companies that exceed ThCh$200,000.
Within the due course of operations, the Company executed with IANSAGRO S.A. sugar future supply agreements to cover sugar needs for the next two years approximately.
Company | Relation | Transaction | June 30, 2007 | June 30, 2006 | ||
|
|
| Effect on Income | Effect on Income | ||
|
|
| Amount | ((charge)/credit) | Amount | ((charge)/credit) |
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
ENVASES CENTRAL S.A | Equity Investee | Purchase of finished products | 7,508,259 | 0 | 7,066,919 | 0 |
- | - | Sale of raw materials and supplies | 762,807 | 53,160 | 541,021 | 83,329 |
COCA-COLA DE CHILE S.A. | Shareholder | Purchase of concentrate | 22,636,728 | 0 | 18,780,955 | 0 |
- | - | Advertising participation payment | 2,930,819 | (2,930,819) | 648,472 | (648,472) |
- | - | Sale of advertisement | 1,075,421 | 0 | 627,767 | 0 |
- | - | Water source rental | 811,381 | (811,381) | 795,099 | (795,099) |
COCA-COLA DE ARGENTINA S.A. | Shareholder related | Advertising participation payment | 1,103,598 | (1,103,598) | 1,223,553 | (1,223,553) |
SERVICIOS Y PRODUCTOS PARA BEBIDAS REFRESCANTES | Shareholder related | Purchase of concentrate | 12,783,408 | 0 | 10,553,085 | 0 |
CICAN S.A. | Equity Investee | Purchase of finished products | 742,986 | 0 | 407,316 | 0 |
- | - | Sale of raw materials | 179,699 | 50,531 | 0 | 0 |
ENVASES DEL PACIFICO | Director in Common | Purchase of raw materials | 52,230 | 0 | 334,001 | 0 |
RECOFARMA INDUSTRIAS DO AMAZONAS LTDA. | Shareholder related | Purchase of concentrate | 28,398,396 | 0 | 20,452,865 | 0 |
- | - | Advertising participation payment | 1,381,277 | 1,381,277 | 1,644,870 | (1,644,870) |
ENVASES CMF S.A. | Equity Investee | Purchase of containers | 7,197,040 | 0 | 7,093,991 | 0 |
- | - | Services rendered | 114,378 | 0 | 0 | 0 |
- | - | Dividend payment | 3,045,024 | 0 | 1,508,083 | 0 |
EMBONOR S.A. | Shareholder related | Sale of finished products | 3,814,101 | 774,945 | 1,586,149 | 0 |
- | - | Purchase of finished products | 194,539 | 0 | 0 | 0 |
- | - | Purchase of fixed asset | 1,091 | 0 | 0 | 0 |
EMBOTELLADORA COCA COLA POLAR S.A. | Shareholder related | Sale of finished products | 2,259,407 | 404,747 | 1,144,902 | 0 |
IANSAGRO S.A. | Director in common | Purchases of sugar | 6,422,561 | 0 | 3,494,951 | 0 |
BBVA ADMINISTRADORA GENERAL DE FONDOS | Related to a director | Redemption of mutual funds | 44,610,441 | 0 | 0 | 0 |
15
NOTE 7 – INVENTORIES
| June 30, 2007 |
| June 30, 2006 | ||||
| Gross | Obsolescence | Net |
| Gross | Obsolescence | Net |
| value | provision | Value |
| value | provision | Value |
| ThCh$ | ThCh$ | ThCh$ |
| ThCh$ | ThCh$ | ThCh$ |
|
|
|
|
|
|
|
|
Raw materials | 11,627,438 | (165,321) | 11,462,117 |
| 9,721,031 | (50,778) | 9,670,253 |
Finished products | 10,362,516 | (405,572) | 9,956,944 |
| 8,934,835 | (353,561) | 8,581,274 |
Products in process | 1,200,182 | 0 | 1,200,182 |
| 1,432,608 | 0 | 1,432,608 |
Raw materials in transit | 645,371 | (3,592) | 641,779 |
| 1,693,284 | (54,214) | 1,639,070 |
Total | 23,835,507 | (574,485) | 23,261,022 |
| 21,781,758 | (458,553) | 21,323,205 |
16
NOTE 8 - INCOME TAXES AND DEFERRED INCOME TAXES
a)
At period end 2007 and 2006, the Company did no present taxable profit or non-taxable profit funds. Short-term and long-term assets and liabilities must be netted out to compose the general balance sheet on deferred taxes.
| June 30, 2007 | June 30, 2006 | ||||||
| Assets | Liabilities | Assets | Liabilities | ||||
| Short term | Long term | Short term | Long term | Short term | Long term | Short term | Long term |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Temporary Differences |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts | 261,252 | 35,265 | 0 | 0 | 307,296 | 35,628 | 0 | 0 |
Vacation provision | 137,697 | 0 | 0 | 0 | 140,634 | 0 | 0 | 0 |
Production expenses | 2,953 | 0 | 0 | 0 | 14,829 | 0 | 0 | 0 |
Depreciation of property, plant & equipment | 2,741 | 0 | 107,845 | 3,616,183 | 0 | 0 | 111,373 | 4,076,115 |
Severance indemnities | 66,565 | 0 | 32,128 | 206,777 | 0 | 173 | 47,396 | 328,408 |
Provision for assets write off | 350,349 | 750,318 | 0 | 0 | 266,384 | 1,502,410 | 0 | 0 |
Provision for labor lawsuits | 0 | 1,244,608 | 0 | 0 | 0 | 5,478,396 | 0 | 0 |
Tax loss carry-forwards | 3,172,723 | 3,854,747 | 0 | 0 | 1,103,770 | 7,553,283 | 0 | 0 |
Guarantee deposit | 0 | 0 | 0 | 1,000,000 | 0 | 0 | 0 | 2,707,333 |
Others | 897,514 | 790,267 | 10,628 | 0 | 870,177 | 698,174 | 0 | 84,889 |
Local bond issue expenses | 0 | 0 | 0 | 146,969 | 0 | 0 | 0 | 228,179 |
Contingency allowance | 0 | 238,940 | 0 | 0 | 0 | 2,056,182 | 0 | 0 |
Social contributions | 0 | 0 | 0 | 0 | 397,357 | 2,271,479 | 0 | 0 |
Accrued interests abroad | 0 | 0 | 4,235,065 | 0 | 0 | 0 | 3,809,455 | 0 |
Exchange rate difference | 0 | 0 | 0 | 11,209,260 | 0 | 0 | 0 | 0 |
Others |
|
|
|
|
|
|
|
|
Complementary accounts, net of amortization | 0 | 0 | 0 | (2,205,321) | 0 | (4,585,739) | 0 | (3,000,031) |
Valuation allowance | 0 | 0 | 0 | 0 | 0 | (10,406,365) | 0 | 0 |
Total | 4,891,794 | 6,914,145 | 4,385,666 | 13,973,868 | 3,100,447 | 4,603,621 | 3,968,224 | 4,424,893 |
17
b)
The following table contains information on deferred income taxes at each period-end.
| June 30, 2007 | June 30, 2007 |
| ThCh$ | ThCh$ |
Current tax expense (tax allowance) | (6,999,950) | (5,339,230) |
Tax expense adjustment (previous period) | 99,149 | (169,315) |
Deferred income tax expense/effect over assets or liabilities | (2,731,053) | (1,608,190) |
Amortization of deferred income tax asset and liability complementary accounts | (194,229) | (574,524) |
Deferred income tax expense/effect over assets or liabilities due to changes in the valuation allowance | 0 | 1,233,444 |
Other charges or credits | 202,193 | 105,178 |
Total | (9,623,890) | (6,352,637) |
18
NOTE 9 - SHORT AND LONG-TERM LEASING AGREEMENTS AND LEASING ASSETS
Not applicable.
NOTE 10 - OTHER CURRENT ASSETS
| June 30, 2007 | June 30, 2006 |
| ThCh$ | ThCh$ |
Cross currency swap effects | 19,755,471 | 1,490,856 |
Supplies | 3,609,342 | 5,204,762 |
Accrued interest on long-term bonds | 980,586 | 1,613,017 |
Bond placement expenses and par value difference | 360,586 | 387,785 |
Wachovia Investment Fund (restricted) | 273,407 | 0 |
Others | 284,196 | 261,047 |
Total | 25,263,588 | 8,957,467 |
NOTE 11 - REPURCHASE / RESALE AGREEMENTS
The Company had no agreements of this type.
19
NOTE 12 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist principally of land, buildings, improvements and machinery. Machinery and equipment included production lines and supporting equipment; sugar processing and liquefaction equipment; transportation machinery; and computer equipment. The Company has purchased insurance to cover its fixed assets and inventories. These assets are geographically distributed as follows:
Chile
:
Santiago, Renca, Rancagua, San Antonio and Rengo
Argentina
:
Buenos Aires, Mendoza, Cordoba, and Rosario
Brazil
:
Rio de Janeiro, Niteroi, Campos, Cabo Frío, Nova Iguaçu, Espirito Santo and Vitoria.
a) Main Components of Property Plant & Equipment |
|
|
|
|
|
|
| Balances at June 30, 2007 | Balances at June 30, 2006 | ||||
| Assets | Accumulated Depreciation | Net property, plant & equipment | Assets | Accumulated Depreciation | Net property, plant & equipment |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Land | 16,430,796 | 0 | 16,430,796 | 13,407,281 | 0 | 13,407,281 |
Buildings and improvements | 89,154,266 | (34,941,417) | 54,212,849 | 83,741,263 | (32,938,479) | 50,802,784 |
Machinery and equipment | 218,501,783 | (176,734,524) | 41,767,259 | 221,813,286 | (173,542,680) | 48,270,606 |
Other property, plant and equipment | 216,983,428 | (182,016,976) | 34,966,452 | 212,054,094 | (180,566,296) | 31,487,798 |
Technical reappraisal of property, plant & equipment | 2,095,208 | (635,788) | 1,459,420 | 2,095,144 | (634,441) | 1,460,703 |
Total | 543,165,481 | (394,328,705) | 148,836,776 | 533,111,068 | (387,681,896) | 145,429,172 |
|
|
|
|
|
|
|
b) Other fixed assets |
|
|
|
|
|
|
| Balances at June 30, |
|
|
|
| |
| 2007 | 2006 |
|
|
|
|
| ThCh$ | ThCh$ |
|
|
|
|
Containers | 123,881,602 | 116,379,584 |
|
|
|
|
Refrigerating equipment, promotional items and other minor assets | 58,092,901 | 57,886,336 |
|
|
|
|
Furniture and tools | 7,756,236 | 4,052,480 |
|
|
|
|
Other | 27,252,689 | 33,735,694 |
|
|
|
|
Total other property, plant and equipment | 216,983,428 | 212,054,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
c) Technical Reappraisal |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balances at June 30, 2007 | Balances at June 30, 2006 | ||||
| Assets | Accumulated Depreciation | Net property, plant & equipment | Assets | Accumulated Depreciation | Net property, plant & equipment |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Land | 1,399,255 | 0 | 1,399,255 | 1,399,148 | 0 | 1,399,148 |
Buildings and improvements | 195,895 | (139,275) | 56,620 | 195,880 | (134,629) | 61,251 |
Machinery and equipment | 500,058 | (496,513) | 3,545 | 500,116 | (499,812) | 304 |
Total | 2,095,208 | (635,788) | 1,459,420 | 2,095,144 | (634,441) | 1,460,703 |
|
|
|
|
|
|
|
d) Depreciation for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation charges for the period amounted to ThCh$ 14,552,514 (ThCh$15,574,241 in 2006) of which ThCh$ 10,864,382 (ThCh$11,370,525 in 2006) are included under Operating Costs and | ||||||
ThCh$ 3,658,132 (ThCh$ 4,203,716 in 2006) under Sales and Administrative Expenses in the income statement. |
|
|
|
|
21
NOTE 13 - SALES TRANSACTIONS UNDER LEASEBACK AGREEMENTS
The Company had no agreements of this type.
NOTE 14 - INVESTMENT IN RELATED COMPANIES
1.
Investments in related companies and the corresponding direct shareholding in equity, as well as the recognition of unrealized income at year end of the respective years, are shown in the table attached.
The main changes occurred in the reported periods are described below:
By a public deed dated June 5, 2006, the company Andina Inversiones Societarias S.A. was divided, creating a new company, “Andina Inversiones Societarias Dos S.A.”. with the same shareholders and the same ownership interest as in the first one, with a capital of ThCh$24,405,291 and that corresponds to the investment in Envases Multipack Ltda. The financial impact of this division is recorded beginning January 1, 2006.
By a public deed dated August 31, 2006 Andina Inversiones Societarias Dos S.A. changed its corporate name to Andina Inversiones Societarias Dos Ltda. (thus becoming a limited responsibility corporation).
On November 15, 2006 Embotelladora Andina S.A. acquired 0.0001% of the social rights of Andina Inversiones Societarias Dos Ltda., consequently the company has been completely merged into Embotelladora Andina since 100% ownership interest is now held by Embotelladora Andina. Likewise, Envases Multipack Ltda. is now fully merged into Embotelladora Andina since it originally held 5% and Andina Inversiones Societarias Dos Ltda. held the remaining 95%.
Centralli Refrigerantes S.A. records a negative equity, which has been provisioned accordingly.
The investments in Kaik Partipacoes Ltda. (Brazil) and in Cican S.A. (Argentina), where Embotelladora Andina S.A. holds an indirect ownership of 11.32% and 15.2% respectively, have been valued according to the equity method, because we have presence in both companies through a Director, who participates in the procedures for setting policies, operating and financial decisions in accordance with the ownership structure of both companies, which are exclusively owned by Coca-Cola bottlers in Brazil and Argentina, respectively.
The investment in Envases Central S.A. is presented with a 48% reduction (the percentage share on the date of transaction) of the earnings generated during the sale to Envases Central during December 1996 for property located in Renca, because this transaction represents unrealized income for Embotelladora Andina S.A. The amount of the reduction is reflected in the following chart. This transaction will be realized once the property is transferred to a third party different from the group.
The investment in Envases CMF S.A. is presented with a 50% reduction of the earnings generated during the sale of machinery and equipment of our subsidiary Envases Multipack S.A. which took place in June, 2001, and will be recorded under Results during the remaining useful life period of the goods sold to Envases CMF S.A.
Unrealized income corresponds to transactions between subsidiaries and/or the parent company that have been deducted or added to the category of the originating asset with the following effect on income of the subsidiaries:
|
| June 30, | |
|
| 2007 | 2006 |
|
| ThCh$ | ThCh$ |
Envases CMF S.A. | Purchase of containers | (442,202) | (435,127) |
Envases Central S.A. | Purchase of finished products | (2,467) | (4,863) |
2.
No liabilities have been designated as hedging instruments for investments abroad.
3.
Income likely to be remitted by subsidiaries abroad amounts to US$225 million.
22
The following table presents a detail of the investments in related companies and the related direct participation in equity and unrealized results at each period end.
|
|
|
| Ownership Interest | Equity of companies | Income (loss) for the period | Accrued income | Partic in net income (loss) | Unrealized income (loss) | Book value of investment | |||||||
Company | Country | Functional Currency | Number of Shares | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 |
|
|
|
| % | % | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
ENVASES CMF S.A. | Chile | Ch$ | 28,000 | 50.00 | 50.00 | 34,064,581 | 36,053,635 | 1,871,905 | 1,283,098 | 493,751 | 206,422 | 17,032,291 | 18,026,818 | (1,037,960) | (1,112,015) | 15,994,331 | 16,914,803 |
ENVASES CENTRAL S.A. | Chile | Ch$ | 1,499,398 | 49.00 | 49.00 | 4,377,718 | 4,632,492 | (159,848) | 59,476 | (82,247) | 24,822 | 2,184,919 | 2,312,077 | (229,271) | (229,253) | 1,955,648 | 2,082,824 |
KAIK PARTIPACOES | Brazil | US$ | 16,098,919 | 11.00 | 11.00 | 15,214,029 | 13,456,740 | 183,652 | 815 | 20,789 | 93 | 1,722,180 | 1,523,263 | 0 | 0 | 1,722,180 | 1,523,263 |
CICAN S.A. | Argentina | US$ | 3,040 | 15.00 | 15.00 | 5,718,287 | 8,319,969 | (16,110) | 807,342 | (244,884) | 122,716 | 869,180 | 1,264,634 | 0 | 0 | 869,180 | 1,264,634 |
TOTALS |
|
|
|
|
|
|
|
|
|
|
| 21,808,570 | 23,126,792 | (1,267,231) | (1,341,268) | 20,541,339 | 21,785,524 |
23
NOTE 15 - INVESTMENTS IN OTHER COMPANIES
In accordance with Circular 1501, no information was reported since this balance represents less than 10% of Other assets.
NOTE 16 – GOODWILL AND NEGATIVE GOODWILL
| June 30, 2007 | June 30, 2006 | ||
| Amortization during the period | Goodwill balance | Amortization during the period | Goodwill balance |
Company | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
|
|
|
|
|
RIO DE JANEIRO REFRESCOS LTDA. | 1,774,075 | 39,342,152 | 1,865,345 | 45,121,382 |
EMBOTELLADORA DEL ATLANTICO S.A. | 1,380,129 | 24,195,222 | 1,454,063 | 28,399,478 |
VITAL S. A. | 74,659 | - | 33,594 | 638,289 |
TOTAL | 3,228,863 | 63,537,374 | 3,353,002 | 74,159,149 |
NOTE 17 - INTANGIBLES
In accordance with Circular 1501, no information was reported since the balance represents less than 10% of Other assets.
24
NOTE 18 - OTHER LONG TERM ASSETS
| June 30, | |
| 2007 | 2006 |
| ThCh$ | ThCh$ |
Bonds |
|
|
Celulosa Arauco S.A. | 12,018,649 | 12,645,165 |
Enap S.A. | 9,266,559 | 9,875,175 |
Chile Soberano | 7,537,679 | 7,972,151 |
Compañía Manufacturera de Papeles y Cartones S.A. | 7,302,562 | 7,680,797 |
Petróleos Mexicanos S.A. | 6,188,048 | 7,805,428 |
Codelco S.A. | 5,339,390 | 5,677,688 |
México Soberano | 4,873,564 | 5,173,509 |
Teléfonos de México S.A. | 3,085,282 | 7,421,790 |
Endesa S.A. | 2,644,771 | 8,424,481 |
Raytheon Company | 2,136,972 | 2,256,852 |
International Paper Company | 2,107,440 | 2,220,335 |
Brasil Telecom S.A. | 2,075,397 | 2,242,115 |
Altria Group | 1,197,085 | 1,276,249 |
Alcoa Inc. | 1,072,453 | 1,133,460 |
Federal Home Loan Bank (FHLB) | 0 | 2,782,082 |
|
|
|
CLN Endesa -Deutsche Bank A.G. | 0 | 5,550,838 |
CLN GMAC - Deutsche Bank A.G. | 0 | 1,798,472 |
CLN Ford-Deutsche Bank A.G. | 0 | 1,665,251 |
|
|
|
Cross Currency Swap | 8,431,318 | 23,906,038 |
Judicial Deposits (Brazil) | 6,181,769 | 5,056,110 |
Recovery of fiscal credit (Brazil) | 5,197,583 | 0 |
Prepaid expenses | 2,942,318 | 1,770,378 |
Issuance Bond Placement | 2,878,841 | 3,222,966 |
Spare parts | 2,877,770 | 1,393,858 |
Non operating assets | 441,304 | 186,537 |
Others | 594,590 | 1,444,311 |
Total | 96,391,344 | 130,582,036 |
25
NOTE 19 - SHORT-TERM BANK LIABILITIES
a)
Short Term
| Currency or Indexation Adjustment | |||||
| US Dollars | Other foreign currencies | TOTAL | |||
Bank or Financial Institution | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
DEXIA BANK | 0 | 23,483,619 | 0 | 0 | 0 | 23,483,619 |
BANCO JP MORGAN | 0 | 23,267,774 | 0 | 0 | 0 | 23,267,774 |
BOSTON - FINAME | 0 | 0 | 181,250 | 0 | 181,250 | 0 |
SANTENDER FINAME | 0 | 0 | 129,159 | 0 | 129,159 | 0 |
ALFA FINAME | 0 | 0 | 28,206 | 0 | 28,206 | 0 |
CITIBANK N.A. | 0 | 0 | 0 | 1,471,071 | 0 | 1,471,071 |
BANCO ITAÚ | 0 | 0 | 0 | 1,026,433 | 0 | 1,026,433 |
Others | 0 | 0 | 0 | 0 | 0 | 0 |
TOTAL | 0 | 46,751,393 | 338,615 | 2,497,504 | 338,615 | 49,248,897 |
Outstanding Balance | 0 | 44,083,037 | 338,615 | 2,427,118 | 338,615 | 46,510,155 |
Annual average interest rate (%) |
| 5.99 | 13.47 |
|
|
|
|
|
|
|
|
|
|
Foreign currency liabilities (%) | 100.00 |
|
|
|
|
|
Local currency liabilities (%) | 0.00 |
|
|
|
|
|
b)
Long term – Portion Short Term
| Currency or indexation adjustment | |||
| Other foreign currencies | TOTAL | ||
Bank | June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
BANCO SANTANDER | 0 | 435,284 | 0 | 435,284 |
BANCO BOSTON | 0 | 92,875 | 0 | 92,875 |
TOTAL | 0 | 528,159 | 0 | 528,159 |
Principal Due | 0 | 506,863 | 0 | 506,863 |
|
|
|
|
|
Average annual interest rate (%) | 13.26 |
| ||
|
|
|
|
|
Foreign currency liabilities (%) | 100.00 |
|
|
|
Local currency liabilities (%) | 0.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
26
NOTE 20 - OTHER CURRENT LIABILITIES
In accordance with Circular 1501, no information was reported since this balance represents less than 10% of current liabilities.
NOTE 21 - LONG-TERM BANK LIABILITIES
|
| Years to Maturity |
|
|
| ||
Bank or Financial Institution | Currency | More than 1 up to 2 | More than 2 up to 3 | More than 3 up to 5 | Total long term at June 30, 2007 | Average annual interest rate % | Total long term at June 30, 2006 |
|
| ThCh$ | ThCh$ |
| ThCh$ |
| ThCh$ |
BANCO SANTANDER | Other currencies | 0 | 0 | 0 | 0 | - | 234,969 |
BANCO ALFA | Other currencies | 53,937 | 114,865 | 164,617 | 333,419 | 11.57% | 90,233 |
BANCO BOSTON | Other currencies | 0 | 0 | 0 | 0 | - | 8,803 |
BANCO VOTORANTIM | Other currencies | 79,443 | 111,271 | 254,294 | 445,008 | 9.40% | 0 |
TOTAL |
| 133,380 | 226,136 | 418,911 | 778,427 |
| 334,005 |
|
|
|
|
|
|
| |
Foreign currency liabilities (%) | 100.00 |
|
|
|
|
|
|
NOTE 22 - LONG-AND SHORT-TERM BONDS PAYABLE (PROMISSORY NOTES AND BONDS)
1.
Current risk rating of bonds is as follows:
BONDS ISSUED IN THE US MARKET
A-
:
Rating according to Fitch Ratings Ltd.
BBB+
:
Rating according to Standard & Poor’s
BONDS ISSUED IN THE LOCAL MARKET
AA
:
Rating according to Fitch Chile Clasificadora de Riesgo Ltda.
AA
:
Rating according to Feller Rate Clasificadora de Riesgo Ltda.
2.
Bond repurchases.
During 2000, 2001 and 2002, Embotelladora Andina S.A. repurchased bonds issued in the U.S. market through its subsidiary, Abisa Corp S.A. for a total amount of US$314 million of the US$350 million, which are presented deducting the long term liability from the bonds payable account.
3.
Bonds issued by the subsidiary Rio de Janeiro Refrescos Ltda. (RJR).
The subsidiary RJR has liabilities corresponding to an issuance of bonds for US$75 million maturing in December 2012 and semiannual interest payments. At period end, all such bonds are wholly-owned by the subsidiary Abisa Corp. Consequently, the effects of such transactions have been eliminated from these consolidated financial statements, both in the balance sheet and in the consolidated statement of income.
27
The following table contains more information on Bonds Payable:
Instrument subscription or ID N° | Series | Nominal Value | Currency | Interest rate | Final Maturity | Term |
| Par Value | Placement in Chile or abroad | |
|
|
|
| % |
| Interest paid | Amortization period | June 30, 2007 | June 30, 2006 | |
Current portion of bonds payable |
|
|
|
|
|
|
| ThCh$ | ThCh$ |
|
YANKEE BONDS | A | 32,076,000 | US$ | 7.000 | 01-Oct-07 | HALF YEARLY | OCT. 2007 | 17,195,304 | 311,585 | ABROAD |
YANKEE BONDS | B | 4,000,000 | US$ | 7.625 | 01-Oct-27 | HALF YEARLY | OCT. 2027 | 40,173 | 42,325 | ABROAD |
Register 254 SVS June 13, 2001 | A | 660,000 | UF | 6.200 | 01-Jun-08 | HALF YEARLY | JUN. 2008 | 12,354,506 | 12,452,810 | CHILE |
Register 254 SVS June 13, 2001 | B | 3,700,000 | UF | 6.500 | 01-Jun-26 | HALF YEARLY | DEC. 2009 | 367,399 | 368,441 | CHILE |
Total current maturities |
|
|
|
|
|
| 29,957,382 | 13,175,161 |
| |
|
|
|
|
|
|
|
|
|
| |
Long term portion of bonds payable |
|
|
|
|
|
|
|
|
| |
YANKEE BONDS | A | 32,076,000 | US$ | 7.000 | 01-Oct-07 | HALF YEARLY | OCT. 2007 | 0 | 17,804,866 | ABROAD |
YANKEE BONDS | B | 4,000,000 | US$ | 7.625 | 01-Oct-27 | HALF YEARLY | OCT. 2027 | 2,107,440 | 2,220,335 | ABROAD |
Register 254 SVS June 13, 2001 | A | 660,000 | UF | 6.200 | 01-Jun-08 | HALF YEARLY | JUN. 2008 | 0 | 12,327,358 | CHILE |
Register 254 SVS June 13, 2001 | B | 3,700,000 | UF | 6.500 | 01-Jun-26 | HALF YEARLY | DEC. 2009 | 68,909,429 | 69,107,825 | CHILE |
Total long term |
|
|
|
|
|
|
| 71,016,869 | 101,460,384 |
|
28
NOTE 23 - PROVISIONS AND WRITE-OFFS
| Short Term | Long Term | ||
| June 30, 2007 | June 30, 2006 | June 30, 2007 | June 30, 2006 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
|
|
|
|
|
Taxation on banking transactions & social contribution(Brazil) | 2,466,650 | 0 | 8,760,659 | 10,988,698 |
Staff severance indemnities | 676,143 | 703,572 | 5,852,888 | 5,185,638 |
Contingencies | 80,907 | 66,025 | 2,560,660 | 9,560,504 |
Others | 0 | 143 | 0 | 0 |
TOTAL | 3,223,700 | 769,740 | 17,174,207 | 25,734,840 |
NOTE 24 - STAFF SEVERANCE INDEMNITIES
| June 30, 2007 | June 30, 2006 |
| ThCh$ | ThCh$ |
Beginning balance | 6,227,964 | 5,628,252 |
Provision for the period | 391,657 | 377,681 |
Payments | (90,590) | (116,723) |
Ending balance | 6,529,031 | 5,889,210 |
NOTE 25 - OTHER LONG-TERM LIABILITIES
In accordance with Circular 1501, no information was reported since this balance represents less than 10% of Long-term liabilities.
NOTE 26 - MINORITY INTEREST
|
| |
| June 30, 2007 | June 30, 2006 |
LIABILITIES | ThCh$ | ThCh$ |
|
|
|
Vital Aguas S. A. | 1,211,155 | 1,183,706 |
Embotelladora del Atlántico S. A. | 20,296 | 19,778 |
Andina Inversiones Societarias S.A. | 41 | 61 |
| 1,231,492 | 1,203,545 |
|
|
|
|
|
|
| June 30, 2007 | June 30, 2006 |
INCOME STATEMENT | ThCh$ | ThCh$ |
|
|
|
Vital Aguas S. A. | (38,423) | (39,442) |
Embotelladora del Atlántico S. A. | (523) | (765) |
Andina Inversiones Societarias S.A. | (4) | (1) |
| (38,950) | (40,208) |
29
NOTE 27 - CHANGES IN SHAREHOLDERS’ EQUITY
The activity in Shareholders’ Equity, Dividend Distribution and Other Reserves is detailed in the following tables:
| June 30, 2007 | June 30, 2006 | ||||||||||
| Paid in Capital | Capital Revalued Reserve | Other Reserves | Accumulated Income | Interim Dividends | Net Income | Paid in Capital | Capital Revalued Reserve | Other Reserves | Accumulated Income | Interim Dividends | Net Income |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Beginning balance | 202,060,999 | 0 | 0 | 10,005,036 | (13,438,065) | 74,355,094 | 197,904,994 | 0 | (201,145) | 26,334,355 | (11,640,959) | 56,039,346 |
Distribution of prior-year income | 0 | 0 | 0 | 60,917,029 | 13,438,065 | (74,355,094) | 0 | 0 | 0 | 44,398,387 | 11,640,959 | (56,039,346) |
Final dividend prior year | 0 | 0 | 0 | (8,876,966) | 0 | 0 | 0 | 0 | 0 | (5,172,908) | 0 | 0 |
Translation adjustment reserve | 0 | 0 | (1,951,883) | 0 | 0 | 0 | 0 | 0 | 5,116,042 | 0 | 0 | 0 |
Extraordinary dividend charged to accumulated income | 0 | 0 | 0 | (52,040,412) | 0 | 0 | 0 | 0 | 0 | (55,880,179) | 0 | 0 |
Capital revalued | 0 | 3,839,159 | 33,256 | 616,509 | 0 | 0 | 0 | 2,176,955 | (2,213) | 228,584 | 0 | 0 |
Income for the period | 0 | 0 | 0 | 0 | 0 | 35,014,442 | 0 | 0 | 0 | 0 | 0 | 30,949,277 |
Interim dividends | 0 | 0 | 0 | 0 | (5,588,018) | 0 | 0 | 0 | 0 | 0 | (4,470,414) | 0 |
Ending balance | 202,060,999 | 3,839,159 | (1,918,627) | 10,621,196 | (5,588,018) | 35,014,442 | 197,904,994 | 2,176,955 | 4,912,684 | 9,908,239 | (4,470,414) | 30,949,277 |
Price level restated balances |
|
|
|
|
|
| 203,644,239 | 2,240,087 | 5,055,152 | 10,195,578 | (4,600,056) | 31,846,806 |
30
Changes in Shareholders’ Equity Number of Shares | |||
Series | Subscribed Shares | Paid in shares | Number of shares with voting rights |
A | 380,137,271 | 380,137,271 | 380,137,271 |
B | 380,137,271 | 380,137,271 | 380,137,271 |
Series | Subscribed Capital | Paid in Capital |
| ThCh$ | ThCh$ |
A | 98,952,497 | 98,952,497 |
B | 98,952,497 | 98,952,497 |
1.- Other Reserves |
|
|
|
|
| |
|
|
|
|
|
| |
Balance of Other Reserves is composed as follows |
|
|
|
|
| |
| June 30, |
|
|
| ||
| 2007 | 2006 |
|
|
| |
| ThCh$ | ThCh$ |
|
|
| |
|
|
|
|
|
| |
Reserve for cumulative translation adjustments(1) | ( 2,946,834) | 4,027,024 |
|
|
| |
Reserve for technical reappraisal of property, plant and equipment | 77,177 | 67,110 |
|
|
| |
Other | 951,030 | 961,018 |
|
|
| |
Total | ( 1,918,627) | 5,055,152 |
|
|
| |
|
|
|
|
|
| |
(1)The Reserve for cumulative translation adjustments was established in accordance with Technical Bulletin No. 64 issued by the Chilean Institute of Accountants and regulations specified under Circular letter No. 5,294 from the SVS. |
|
|
| |||
|
|
|
|
|
| |
The activity in the Reserve for cumulative translation adjustments was as follows: |
|
|
|
| ||
| Balance | Foreign exchange generated during the period | Reserve Release / Realized (*) | |||
Company | January 1, 2007 | Investment | June 30, 2007 | |||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||
Rio de Janeiro Refrescos Ltda. | (797,435) | (2,156,450) | 478,182 | (2,475,703) | ||
Embotelladora del Atlántico S. A. | 1,552,759 | (2,023,890) | 0 | (471,131) | ||
Total | 755,324 | (4,180,340) | 478,182 | (2,946,834) | ||
|
|
|
|
| ||
Reserve realized in the amount of ThCh$478,182, resulted from dividends paid by our subsidiary Río de Janeiro Refrescos Ltda. for a total amount of ThUS$47,839.- |
31
NOTE 28 - OTHER NON-OPERATING INCOME AND EXPENSES
| For the period ended June 30, | |
| 2007 | 2006 |
| ThCh$ | ThCh$ |
Other non-operating income during the period was as follows: |
|
|
Recovery of prior year taxes | 2,013,027 | 0 |
Provision adjustment obsolescence fixed asset | 727,528 | 0 |
Income on sale of property, plant and equipment | 133,033 | 271,143 |
Other income | 297,489 | 168,798 |
Sub-total | 3,171,077 | 439,941 |
Translation of Financial Statements (1) | 1,124,549 | 17,396 |
Total | 4,295,626 | 457,337 |
Other non-operating expenses during the period was as follows: |
|
|
Obsolescence and write-offs of property, plant and equipment | (433,451) | (22,796) |
Conversion adjustment reserve realized (2) | (478,182) | (160,285) |
Loss on sale of property, plant and equipment | (359,883) | (18,094) |
Provision for labor and commercial lawsuits | (260,129) | (314,502) |
Provision for loss in Centralli investment | (43,152) | (26,459) |
Others | (506,940) | (432,003) |
Total | (2,081,737) | (974,139) |
|
|
|
|
|
|
(1) This refers to the effects of the translation of the financial statements corresponding to investment in foreign companies (translation of local currency to US dollars), in accordance with Technical Bulletin N°64 issued by the Chilean Institute of Accountants | ||
(2) This refers to the release of conversion adjustment reserves due to dividend payments carried out at our subsidiary Rio de Janeiro Refrescos Ltda. during the first half of 2007 and 2006, respectively |
32
NOTE 29 - PRICE-LEVEL RESTATEMENT
|
| June 30, 2007 | June 30, 2006 |
|
| ThCh$ | ThCh$ |
Assets - (charges)/credits | Index |
|
|
Inventories | CPI | (77,815) | (306,311) |
Property, plant and equipment | CPI | 1,441,899 | 827,441 |
Investments in related companies | CPI | 4,040,264 | 1,545,147 |
Cash, Time Deposits, Marketable Securities | CPI | 219,066 | 113,091 |
Trade Accounts Receivable, Notes Receivable | UF | 0 | 13 |
Trade Accounts Receivable, Notes Receivable | CPI | 0 | (38) |
Accounts payable from related companies - short term | CPI | 540,362 | 284,882 |
Recoverable taxes | CPI | 65,618 | 32,243 |
Other current assets | UF | 244,654 | 6,924 |
Other current assets | CPI | (25,107) | 109,208 |
Other long term assets | UF | 6,307 | 0 |
Other long term assets | CPI | 1,353,465 | 1,058,869 |
Cost and expense accounts | CPI | 1,166,188 | 1,004,545 |
Total (charges) credits |
| 8,974,901 | 4,676,014 |
|
|
|
|
Liabilities - (charges)/credits |
|
|
|
Shareholders’ equity | CPI | (4,488,925) | (2,473,021) |
Short and long term bank liabilities | CPI | 0 | (45,674) |
Short and long term bonds payable | UF | (1,227,399) | (893,441) |
Short and long term bonds payable | CPI | (324,155) | (207,255) |
Other current liabilities | UF | (92,018) | (106,397) |
Other current liabilities | CPI | (210,904) | (223,646) |
Other long term liabilities | CPI | (72,021) | (21,842) |
Accounts payable to related companies long term | UF | (238,823) | 0 |
Accounts payable to related companies short term | CPI | (646,496) | 0 |
Accounts payable to related companies long term | CPI | 0 | (11,412) |
Income accounts | CPI | (1,590,551) | (1,280,757) |
Total (charges) credits |
| (8,891,292) | (5,263,445) |
Price-level restatement gain (loss) |
| 83,609 | (587,431) |
33
NOTE 30 - FOREIGN EXCHANGE GAINS/LOSSES
| Currency | June 30, 2007 | June 30, 2006 |
|
| ThCh$ | ThCh$ |
Assets - (charges)/credits |
|
|
|
Cash | US$ | 23,450 | (373,202) |
Marketable securities (net) | US$ | (699,264) | (91,371) |
Other receivables (net) | US$ | (127) | 236,202 |
Accounts receivable related companies | US$ | (1,375,599) | 2,980,357 |
Inventories (net) | US$ | (9,513) | 28,671 |
Other current assets | US$ | 172,627 | 5,138 |
Property, plant & equipment | US$ | (5,739) | 5,750 |
Other assets | US$ | (1,775,606) | 3,720,316 |
Time deposits | EUROS$ | 0 | 1,209,853 |
Time deposits | US$ | (420) | 705 |
Trade accounts receivable | US$ | 0 | (1,010) |
Total (charges) credits |
| (3,670,191) | 7,721,409 |
|
|
|
|
Liabilities - (Charges) / credits |
|
|
|
Short term liabilities with banks and financial institutions | US$ | 0 | ( 540,798) |
Bonds payable | US$ | ( 39,065) | ( 155,522) |
Accounts payable | US$ | ( 1,744) | ( 43,710) |
Provisions | US$ | ( 3,676) | 10,239 |
Other current liabilities | US$ | ( 42,941) | ( 33,605) |
Long term bonds payable | US$ | 564,424 | ( 790,796) |
Withholdings | US$ | 0 | ( 2) |
Total (charges) credits | US$ | 476,998 | ( 1,554,194) |
Foreign exchange gain (loss) on income | US$ | ( 3,193,193) | 6,167,215 |
NOTE 31 - EXTRAORDINARY ITEMS
There were no extraordinary items in 2007 and 2006.
NOTE 32 - SHARE AND DEBT SECURITY ISSUE AND PLACEMENT EXPENSES
Bond issue and placement expenses are presented in Other current assets and Other long-term assets and are amortized on a straight-line basis over the term of the debt issued. Amortization is presented as financial expenses.
Bonds issued in the US market:
Debt issue costs and discounts have all been amortized, as a result of the repurchase of Bonds reported in note 22.
Bonds issued in the local market:
Debt issue costs and discounts amounted to ThCh$3,239,428. Disbursements for risk rating reports, legal and financial advisory services, printing and placement fees are included as Debt issue costs.
Amortization for the period 2007 amounted to ThCh$147,252 and ThCh$160,339 in 2006.
NOTE 33 - CONSOLIDATED STATEMENT OF CASH FLOWS
For the projection of future cash flows, there are no transactions and events to consider which have not been revealed in these financial statements and accompanying notes.
34
The following table presents an itemization of the movement of assets and liabilities not affecting the cash flow in the period, but compromising future cash flows.
Expected Cash Flows | June 30, 2007 | Maturity Date | June 30, 2006 | Maturity Date |
Expenses | ThCh$ |
| ThCh$ |
|
Dividend payments | 52,042,412 | 05-Jul-07 |
|
|
Dividend payments | 5,588,018 | 26-Jul-07 | ( 4,600,056) | 26-Jul-06 |
Additions to property, plant and equipment | 1,207,825 | 31-Aug-07 | ( 1,490,355) | 31-Aug-06 |
Additions to property, plant and equipment | 621,285 | 31-Jul-07 | ( 255,764) | 31-Jul-06 |
Additions to property, plant and equipment | 63,810 | 30-Sep-07 |
|
|
Total expenses | 59,523,350 |
| ( 6,346,175) |
|
|
|
|
|
|
Income |
|
|
|
|
Sale of property, plant and equipment | 9,852 | 15-Aug-07 | 4,429 | 15-Aug-06 |
Total income | 9,852 |
| 4,429 |
|
|
|
|
|
|
Total net | 59,533,202 |
| ( 6,341,746) |
|
35
NOTE 34 - DERIVATIVE CONTRACTS
|
|
|
|
|
| Hedged item or transaction |
| Assets/liabilities |
|
|
| ||
Derivative | Contract | Value | Maturity | Specific Item | Position purchase/ | Concept | Amount | Hedged item value | Item | Net Carrying Values | Realized Income | Deferred Income (loss) | |
|
| ThCh$ |
|
|
|
| ThCh$ | ThCh$ |
| ThCh$ | ThCh$ | ThCh$ |
|
SWAP | CCPE | 2,702,945 | 3Q07 | US$ Exchange Rate | S | Long term bonds US$ | 3,524,950 | 2,817,176 | Other long term and current assets | 1,279,796 | 89,914 | (1,504) |
|
SWAP | CCPE | 39,527,123 | 4Q07 | US$ Exchange Rate | S | Long term bonds US$ | 45,346,950 | 39,514,500 | Other long term and current assets | 10,534,832 | 1,187,286 | 869,911 |
|
SWAP | CCPE | 8,070,441 | 1Q08 | US$ Exchange Rate | S | Long term bonds US$ | 10,574,850 | 8,033,783 | Other long term and current assets | 3,814,868 | 268,366 | (21,179) |
|
SWAP | CCPE | 8,022,880 | 3Q08 | US$ Exchange Rate | S | Long term bonds US$ | 10,574,850 | 8,256,078 | Other long term and current assets | 3,789,439 | 265,857 | 37,796 |
|
SWAP | CCPE | 13,167,268 | 3Q08 | US$ Exchange Rate | S | Long term bonds US$ | 16,979,441 | 13,132,136 | Other long term and current assets | 6,100,826 | 433,278 | 278,945 |
|
SWAP | CCPE | 5,422,542 | 1Q13 | US$ Exchange Rate | S | Long term bonds US$ | 6,985,500 | 5,423,956 | Other long term and current assets | 2,551,502 | 179,059 | 787,865 |
|
FR | CCTE | 8,909,867 | 3Q07 | US$ Exchange Rate | P | Suppliers Foreign Currecny | 8,949,771 | 0 | Other current assets and liabilities | 80,188 | 0 | 80,188 |
|
FR | CCTE | 14,534,370 | 3Q07 | US$ Exchange Rate | S | Suppliers Foreign Currecny | 14,532,561 | 0 | Other current assets and liabilities | 172,555 | 0 | (172,555) |
|
FR | CCTE | 34,110,641 | 4Q07 | US$ Exchange Rate | P | Suppliers Foreign Currecny | 34,187,945 | 0 | Other current assets and liabilities | 279,047 | 0 | 279,047 |
|
FR | CCTE | 3,193,299 | 4Q07 | US$ Exchange Rate | S | Suppliers Foreign Currecny | 3,161,120 | 0 | Other current assets and liabilities | 58,281 | 0 | (58,281) |
|
FU | CCPE | 412,423 | 3Q07 | Raw Material Prices | S | Future Purchases Raw Materials | 448,930 | 385,290 | Other current assets | 32,560 | 0 | 32,560 |
|
FU | CI | 347,362 | 3Q07 | Raw Material Prices | S | Future Purchases Raw Materials | 0 | 0 | Other current assets | 81,023 | 7,043 | 0 |
|
FU | CCPE | 804,262 | 4Q07 | Raw Material Prices | S | Future Purchases Raw Materials | 884,646 | 732,928 | Other current assets | 55,715 | 0 | 55,715 |
|
FU | CI | 319,395 | 4Q07 | Raw Material Prices | S | Future Purchases Raw Materials | 0 | 0 | Other current assets | 81,912 | 11,497 | 0 |
|
FU | CCPE | 487,343 | 1Q08 | Raw Material Prices | S | Future Purchases Raw Materials | 503,578 | 439,594 | Other current assets | 66,707 | 0 | 66,707 |
|
FU | CI | 499,948 | 1Q08 | Raw Material Prices | S | Future Purchases Raw Materials | 0 | 0 | Other current assets | 110,472 | 27,078 | 0 |
|
36
NOTE 35 - CONTINGENCIES AND RESTRICTIONS
a.
Litigation and other legal actions:
Andina and its subsidiaries are involved or likely to be involved in material judicial or out-of-court litigation that, in the opinion of its legal advisors, could result in relevant gains or losses for the Company.
Current lawsuits and other legal actions are described below.
1)
Embotelladora del Atlántico S.A. faces labor and other lawsuits. Accounting provisions to back any probable loss contingency stemming from these lawsuits, amounts to ThCh$1,492,302 (ThCh$1,861,745 in 2006). In accordance with its legal counsel’s opinion, the Company deems improbable that unstipulated contingencies may affect the results or equity of the Company.
2)
Rio de Janeiro Refrescos Ltda. faces labor, tax and other lawsuits. Accounting provisions to back any probable loss contingency arising from these lawsuits, amounts to ThCh$975,166 (ThCh$18,687,457 in 2006). In accordance with its legal counsel’s opinion, the Company deems improbable that unstipulated contingencies may affect the results or equity of the Company.
3)
Embotelladora Andina S.A. faces, labor, tax, commercial and other lawsuits. Accounting provisions to back any probable loss contingency stemming from these lawsuits, amounts to ThCh$64,696 (ThCh$66,156 in 2006). In accordance with its legal counsel’s opinion, the Company deems improbable that contingencies without provisions may affect the results or equity of the Company.
b.
Restrictions
The bond issue and placement on the US market for US$ 350 million is subject to certain restrictions against preventive attachments, sale and leaseback transactions, sale of assets, subsidiary debt and certain conditions in the event of a merger or consolidation.
The bond issue and placement in the Chilean market for UF 7,000,000 is subject to the following restrictions:
Leverage ratio, defined as the total financial debt/shareholder’s equity plus minority interest should be less than 1.20 times.
Financial debt shall be deemed Consolidated Finance Liabilities which include: (i) short-term bank liabilities, (ii) short-term portion of long-term bank liabilities, (iii) short-term bonds payable-promissory notes, (iv) short-term portion of bonds payable, (v) long-term bank liabilities, and (vi) long-term bonds payable. Consolidated equity means Total equity plus Minority Interest.
Consolidated assets are to be free of any pledge, mortgage or other encumbrance for an amount equal to at least 1.30 times the consolidated liabilities that are not guaranteed by the investee.
Andina must retain and, in no way, lose, sell, assign or dispose of to a third party the geographical zone denominated “Región Metropolitana”, as a franchised territory in Chile by The Coca-Cola Company for the preparation, production, sale and distribution of the products and brands in accordance with the respective Bottling agreement, renewable from time to time.
Andina shall not lose, sell, assign or dispose of to a third party any other territory in Brazil or Argentina that is currently franchised to Andina by The Coca-Cola Company for the preparation, production, sale and distribution of the products and brands of the franchisor, as long as the referred territory represents more than forty percent of the Company’s Consolidated Operating Cash Flows.
37
c.
Direct guarantees
Guarantees at June 30, 2007 are presented on the following table:
NOTE 36 - GUARANTEES FROM THIRD PARTIES
Guarantor | Relationship | Type of Guarantee | Amount | Currency | Transaction |
Russel W. Coffin | Subsidiary | Letter of Credit | 47,922,759 | USD | Purchase of Nitvitgov Refrigerantes S.A. |
CONFAB | Subsidiary | Mortgage | 30,000,000 | USD | Purchase of Rio de Janeiro Refrescos Ltda. |
Other clients | Subsidiary | Deposits | 2,464,009 | USD | Guaranty over containers |
Soc. Com. Champfer | Subsidiary | Mortgage | 1,105,804 | USD | Distributor credit |
Constructora Inarco S.A. | Parent Company | Policy | 29,960 | UF | Construction Agreement Puente Alto Distribution Center |
Empresa Constructora Precon S.A. | Parent Company | Receipt | 26,596 | UF | Construction Agreement Maipu Distribution Center |
Mac Coke Dist. Beb. | Subsidiary | Mortgage | 622,988 | USD | Distributor credit |
AGA S.A. | Parent Company | Receipt | 600,000 | USD | Supplier Agreement |
MAESTRANZA JOMA S.A. | Parent Company | Receipt | 294,738 | ThCh$ | Construction Agreement Puente Alto-Maipu Distribution Centers |
ESTRUCTURAS METALICAS LTDA | Parent Company | Receipt | 294,738 | ThCh$ | Construction Agreement Puente Alto-Maipu Distribution Centers |
METALURGICA METTAL LTDA | Parent Company | Receipt | 294,738 | ThCh$ | Construction Agreement Puente Alto-Maipu Distribution Centers |
EIFFEL CONSTRUCCIONES METALICAS LTDA | Parent Company | Receipt | 294,738 | ThCh$ | Construction Agreement Puente Alto-Maipu Distribution Centers |
Franciscana Dist. | Subsidiary | Mortgage | 550,306 | USD | Distributor credit |
Dist. Real Cola (Apucarana) | Subsidiary | Mortgage | 539,923 | USD | Distributor credit |
Zulmer Comércio de Bebidas | Subsidiary | Mortgage | 441,283 | USD | Distributor credit |
ASXT Fluminense Distrib.Bebidas | Subsidiary | Mortgage | 373,793 | USD | Distributor credit |
ATANOR - S.C.A | Subsidiary | Guaranty | 357,087 | USD | Supplier |
LEDESMA - SAAI - - | Subsidiary | Guaranty | 352,590 | USD | Supplier |
Motta Distribuidora de Beb | Subsidiary | Mortgage | 337,452 | USD | Distributor credit |
LEDESMA - SAAI - - | Subsidiary | Guaranty | 330,565 | USD | Supplier |
Aguiar Distrib.de Bebidas Ltda | Subsidiary | Mortgage | 311,494 | USD | Distributor credit |
Rosas de Casimiro | Subsidiary | Mortgage | 295,919 | USD | Distributor credit |
Clauver Nova Dist Beb Ltda | Subsidiary | Mortgage | 181,705 | USD | Distributor credit |
Catering Argentina S.A. | Subsidiary | Guaranty | 123,812 | USD | Supplier |
38
NOTE 37 - LOCAL AND FOREIGN CURRENCY - ASSETS
39
NOTE 37 - LOCAL AND FOREIGN CURRENCY - SHORT-TERM LIABILITIES
| Currency | Up to 90 days |
| 90 days to 1 year | ||||||
|
| June 30, 2007 | June 30, 2006 |
| June 30, 2007 | June 30, 2006 | ||||
|
| Amount | Int. Rate | Amount | Int. Rate |
| Amount | Int. Rate | Amount | Int. Rate |
Short term bank liabilities |
| ThCh$ | % | ThCh$ | % |
| ThCh$ | % | ThCh$ | % |
- | AR$ | 0 |
| 0 |
|
| 0 |
| 0 |
|
- | R$ | 0 |
| 2.497.504 |
|
| 338.615 |
| 0 |
|
Long term bank liabilities | R$ | 0 |
| 0 |
|
| 0 |
| 528.159 |
|
Bonds payable | Indexed Ch$ | 6.575.900 | 6,9% | 12.821.251 | 7,0% |
| 6.145.976 | 6,9% | 0 |
|
- | US$ | 335.915 | 6,2% | 353.910 | 6,2% |
| 16.899.591 | 7,35% | 0 |
|
Dividends payable | Non-Indexed Ch$ | 57.844.398 |
| 5.028.307 |
|
| 0 |
| 0 |
|
Accounts payable | Non-Indexed Ch$ | 14.383.498 |
| 15.203.572 |
|
| 0 |
| 0 |
|
- | US$ | 2.369.285 |
| 1.213.767 |
|
| 0 |
| 0 |
|
- | AR$ | 4.874.037 |
| 6.612.769 |
|
| 0 |
| 0 |
|
- | R$ | 8.215.350 |
| 8.352.543 |
|
| 0 |
| 0 |
|
- | EURO$ | 2.181 |
| 0 |
|
| 0 |
| 0 |
|
Other creditors | AR$ | 79.169 |
| 46.028 |
|
| 34.665 |
| 43.172 |
|
- | R$ | 3.977.771 |
| 2.920.899 |
|
| 0 |
| 0 |
|
- | US$ | 176.764 |
| 0 |
|
| 0 |
| 0 |
|
Notes and accounts payable related companies | Non-Indexed Ch$ | 1.044.603 |
| 3.191.778 |
|
| 0 |
| 0 |
|
- | US$ | 1.359.451 |
| 946.837 |
|
| 0 |
| 0 |
|
- | AR$ | 0 |
| 696.019 |
|
| 0 |
| 0 |
|
- | R$ | 1.485.606 |
| 2.199.094 |
|
| 0 |
| 0 |
|
Provisions | Non-Indexed Ch$ | 723.803 |
| 769.596 |
|
| 0 |
| 0 |
|
- | AR$ | 0 |
| 144 |
|
| 0 |
| 0 |
|
- | R$ | 2.499.897 |
| 0 |
|
| 0 |
| 0 |
|
Withholdings | Non-Indexed Ch$ | 3.961.818 |
| 7.366.482 |
|
| 0 |
| 0 |
|
- | AR$ | 3.843.936 |
| 2.754.769 |
|
| 0 |
| 0 |
|
- | R$ | 0 |
| 0 |
|
| 1.723.155 |
| 3.221.120 |
|
Income Tax Provision | Non-Indexed Ch$ | 650.307 |
| 2.490.736 |
|
| 0 |
| 0 |
|
- | AR$ | 0 |
| 0 |
|
| 161.251 |
| 197.043 |
|
- | R$ | 2.489.082 |
| 0 |
|
| 0 |
| 2.730.531 |
|
Unearned Income | Non-Indexed Ch$ | 546.382 |
| 497.216 |
|
| 0 |
| 0 |
|
Deferred Taxes | Non-Indexed Ch$ | 0 |
| 756.404 |
|
| 0 |
| 0 |
|
- | AR$ | 0 |
| 0 |
|
| 0 |
| 111.373 |
|
Other current liabilities | Non-Indexed Ch$ | 4.335.225 |
| 3.707.696 |
|
| 0 |
| 0 |
|
Total Current Liabilities | Non-Indexed Ch$ | 83.490.034 |
| 39.011.787 |
|
| 0 |
| 0 |
|
| US$ | 4.241.415 |
| 49.265.907 |
|
| 16.899.591 |
| 0 |
|
| AR$ | 8.797.142 |
| 10.109.729 |
|
| 195.916 |
| 351.588 |
|
| R$ | 18.667.706 |
| 15.970.040 |
|
| 2.061.770 |
| 6.479.810 |
|
| Indexed Ch$ | 6.575.900 |
| 12.821.251 |
|
| 6.145.976 |
| 0 |
|
| EURO$ | 2.181 |
| 0 |
|
| 0 |
| 0 |
|
40
NOTE 37 - LOCAL AND FOREIGN CURRENCY - LONG TERM LIABILITIES AS OF JUNE 30, 2007
| Currency | 1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | ||||
|
| Amount | Average int rate % | Amount | Average int rate % | Amount | Average int rate % | Amount | Average int rate % |
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||||
|
|
|
|
|
|
|
|
|
|
Current portion of long term bank liabilities | R$ | 778,427 |
| 0 |
| 0 |
| 0 |
|
Bonds payable | US$ | 0 |
| 0 |
| 0 |
| 2,107,441 | 7.63% |
- | Indexed Ch$ | 4,053,511 | 6.90% | 8,106,992 | 6.90% | 20,267,479 | 6.90% | 36,481,446 | 6.90% |
Other creditors | AR$ | 104,077 |
| 0 |
| 0 |
| 0 |
|
- | R$ | 0 |
| 30,234 |
| 0 |
| 0 |
|
Notes and accounts payable related companies | Non-indexed Ch$ | 3,403,981 |
| 0 |
| 0 |
| 0 |
|
Provisions | Non-indexed Ch$ | 710,908 |
| 0 |
| 0 |
| 5,141,982 |
|
- | AR$ | 1,492,302 |
| 0 |
| 0 |
| 0 |
|
- | R$ | 9,829,015 |
| 0 |
| 0 |
| 0 |
|
Deferred taxes | Non-indexed Ch$ | 1,683,980 |
| 0 |
| 0 |
| 0 |
|
- | AR$ | 0 |
| 607,690 |
| 0 |
| 0 |
|
- | R$ | 4,768,053 |
| 0 |
| 0 |
| 0 |
|
Other liabilities | Non-indexed Ch$ | 0 |
| 0 |
| 5,057,522 |
| 0 |
|
- | AR$ | 0 |
| 222,346 |
| 2,001,118 |
| 0 |
|
- | R$ | 2,811,990 |
| 0 |
| 0 |
| 0 |
|
Total Long term liabilities |
|
|
|
|
|
|
|
|
|
| R$ | 18,187,485 |
| 30,234 |
| 0 |
| 0 |
|
| US$ | 0 |
| 0 |
| 0 |
| 2,107,441 |
|
| Indexed Ch$ | 4,053,511 |
| 8,106,992 |
| 20,267,479 |
| 36,481,446 |
|
| AR$ | 1,596,379 |
| 830,036 |
| 2,001,118 |
| 0 |
|
| Non-indexed Ch$ | 5,798,869 |
| 0 |
| 5,057,522 |
| 5,141,982 |
|
41
NOTE 37 - LOCAL AND FOREIGN CURRENCY - LONG TERM LIABILITIES AS OF JUNE 30, 2006
| Currency | 1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | ||||
|
| Amount | Average int rate % | Amount | Average int rate % | Amount | Average int rate % | Amount | Average int rate % |
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||||
Long term bank liabilities | R$ | 334z,005 |
| 0 |
| 0 |
| 0 |
|
Bonds Payable | US$ | 17,804,866 | 7.00% | 0 |
| 0 |
| 2,220,335 | 7.63% |
- | Indexed Ch$ | 12,327,341 | 6.20% | 8,130,349 | 6.50% | 17,238,831 | 6.50% | 43,738,662 | 6.50% |
Other creditors | AR$ | 142,599 |
| 0 |
| 0 |
| 0 |
|
| R$ | 0 |
| 48,599 |
| 0 |
| 0 |
|
Notes and accounts payable related companies | Non-indexed Ch$ | 3,808,476 |
| 0 |
| 0 |
| 0 |
|
Provisions | Indexed Ch$ | 0 |
| 0 |
| 0 |
| 4,567,033 |
|
- | Non-indexed Ch$ | 618,605 |
| 0 |
| 0 |
| 0 |
|
- | AR$ | 1,861,745 |
| 0 |
| 0 |
| 0 |
|
- | R$ | 18,687,457 |
| 0 |
| 0 |
| 0 |
|
Other liabilities | Non-indexed Ch$ | 89,443 |
| 4,742,688 |
| 0 |
| 0 |
|
| AR$ | 0 |
| 224,896 |
| 0 |
| 2,024,064 |
|
| R$ | 2,105,241 |
| 0 |
| 0 |
| 0 |
|
Total long term liabilities |
|
|
|
|
|
|
|
|
|
| R$ | 21,126,703 |
| 48,599 |
| 0 |
| 0 |
|
| US$ | 17,804,866 |
| 0 |
| 0 |
| 2,220,335 |
|
| Indexed Ch$ | 12,327,341 |
| 8,130,349 |
| 17,238,831 |
| 48,305,695 |
|
| AR$ | 2,004,344 |
| 224,896 |
| 0 |
| 2,024,064 |
|
| Non-indexed Ch$ | 4,516,524 |
| 4,742,688 |
| 0 |
| 0 |
|
42
NOTE 38 – PENALTIES
The Company has not been subject to penalties by the SVS or any other administrative authority.
NOTE 39 - SUBSEQUENT EVENTS
There are no matters to be reported which have occurred between the closing period of June 30, 2007 and the date of preparation of these financial statements that may have an impact over Company assets, liabilities and/or results.
NOTE 40 - COMPANIES SUBJECT TO SPECIAL REGULATIONS
Andina and its subsidiaries are not subject to special regulations.
NOTE 41 – ENVIRONMENT
The Company has disbursed ThCh$1,039,245 to improve its industrial process, industrial waste metering equipment, laboratory analyses, environmental impact consultancy and other studies. Future commitments, which are all short-term and for the same concepts, amount to ThCh$3,082,230.-
ANALYSYS OF THE CONSOLIDATED FINANCIAL STATEMENTS
Highlights
·
Operating Income reached US$38.4 million during the Second Quarter of 2007, increasing 26.7% compared to the same period of the previous year. Operating Margin was 14.6%.
·
Consolidated Sales Volume for the Second Quarter amounted to 95.6 million unit cases, an increase of 5.7% during the quarter.
·
Second Quarter EBITDA totaled US$52.5 million, representing an increase of 16.1. % compared to the Second Quarter of 2006. EBITDA Margin was 19.9%.
·
Net Income for the Second Quarter of 2007 reached US$24.2 million, 25% higher than the figure recorded in the Second Quarter of 2006.
·
Consolidated Operating Income reached US$92.6 million during the period ended June 30, 2007, 17.6% higher than the figure recorded as of June 30, 2006. Operating Margin was 16.4%.
·
Consolidated Sales Volume for the period ended June 30, 2007 totaled 209.7 million unit cases, an increase of 6.0% compared to 2006.
·
Consolidated EBITDA for the period ended June 30, 2007 amounted to US$120.2 million, an increase of 10.9%. EBITDA Margin was 21.3%.
·
Net Income for the First Half of 2007 reached US$66.5 million, 9.9% higher than the First Half of 2006.
Comments from the Chief Executive Officer, Mr. Jaime Garcia R.
“For the Second Quarter of 2007, the Company reported satisfactory results. In terms of volume and cash generation, Andina continues on a path of growth that for this period was mainly driven by our Brazilian operations. It is worth mentioning that during the Second Quarter of 2007 we launched several products in the Light (Diet) and Still beverages categories which have been very successful in the three countries where Andina operates. We are confident that the remainder of 2007 will prove to be a good one for Andina.”
CONSOLIDATED SUMMARY
First Half ended June 30, 2007 vs. First Half ended June 30, 2006
During the First Half of 2007, the Company reported solid results, due to growth in volume, increases in real prices and positive macro-economic surroundings. The average 6.5% appreciation of the Brazilian real has had a positive impact over our dollar-denominated cost and the translation of figures. The Chilean and Argentine peso remained relatively stable, with an average depreciation of 1.5% and 0.9%, respectively.
Consolidated Sales Volume amounted to 209.7 million unit cases, an increase of 6.0%. Soft Drinks increased 5.6%, while the Juices, Waters and Beer categories together increased by 10.8%.
43
Net Sales amounted to US$563.5 million, 12.8% higher than 2006. This was a result of higher volumes and price adjustments in the three countries where the Company operates and the favorable exchange rate in Brazil upon the translation of figures.
Cost of Sales per unit case increased 3.3% compared to the First Half of 2006, mainly due to the increase of costs in important raw materials such as sugar and concentrate (due to price increases) and higher labor costs. These were partially offset by the appreciation of the Brazilian real and the decrease of PET resin costs at the consolidated level.
On the other hand, SG&A expenses increased 17.2% as a result of higher volumes, increases in advertising expenses, and freight fees, which rose due to higher labor costs and fuel prices.
Consolidated Operating Income amounted to US$92.6 million, a 17.6% increase compared to the First Half of 2006. Operating Margin was 16.4%, an increase of 60 basis points.
Consolidated EBITDA amounted to US$120.2 million, an increase of 10.9%. EBITDA Margin was 21.3%, a decrease of 40 basis points.
Second Quarter 2007 vs. Second Quarter 2006
Consolidated Sales Volume for the Second Quarter of 2007 reached 95.6 million unit cases, a 5.7% increase compared to the same period of the previous year.
Net Sales amounted to US$263.7 million, representing a 15.6% improvement compared to the Second Quarter of 2006, mainly due to increased volumes and a significant increase in average income in the three countries in where the Company operates.
Cost of Sales per unit case increased 4.6%, mainly explained by the previously-mentioned circumstances during the First Half of 2007.
SG&A expenses increased 21.2%, as a result of increased volumes, higher freight fees and the increase in advertising expenses.
Consolidated Operating Income amounted to US$38.4 million, a 26.7% increase compared to the Second Quarter of 2006.
Operating Margin was 14.6%, an increase of 130 basis points.
Finally, Consolidated EBITDA amounted to US$52.5 million, a 16.1% improvement compared to the same period of the previous year. EBITDA Margin was 19.9%, representing an increase of 10 basis points compared to the Second Quarter of 2006.
SUMMARY BY COUNTRY
CHILE
First Half ended June 30, 2007 vs. First Half ended June 30, 2006
During the First Half of 2007, Sales Volume amounted to 70.7 million unit cases; a 3.5% growth impacted by the harsh winter season, but partially offset by the significant launch of Coca-Cola Zero during the period. This increase was also impacted by increased Soft Drink volumes (+3.2%), as well as an increase in the Juices and Waters segment (+4.6%).
Net Sales amounted to US$209.7 million, a 4.7% improvement compared to the previous year, as a result of higher volumes and price adjustments
Operating Income was 9.6% higher than the figure reported in the same period of 2006, amounting to US$50.0 million.
Operating Margin was 23.8%, an increase of 100 basis points compared to the previous year.
EBITDA amounted to US$61.2 million, 4.2% higher than the EBITDA figure recorded in 2006. EBITDA Margin was 29.2%, a decrease of 10 basis points.
44
Second Quarter 2007 vs. Second Quarter 2006
During the Second Quarter of 2007 Sales Volume amounted to 31.9 million unit cases, a 1.1% growth compared to the same period of the previous year, strongly impacted by the low temperatures of this winter season, one of the coldest during the past 25 years. Soft Drinks increased by 0.7%, while Juices and Waters increased 3.4%.
Net Sales amounted to US$94.9 million, reflecting a growth of 3.0%, driven by the increase in real prices.
Cost of Sales per unit case decreased a 0.7%. This lower cost is mainly explained by a decrease in PET resin and carbon dioxide along with a decrease in depreciation due to the end of the useful life period for certain fixed assets. These were partially offset by the increase in the costs of sugar and concentrate (due to increased prices).
Operating Income amounted to US$20.7 million, a 7.5% improvement compared to the Second Quarter of 2006. Operating Margin was 21.8%, an increase of 90 basis points.
EBITDA amounted to US$26.5 million, a 2.6% increase regarding the EBITDA figure recorded during the same period of the previous year. EBITDA Margin was 27.9%, a decrease of 10 basis points.
BRAZIL
First Half ended June 30, 2007 vs. First Half ended June 30, 2006
Sales Volume amounted to 84.2 million unit cases, representing a 6.5% growth compared to 2006.
Net Sales reached US$241.7 million, increasing 19.5% compared to the previous year. This significant increase was a result of volume growth, price adjustments and the favorable exchange rate upon the translation of figures.
Cost of Sales per unit case increased 7.7%. Higher freight fees and revaluation of the Brazilian real led to an increase of SG&A expenses of 25.3%.
Operating Income increased 27.8%, amounting to US$35.9 million. Operating Margin was 14.8%, an improvement of 90 basis points.
EBITDA amounted to US$45.6 million, an increase of 21.2%, with an EBITDA Margin of 18.9%, increasing 30 basis points compared to the previous period.
Second Quarter 2007 vs. Second Quarter 2006
Sales Volume for the Second Quarter of 2007 amounted to 39.9 million unit cases, representing an 8.6% increase compared to the Second Quarter of 2006. The launch of Coca-Cola Zero in May of 2007 partially impacted this important growth.
Net Sales reached US$118.7 million, representing a significant increase of 26.2%. This growth along with higher volumes is explained by price adjustments during the period, as well as the appreciation of the Brazilian exchange rate which had a positive impact upon translating figures into US dollars.
Cost of Sales per unit case grew 8.3% mainly explained by the increase in concentrate (resulting from price adjustments) and PET resin (due to the loss of certain tax benefits which the Company had during 2006); along with the figure conversion effect that negatively impacts the costs. These factors were partially offset by the decrease in the cost of sugar.
Operating Income reached US$17.4 million, an improvement of 57%, while Operating Margin was 14.6%, an improvement of 280 basis points.
Finally, EBITDA amounted to US$22.4 million, a 40.3% improvement compared to the US$16 million recorded during the Second Quarter of 2006. EBITDA Margin was 18.9%, an increase of 190 basis points compared to the previous period.
ARGENTINA
First Half ended June 30, 2007 vs. First Half ended June 30, 2006
45
Sales Volume reached 54.8 million unit cases, an 8.8% improvement compared to the Sales Volume reported in 2006. This increase was supported by the launch of Coca-Cola Zero in the Light (Diet) segment, and by the increase in salaries.
Net Sales reached US$115.4 million, representing an increase of 13.9%. This increase is explained by higher volumes and price adjustments that took place during the period, partially offset by the effect of the figure translation due the devaluation of the Argentine peso (0.9% on average).
Cost of Sales per unit case increased 1.1%. SG&A expenses increased 17.5% mainly due to higher salaries, partially offset by the devaluation of the Argentine peso.
Operating Income amounted to US$12.6 million, a significant 29.5% increase. Operating Margin was 10.9%, 130 basis points higher than 2006.
EBITDA reached US$19.3 million, an increase of 15.8% compared to the same period of 2006. EBITDA Margin increased 30 basis points amounting to 16.7%.
Second Quarter 2007 vs. Second Quarter 2006
Sales Volume for the Second Quarter of 2007 increased 7.4% reaching 23.8 million unit cases.
Net Sales reached US$51.9 million, representing an increase of 17.9% compared to the Second Quarter of 2006. This is explained by higher volumes and price adjustments during the period, partially offset by the effect of the devaluation of the Argentine peso.
Cost of Sales per unit case increased 6.3%, mainly explained by the increase in the cost of sugar (due to weather factors that impacted domestic production) and concentrate (as a result of higher prices), higher labor costs and fluctuations of the exchange rate upon the translation of figures. These factors were partially offset by lower PET resin prices.
Operating Income amounted to US$3.2 million, a 41.8% increase. Operating Margin was 6.2%, 110 basis points higher than the Second Quarter of 2006.
Finally, EBITDA reached US$6.5 million, an increase of 14.0%. EBITDA Margin was 12.5% a decrease of 50 basis points compared to the Second Quarter of 2006.
NON-OPERATING RESULTS
First Half ended June 30, 2007 vs. First Half ended June 30, 2006
Non-Operating Results totaled a loss of (US$7.9) million, which compares negatively to a lower accumulated loss of (US$6.2) million recorded during 2006.
This increased loss in the non-operating result line is best explained by:
·
Price Level Restatement: Resulted in a loss compared to a profit recorded in the same period of 2006, due to a lower end of period exchange rate (Ch$526.9 per US$ in 2007 vs. Ch$539.4 per US$ in 2006) over the Company’s U.S. Dollar asset position.
·
Financial Expense/Income (Net): Reflecting a positive variation due to profits realized in Cross Currency Swap Agreements, resulting from the revaluation of the exchange rate recorded during the First Quarter of 2007 compared to the devaluation in the First Quarter of 2006.
·
Other Income/Expenses: reflect a positive variation mainly due to the recovery of taxes derived from the settlement of some pending litigations.
Finally, net income amounted to US$66.5 million, an increase of 9.9% compared to the figure recorded in the First Quarter of 2006.
ANALYSIS OF THE BALANCE SHEET
46
As of June 30, 2007, the Company’s financial assets amounted to US$330.8 million. These represent cash, investments in mutual funds, deposits, structured notes, corporate bonds and sovereign bonds. 70.3% of the total financial investments are U.S. Dollar-denominated. Nevertheless, through “Cross-Currency Swap” agreements executed in 2003 and 2004, part of the portfolio has been converted to Chilean Pesos (UF – Chilean Inflation Indexed Currency), thereby decreasing the amount denominated in U.S. Dollars to 10.6%.
On the other hand, the Company’s total debt was US$193.8 million, with an average annual rate of 7.07% on U.S. Dollar debt, and an average real annual rate of 6.40% on Chilean Peso-denominated debt. The U.S. Dollar-denominated debt represents 19.5% of total debt.
As a result, the Company holds a positive net cash position of US$137.1 million.
II.
MAIN INDICATORS
The main indicators contained in the table reflect for both periods the solid financial position and profitability of Embotelladora Andina S.A.
|
|
|
|
|
|
|
INDICATORS | Unit | Jun-07 | Dec-06 | Jun-06 | Variance | |
LIQUIDITY |
|
|
|
|
| |
| Current Ratio | Times | 1.17 | 1.30 | 1.13 | 0.04 |
| Acid Tests | Times | 1.01 | 1.12 | 0.97 | 0.04 |
| Working Capital | MCh$ | 56,069 | 22,607 | 2,689 | 53,380 |
ACTIVITY |
|
|
|
|
| |
| Investments | MCh$ | 23,000 | 37,707 | 14,643 | 8,356 |
| Inventory turnover | Times | 7.29 | 15.42 | 7.82 | -0.53 |
| Days of inventory on hand | Days | 49.41 | 23.35 | 46.04 | 3.37 |
INDEBTEDNESS |
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| |
| Debt to equity ratio | % | 105.71% | 86.94% | 111.09% | -5.38% |
| Short-term liabilities to total liabilities | % | 57.01% | 52.86% | 48.57% | 8.45% |
| Long-term liabilities to total liabilities | % | 42.99% | 47.14% | 51.43% | -8.45% |
| Interest charges coverage ratio | Times | 21.39 | 23.50 | 13.66 | 7.73 |
PROFITABILITY |
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| |
| Return over equity | % | 13.36% | 27.10% | 12.07% | 1.29% |
| Return over total assets | % | 6.83% | 14.15% | 5.94% | 0.89% |
| Return over operating assets | % | 13.96% | 30.72% | 13.30% | 0.67% |
| Operating income | MCh$ | 48,813 | 97,005 | 41,525 | 7,288 |
| Operating margin | % | 16.44% | 17.41% | 15.78% | 0.66% |
| EBITDA (1) | MCh$ | 64,619 | 130,347 | 60,187 | 4,433 |
| EBITDA margin | % | 21.77% | 23.40% | 22.88% | -1.11% |
| Dividends payout ratio - Series A shares | % | 1.65% | 6.61% | 7.51% | -5.86% |
| Dividends payout ratio - Series B shares | % | 1.69% | 6.72% | 7.66% | -5.97% |
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EBITDA (1) Earnings before income taxes, interests, depreciation, amoritization and extraordinary items.
Liquidity indicators remain solid and stable, Although, the following changes can be observed under short term liabilities: (i) a significant decrease over bank liabilities due to the maturity during August of 2006 of the US$40 million of our subsidiary in Argentina; and the debt paid during December of 2006 for approximately US$40 million in order to distribute the additional dividend of the prior period (for this period the additional dividend was financed solely with own resources); (ii) a significant increase in dividends payable since the date of distribution is July 5, 2007 (during 2006, by June 30th, the additional dividend had already been distributed).
47
Indicators of indebtedness improve mainly due to the decrease in the short term debt already explained; and due to the amortizations of the local bond for an approximate amount of MUS$26 carried out during June 2007 and December 2006. During the period net financial expenses amounted to Ch$2,191 million and earnings before interests and taxes amounted to Ch$46,868 million, achieving an interest coverage of 21.4 times, significantly higher than the previous period.
Operating profitability indicators and Profitability over Equity benefited from the reasons mentioned in paragraph I.
III.
ANALYSIS OF BOOK VALUES AND PRSENT VALUE OF ASSETS
With respect to the Company’s main assets the following should be noted:
Given the high rotation of the items that compose working capital, book values of current assets are considered to represent market values.
Fixed asset values in the Chilean companies are presented at restated acquisition cost. In the foreign companies, fixed assets are valued in accordance with Technical Bulletin N° 64 issued by the Chilean Institute of Accountants (controlled in historical dollars).
Depreciation is estimated over the restated value of assets along with the remaining useful economic life of each asset.
All fixed assets that are considered available for sale are held at their respective market values.
Investments in shares, in situations where the Company has a significant influence on the issuing company, are presented following the equity method. The Company’s participation in the results of the issuing company for each year has been recognized on an accrual basis, and unrealized results on transactions between related companies have been eliminated.
In summary, assets are valued in accordance with generally accepted accounting standards in Chile and the instructions provided by the Chilean Securities Commission, as shown in Note 2 of the Financial Statements.
IV.
ANALYSIS OF THE MAIN COMPONENTS OF CASH FLOW
Cash Flow (MCH$) | June 2007 MCh$ | June 2006 MCh$ | Variation MCh$ | Variation % |
Operating | 53,894 | 62,157 | (8,263) | -13 |
Financing | (22,517) | (51,764) | 29,247 | 57 |
Investment | (591) | (5,197) | 4,606 | 89 |
Net cash flow for the Period | 30,786 | 5,196 | 25,590 | -492 |
The Company generated positive net cash flow of MCh$30,786 during the quarter, analyzed as follows:
Operating activities generated a positive net cash flow of MCh$53,894 representing a negative variation regarding the previous year which amounted to Ch$8,263 million. Principally higher income tax payments during the first half due to better results during 2006 regarding 2005. Additionally, higher VAT payments are recorded during 2007, mainly as a result of fiscal credits obtained for anticipated purchases that reduce VAT paid during 2006, and this situation is not repeated for the first half of 2007.
Financing activities generated a negative cash flow of MCh$22,517 representing appositive variation of MCh$29,247 mainly because the extraordinary dividend for 2007 was pending to be distributed at the closing of the first half, whereas, the distribution of that dividend during 2006 was already distributed by the closing of the first half. This was partially offset by the higher loans obtained during 2006 in order to finance the payment of the extraordinary dividend.
Investment activities generated a negative cash flow of MCh$591; with a positive variation of MCh$4,606 regarding the previous year, mainly because of higher sales of investments in financial instruments during the current year, and which is partially offset by higher investments in fixed assets during the first half of 2007 and earned income due to sale of permanent investments collected during 2006 which does not occur during 2007.
48
V.
ANALYSIS OF MARKET RISK
Interest Rate Risk
As of June 30, 2006 and 2007, the Company held 100% of its debt obligations at fixed-rates. Consequently, the risk fluctuation of market interest rates regarding the Company’s cash flow remains low.
Foreign Currency Risk
Income generated by the Company is linked to the currencies of the markets in which it operates. For the period the breakdown for each is the following:
Chilean peso:
37%
Brazilian real:
43%
Argentine peso:
20%
Since the Company’s sales are not linked to the United States dollar, the policy adopted for managing foreign exchange risk, this is the mismatch between assets and liabilities denominated in a given currency, has been to maintain financial investments in dollar-denominated instruments, for an amount at least equivalent to the dollar-denominated liabilities.
Additionally, it is Company policy to maintain foreign currency hedge agreements to lessen the effects of exchange risk in cash expenditures expressed in US dollars which mainly correspond to payment to suppliers for raw materials.
Accounting exposure of foreign subsidiaries (Brazil and Argentina) for the difference between monetary assets and liabilities, those denominated in local currency, and therefore, exposed to risks upon translation to the US dollar, are only covered when it is foreseen that it will result in significant negative differences and when the associated cost of said coverage is deemed reasonable by management.
Commodity Risks
The Company faces the risk of price changes in the international markets for sugar, aluminum and PET resin, all of which are necessary raw materials for preparing beverages, and that altogether represent between 25% and 30% of our operating costs. In order to minimize and/or stabilize such risk, supply contracts and advanced purchases are negotiated when market conditions are favorable. Likewise commodity coverage instruments have also been utilized.
This document may contain forward-looking statements reflecting Embotelladora Andina SA’s good faith expectations and are based upon currently available data; however, actual results are subject to numerous uncertainties, many of which are beyond the control of the Company and any one or more of which could materially impact actual performance. Among the factors that can cause performance to differ materially are: political and economic conditions on consumer spending, pricing pressure resulting from competitive discounting by other bottlers, climatic conditions in the Southern Cone, and other risk factors applicable from time to time and listed in Andina’s periodic reports filed with relevant regulatory institutions.
49
Embotelladora Andina S.A. |
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Second Quarter Results for the period ended June 30, Chilean GAAP |
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(In millions of constant 06/30/07 Chilean Pesos, except per share) |
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| 30/06/2007 | 30/06/2006 |
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| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 31.9 | 39.9 | 23.8 | 95.6 | 31.5 | 36.7 | 22.2 | 90.4 | 5.7% |
Soft Drink | 26.5 | 37.7 | 23.6 | 87.8 | 26.3 | 35.2 | 22.0 | 83.5 | 5.1% |
Mineral Water | 2.0 | 0.5 | 0.2 | 2.7 | 2.2 | 0.4 | 0.2 | 2.8 | -4.5% |
Juices | 3.4 | 0.8 | 0.1 | 4.2 | 3.0 | 0.3 | 0.0 | 3.4 | 25.7% |
Beer | NA | 0.9 | NA | 0.9 | NA | 0.7 | NA | 0.7 | 20.0% |
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NET SALES | 50,014 | 62,529 | 27,362 | 138,927 | 48,574 | 49,536 | 23,198 | 120,149 | 15.6% |
COST OF SALES | (28,608) | (34,159) | (17,480) | (79,270) | (28,502) | (29,045) | (15,314) | (71,700) | 10.6% |
GROSS PROFIT | 21,405 | 28,370 | 9,882 | 59,657 | 20,073 | 20,492 | 7,884 | 48,449 | 23.1% |
Gross Margin | 42.8% | 45.4% | 36.1% | 42.9% | 41.3% | 41.4% | 34.0% | 40.3% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (10,486) | (19,214) | (8,189) | (37,889) | (9,918) | (14,660) | (6,690) | (31,269) | 21.2% |
CORPORATE EXPENSES | 0 | 0 | 0 | (1,517) | 0 | 0 | 0 | (1,195) | 27.0% |
OPERATING INCOME | 10,919 | 9,156 | 1,693 | 20,251 | 10,154 | 5,832 | 1,194 | 15,985 | 26.7% |
Operating Margin | 21.8% | 14.6% | 6.2% | 14.6% | 20.9% | 11.8% | 5.1% | 13.3% |
|
EBITDA (1) | 13,948 | 11,793 | 3,427 | 27,650 | 13,591 | 8,408 | 3,006 | 23,810 | 16.1% |
Ebitda Margin | 27.9% | 18.9% | 12.5% | 19.9% | 28.0% | 17.0% | 13.0% | 19.8% |
|
NON OPERATIONAL RESULTS |
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FINANCIAL EXPENSE/INCOME (Net) |
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| 1,500 |
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| (1,394) | 207.6% |
RESULTS FROM AFFILIATED |
|
|
| (418) |
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| 76 | -648.2% |
AMORTIZATION OF GOODWILL |
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|
| (1,615) |
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| (1,676) | -3.7% |
OTHER INCOME/(EXPENSE) |
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| 1,698 |
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| (309) | 648.7% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| (3,250) |
|
|
| 579 | -661.1% |
NON-OPERATING RESULTS |
|
|
| (2,084) |
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| (2,725) | -23.5% |
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INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
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NEGATIVE GOODWILL AND MINORITY INTEREST |
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| 18,167 |
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| 13,261 | 37.0% |
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INCOME TAXES |
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| (5,427) |
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| (3,093) | 75.5% |
MINORITY INTEREST |
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| 16 |
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| 34 | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
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| 0 |
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| 0 | NA |
NET INCOME |
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| 12,756 |
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| 10,202 | 25.0% |
Net Margin |
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| 9.2% |
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| 8.5% |
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WEIGHTED AVERAGE SHARES OUTSTANDING |
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|
| 760.3 |
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| 760.3 |
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EARNINGS PER SHARE |
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| 16.8 |
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| 13.4 |
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EARNINGS PER ADS |
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| 100.7 |
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| 80.5 | 25.0% |
(1) EBITDA: Operating Income + Depreciation |
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(2) Total may be different from the addition of the three countries because of intercountry eliminations |
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(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts. |
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50
Embotelladora Andina S.A. |
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Second Quarter Results for the period ended June 30, Chilean GAAP |
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(In millions US$, except per share) |
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| Exch. Rate : | 526.86 |
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| 30/06/2007 | 30/06/2006 |
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| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 31.9 | 39.9 | 23.8 | 95.6 | 31.5 | 36.7 | 22.2 | 90.4 | 5.7% |
Soft Drink | 26.5 | 37.7 | 23.6 | 87.8 | 26.3 | 35.2 | 22.0 | 83.5 | 5.1% |
Mineral Water | 2.0 | 0.5 | 0.2 | 2.7 | 2.2 | 0.4 | 0.2 | 2.8 | -4.5% |
Juices | 3.4 | 0.8 | 0.1 | 4.2 | 3.0 | 0.3 | 0.0 | 3.4 | 25.7% |
Beer | NA | 0.9 | NA | 0.9 | NA | 0.7 | NA | 0.7 | 20.0% |
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NET SALES | 94.9 | 118.7 | 51.9 | 263.7 | 92.2 | 94.0 | 44.0 | 228.0 | 15.6% |
COST OF SALES | (54.3) | (64.8) | (33.2) | (150.5) | (54.1) | (55.1) | (29.1) | (136.1) | 10.6% |
GROSS PROFIT | 40.6 | 53.8 | 18.8 | 113.2 | 38.1 | 38.9 | 15.0 | 92.0 | 23.1% |
Gross Margin | 42.8% | 45.4% | 36.1% | 42.9% | 41.3% | 41.4% | 34.0% | 40.3% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (19.9) | (36.5) | (15.5) | (71.9) | (18.8) | (27.8) | (12.7) | (59.3) | 21.2% |
CORPORATE EXPENSES | 0.0 | 0.0 | 0.0 | (2.9) | 0.0 | 0.0 | 0.0 | (2.3) | 27.0% |
OPERATING INCOME | 20.7 | 17.4 | 3.2 | 38.4 | 19.3 | 11.1 | 2.3 | 30.3 | 26.7% |
Operating Margin | 21.8% | 14.6% | 6.2% | 14.6% | 20.9% | 11.8% | 5.1% | 13.3% |
|
EBITDA (1) | 26.5 | 22.4 | 6.5 | 52.5 | 25.8 | 16.0 | 5.7 | 45.2 | 16.1% |
Ebitda Margin | 27.9% | 18.9% | 12.5% | 19.9% | 28.0% | 17.0% | 13.0% | 19.8% |
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NON OPERATIONAL RESULTS |
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FINANCIAL EXPENSE/INCOME (Net) |
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| 2.8 |
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| (2.6) | 207.6% |
RESULTS FROM AFFILIATED |
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| (0.8) |
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| 0.1 | -648.2% |
AMORTIZATION OF GOODWILL |
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| (3.1) |
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| (3.2) | -3.7% |
OTHER INCOME/(EXPENSE) |
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| 3.2 |
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| (0.6) | 648.7% |
PRICE LEVEL RESTATEMENT (3) |
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| (6.2) |
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| 1.1 | -661.1% |
NON-OPERATING RESULTS |
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|
| (4.0) |
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| (5.2) | -23.5% |
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INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
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NEGATIVE GOODWILL AND MINORITY INTEREST |
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| 34.5 |
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| 25.2 | 37.0% |
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INCOME TAXES |
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| (10.3) |
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| (5.9) | 75.5% |
MINORITY INTEREST |
|
|
| 0.0 |
|
|
| 0.1 | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0.0 |
|
|
| 0.0 | NA |
NET INCOME |
|
|
| 24.2 |
|
|
| 19.4 | 25.0% |
Net Margin |
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| 9.2% |
|
|
| 8.5% |
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|
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|
|
|
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WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
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|
| 760.3 |
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EARNINGS PER SHARE |
|
|
| 0.03 |
|
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| 0.03 |
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EARNINGS PER ADS |
|
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| 0.19 |
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| 0.15 | 25.0% |
(1) EBITDA: Operating Income + Depreciation |
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(2) Total may be different from the addition of the three countries because of intercountry eliminations |
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(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts. |
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51
Embotelladora Andina S.A. |
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Six Months Results for the period ended June 30, Chilean GAAP |
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(In millions of constant 06/30/07 Chilean Pesos, except per share) |
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| 30/06/2007 | 30/06/2006 |
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| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 70.7 | 84.2 | 54.8 | 209.7 | 68.4 | 79.1 | 50.3 | 197.8 | 6.0% |
Soft Drink | 58.3 | 79.8 | 54.1 | 192.2 | 56.5 | 75.8 | 49.7 | 182.0 | 5.6% |
Mineral Water | 6.0 | 1.0 | 0.5 | 7.5 | 6.3 | 1.0 | 0.6 | 7.8 | -3.8% |
Juices | 6.4 | 1.5 | 0.1 | 8.0 | 5.6 | 0.7 | 0.0 | 6.3 | 27.1% |
Beer | NA | 1.9 | NA | 1.9 | NA | 1.6 | NA | 1.6 | 17.8% |
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NET SALES | 110,502 | 127,368 | 60,811 | 296,864 | 105,553 | 106,615 | 53,410 | 263,066 | 12.8% |
COST OF SALES | (61,952) | (71,036) | (37,818) | (168,990) | (60,454) | (61,946) | (34,366) | (154,254) | 9.6% |
GROSS PROFIT | 48,550 | 56,332 | 22,993 | 127,874 | 45,099 | 44,669 | 19,044 | 108,812 | 17.5% |
Gross Margin | 43.9% | 44.2% | 37.8% | 43.1% | 42.7% | 41.9% | 35.7% | 41.4% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (22,213) | (37,431) | (16,339) | (75,984) | (21,069) | (29,878) | (13,907) | (64,854) | 17.2% |
CORPORATE EXPENSES | 0 | 0 | 0 | (3,077) | 0 | 0 | 0 | (2,433) | 26.5% |
OPERATING INCOME | 26,337 | 18,900 | 6,654 | 48,813 | 24,029 | 14,792 | 5,137 | 41,525 | 17.6% |
Operating Margin | 23.8% | 14.8% | 10.9% | 16.4% | 22.8% | 13.9% | 9.6% | 15.8% |
|
EBITDA (1) | 32,243 | 24,022 | 10,148 | 63,336 | 30,942 | 19,825 | 8,766 | 57,099 | 10.9% |
Ebitda Margin | 29.2% | 18.9% | 16.7% | 21.3% | 29.3% | 18.6% | 16.4% | 21.7% |
|
NON OPERATIONAL RESULTS |
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSE/INCOME (Net) |
|
|
| (199) |
|
|
| (5,349) | -96.3% |
RESULTS FROM AFFILIATED |
|
|
| 187 |
|
|
| 354 | -47.1% |
AMORTIZATION OF GOODWILL |
|
|
| (3,229) |
|
|
| (3,353) | -3.7% |
OTHER INCOME/(EXPENSE) |
|
|
| 1,089 |
|
|
| (534) | 303.9% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| (1,985) |
|
|
| 5,597 | -135.5% |
NON-OPERATING RESULTS |
|
|
| (4,136) |
|
|
| (3,285) | 25.9% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
|
|
|
|
|
|
|
|
|
NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 44,677 |
|
|
| 38,240 | 16.8% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (9,624) |
|
|
| (6,353) | 51.5% |
MINORITY INTEREST |
|
|
| (39) |
|
|
| (40) | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0 |
|
|
| 0 | NA |
NET INCOME |
|
|
| 35,014 |
|
|
| 31,847 | 9.9% |
Net Margin |
|
|
| 11.8% |
|
|
| 12.1% |
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|
|
|
|
|
|
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|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 46.1 |
|
|
| 41.9 |
|
EARNINGS PER ADS |
|
|
| 276.3 |
|
|
| 251.3 | 9.9% |
(1) EBITDA: Operating Income + Depreciation |
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|
|
|
|
|
|
|
|
(2) Total may be different from the addition of the three countries because of intercountry eliminations |
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| ||
(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts. |
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52
Embotelladora Andina S.A. |
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Six Months Results for the period ended June 30, Chilean GAAP |
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(In millions US$, except per share) |
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| Exch. Rate : | $ 526.86 |
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| 30/06/2007 | 30/06/2006 |
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| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 70.7 | 84.2 | 54.8 | 209.7 | 68.4 | 79.1 | 50.3 | 197.8 | 6.0% |
Soft Drink | 58.3 | 79.8 | 54.1 | 192.2 | 56.5 | 75.8 | 49.7 | 182.0 | 5.6% |
Mineral Water | 6.0 | 1.0 | 0.5 | 7.5 | 6.3 | 1.0 | 0.6 | 7.8 | -3.8% |
Juices | 6.4 | 1.5 | 0.1 | 8.0 | 5.6 | 0.7 | 0.0 | 6.3 | 27.1% |
Beer | NA | 1.9 | NA | 1.9 | NA | 1.6 | NA | 1.6 | 17.8% |
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NET SALES | 209.7 | 241.7 | 115.4 | 563.5 | 200.3 | 202.4 | 101.4 | 499.3 | 12.8% |
COST OF SALES | (117.6) | (134.8) | (71.8) | (320.7) | (114.7) | (117.6) | (65.2) | (292.8) | 9.6% |
GROSS PROFIT | 92.1 | 106.9 | 43.6 | 242.7 | 85.6 | 84.8 | 36.1 | 206.5 | 17.5% |
Gross Margin | 43.9% | 44.2% | 37.8% | 43.1% | 42.7% | 41.9% | 35.7% | 41.4% |
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SELLING AND ADMINISTRATIVE EXPENSES | (42.2) | (71.0) | (31.0) | (144.2) | (40.0) | (56.7) | (26.4) | (123.1) | 17.2% |
CORPORATE EXPENSES | 0.0 | 0.0 | 0.0 | (5.8) | 0.0 | 0.0 | 0.0 | (4.6) | 26.5% |
OPERATING INCOME | 50.0 | 35.9 | 12.6 | 92.6 | 45.6 | 28.1 | 9.8 | 78.8 | 17.6% |
Operating Margin | 23.8% | 14.8% | 10.9% | 16.4% | 22.8% | 13.9% | 9.6% | 15.8% |
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EBITDA (1) | 61.2 | 45.6 | 19.3 | 120.2 | 58.7 | 37.6 | 16.6 | 108.4 | 10.9% |
Ebitda Margin | 29.2% | 18.9% | 16.7% | 21.3% | 29.3% | 18.6% | 16.4% | 21.7% |
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NON OPERATIONAL RESULTS |
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FINANCIAL EXPENSE/INCOME (Net) |
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| (0.4) |
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| (10.2) | -96.3% |
RESULTS FROM AFFILIATED |
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| 0.4 |
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| 0.7 | -47.1% |
AMORTIZATION OF GOODWILL |
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| (6.1) |
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| (6.4) | -3.7% |
OTHER INCOME/(EXPENSE) |
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| 2.1 |
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| (1.0) | 303.9% |
PRICE LEVEL RESTATEMENT (3) |
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| (3.8) |
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| 10.6 | -135.5% |
NON-OPERATING RESULTS |
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| (7.9) |
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| (6.2) | 25.9% |
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INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
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NEGATIVE GOODWILL AND MINORITY INTEREST |
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| 84.8 |
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| 72.6 | 16.8% |
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INCOME TAXES |
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| (18.3) |
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| (12.1) | 51.5% |
MINORITY INTEREST |
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| (0.1) |
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| (0.1) | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
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| 0.0 |
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| 0.0 | NA |
NET INCOME |
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| 66.5 |
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| 60.4 | 9.9% |
Net Margin |
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| 11.8% |
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| 12.1% |
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WEIGHTED AVERAGE SHARES OUTSTANDING |
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| 760.3 |
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| 760.3 |
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EARNINGS PER SHARE |
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| 0.09 |
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| 0.08 |
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EARNINGS PER ADS |
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| 0.52 |
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| 0.48 | 9.9% |
(1) : Operating Income + Depreciation |
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(2) Total may be different from the addition of the three countries because of intercountry eliminations |
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(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts. |
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53
Embotelladora Andina S.A. | ||||||||
Consolidated Balance Sheet | ||||||||
(In million of constant 06/30/07 Chilean Pesos) | ||||||||
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ASSETS | 06-30-2007 | 06-30-2006 | %Ch |
| LIABILITIES & SHAREHOLDERS' EQUITY | 06-30-2007 | 06-30-2006 | %Ch |
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Cash + Time deposits + market. Securit. | 77,576 | 65,833 | 17.8% |
| Short term bank liabilities | 339 | 49,249 | -99.3% |
Account receivables (net) | 38,870 | 44,229 | -12.1% |
| Current portion of long term bank liabilities | 0 | 528 | -100.0% |
Inventories | 23,261 | 21,323 | 9.1% |
| Current portion of bonds payable | 29,957 | 13,175 | 127.4% |
Other current assets | 32,669 | 20,386 | 60.3% |
| Trade accounts payable and notes payable | 95,847 | 46,455 | 106.3% |
Total Current Assets | 172,376 | 151,771 | 13.6% |
| Other liabilities | 20,935 | 24,603 | -14.9% |
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| Total Current Liabilities | 147,078 | 134,010 | 9.8% |
Property, plant and equipment | 543,165 | 533,111 | 1.9% |
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Depreciation | (394,329) | (387,682) | 1.7% |
| Long term bank liabilities | 778 | 334 | 133.1% |
Total Property, Plant, and Equipment | 148,837 | 145,429 | 2.3% |
| Bonds payable | 71,017 | 101,460 | -30.0% |
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| Other long term liabilities | 37,865 | 38,921 | -2.7% |
Investment in related companies | 20,541 | 21,786 | -5.7% |
| Total Long Term Liabilities | 109,661 | 140,715 | -22.1% |
Investment in other companies | 57 | 58 | -2.5% |
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Goodwill | 63,537 | 74,159 | -14.3% |
| Minority interest | 1,231 | 1,204 | 2.3% |
Other long term assets | 96,651 | 131,108 | -26.3% |
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Total Other Assets | 180,786 | 227,111 | -20.4% |
| Stockholders' Equity | 244,029 | 248,382 | -1.8% |
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TOTAL ASSETS | 501,999 | 524,311 | -4.3% |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 501,999 | 524,311 | -4.3% |
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Financial Highlights |
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(In million of constant 06/30/07 Chilean Pesos) |
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ADDITIONS TO FIXED ASSETS | 06-30-2007 | 06-30-2006 |
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| DEBT RATIOS | 06-30-2007 | 06-30-2006 |
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Chile | 14,317 | 5,975 |
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| Financial Debt / Total Capitalization | 0.29 | 0.40 |
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Brazil | 7,229 | 6,245 |
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| Financial Debt / EBITDA L12M | 0.77 | 1.41 |
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Argentina | 1,454 | 2,423 |
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| EBITDA L12M+Interest Income / Interest Expense L12M | 10.44 | 7.85 |
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| 23,000 | 14,643 |
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| L12M: Last twelve months |
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* As June 30, 2007, the company's registered a positive net cash position of US$ 137 million. Total debt amounted to US$ 194 million. |
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Total Cash amounted to US$ 331 million, which includes cash investments accounted for under Other Current Assets as well as Long Term Assets. |
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54
MATERIAL EVENTS
During the period between April 1, 2007 and June 30, 2007, the following material events were filed:
Resolutions of the General Shareholders’ Meeting
At the Regular General Shareholders’ Meeting of Embotelladora Andina S.A., held yesterday, April 17, 2007 (hereinafter
the “Meeting”), among other matters, the following was resolved:
1.
The distribution of the following amounts asFinal Dividend N° 155, on account of the fiscal year ending December 31, 2006:
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Ch$11.120 (eleven pesos and one hundred and twenty cents) per Series A shares; and
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Ch$12.232 (twelve pesos and two hundred and thirty two cents) per Series B shares.
This dividend will be available to shareholders beginningApril 26, 2007. Regarding payment of this dividend, the Shareholders’ Registry will close on April 20, 2007.
2.
The distribution of anAdditionalDividend N° 156 on account of retained earnings:
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Ch$65.190 (sixty five pesos and one hundred and ninety cents) per Series A shares; and
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Ch$71.709 (seventy one pesos and seven hundred and nine cents) per Series B shares.
This dividend will be available to shareholders beginningJuly 5, 2007. Regarding payment of this
dividend, the Shareholders Registry will close on June 28, 2007.
3.
The Meeting acknowledged and approved the amendment of the Company’s dividend safeguard and payment procedures that will be in full force and effect beginning with the previously mentioned Final Dividend N° 155. Current payment procedures, consisting of the payment of dividends within the first seven days at the Company’s corporate domicile and the following days at the offices of DCV, will no longer continue. The payment of dividends will now solely take place at the offices of DCV, located at Huérfanos 770, 22nd floor, Santiago, in coordination with Banco de Crédito e Inversiones S.A. (“BCI”). Hence, the new dividend payment procedure considers the participation of DCV Registros S.A., BCI and our Company.
Board Appointments and Committees
The following resolutions were adopted at the Regular Board of Directors Meeting held April 24, 2007:
1.
Mr.Juan Claro was ratified in his position ofChairman of the Boardof the Company.
2.
Mr. Salvador Said Somavía was appointed newVice-Chairman of the Board of the Company.
3.
TheExecutive Committee was elected, comprised of regular directorsJosé Antonio Garcés Silva, Arturo Majlis Albala, Gonzalo Said HandalandSalvador Said Somavía.
This Committee is also comprised, by virtue of office, by Mr.Juan Claro González, Chairman of the Board, and Mr.Jaime García Rioseco, Chief Executive Officer of the Company.
4.
The current composition of theArticle 50-bis Directors Committee(pursuant to the Companies Law) was ratified, which will continue to be comprised of Regular DirectorsJuan Claro González, José Antonio Garcés Silva andHeriberto Urzúa Sánchez. Mr. Claro will continue to be the Chairman of this Committee.
5.
The current composition of theAudit Committee under U.S. the Sarbanes–Oxley Actwas ratified, which will continue to be comprised of regular directorsJuan Claro González, José Antonio Garcés Silva andHeriberto Urzúa Sánchez. Mr. Claro will continue to be the Chairman of this Committee.
6.
Mr.Pedro Pellegrini Ripamonti, Corporate Legal Manager, was appointed representative or person authorized to receive notifications in absence of Mr.Renato Ramírez Fernández, General Manager.
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Legal Strike – Chilean Operations
Embotelladora Andina S.A. informs that Workers’ Union N° of our Company’s Chilean Operations has entered into a legal strike on this date, Wednesday June 6, 2007, within the framework of renewing the Collective Bargaining Agreement. The strike involves 222 workers affiliated to Workers’ Union N°1 of a total of 886 who work at the Company’s Chilean Bottling facility.
The Collective Bargaining Agreements of the other Unions of the Company’s Chilean operations are in full force and effect and the remaining employees are working normally.
The Company has implemented timely measures to maintain all commercial and production activities in order to supply the market accordingly.
End of Legal Strike – Chilean Operations
Embotelladora Andina S.A. informs that the strike that had been called on June 6, 2007, by its Union No. 1 (comprised of 223 workers out of a total of 886 who work for the company) has ended on June 26, 2007. With this, the Company and all of its workers have resumed their job functions under complete normality.
INTERIM DIVIDEND NO. 157
As authorized by the Regular Shareholders Meeting held April 17th of this year (the “Meeting”), the Board resolved to distribute the following sums as interim dividend No. 157:
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$7.00 (seven pesos) per Series A share; and
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$7.70 (seven pesos and seventy cents) per Series B share.
This dividend will be paid on account of income from the 2007 fiscal year and will be available to shareholders beginning July 26, 2007. The Shareholders’ Registry will close on July 20, 2007 for payment of this dividend.
No other significant events of a financial or any other nature have occurred between June 30, 2007 and the issuance date of these financial statements that affect or may affect the assets, liabilities and/or income of the Company
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Santiago, Chile.
EMBOTELLADORA ANDINA S.A.
By:/s/ Osvaldo Garay
Name: Osvaldo Garay
Title: Chief Financial Officer
Santiago, April 8, 2008