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
May 2008
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____
CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2008 and 2007
(Free translation of original in Spanish)
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Analysis of Results
Ch$
-
Chilean pesos
ThCh$
-
Thousands of Chilean pesos
US$
-
United States dollars
UF
-
Unidades de Fomento (Chilean government inflation-indexed monetary units)
AR$
-
Argentine pesos
R$
-
Brazilian Reais
ThR$
-
Thousands Brazilian Reais
2
Consolidated Balance Sheets
(Figures in ThCh$ of March 31, 2008)
| For the period ended | |
ASSETS | March 31, | |
| 2008 | 2007 |
CURRENT ASSETS | ThCh$ | ThCh$ |
Cash | 19,665,569 | 19,989,650 |
Time deposits | 65,243,049 | 3,877,101 |
Marketable securities (net) | 62,679,684 | 50,477,108 |
Trade accounts receivable (net) | 30,392,459 | 31,083,532 |
Notes receivable (net) | 9,384,773 | 9,604,248 |
Other receivables (net) | 14,202,074 | 10,807,413 |
Notes and accounts receivable from related companies | 1,702,404 | 1,559,627 |
Inventories (net) | 22,183,883 | 24,098,822 |
Recoverable taxes | 3,055,360 | 9,706,578 |
Prepaid expenses | 2,388,819 | 1,946,338 |
Deferred income taxes | 5,059,878 | 391,337 |
Other current assets | 6,962,478 | 20,747,719 |
TOTAL CURRENT ASSETS | 242,920,430 | 184,289,473 |
|
|
|
PROPERTY, PLANT & EQUIPMENT |
|
|
Land | 16,835,231 | 17,696,061 |
Buildings & improvements | 94,662,977 | 93,714,754 |
Machinery and equipment | 214,804,198 | 235,863,811 |
Other property, plant & equipment | 216,610,739 | 230,647,729 |
Technical reappraisal of property, plant & equipment | 2,225,746 | 2,227,198 |
Depreciation | (379,213,387) | (423,420,503) |
TOTAL PROPERTY, PLANT & EQUIPMENT | 165,925,504 | 156,729,050 |
|
|
|
OTHER ASSETS |
|
|
Investments in related companies | 24,833,673 | 23,165,857 |
Investments in other companies | 124,647 | 60,753 |
Goodwill | 49,085,865 | 72,521,196 |
Long-term receivables | 31,511 | 41,730 |
Long-term notes and accounts receivable from related companies | 57,296 | 39,106 |
Intangibles | 369,765 | 465,236 |
Amortization | (227,337) | (286,070) |
Others | 20,563,103 | 124,784,441 |
TOTAL OTHER ASSETS | 94,838,523 | 220,792,249 |
TOTAL ASSETS | 503,684,457 | 561,810,772 |
The accompanying Notes 1 to 33 are an integral part of these consolidated financial statements.
3
Consolidated Balance Sheets
(Figures in ThCh$ of March 31, 2008)
| For the period ended | |
| March 31, | |
LIABILITIES AND SHAREHOLDERS' EQUITY | 2008 | 2007 |
| ThCh$ | ThCh$ |
CURRENT LIABILITIES |
|
|
Short-term bank liabilities | 1,361,403 | 0 |
Current portion of long-term bank liabilities | 107,191 | 488,711 |
Current portion of bonds payable | 8,238,682 | 33,772,419 |
Dividends payable | 235,207 | 233,172 |
Accounts payable | 47,177,228 | 39,274,991 |
Other creditors | 4,810,158 | 5,328,930 |
Notes and accounts payable to related companies | 9,816,272 | 9,484,710 |
Provisions | 3,346,300 | 3,325,569 |
Withholdings | 12,927,346 | 12,920,915 |
Income taxes payable | 6,200,030 | 6,204,171 |
Unearned income | 518,191 | 588,101 |
Other current liabilities | 1,316,758 | 4,415,270 |
TOTAL CURRENT LIABILITIES | 96,054,766 | 116,036,959 |
|
|
|
LONG-TERM LIABILITIES |
|
|
Long-term bank liabilities | 634,737 | 356,207 |
Bonds payable | 74,218,794 | 82,372,119 |
Other creditors | 70,783 | 153,678 |
Long-term notes and accounts payable to related companies | 3,325,807 | 3,737,168 |
Provisions | 15,304,522 | 18,942,983 |
Deferred income taxes | 11,924,176 | 4,258,318 |
Other long-term liabilities | 11,214,706 | 11,166,878 |
TOTAL LONG-TERM LIABILITIES | 116,693,525 | 120,987,351 |
|
|
|
Minority interest | 1,324,232 | 1,327,272 |
|
|
|
TOTAL SHAREHOLDERS’ EQUITY |
|
|
Paid-in capital | 217,013,513 | 218,427,940 |
Reserve capital revalued | 1,736,108 | 436,856 |
Other reserves | (26,165,500) | 3,712,666 |
|
|
|
Retained earnings | 97,027,813 | 100,881,728 |
|
|
|
Accumulated earnings | 76,183,700 | 76,820,085 |
Net income for the period | 20,844,113 | 24,061,643 |
TOTAL SHAREHOLDERS’ EQUITY | 289,611,934 | 323,459,190 |
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 503,684,457 | 561,810,772 |
The accompanying Notes 1 to 33 are an integral part of these consolidated financial statements.
4
Consolidated Statements of Income
(Figures in ThCh$ of March 31, 2008)
| For the period ended | |
| March 31, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
OPERATING INCOME |
|
|
Gross margin | 79,439,926 | 74,320,986 |
Net sales | 171,514,937 | 172,168,894 |
Cost of sales | (92,075,011) | (97,847,908) |
Administrative and selling expenses | (46,841,720) | (43,308,945) |
OPERATING INCOME | 32,598,206 | 31,012,041 |
|
|
|
NON OPERATING INCOME AND EXPENSE |
|
|
Financial income | 6,143,556 | 2,171,246 |
Equity in earnings of equity investments | 342,510 | 527,435 |
Other non-operating income | 5,029,466 | 571,539 |
Equity in losses of equity investments | (81,904) | (174,200) |
Amortization of goodwill | (1,318,372) | (1,782,968) |
Financial expenses | (2,116,016) | (3,143,836) |
Other non-operating expenses | (3,141,280) | (1,617,139) |
Price level restatement | 17,814 | (212,806) |
Foreign exchange gains | (8,869,807) | 1,416,212 |
NON OPERATING INCOME AND EXPENSE | (3,994,033) | (2,244,517) |
|
|
|
Income before income taxes and extraordinary items | 28,604,173 | 28,767,524 |
Income tax expense | (7,732,119) | (4,647,097) |
Income before minority interest | 20,872,054 | 24,120,427 |
Minority interest | (27,941) | (58,784) |
NET INCOME FOR THE PERIOD | 20,844,113 | 24,061,643 |
The accompanying Notes 1 to 33 are an integral part of these consolidated financial statements.
5
Consolidated Statements of Cash Flow
(Figures in ThCh$ of March 31, 2008)
| For the year ended | |
| March 31, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
NET CASH PROVIDED BY OPERATING ACTIVITIES |
|
|
Collection of trade receivables | 258,598,946 | 250,953,471 |
Financial income received | 23,488,491 | 4,638,848 |
Dividend & other distributions received | 0 | 1,891,750 |
Other income received | 23,939 | 25,698 |
Payments to suppliers and personnel | (189,630,445) | (175,502,567) |
Interest paid | (2,044,987) | (3,750,254) |
Income taxes paid | (3,224,578) | (3,996,151) |
VAT and other tax payments | (35,023,650) | (33,686,995) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 52,187,716 | 40,573,800 |
|
|
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |
|
|
Borrowings | 7,739,737 | 1,346 |
Dividend distribution | (5,387,365) | (5,496,541) |
Loan payments | (10,006,167) | (2,990,864) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (7,653,795) | (8,486,059) |
|
|
|
NET CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES |
|
|
Proceeds from sales of property, plant and equipment | 146,161 | 165,620 |
Proceeds from sales of other investments | 15,889 | 4,853,300 |
Additions to property, plant & equipment | (11,069,565) | (12,338,037) |
Permanent investments | (15,889) | 0 |
NET CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES | (10,923,404) | (7,319,117) |
|
|
|
TOTAL NET CASH FOR THE PERIOD | 33,610,517 | 24,768,624 |
Effect of inflation on cash and cash equivalents | (5,450,149) | 646,252 |
Net (decrease) increase in cash and cash equivalents | 28,160,368 | 25,414,876 |
Cash and cash equivalents at beginning of period | 118,659,054 | 45,248,367 |
Cash and cash equivalents at end of period | 146,819,422 | 70,663,243 |
The accompanying Notes 1 to 33 are an integral part of these consolidated financial statements.
6
Reconciliation between Net Income and Net Cash Flows
Provided by Operating Activities
(Figures in ThCh$ of March 31, 2008)
| For the year ended | |
| March 31, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
|
|
|
Net Income | 20,844,113 | 24,061,643 |
Income on sale of assets: | 15,154 | 405,827 |
Loss (Gain) on sale of property, plant and equipment | 17,819 | 414,264 |
Gain on sale of other assets | (2,665) | (8,437) |
Income on sale of assets: | 20,844,113 | 24,061,643 |
|
|
|
Adjustments to net income that do not represent movements of cash |
|
|
Depreciation | 7,379,752 | 7,759,210 |
Amortization of intangibles | 57,038 | 345,937 |
Write-offs and provisions | 184,605 | 105,984 |
Equity in earnings of equity investments | (342,510) | (527,435) |
Equity in losses of equity investments | 81,904 | 174,200 |
Amortization of goodwill | 1,318,372 | 1,782,968 |
Price level restatement | (17,814) | 212,806 |
Foreign exchange gains, net | 8,869,807 | (1,416,212) |
Other credits to income that do not represent cash flows | 0 | (612,836) |
Other charges to income that do not represent cash flows | 2,211,686 | 70,303 |
Adjustments to net income that do not represent movements of cash | 19,742,840 | 7,894,925 |
|
|
|
Changes in operating assets |
|
|
(Increase) decrease in trade accounts receivable | 17,329,573 | 16,814,133 |
(Increase) decrease in inventories | 2,686,862 | 697,417 |
(Increase) decrease in other assets | (7,737,435) | (506,334) |
Changes in operating assets | 12,279,000 | 17,005,216 |
|
|
|
Changes in operating liabilities |
|
|
Increase (decrease) in accounts payable related to operating income | (23,795,161) | (12,242,127) |
Increase (decrease) in interest payable | 24,927,481 | 2,759,347 |
Increase (decrease) in income taxes payable | (3,745,296) | 3,974,262 |
Increase (decrease) in other accounts payable related to non-operating income | 4,792,652 | 2,081,083 |
Increase (decrease) in value added tax and other similar items | (2,901,008) | (5,425,160) |
Changes in operating liabilities | (721,332) | (8,852,595) |
|
|
|
Minority interest | 27,941 | 58,784 |
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES | 52,187,716 | 40,573,800 |
The accompanying Notes 1 to 33 are an integral part of these consolidated financial statements.
7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2008 and 2007 (figures in ThCh$ of March 31, 2008)
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 March 31, 2008 and are compared to the same period in 2007.
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 8.1% 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 | |||
| 2008 | 2007 | ||
| Direct | Indirect | Total | Total |
Abisa Corp S.A. | 0 | 99.99 | 99.99 | 99.99 |
Andina Bottling Investments S.A. | 99.9 | 0.09 | 99.99 | 99.99 |
Andina Inversiones Societarias S.A. | 99.9999 | 0 | 99.9999 | 99.9999 |
Andina Bottling Investments Dos S.A. | 99.9 | 0.09 | 99.99 | 99.99 |
Embotelladora del Atlántico S.A. | 0 | 99.98 | 99.98 | 99.96 |
Rio de Janeiro Refrescos Ltda. | 0 | 99.99 | 99.99 | 99.99 |
Servicios Multivending Ltda. | 99.9 | 0.09 | 99.99 | 99.99 |
Transportes Andina Refrescos Ltda. | 99.9 | 0.09 | 99.99 | 99.99 |
Vital S.A. | 0 | 99.99 | 99.99 | 99.99 |
RJR Investments Corp S.A. | 0 | 99.99 | 99.99 | 99.99 |
Vital Aguas S.A. | 56.5 | 0 | 56.5 | 56.5 |
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 0.8% for the period December 1, 2007 to February 29, 2008 (0.2% 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:
|
| 2008 | 2007 |
|
| Ch$ | Ch$ |
Unidades de Fomento | (UF) | 19,822.53 | 18,372.97 |
United States dollars | (US$) | 437.71 | 539.21 |
Argentine pesos | (AR$) | 138.17 | 173.94 |
Brazilian Real | (R$) | 250.25 | 262.98 |
Euro | (€$) | 690.94 | 714.19 |
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 are valued at the lesser of restated cost plus accrued interest and market value.
h)
Inventories
The cost of raw materials includes all disbursements made in the acquisition process and deemed necessary for them to be readily available for use. 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.
9
j)
Property, plant and equipment
For companies incorporated in Chile, Property, Plant and Equipment is carried at acquisition value 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 2m.
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.
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.
10
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, under Financial Expenses.
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.
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.
11
u)
Derivative contracts
Derivative contracts include instruments used to hedge the risk of exposure to exchange rate differences as follows:
Derivative instruments used to hedge existing items on the balance sheet are recorded at their fair values. Unrealized losses are recognized as a charge to income and gains are deferred and included in Other liabilities (current or long-term). Hedge ineffectiveness is recognized in the income statement.
Derivative instruments used to hedge forecasted transactions are recorded at their market values and the changes in their values are accounted for as unrealized gains or losses. Upon contract expiration, the deferred gains and losses are recorded in the income statements.
v)
Computer software
Corresponds to computer packages currently in use that have a future economic benefit, and are amortized over a period equal to their useful life.
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 Securities and Exchange Commission)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.
12
Note 4 - Marketable Securities
Type of Instrument | Accounting value for the period ended March 31, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
Bonds | 897,869 | 1,178,866 |
Mutual funds | 7,371,399 | 19,342,276 |
Investment funds | 54,410,416 | 29,955,966 |
Total marketable securities | 62,679,684 | 50,477,108 |
Bonds |
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of Instrument | Date | Par Value | Accounting Value | Market Value | ||
| Purchase | Maturity | Amount | Rate | ||
|
|
| ThCh$ | ThCh$ |
| ThCh$ |
UNITED STATES TREASURY NOTES | July 26-2006 | June 30-2008 | 897,869 | 897,869 | 5,125% | 906,337 |
Mutual funds: |
|
|
|
Institution | ThCh$ |
Fondo Mutuo Larraín Vial | 4,985,399 |
Fondo Mutuo B.Scotiabank | 135,000 |
Fondo Mutuo Itaú | 2,251,000 |
Balance mutual funds | 7,371,399 |
|
|
Investment funds: |
|
|
|
Institution | ThCh$ |
Fondo Mutuo DWS Institutional USD Money Plus | 13,331,521 |
Citi Institutional Liquid Reserves Limited - USA | 41,078,895 |
Balance investment funds | 54,410,416 |
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.
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 | ||
| 2008 | 2007 | 2008 | 2007 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Coca-Cola de Chile S. A. | 0 | 595,512 | 57,296 | 39,106 |
Embonor S.A. | 1,173,812 | 580,995 | 0 | 0 |
Embotelladora Coca-Cola Polar S.A. | 528,592 | 383,120 | 0 | 0 |
Total | 1,702,404 | 1,559,627 | 57,296 | 39,106 |
2) Notes and accounts payable:
Recofarma Indústrias do Amazonas Ltda.: Concentrate purchases
Envases CMF S.A.: Raw material purchases
Servicios y Productos para Bebidas Refrescantes S.R.L.: 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 | ||
| 2008 | 2007 | 2008 | 2007 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Recofarma Indústrias do Amazonas Ltda. | 2,513,806 | 3,878,429 | 0 | 0 |
Envases CMF S. A. | 2,397,215 | 2,914,042 | 0 | 0 |
Coca-Cola de Chile S.A. | 2,284,703 | 0 | 0 | 0 |
Servicios y Productos para Bebidas Refrescantes S.R.L. | 1,469,811 | 1,500,355 | 0 | 0 |
Envases Central S. A. | 1,058,806 | 953,393 | 0 | 0 |
Envases del Pacífico S. A. | 91,931 | 32,368 | 0 | 0 |
Cican S.A. | 0 | 206,123 | 0 | 0 |
Embonor S.A. | 0 | 0 | 2,583,844 | 2,972,762 |
Embotelladora Coca-Cola Polar S.A. | 0 | 0 | 669,669 | 764,406 |
Centralli Refrigerantes S.A. | 0 | 0 | 72,294 | 0 |
Total | 9,816,272 | 9,484,710 | 3,325,807 | 3,737,168 |
14
3) Transactions with related companies
The following table includes the transactions with related companies that exceed ThCh$200,000.
Company | Relation | Transaction | 2008 | 2007 | ||
|
|
| Amount | Effect on income (charge) credit | Amount | Effect on income (charge) credit |
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Envases Central S.A | Equity Investee | Sales of raw materials and supplies | 418,446 | 17,536 | 494,778 | 46,705 |
- | - | Finished product purchase | 3,773,886 | - | 4,656,638 | - |
Coca-Cola de Chile S.A. | Shareholder | Concentrate purchases | 12,898,067 | - | 13,950,030 | - |
- | - | Payment of advertising participation | 625,743 | (625,743) | 1,104,590 | (1,104,590) |
- | - | Water source rental | 723,054 | (723,054) | 637,277 | (637,277) |
- | - | Sales of advertisement | 811,154 | - | 723,218 | - |
Envases CMF S.A. | Equity Investee | Purchase of containers | 3,349,468 | - | 4,469,158 | - |
- | - | Services rendered | - | - | 81,727 | - |
- | - | Dividend payment | - | - | 1,891,750 | - |
Envases del Pacífico S.A. | Director in common | Purchase of raw materials | 97,945 | - | 45,731 | - |
Servicios y Productos para Bebidas Refrescantes S.R.L. | Shareholder | Concentrate purchases | 7,891,168 | - | 8,021,378 | - |
Recofarma Indústrias Do Amazonas Ltda. | Shareholder related | Concentrate purchases | 14,624,748 | - | 17,466,226 | - |
- | - | Payment of advertising participation | 1,077,486 | 1,077,486 | 533,102 | 533,102 |
- | - | Reimbursements and other purchases | 8,167,200 | 8,167,200 | 130,139 | 130,139 |
Embonor S.A. | Shareholder related | Sale of finished products | 2,607,322 | 533,082 | 2,366,013 | 473,859 |
Embotelladora Coca-Cola Polar S.A. | Shareholder related | Sale of finished products | 1,506,702 | 275,449 | 1,227,098 | 15,227 |
Iansagro S.A. | Director in common | Purchase of raw materials | 2,869,110 | - | 3,018,430 | - |
Coca-Cola de Argentina S.A. | Director in common | Advertising expense | - | - | 197,060 | (197,026) |
Cican S.A. | Equity investee | Purchase of finished products | - | - | 466,191 | - |
|
| Sale of raw materials | - | - | 159,419 | 46,392 |
BBVA Administradora General de Fondos | Director related company | Investment in mutual funds | 6,890,000 | - | 21,387,585 | - |
| Director related company | Redemption of mutual funds | 6,890,000 | 36,517 | 23,590,663 | 85,550 |
Vendomática S.A. | Director related company | Sale of finished products | 301,069 | 90,321 | - | - |
Within the normal course of business, in 2006 the Company entered into a future supply agreement with Iansagro S.A. for the purchase of sugar. This agreement will expire in January 2009.
Note 7 – Inventories
| 2008 | 2007 | ||||
| Gross Value | Obsolescence provision | Net value | Gross Value | Obsolescence provision | Net value |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Finished products | 10,340,225 | (494,576) | 9,845,649 | 10,255,166 | (423,328) | 9,831,838 |
Raw materials | 10,050,200 | (215,719) | 9,834,481 | 12,459,347 | (126,647) | 12,332,700 |
Products in process | 1,897,085 | 0 | 1,897,085 | 1,162,880 | 0 | 1,162,880 |
Raw materials in transit | 606,668 | 0 | 606,668 | 771,404 | 0 | 771,404 |
|
|
|
|
|
|
|
Total | 22,894,178 | (710,295) | 22,183,883 | 24,648,797 | (549,975) | 24,098,822 |
15
Note 8 - Deferred Taxes and Income Taxes
At period end 2008 and 2007, the Company had accumulated taxable profits for ThCh$ 9,365,543 with 17% credit, and also taxable profits for ThCh$ 12,565,400 with no credit.
Short-term and long-term assets and liabilities must be netted out to compose the general balance sheet on deferred taxes.
| 2008 | 2007 | ||||||
| Assets | Liabilities | Assets | Liabilities | ||||
| Short term | Long term | Short term | Long term | Short term | Long term | Short term | Long term |
Temporary differences | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Allowance for doubtful accounts | 266,873 | 19,950 | 0 | 0 | 270,767 | 38,927 | 0 | 0 |
Vacation provision | 134,333 | 0 | 0 | 0 | 124,530 | 0 | 0 | 0 |
Production expenses | 73,901 | 0 | 0 | 0 | 17,728 | 0 | 0 | 0 |
Depreciation of property, plant & equipment | 0 | 0 | 132,810 | 5,393,765 | 504 | 0 | 125,258 | 4,317,137 |
Severance indemnities | 4,837 | 0 | 22,096 | 179,273 | 7,328 | 1,450 | 33,360 | 224,203 |
Provision for assets write off | 210,163 | 1,003,563 | 0 | 0 | 360,266 | 941,390 | 0 | 0 |
Provision for labor lawsuits | 0 | 1,212,862 | 0 | 0 | 0 | 1,416,350 | 0 | 0 |
Tax loss carry-forwards | 2,379,828 | 0 | 0 | 0 | 2,424,625 | 3,407,870 | 0 | 0 |
Guarantee deposit | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 598,834 |
Others | 531,396 | 585,467 | 23 | 0 | 699,736 | 627,529 | 0 | 0 |
Local bond issue expenses | 0 | 0 | 0 | 143,097 | 0 | 0 | 0 | 161,505 |
Contingency allowance | 0 | 242,832 | 0 | 0 | 0 | 248,219 | 0 | 0 |
Social contributions | 1,412,399 | 0 | 0 | 0 | 872,864 | 1,226,833 | 0 | 0 |
Income participation provision | 201,077 | 0 | 0 | 0 | 198,867 | 0 | 0 | 0 |
Accrued interests abroad | 0 | 0 | 0 | 0 | 0 | 0 | 4,427,260 | 0 |
Exchange rate difference (FRN Debt-Brazil) | 0 | 0 | 0 | 11,385,204 | 0 | 0 | 0 | 10,116,454 |
Unrealized income | 0 | 245,450 | 0 | 0 | 0 | 297,222 | 0 | 0 |
Others |
|
|
|
|
|
|
|
|
Complementary accounts, net of amortization | 0 | 0 | 0 | (1,867,039) | 0 | 0 | 0 | (2,954,025) |
Total | 5,214,807 | 3,310,124 | 154,929 | 15,234,300 | 4,977,215 | 8,205,790 | 4,585,878 | 12,464,108 |
b)
The following table contains information on income taxes at each period-end.
16
Note 9 - Other Current Assets
| 2007 | 2006 |
| ThCh$ | ThCh$ |
Supplies | 4,882,356 | 3,397,995 |
Cross currency swap and forward effects | 720,875 | 14,897,375 |
Short term bonds discount | 183,378 | 206,426 |
Accrued interest on long-term bonds | 0 | 1,511,370 |
Pacts | 100,054 | 0 |
Wachovia Investment Fund (restricted) | 90,963 | 275,319 |
Others | 984,852 | 459,234 |
Total | 6,962,478 | 20,747,719 |
Note 10 – Purchase Agreements, Sale Agreements, Sale-back Agreements and Purchase-back Agreements of securities and goods
Dates | Counterparty | Currency | Subscription value | Rate | Final Value | Identification of instruments | Market Value | |
Beginning | Ending |
|
| ThCh$ |
| ThCh$ | ThCh$ | |
28-Mar-08 | 31-Mar-09 | SANTANDER S.A. AGENTE DE VALORES | Ch$ | 92,733 | 0.54% | 92,834 | D$SAN 310309 | 92,783 |
28-Mar-08 | 5-Jan-09 | SANTANDER S.A. AGENTE DE VALORES | Ch$ | 4,720 | 0.54% | 4,724 | D$SAN 050109 | 4,723 |
1-Aug-03 | 1-Aug-18 | SANTANDER S.A. AGENTE DE VALORES | Ch$ | 2,340 | 0.54% | 2,342 | STD47D0803 | 2,341 |
1-Feb-01 | 2-Feb-13 | SANTANDER S.A. AGENTE DE VALORES | Ch$ | 207 | 0.54% | 208 | STD67L0201 | 207 |
Note 11 - 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, Puente Alto, Maipú, Renca, Rancagua, San Antonio and Rengo
Argentina
:
Buenos Aires, Mendoza, Cordoba, and Rosario
Brazil
:
Rio de Janeiro, Niteroi, Campos, Cabo Frío, Nova Iguaçu, Espírito Santo and Vitoria.
a) Principal components of property, plant and equipment | |||||||||||
|
|
|
|
|
|
| |||||
| Balances at March 31, 2008 | Balances at March 31, 2007 | |||||||||
| Assets | Accumulated depreciation | Net, property, plant and equipment | Assets | Accumulated depreciation | Net, property, plant and equipment | |||||
| |||||||||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |||||
|
|
|
|
|
|
| |||||
Land | 16,835,231 | 0 | 16,835,231 | 17,696,061 | 0 | 17,696,061 | |||||
Buildings and improvements | 94,662,977 | ( 34,835,355) | 59,827,622 | 93,714,754 | ( 37,127,500) | 56,587,254 | |||||
Machinery and equipment | 214,804,198 | ( 166,810,745) | 47,993,453 | 235,863,811 | ( 191,910,840) | 43,952,971 | |||||
Other property, plant and equipment | 216,610,739 | ( 176,890,500) | 39,720,239 | 230,647,729 | ( 193,706,722) | 36,941,007 | |||||
Technical reappraisal of property, plant & equipment | 2,225,746 | ( 676,787) | 1,548,959 | 2,227,198 | ( 675,441) | 1,551,757 |
17
|
|
|
|
|
|
| |||||
Total | 545,138,891 | ( 379,213,387) | 165,925,504 | 580,149,553 | ( 423,420,503) | 156,729,050 |
b) Other property, plant and equipment |
|
|
|
|
|
|
|
|
| 2008 | 2007 |
|
| ThCh$ | ThCh$ |
|
|
|
|
Containers |
| 126,206,283 | 130,785,446 |
Refrigerating equipment, promotional items and other minor assets | 53,021,294 | 61,999,338 | |
Furniture and tools |
| 7,435,431 | 8,389,866 |
Other |
| 29,947,731 | 29,473,079 |
|
|
|
|
Total other property, plant and equipment |
| 216,610,739 | 230,647,729 |
c) Technical reappraisal of property, plant and equipment |
|
|
|
| ||||||||||
|
|
|
|
|
|
| ||||||||
| Balances at March 31, 2008 | Balances at March 31, 2007 | ||||||||||||
| Assets | Accumulated depreciation | Net, property, plant and equipment | Assets | Accumulated depreciation | Net, property, plant and equipment | ||||||||
| ||||||||||||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||||||||
Land | 1,486,578 | 0 | 1,486,578 | 1,487,360 | 0 | 1,487,360 | ||||||||
Buildings and improvements | 208,120 | ( 151,565) | 56,555 | 208,228 | ( 146,813) | 61,415 | ||||||||
Machinery and equipment | 531,048 | ( 525,222) | 5,826 | 531,610 | ( 528,628) | 2,982 | ||||||||
Total | 2,225,746 | ( 676,787) | 1,548,959 | 2,227,198 | ( 675,441) | 1,551,757 |
d) Depreciation for the period
Depreciation charges for the period amounted to ThCh$ 7,379,752 (ThCh$ 7,759,210 in 2007) of which ThCh$ 5,847,360 (ThCh$ 5,818,360 in 2007) are included under Operating Costs and ThCh$ 1,532,392 (ThCh$ 1,940,850 in 2007) under Sales and Administrative Expenses in the income statement.
18
Note 12 - 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.
Company | Country | Functional Currency | N° of Shares | Ownership Interest | Equity of companies | Income (loss) for the period | Accrued income | Partic. in net income (loss) | Unrealized income (loss) | Accounting value of investment | |||||||
2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | ||||
|
|
|
| % | % | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
ENVASES CMF S.A. | CHILE | Ch$ | 28,000 | 50.00 | 50.00 | 38,715,392 | 38,292,717 | 892,669 | 1,483,048 | 180,268 | 521,328 | 19,357,696 | 19,196,359 | 1,043,660 | 1,123,017 | 18,314,036 | 18,073,342 |
ENVASES CENTRAL S.A. | CHILE | Ch$ | 1,499,398 | 49.91 | 49.91 | 4,798,542 | 4,785,518 | (31,762) | (37,758) | (21,951) | (22,329) | 2,394,952 | 2,388,452 | 242,612 | 243,708 | 2,152,340 | 2,144,744 |
KAIK PARTIPACOES LTDA. | BRAZIL | US$ | 16,098,919 | 11.32 | 11.32 | 7,972,844 | 15,725,337 | (529,635) | 53,946 | (59,953) | 6,107 | 902,502 | 1,780,061 | - | - | 902,502 | 1,780,061 |
HOLDFAB PARTIC. LTDA. | BRASIL | US$ | 1,283,158,339 | 14.73 | 0.00 | 23,518,996 | - | 1,101,308 | - | 162,242 | - | 3,464,795 | - | - | - | 3,464,795 | - |
CICAN S.A. | ARGENTINA | US$ | 3,040 | 0.00 | 15.00 | - | 7,682,304 | - | (856,486) | - | (130,186) | - | 1,167,710 | - | - | - | 1,167,710 |
CENTRALLI REFRIGERANTES S.A. | BRAZIL | US$ | 3,005 | 0.00 | 25.00 | - | - | - | - | - | (21,685) | - | - | - | - | - | - |
Total |
|
|
|
|
|
|
|
|
|
|
| 26,119,945 | 24,532,582 | 1,286,272 | 1,366,725 | 24,833,673 | 23,165,857 |
19
The main changes occurred in the reported periods are described below:
On October 4, 2007, our subsidiary Rio de Janeiro Refrescos Ltda, acquired a 14.732% ownership interest in Holdfab Participações Ltda., for an amount of ThR$12,831.63. In turn, Holdfab Participações Ltda. holds a 50% ownership interest in Amarantina Participações S.A.
Centralli Refrigerantes S.A. records a negative equity, which has been provisioned accordingly.
The investment in Kaik Participações Ltda. (Brazil) where Embotelladora Andina S.A. holds an indirect ownership of 11.32% has been accounted for under the equity method, since the Company has a significant influence through one of its directors, who participates in the process of setting policies, operating and financial decision-making in accordance with the ownership structure which is exclusively owned by the Coca-Cola bottlers in Brazil
The investment in Envases Central S.A. is presented with a 48% reduction (the percentage share on the date of transaction) of the earnings generated during the sale to Envases Central during December 1996 for property located in Renca, because this transaction represents unrealized income for Embotelladora Andina S.A. The amount of the reduction is reflected in the following chart. This transaction will be realized once the property is transferred to a third party different from the group.
The investment in Envases CMF S.A. is presented with a 50% reduction of the earnings generated during the sale of machinery and equipment of our subsidiary Envases Multipack S.A. which took place in June, 2001, and will be recorded under Results during the remaining useful life period of the goods sold to Envases CMF S.A.
Unrealized income corresponds to transactions between subsidiaries and/or the parent company that have been deducted or added to the category of the originating asset with the following effect on income of the subsidiaries:
Envases CMF S.A. (purchase of property, plant and equipment): ThCh$ -1,043,660 in 2008 (ThCh$ -1,123,017 in 2007)
Envases Central S.A. (purchase of finished products): ThCh$ -6,099 in 2008 (ThCh$ -3,484 in 2007)
2.
No liabilities have been designated as hedging instruments for investments abroad.
3.
Income likely to be remitted by subsidiaries abroad amounts to US$307 million.
20
Note 13 - Goodwill and Negative Goodwill
Company | 2008 | 2007 | ||
Amortization | Goodwill balance | Amortization during the period | Goodwill balance | |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Rio de Janeiro Refrescos Ltda. | 745,073 | 30,704,614 | 979,842 | 44,457,907 |
Embotelladora del Atlántico S.A. | 573,299 | 18,381,251 | 763,447 | 27,531,574 |
Vital S.A. | 0 | 0 | 39,679 | 531,715 |
Total | 1,318,372 | 49,085,865 | 1,782,968 | 72,521,196 |
Note 14 - Other Long Term Assets
| 2008 | 2007 |
| ThCh$ | ThCh$ |
Bonds: |
|
|
Celulosa Arauco S.A. | 0 | 13,292,171 |
Enap S.A. | 0 | 10,281,336 |
Endesa S.A. | 0 | 8,798,449 |
Chile Soberano | 0 | 8,347,263 |
Petróleos Mexicanos S.A. | 0 | 6,875,750 |
Compañía Manufacturera de Papeles y Cartones S.A. | 0 | 8,075,720 |
Teléfonos de México S.A. | 0 | 7,795,318 |
Codelco S.A. | 0 | 5,920,862 |
México Soberano | 0 | 5,401,992 |
Federal Home Loan Bank (FHLB) | 0 | 2,920,579 |
Brasil Telecom S.A. | 0 | 2,304,507 |
Raytheon Company | 0 | 2,365,631 |
International Paper Company | 0 | 2,331,544 |
Altria Group | 0 | 1,328,318 |
United States Treasury Notes | 0 | 1,200,574 |
Alcoa Inc. | 0 | 1,187,428 |
CLN Endesa-Deutsche Bank A.G. | 0 | 5,828,860 |
|
|
|
Judicial deposits (Brazil) | 6,288,949 | 6,120,009 |
Transfer fiscal credits (Brazil) | 4,914,725 | 0 |
Prepaid expenses | 3,213,950 | 3,141,877 |
Bond issuance and placement expenses | 2,841,531 | 3,145,440 |
Spare parts | 2,088,069 | 3,134,442 |
Non operating assets | 1,154,917 | 1,306,297 |
Cross currency swap | 0 | 11,938,412 |
Others | 60,962 | 1,741,662 |
|
|
|
Total | 20,563,103 | 124,784,441 |
21
Note 15 - Short-Term and Long-Term Bank Liabilities
SHORT TERM BANK LIABILITIES |
|
|
|
|
| Currency or indexation adjustment | |||
Bank or Financial Institution | Other foreign currencies | TOTAL | ||
| 2008 | 2007 | 2008 | 2007 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
BANCO DO BRASIL | 1,361,403 | 0 | 1,361,403 | 0 |
TOTAL | 1,361,403 | 0 | 1,361,403 | 0 |
Principal due | 1,361,403 | 0 | 1,361,403 | 0 |
Annual average interest rate | 6.75% |
|
|
|
|
|
|
|
|
LONG TERM BANK LIABILITIES CURRENT PORTION |
|
|
| |
| Currency or indexation adjustment | |||
Bank or Financial Institution | Other foreign currencies | TOTAL | ||
| 2008 | 2007 | 2008 | 2007 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
BANCO SANTANDER | 0 | 364,171 | 0 | 364,171 |
BANCO ALFA | 105,401 | 124,540 | 105,401 | 124,540 |
BANCO VOTORANTIM (BRAZIL) | 1,790 | 0 | 1,790 | 0 |
TOTAL | 107,191 | 488,711 | 107,191 | 488,711 |
Principal due | 107,191 | 488,711 | 107,191 | 488,711 |
Annual average interest rate | 11.89% | 15.66% |
|
|
|
|
|
|
|
Foreign currency liabilities (%) | 100 |
|
|
|
Local currency liabilities (%) | 0 |
|
|
|
Note 16 - Long-Term Bank Liabilities
|
| Years to maturity | Total long term at year end | Annual average interest rate | Total long term at year end | |||
Bank or Financial Institution | Currency or indexation adjustment | More than 1 up to 2 | More than 2 up to 3 | More than 3 up to 5 | 2008 |
| 2007 | |
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
| ThCh$ | |
Banco Alfa | Other currencies | 103,546 | 105,977 | 17,761 | 227,284 | 10.79% | 356,207 | |
Banco Votorantim | Other currencies | 101,525 | 102,845 | 203,083 | 407,453 | 9.40% | - | |
|
|
|
|
|
|
|
| |
Total |
| 205,071 | 208,822 | 220,844 | 634,737 |
| 356,207 | |
|
|
|
|
|
|
|
| |
Foreign currency liabilities (%) | 100.00 |
|
|
|
|
| ||
Local currency liabilities (%) | - |
|
|
|
|
|
22
Note 17 – 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, 2002 and 2007, 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$348 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$75 million maturing in December 2012 and semiannual interest payments. At period end, all such bonds are wholly-owned by the subsidiary Abisa Corp. Consequently, the effects of such transactions have been eliminated from these consolidated financial statements, both in the balance sheet and in the consolidated statement of income.
23
The following table contains more information on Bonds Payable:
Instrument subscription or ID N° | Series | Current nominal value | Currency | Interest rate | Maturity date | Term | Par value | Placement in Chile or abroad | ||
Interest paid | Amortization period | 2008 | 2007 | |||||||
Current portion of bonds payable |
|
|
|
|
|
|
| ThCh$ | ThCh$ |
|
Yankee bonds | A | - | US$ | 7.00% | Oct. 1, 2007 | Half yearly | October 2007 | - | 18,696,651 | Abroad |
Register 254 SVS June 13, 2001 | A | 330,000 | UF | 6.20% | June 1, 2008 | Half yearly | June 2008 | 6,674,592 | 13,508,628 | Chile |
Register 254 SVS June 13, 2001 | B | 3,700,000 | UF | 6.50% | June 1, 2026 | Half yearly | December 2009 | 1,564,090 | 1,567,140 | Chile |
Total current maturities |
|
|
|
|
|
|
| 8,238,682 | 33,772,419 |
|
|
|
|
|
|
|
|
|
|
|
|
Long term portion of bonds payable |
|
|
|
|
|
|
|
|
|
|
Yankee bonds | A | - | US$ | 0.00% | Oct. 1, 2007 | Half yearly | October 2007 | - | 2,331,554 | Abroad |
Yankee bonds | B | 2,000,000 | US$ | 7.63% | Oct. 1, 2027 | Half yearly | October 2027 | 875,420 | 0 | Abroad |
Register 254 SVS June 13, 2001 | A | 330,000 | UF | 6.20% | June 1, 2008 | Half yearly | June 2008 | - | 6,554,207 | Chile |
Register 254 SVS June 13, 2001 | B | 3,700,000 | UF | 6.50% | June 1, 2026 | Half yearly | December 2009 | 73,343,374 | 73,486,368 | Chile |
Total long term |
|
|
|
|
|
|
| 74,218,794 | 82,372,119 |
|
Note 18 - Provisions and Write-Offs
| Short term | Long term | ||
Provisions | ||||
| 2008 | 2007 | 2008 | 2007 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
|
|
|
|
|
Taxation on banking transactions and social contributions (Brazil) | 2,608,290 | 2,354,809 | 6,656,788 | 9,747,568 |
Staff severance indemnities | 690,349 | 884,881 | 6,442,699 | 6,107,277 |
Contingencies | 47,661 | 85,879 | 2,205,035 | 3,088,138 |
Total | 3,346,300 | 3,325,569 | 15,304,522 | 18,942,983 |
Note 19 - Staff Severance Indemnities
| 2008 | 2007 |
| ThCh$ | ThCh$ |
Beginning balance | 7,133,869 | 6,732,433 |
Provision for the period | 94,441 | 311,264 |
Payments | ( 95,262) | ( 51,539) |
Ending balance | 7,133,048 | 6,992,158 |
24
Note 20 - Minority Interest
| 2008 | 2007 |
Liabilities | ThCh$ | ThCh$ |
|
|
|
Vital Aguas S. A. | 1,315,750 | 1,304,510 |
Embotelladora del Atlántico S. A. | 8,464 | 22,720 |
Andina Inversiones Societarias S.A. | 18 | 42 |
Total | 1,324,232 | 1,327,272 |
|
|
|
|
|
|
| 2008 | 2007 |
Income Statement | ThCh$ | ThCh$ |
|
|
|
Vital Aguas S. A. | (27,452) | (57,936) |
Embotelladora del Atlántico S. A. | (487) | (845) |
Andina Inversiones Societarias S.A. | (2) | (3) |
Total | ( 27,941) | (58,784) |
25
Note 21 - Changes in Shareholders’ Equity
The activity in Shareholders’ Equity, Dividend Distribution and Other Reserves is detailed in the following tables:
| 2008 | 2007 | ||||||||||
| Paid-in Capital | Reserve Capital Revalued | Other Reserves | Accumulated Income | Interim Dividends | Net Income | Paid in Capital | Reserve Capital Revalued | Other Reserves | Accumulated Income | Interim Dividends | Net Income |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Beginning balance | 217,013,513 | 0 | (11,443,442) | 11,171,454 | (17,194,331) | 81,601,944 | 202,060,999 | 0 | 1,750,257 | 10,005,036 | (13,438,065) | 74,355,094 |
Distribution of prior year income | 0 | 0 | 0 | 64,407,613 | 17,194,331 | (81,601,944) | 0 | 0 | 0 | 60,917,029 | 13,438,065 | (74,355,094) |
Translation adjustment reserve | 0 | 0 | (14,630,510) | 0 | 0 | 0 | 0 | 0 | 1,680,698 |
| 0 | 0 |
Capital revalued | 0 | 1,736,108 | (91,548) | 604,633 | 0 | 0 | 0 | 404,122 | 3,501 | 141,843 | 0 | 0 |
Income for the period | 0 | 0 | 0 | 0 | 0 | 20,844,113 | 0 | 0 | 0 | 0 | 0 | 22,258,689 |
Ending balance | 217,013,513 | 1,736,108 | (26,165,500) | 76,183,700 | 0 | 20,844,113 | 202,060,999 | 404,122 | 3,434,474 | 71,063,908 | 0 | 22,258,689 |
Price level restated balances |
|
|
|
|
|
| 218,427,940 | 436,856 | 3,712,666 | 76,820,085 | 0 | 24,061,643 |
26
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 |
Capital |
|
|
Series | Subscribed capital | Paid in capital |
| ThCh$ | ThCh$ |
A | 108,506,757 | 108,506,757 |
B | 108,506,756 | 108,506,756 |
Other Reserves |
|
|
|
Balance of Other Reserves is composed as follows: |
|
|
|
|
| March 31, | |
|
| 2008 | 2007 |
|
| ThCh$ | ThCh$ |
|
|
|
|
Reserve for cumulative translation adjustments(1) |
| (27,257,873) | 2,619,720 |
Reserve for technical reappraisal of property, plant and equipment | 67,825 | 68,383 | |
Other |
| 1,024,548 | 1,024,563 |
Total |
| 26,165,000 | 3,712,666 |
(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:
| |||||||
|
|
|
| Foreign Exchange rate generated during the period | Release/ transfers of reserve(*) | Balance March 31, 2008 | |
|
|
| Balance | ||||
Company |
|
| January 1, 2008 | Investment | Liabilities | ||
|
|
| ThCh$ | ThCh$ | ThCh$ |
| M$ |
Rio de Janeiro Refrescos Ltda. |
|
| (7,635,401) | (10,708,833) | 0 | 1,590,266 | (16,753,968) |
Embotelladora del Atlántico S. A. |
|
| (4,991,961) | (5,511,944) | 0 | 0 | (10,503,905) |
Total |
|
| (12,627,362) | (16,220,777) | 0 | 1,590,266 | (27,257,873) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Reserve realized resulted from dividends paid by our subsidiary Rio de Janeiro Refrescos Ltda. And by the capital decrease of our subsidiary Embotelladora del Atlántico S.A. carried out in the 2008 period. | |||||||
27
Note 22 - Other Non-Operating Income and Expenses
Other non-operating income during the period was as follows: |
| |
| For the period ended March 31, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
Reverse provision devaluation fixed assets | 4,895,389 | 0 |
Cumulative translation reserve realized(2) | 0 | 14,814 |
Other income | 134,077 | 14,194 |
Sub-total | 5,029,466 | 29,008 |
Translation of financial statements(1) | 0 | 542,531 |
Total | 5,029,466 | 571,539 |
|
|
|
|
|
|
|
|
|
|
|
|
Other non-operating expenses during the period were as follows: |
|
|
|
|
|
|
|
|
Cumulative translation reserve realized(2) | (1,590,266) | 0 |
Bank taxes | (474,705) | (916,093) |
Obsolescence and write-offs of property, plant and equipment | 0 | (26) |
Provision for labor and commercial lawsuits | (164,765) | (138,385) |
Loss on sale of property, plant and equipment | (17,819) | (414,264) |
Others | (272,305) | (148,371) |
Sub-total | (2,519,860) | (1,617,139) |
Translation of financial statements(1) | (621,420) | 0 |
Total | (3,141,280) | (1,617,139) |
|
|
|
(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, which are presented as Other Non-Operating Income and/or expenses accordingly. | ||
(2)This refers to the release of conversion adjustment reserves due to dividend payments carried out at our subsidiary Rio de Janeiro Refrescos Ltda. and the remittance of capital by Embotelladora del Atlántico S.A. during the 2008 and 2077 period, respectively. |
28
Note 23 - Price-Level Restatement
| Adjustment index | 2007 | 2006 |
Assets - - (charges)/credits |
| ThCh$ | ThCh$ |
Inventories | CPI | (52,755) | (87,159) |
Property, plant and equipment | CPI | 758,899 | 157,937 |
Investments in related companies | CPI | 1,448,103 | 381,177 |
Cash, Time Deposits, Marketable Securities | CPI | 230,984 | (8,178) |
Cash, Time Deposits, Marketable Securities | UF | 533,548 | 0 |
Accounts receivable, notes receivable, and other debtors | UF | 0 | 9 |
Accounts receivable related companies - short term | UF | 72,688 | 0 |
Accounts receivable related companies - short term | CPI | 368,510 | 111,018 |
Recoverable taxes | CPI | 2,984 | (5,019) |
Other current assets | UF | 179,948 | 37,447 |
Other current assets | CPI | (21,788) | (36,324) |
Other long term assets | UF | 16 | 385 |
Other long term assets | CPI | 17,184 | 485,978 |
Cost and expense accounts | CPI | 125,247 | (17,684) |
Total (charges) credits |
| 3,663,568 | 1,019,587 |
|
|
|
|
Liabilities - - (charges)/credits |
|
|
|
Shareholders’ equity | CPI | (2,249,193) | (593,973) |
Short and long term bonds payable | UF | (800,496) | (184,643) |
Short and long term bonds payable | CPI | (27,379) | (368,701) |
Accounts payable related companies - short term | UF | (261,953) | 0 |
Accounts payable related companies - short term | CPI | (108,871) | 0 |
Other current liabilities | UF | 120,528 | (387) |
Other current liabilities | CPI | (44,663) | (82,340) |
Other long term liabilities | CPI | (107,123) | (24,607) |
Income accounts | CPI | (166,604) | 22,258 |
Total (charges) credits |
| (3,645,754) | (1,232,393) |
Price-level restatement (loss) gain |
| 17,814 | (212,806) |
29
Note 24 - Foreign Exchange Gains/Losses
| Currency | 2008 | 2007 |
Assets - (charges)/credits |
| ThCh$ | ThCh$ |
Cash | US$ | 143 | (41,410) |
Time deposits | US$ | 0 | 184 |
Marketable securities (net) | US$ | (4,569,933) | 65,628 |
Accounts receivable | US$ | 423 | 0 |
Other debtors (net) | US$ | (5,500) | 101 |
Accounts receivable related companies short-term | US$ | (5,397,140) | 751,551 |
Inventories (net) | US$ | 0 | (15,776) |
Other current assets | US$ | 327,507 | 132,918 |
Property, plant and equipment | US$ | 210 | 1,095 |
Others | US$ | (120,250) | 802,918 |
Total (charges)/credits | US$ | (9,764,540) | 1,697,209 |
|
|
|
|
|
|
|
|
Liabilities - (Charges) / credits |
|
|
|
Bonds payable | US$ | 0 | (37,405) |
Accounts payable | US$ | 66,387 | (293) |
Accounts payable related companies | US$ | 14,321 | 0 |
Provisions | US$ | 14,527 | (8,224) |
Bonds payable long term | US$ | 883,370 | (224,443) |
Other liabilities | US$ | (139,401) | (17,027) |
Accounts payable related companies – long term | US$ | 0 | 6,395 |
Prepaid income | US$ | 55,529 | 0 |
Total (charges) credits |
| 894,733 | (280,997) |
Foreign exchange gain (loss) on income |
| (8,869,807) | 1,416,212 |
Note 25 - 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 17.
Bonds issued in the local market:
Debt issue costs and interest rate differences net of amortization as of the end of the period amounted to ThCh$3,209,740 and ThCh$3,513,711 in 2007. Disbursements for risk rating reports, legal and financial advisory services, printing and placement fees are included as Debt issue costs.
Amortization for the period 2008 amounted to ThCh$94,661 and ThCh$108,808 in 2007.
30
Note 26 - Consolidated Statement of Cash Flows
For the projection of future cash flows, there are no transactions and events to consider which have not been revealed in these financial statements and accompanying notes.
The following table presents an itemization of the movement of assets and liabilities not affecting the cash flow in the period, but compromising future cash flows.
| 2008 | Maturity date | 2007 | Maturity date |
| ThCh$ | ThCh$ | ||
|
|
|
|
|
Expected cash outflow |
|
|
|
|
Expenses |
|
|
|
|
Dividend payment | (7,288,372) | 24-Apr-08 | (9,596,000) | 26-Apr-07 |
Addition to property, plant and equipment | (338,467) | 30-Apr-08 | (695,258) | 30-Jun-07 |
Addition to property, plant and equipment | (2,328,984) | 15-May-08 | (3,747,163) | 15-May-07 |
Addition to property, plant and equipment | (254,298) | 31-May-08 | (268,222) | 31-May-07 |
Addition to property, plant and equipment | (13,705) | 30-Jun-08 | (12,174) | 30-Jun-07 |
|
|
|
|
|
Total expenses | (10,223,826) |
| (14,318,817) |
|
|
|
|
|
|
Expected cash inflow |
|
|
|
|
Income |
|
|
|
|
Sale of property, plant and equipment | 9,778 | 30-Apr-08 | 24,712 | 15-May-07 |
Total income | 9,778 |
| 24,712 |
|
|
|
|
|
|
Total net | (10,214,048) |
| (14,294,105) |
|
31
Note 27 - Derivative Contracts
Derivative contracts at March 31, 2008 were as follows:
|
|
|
|
|
| Hedged item or Transaction | Assets/ Liabilities | Effect on income | |||
Derivative | Contract | Value | Maturity period | Specific Item | Position Purchase / Sale | Concept | Amount | Item | Amount | Realized | Unrealized |
|
| ThCh$ |
|
|
|
| ThCh$ |
| ThCh$ | ThCh$ | ThCh$ |
FR | CCTE | 11,875,522 | 2nd Quarter 2008 | US$ Exchange rate | P | Suppliers foreign currency | 11,774,399 | Other current assets and liabilities | 1,277,846 | 0 | (1,277,846) |
FR | CCPE | 46,391,477 | 2nd Quarter 2008 | US$ Exchange rate | S | Foreign currency investment | 45,690,602 | Other current assets | 793,503 | 700,875 | 92,628 |
FR | CCTE | 1,939,945 | 2nd Quarter 2008 | US$ Exchange rate | S | Suppliers foreign currency | 1,925,924 | Other current assets and liabilities | 283,441 | 0 | 283,441 |
FR | CCTE | 8,394,443 | 3rd Quarter 2008 | US$ Exchange rate | P | Suppliers foreign currency | 8,176,423 | Other current assets and liabilities | 641,913 | 0 | (641,913) |
FR | CCTE | 1,883,212 | 3rd Quarter 2008 | US$ Exchange rate | S | Suppliers foreign currency | 1,855,453 | Other current assets and liabilities | 236,458 | 0 | 236,458 |
FR | CCTE | 9,567,703 | 4th Quarter 2008 | US$ Exchange rate | P | Suppliers foreign currency | 9,257,567 | Other current assets and liabilities | 778,588 | 0 | (778,588) |
FR | CCTE | 2,833,769 | 4th Quarter 2008 | US$ Exchange rate | S | Suppliers foreign currency | 2,766,327 | Other current assets and liabilities | 338,183 | 0 | 338,183 |
FR | CCTE | 1,163,249 | 1st Quarter 2009 | US$ Exchange rate | P | Suppliers foreign currency | 1,094,275 | Other current assets and liabilities | 17,800 | 0 | (17,800) |
32
Note 28 - Contingencies and Restrictions
a.
Litigation and other legal actions:
There are various judicial actions and other out-of-court claims pending against the Company incidental to its business and operations. Management believes, based on the opinion of its legal counsel, that none of these proceedings will have a material adverse effect on the Company’s financial position or result of operations.
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$1,334,048 (ThCh$2,001,576 in 2007). In accordance with its legal counsel’s opinion, the Company deems if 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$870,987 (ThCh$1,014,795 in 2007). In accordance with its legal counsel’s opinion, the Company deems if 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$47,661 (ThCh$51,722 in 2007). In accordance with its legal counsel’s opinion, the Company deems if improbable that contingencies without provisions may affect the results or equity of the Company.
b.
Restrictions
The bond issue and placement on the US market for US$ 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
33
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.
c.
Direct guarantees
Guarantees at March 31, 2008 are presented on the following table:
|
|
|
| Assets involved | Balances pending |
| ||||
Guarantee creditor | Debtor |
| Type of guaranty | Guaranty release | ||||||
| Name | Relation |
| Type | Accounting | 2008 | 2007 | 2009 | ||
|
|
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||
ESTADO RIO DE JANEIRO | RIO DE JANEIRO REFRESCOS LTDA. | Subsidiary | Mortgage | Real estate | 9,857,762 | 10,162,298 | 10,968,359 | 0 | ||
UNIA FEDERAL | RIO DE JANEIRO REFRESCOS LTDA. | Subsidiary | Mortgage | Real estate | 8,829,230 | 0 | 0 | 0 | ||
ADUANA DE EZEIZA | EMBOTELLADORA DEL ATLANTICO S.A. | Subsidiary | Guaranty insurance | Inventories | 8,014 | 0 | 0 | 0 | ||
AGA S.A. | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Agreement | 0 | 131,727 | 174,866 | 0 | ||
MUNICIPALIDAD DE SANTIAGO | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | 0 | 11,092 | 11,122 | 11,092 | ||
ESCUELA MILITAR | EMBOTELALDORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | 0 | 1,000 | 0 | 1,000 | ||
MUNICIPALIDAD DE MAIPU | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | 0 | 99,172 | 0 | 0 |
34
Note 28 - Guarantees from Third Parties
Guarantees from Third Parties at March 31, 2008 were as follows:
Guarantor | Relationship | Type of Guarantee | Amount | Currency | Transaction |
|
|
|
|
|
|
AGA S.A. | Parent Company | Receipt | 600,000 | US$ | Supplier agreement |
RUSEEL W. COFFIN | Subsidiary | Letter of credit | 52,774,133 | US$ | Purchase of Nitvitgov Refrigerantes S.A. |
CONFAB | Subsidiary | Mortgage | 30,000,000 | US$ | Purchase of Rio de Janeiro Refrescos Ltda. |
CLIENTES DIVERSOS | Subsidiary | Deposits | 3,339,782 | US$ | Guaranty over containers |
COMPAÑÍA AZUCARERA CONCEPCIÓN | Subsidiary | Guaranty insurance | 2,574,586 | US$ | Supplier |
ATANOR - - S.C.A | Subsidiary | Guaranty insurance | 289,641 | US$ | Supplier |
LEDESMA - - SAAI | Subsidiary | Guaranty insurance | 2,932,492 | US$ | Supplier |
CATERING ARGENTINA S.A. | Subsidiary | Guaranty insurance | 102,862 | US$ | Supplier |
35
Note 29 - Local and Foreign Currency
Assets at each period end were composed of local and foreign currencies as follows:
|
| 31-Mar-08 | 31-Mar-07 |
|
| ThCh$ | ThCh$ |
Current Assets |
|
|
|
Cash | Non-Indexed Ch$ | 3,847,475 | 7,353,707 |
- | Indexed Ch$ | 803,367 | 0 |
- | US$ | 3,587,862 | 7,183,711 |
- | AR$ | 574,971 | 903,887 |
- | R$ | 10,851,894 | 4,548,345 |
Time Deposits | Non-Indexed Ch$ | 65,134,364 | 0 |
| US$ | 5 | 3,660,466 |
- | AR$ | 18,074 | 0 |
- | R$ | 90,606 | 216,635 |
Marketable Securities | Non-Indexed Ch$ | 7,405,800 | 17,018,393 |
- | US$ | 55,004,342 | 31,034,539 |
- | R$ | (2,140) | (40,675) |
- | AR$ | 271,682 | 2,464,851 |
Accounts receivable | Non-Indexed Ch$ | 15,061,672 | 15,024,403 |
- | Indexed Ch$ | 84,820 | 0 |
- | US$ | 381,541 | 1,092,316 |
- | AR$ | 2,087,790 | 1,679,833 |
- | R$ | 12,776,636 | 13,286,980 |
Notes Receivable | Non-Indexed Ch$ | 6,849,091 | 6,262,820 |
- | AR$ | 438,532 | 261,135 |
- | R$ | 2,097,150 | 3,080,293 |
Other debtors | Non-Indexed Ch$ | 4,552,588 | 1,952,403 |
- | Indexed Ch$ | 662,461 | 0 |
- | US$ | 49,482 | 625,524 |
- | AR$ | 2,040,509 | 1,027,592 |
- | R$ | 6,897,034 | 7,201,894 |
Notes Receivable related companies | Non-Indexed Ch$ | 1,702,404 | 1,559,627 |
Inventories | Non-Indexed Ch$ | 532,893 | 2,209,011 |
- | Indexed Ch$ | 4,691,499 | 2,942,936 |
- | US$ | 3,138,373 | 1,795,579 |
- | AR$ | 4,641,824 | 5,307,429 |
- | R$ | 9,179,294 | 11,843,867 |
Recoverable taxes | Indexed Ch$ | 1,669,849 | 434,494 |
- | Non-Indexed Ch$ | 170,503 | 0 |
- | US$ | 0 | 1,496,860 |
- | AR$ | 1,065,523 | 1,215,702 |
- | R$ | 149,485 | 6,559,522 |
Prepaid expenses | Non-Indexed Ch$ | 1,380,715 | 1,099,923 |
- | Indexed Ch$ | 52,337 | 0 |
- | US$ | 30,715 | 14,702 |
- | AR$ | 199,796 | 259,822 |
- | R$ | 725,256 | 571,891 |
Deferred taxes | Non-Indexed Ch$ | 636,248 | 94,251 |
- | Indexed Ch$ | 58,295 | 0 |
- | AR$ | 0 | 297,086 |
- | R$ | 4,365,335 | 0 |
Other current assets | Non-Indexed Ch$ | 323,695 | 2,285,198 |
- | Indexed Ch$ | 1,793,582 | 0 |
- | US$ | 1,478,426 | 15,932,798 |
- | AR$ | 673,765 | 731,179 |
- | R$ | 2,693,010 | 1,798,544 |
Property, plant and equipment |
|
|
|
Property, plant and equipment | Non-Indexed Ch$ | 91,096,743 | 69,019,489 |
- | US$ | 74,828,761 | 87,709,561 |
Other assets |
|
|
|
Investments in related companies | Indexed Ch$ | 20,466,376 | 18,073,341 |
- | US$ | 0 | 1,167,711 |
- | R$ | 4,367,297 | 3,924,805 |
Investments in other companies | Indexed Ch$ | 46,080 | 43,104 |
- | US$ | 78,567 | 17,649 |
Goodwill | Indexed Ch$ | 1,056,708 | 531,715 |
- | US$ | 48,029,157 | 71,989,481 |
Long term debtors | AR$ | 12,614 | 19,571 |
- | Indexed Ch$ | 13,684 | 22,159 |
- | R$ | 5,213 | 0 |
Notes Receivable related companies | Indexed Ch$ | 57,296 | 39,106 |
Intangibles | US$ | 349,364 | 465,236 |
- | Non-Indexed Ch$ | 20,401 | 0 |
Amortization | US$ | (227,337) | (286,070) |
Others | Non-Indexed Ch$ | 1,992,732 | 6,121,889 |
- | Indexed Ch$ | 3,110,523 | 3,077,660 |
- | US$ | 1,051,998 | 103,011,524 |
- | AR$ | 2,577,978 | 4,409,346 |
- | R$ | 11,829,872 | 8,164,022 |
Total Assets | Non-Indexed Ch$ | 200,707,324 | 130,001,114 |
| Indexed Ch$ | 34,566,877 | 25,164,515 |
| US$ | 187,781,256 | 326,911,587 |
| AR$ | 14,603,058 | 18,577,433 |
| R$ | 66,025,942 | 61,156,123 |
36
Note 29 - Local and Foreign Currency (continuation)
Current liabilities for the period ended March 31, 2008 and 2007, denominated in local and foreign currencies were as follows:
|
| Up to 90 days |
| 90 days to 1 year | ||||||
|
| 2008 | 2007 | 2008 | 2007 | |||||
| Currency | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | |
Short term bank liabilities | R$ | 1,361,403 |
| 0 |
| 0 |
|
|
| |
Long term bank liabilities | R$ | 107,191 |
| 0 |
| 0 |
| 488,711 | 15.66 | |
Long term bonds payable | Indexed Ch$ | 8,238,682 | 7.0 | 8,521,578 | 6.2 | 0 |
| 6,554,189 | 6.2 | |
- | US$ | 0 |
| 0 |
| 0 |
| 18,696,652 |
| |
Dividends payable | Non-indexed Ch$ | 231,434 |
| 233,172 |
| 0 |
| 0 |
| |
- | AR$ | 3,773 |
| 0 |
| 0 |
|
|
| |
Accounts payable | Non-indexed Ch$ | 29,768,748 |
| 19,587,142 |
| 0 |
| 0 |
| |
- | US$ | 3,207,556 |
| 1,562,055 |
| 0 |
| 0 |
| |
- | AR$ | 6,438,418 |
| 6,105,044 |
| 0 |
| 0 |
| |
- | R$ | 7,762,506 |
| 12,020,750 |
| 0 |
| 0 |
| |
Other creditors | US$ | 78,429 |
| 236,807 |
| 0 |
| 0 |
| |
- | AR$ | 52,147 |
| 50,409 |
| 97,533 |
| 82,210 |
| |
- | R$ | 4,582,049 |
| 4,950,117 |
| 0 |
| 0 |
| |
- | Non-indexed Ch$ | 0 |
| 9,387 |
| 0 |
| 0 |
| |
Notes and accounts payable related companies | Non-indexed Ch$ | 5,832,655 |
| 3,899,804 |
| 0 |
| 0 |
| |
- | AR$ | 0 |
| 1,706,477 |
| 0 |
| 0 |
| |
- | R$ | 3,983,617 |
| 3,878,429 |
| 0 |
| 0 |
| |
Provisions | Non-indexed Ch$ | 738,010 |
| 936,619 |
| 0 |
| 0 |
| |
- | R$ | 0 |
| 0 |
| 2,608,290 |
| 2,388,950 |
| |
Withholdings | Non-indexed Ch$ | 6,520,726 |
| 6,183,486 |
| 0 |
| 0 |
| |
- | AR$ | 3,799,149 |
| 4,180,218 |
| 0 |
| 0 |
| |
- | R$ | 0 |
| 0 |
| 2,607,471 |
| 2,557,211 |
| |
Income tax provision | Non-indexed Ch$ | 2,880,234 |
| 3,317,471 |
| 0 |
| 0 |
| |
- | AR$ | 2,752,033 |
| 1,764,227 |
| 0 |
| 0 |
| |
- | R$ |
|
| 0 |
| 567,763 |
| 1,122,473 |
| |
Unearned income | Non-indexed Ch$ | 518,191 |
| 588,101 |
| 0 |
| 0 |
| |
Other current liabilities | Non-indexed Ch$ | 1,316,758 |
| 4,415,270 |
| 0 |
| 0 |
| |
Total current liabilities | R$ | 17,796,766 |
| 20,849,296 |
| 5,783,524 |
| 6,557,345 |
| |
| Indexed Ch$ | 8,238,682 |
| 8,521,578 |
| 0 |
| 6,554,189 |
| |
| US$ | 3,285,985 |
| 1,798,862 |
| 0 |
| 18,696,652 |
| |
| Non-indexed Ch$ | 47,806,756 |
| 39,170,452 |
| 0 |
| 0 |
| |
| AR$ | 13,045,520 |
| 13,806,375 |
| 97,533 |
| 82,210 |
|
37
Note 29 - Local and Foreign Currency (continuation)
Long term liabilities at March 31, 2008 were composed of local and foreign currencies as follows:
| Currency | 1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | ||||
| Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | |
|
| ThCh$ | % | ThCh$ | % | ThCh$ | % | ThCh$ | % |
Long term bank liabilities | R$ | 634,737 |
| 0 |
| 0 |
| 0 |
|
Long term bonds payable | Indexed Ch$ | 6,471,473 | 6.2 | 8,628,628 | 6.5 | 21,571,591 | 6.5 | 37,547,102 | 7.625 |
Other creditors | AR$ | 70,783 |
| 0 |
| 0 |
| 0 |
|
Notes and accounts payable related companies | Non-indexed Ch$ | 3,253,513 |
| 0 |
| 0 |
| 0 |
|
- | R$ | 72,294 |
| 0 |
| 0 |
| 0 |
|
Provisions | Non-indexed Ch$ | 758,625 |
| 0 |
| 0 |
| 0 |
|
- | Indexed Ch$ | 0 |
| 0 |
| 0 |
| 5,684,074 |
|
- | AR$ | 1,334,048 |
| 0 |
| 0 |
| 0 |
|
- | R$ | 7,527,775 |
| 0 |
| 0 |
| 0 |
|
Deferred taxes | R$ | 11,924,176 |
| 0 |
| 0 |
| 0 |
|
Other liabilities | Non-indexed Ch$ | 400,000 |
| 0 |
| 4,820,978 |
| 0 |
|
- | AR$ | 0 |
| 205,317 |
| 1,847,852 |
| 0 |
|
- | R$ | 3,940,559 |
| 0 |
| 0 |
| 0 |
|
Total long term liabilities | R$ | 24,099,541 |
| 0 |
| 0 |
| 0 |
|
| Non-indexed Ch$ | 10,883,611 |
| 8,628,628 |
| 26,392,569 |
| 37,547,102 |
|
| AR$ | 1,404,831 |
| 205,317 |
| 1,847,852 |
| 0 |
|
| Indexed Ch$ | 0 |
| 0 |
| 0 |
| 5,684,074 |
|
38
Note 29 - Local and Foreign Currency (continuation)
Long term liabilities at March 31, 2007 were composed of local and foreign currencies as follows:
| Currency | 1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | ||||
|
| Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate |
|
| ThCh$ |
| ThCh$ |
| ThCh$ |
| ThCh$ |
|
Long term bank liabilities | $R | 356,207 |
| 0 |
| 0 |
| 0 |
|
Long term bonds payable | US$ | 0 |
| 0 |
| 0 |
| 2,331,561 | 7.625 |
- | Indexed Ch$ | 8,715,554 | 6.27 | 8,645,455 | 6.5 | 21,613,637 | 6.5 | 41,065,912 | 6.5 |
Other creditors | $AR | 120,303 |
| 0 |
| 0 |
| 0 |
|
- | $R | 0 |
| 33,375 |
| 0 |
| 0 |
|
Notes and accounts payable related companies | Non-indexed Ch$ | 3,737,168 |
| 0 |
| 0 |
| 0 |
|
Provisions | Non-indexed Ch$ | 737,899 |
| 0 |
| 0 |
| 5,369,095 |
|
- | $AR | 2,001,576 |
| 0 |
| 0 |
| 0 |
|
- | $R | 10,834,413 |
| 0 |
| 0 |
| 0 |
|
Deferred taxes | Non-indexed Ch$ | 0 |
| 0 |
| 930,158 |
| 0 |
|
- | $AR | 0 |
| 350,492 |
| 0 |
| 0 |
|
- | $R | 2,977,668 |
| 0 |
| 0 |
| 0 |
|
Other liabilities | Non-indexed Ch$ | 0 |
| 0 |
| 5,868,284 |
| 0 |
|
- | $AR | 0 |
| 234,668 |
| 2,112,009 |
| 0 |
|
- | $R | 2,951,917 |
| 0 |
| 0 |
| 0 |
|
Total long term liabilities | $R | 17,120,205 |
| 33,375 |
| 0 |
| 0 |
|
| US$ | 0 |
| 0 |
| 0 |
| 2,331,561 |
|
| Indexed Ch$ | 8,715,554 |
| 8,645,455 |
| 21,613,637 |
| 41,065,912 |
|
| $AR | 2,121,879 |
| 585,160 |
| 2,112,009 |
| 0 |
|
| Non-indexed Ch$ | 4,475,067 |
| 0 |
| 6,798,442 |
| 5,369,095 |
|
Note 30 – Penalties
The Company has not been subject to penalties by the SVS or any other administrative authority.
Note 31 - Subsequent Events
At the Regular General Shareholders’ Meeting of Embotelladora Andina S.A., held April 15, 2008, among other matters, the following was resolved:
1.
The distribution of the following amounts as Final Dividend N° 160, on account of the fiscal year ending December 31, 2007: (a) Ch$9.130 (nine pesos and one hundred and thirty cents) per Series A shares; and (b) Ch$10.043 (ten pesos and forty three cents) per Series B shares. This dividend will be available to shareholders beginning April 24, 2008. Regarding payment of this dividend, the Shareholders’ Registry will close on April 18, 2008.
2.
The distribution of an Additional Dividend N° 161 on account of retained earnings: (a) Ch$60.00 (sixty pesos) per Series A shares; and (b) Ch$66.00 (sixty six pesos) per Series B shares. This dividend will be available to shareholders beginning May 14, 2008. Regarding payment of this dividend, the Shareholders Registry will close on May 8, 2008.
39
Note 32 – Companies subject to special regulations
The Company and its subsidiaries are not subject to special regulations.
Note 33 – Environment
The Company has disbursed ThCh$855,210 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$653,273.
40
I.
Analysis of Results for the First Quarter of 2008 and the Period ended March 31, 2008
Highlights
·
Consolidated operating income reached Ch$32,598 million during the first quarter of 2008, a 5.1% growth in real terms when compared to the first quarter of 2007. Operating margin was 19.0%.
·
Consolidated sales volume grew 5.7% during the quarter, reaching 120.6 million unit cases.
·
During the quarter consolidated EBITDA totaled Ch$39,978 million, representing an increase of 3.1% in real terms compared to the first quarter of 2007. EBITDA margin was 23.3%.
·
Net income for the period reached Ch$20,844 million, 13.4% lower in real terms than the first quarter of 2007.
Comments from the Chief Executive Officer, Mr. Jaime Garcia R.
“We have begun year 2008 with results that met our expectations. Our Chilean operation showed remarkable growth for a mature market, and in the Brazilian and Argentine operations we improved margins. The appreciation of the Chilean peso, on the other hand, had a significant impact upon translation of figures for the operations outside of Chile. As always, we know we will have to face challenges during this year yet we remain optimistic and enthusiastic.”
CONSOLIDATED SUMMARY
First Quarter 2008 vs. First Quarter 2007
During this quarter our results were affected by volume growth, stable real prices and mixed macroeconomic environments. The appreciation of the Brazilian real and the Chilean peso of an average 17.8% and 16.4% positively impacted operations at the local level respectively, which had a positive impact over our dollar-denominated costs and also offset the price increase of commodities. However the strong 18.8% appreciation of the Chilean peso for the period had a negative impact upon conversion of figures of our Brazilian and Argentine operations. The Argentine peso remained relatively stable with an average depreciation of 1.9%. The increased restatement index figure due to the 8.1% inflation rate in Chile for the period is added to the exchange rate effect that had a negative impact upon comparing figures.
Consolidated sales volume for the first quarter of 2008 reached 120.6 million unit cases, an increase of 5.7% compared to the first quarter of 2007. Our three franchises contributed to this growth at different rates: Chile 8.7%; Brazil 2.3% and Argentina 6.6%.
Net Sales amounted to Ch$171,515 million, a 0.4% decrease in real terms compared to the first three months of 2007. Higher volumes were offset by a drop in average income, driven by a shift in product mix and by the effect of translating figures already mentioned for Brazil and Argentina.
Cost of sales per unit case decreased 10.9%, mainly due to the effect of the appreciation of the Brazilian real and Chilean peso over dollar-denominated costs, and in this case the positive effect upon conversion of figures for Brazil and Argentina. This enabled the Company to offset the price increase of certain raw materials such as sugar and PET resin, as well as the increased labor costs.
41
SG&A increased 8.1% due to higher volumes and also due to salary readjustments and increased labor costs in the commercial area in Brazil.
Consolidated operating income amounted to Ch$32,598 million, a 5.1% increase in real terms compared to the Ch$31,012 million reported in the same period of 2007. Operating margin was 19.0%, an increase of 100 basis points.
Finally, consolidated EBITDA amounted to Ch$39,978 million, a 3.1% improvement in real terms compared to the same period of the previous year. EBITDA margin was 23.3%, an increase of 80 basis points.
SUMMARY BY COUNTRY
CHILE
First Quarter 2008 vs. First Quarter 2007
During the first quarter of 2008, sales volume amounted to 42.3 million unit cases reflecting a growth of 8.7%. Soft Drinks increased 5.4%, Waters increased 30.0% and Juices increased 14.8%. The significant increase in the Waters segment is explained in part due to the incorporation of the Benedictino brand during February of this year,
Net sales amounted to Ch$67,079 million, a growth of 4.2% in real terms. This increase was offset by real prices slightly below those of the comparable period and by the mix effect on income per unit case from the Juice and Waters categories.
Cost of sales per unit case decreased 2.4% in real terms. This lower cost is best explained by the effect of the appreciation of the Chilean peso over dollar-denominated costs that more than compensated the increase of certain raw material prices such as PET resin and the increase of concentrate costs for incremental sales (this year the mechanism set by the new bottler agreement with The Coca-Cola Company became effective).
Operating income amounted to Ch$15,052 million, a decrease of 5.2% in real terms compared to the same period during 2007. Operating margin was 22.4%, a drop of 230 basis points relating to the first quarter of 2007.
EBITDA amounted to Ch$18,610 million, 1.7% lower in real terms than the Ch$18.932 million recorded during the same quarter of the previous year. EBITDA margin was 27.7%, a decrease of 170 basis points regarding the first-three months of 2007.
42
BRAZIL
First Quarter 2008 vs. First Quarter 2007
Sales volume for the first quarter of 2008 amounted to 45.3 million unit cases, a 2.3% increase compared to the first three months of 2007. Lower than usual temperatures and a possible shift in consumption towards durable goods had a strong impact over the low increase in volumes especially regarding soft drinks.
Net sales reached Ch$69,823 million, a 2.7% decrease in real terms compared to the same period of 2007, and a 4.8% decrease in real terms per unit case. Price adjustments in Brazil more than offset the effect of the appreciation of the Chilean peso regarding real figures upon translation of results.
Cost of sales per unit case recorded a decrease of 17.7% in real terms best explained by the effect of appreciation of the Brazilian real over dollar-denominated costs and of the Chilean peso relating to the Brazilian real upon conversion of figures, and lower prices on the costs of sugar and aluminum.
Operating Income reached Ch$12,949 million, a 24.0% increase in real terms. Operating margin was 18.5%, an increase of 390 basis points.
Finally, EBITDA amounted to Ch$15,326 million, a 16.1% improvement in real terms compared to the Ch$13,196 million reported in the first quarter of 2007. EBITDA margin was 21.9%, an increase of 350 basis points regarding the comparable period.
ARGENTINA
First Quarter 2008 vs. First Quarter 2007
Sales volume for the first quarter of 2008 reached 33.0 million unit cases, a 6.6% improvement compared to the same period of 2007, supported by high consumption levels still recorded in Argentina.
Net sales reached Ch$35,147 million, a decrease of 5.0% in real terms compared to the Ch$37,005 million reported in the first quarter of 2007. The decrease in net sales is best explained by increased volumes and price adjustments that took place during the quarter, which were more than offset by the effect of currency exchange rates as a result of the depreciation of the Argentine peso (1.9% average for the period) and the significant appreciation of the Chilean peso (18.8% as of the end of period).
Cost of sales per unit case decreased 14.0% in real terms, higher labor costs as well as higher costs for certain raw materials such as sugar and PET resin, were more than offset by the effects upon translating figures.
Operating Income totaled Ch$5,235 million, in line with that of the same period of 2007. Operating Margin was 14.9%, an increase of 70 basis points compared to the first quarter of 2007.
EBITDA reached Ch$6,680 million, a decrease of 7.4% in real terms. EBITDA margin amounted to 19.0%, a decrease of 50 basis points.
43
NON-OPERATING RESULTS
First Quarter 2008 vs. First Quarter 2007
Non-operating results totaled a loss of Ch$3,994 million, which compares negatively to a lower accumulated loss of Ch$2,245 million recorded in the same period of the previous year.
This increased loss in the non-operating result line is best explained by:
-
Financial Expense/Income (Net): Reflecting a positive variation due to higher earnings in the Cross Currency Swap Agreements, resulting from the appreciation of the Chilean peso during the First quarter of 2008 compared to the devaluation recorded during the First Quarter 2007.
-
Price Level Restatement: Resulted in a loss due to the exchange rate over our U.S. dollar asset position, that although significantly lower than that of 2007, was impacted by the strong appreciation of the Chilean peso. The translation of the subsidiaries’ financial statements is added to this effect as well as the loss in hedging over dollar-denominated raw materials.
-
Income Taxes: Increased given (i) the absorption of tax loss carry-forwards in Argentina and Brazil, and (ii) increased taxable earnings.
Finally, net income amounted to Ch$20,844 million, a decrease of 13.4% in real terms compared to net income of the First Quarter 2007.
ANALYSIS OF THE BALANCE SHEET
As of March 31, 2008, the company’s financial assets amounted to Ch$148,389 million. These represent cash, investments in mutual funds, time deposits and sovereign bonds. 83.4% of total financial investments are in denominated in Chilean pesos, 8.7% in U.S. dollars, 7.5% in Brazilian reais and 0.4% in Argentine pesos.
On the other hand, the Company’s total debt was Ch$84,561 million, with an average annual rate of 6.48% on Chilean peso-denominated debt and an average annual rate of 7.63% on U.S. dollar-denominated debt. Chilean peso-denominated debt represents 96.5% of total debt.
As a result, the Company holds a positive net cash position of Ch$63,828 million.
44
II.
Main Indicators
The main indicators contained in the table reflect for both periods the solid financial position and profitability of Embotelladora Andina S.A.
INDICATORS | Unit | Mar-08 | Dec-07 | Mar-07 | Variance | |
LIQUIDITY |
|
|
|
|
| |
| Current Ratio | Times | 2.53 | 1.92 | 1.59 | 0.94 |
| Acid Tests | Times | 2.30 | 1.72 | 1.38 | 0.92 |
| Working Capital | MCh$ | 19,380 | 27,624 | 19,011 | 369 |
ACTIVITY |
|
|
|
|
| |
| Investments | MCh$ | 11,070 | 56,473 | 12,338 | (1,268) |
| Inventory turnover | Times | 3.71 | 13.60 | 4.02 | (0.32) |
| Days of inventory on hand | Days | 97.16 | 26.46 | 89.54 | 7.62 |
INDEBTEDNESS |
|
|
|
|
| |
| Debt to equity ratio | % | 73.92% | 92.22% | 73.69% | 0.23 |
| Short-term liabilities to total liabilities | % | 45.15% | 53.48% | 48.96% | (3.81) |
| Long-term liabilities to total liabilities | % | 54.85% | 46.52% | 51.04% | 3.81 |
| Interest charges coverage ratio | Times | 46.58 | 60.47 | 20.32 | 26.27 |
PROFITABILITY |
|
|
|
|
| |
| Return over equity | % | 7.28% | 28.32% | 7.75% | (0.47) |
| Return over total assets | % | 3.98% | 14.94% | 4.30% | (0.33) |
| Return over operating assets | % | 8.52% | 32.80% | 9.67% | (1.15) |
| Operating income | MCh$ | 32,598 | 116,418 | 31,012 | 1,586 |
| Operating margin | % | 19.01% | 18.14% | 18.01% | 0.99 |
| EBITDA (1) | MCh$ | 37,930 | 147,158 | 39,799 | (1,869) |
| EBITDA margin | % | 22.11% | 22.93% | 22.58% | (0.47) |
| Dividends payout ratio - Series A shares | % | 6.95% | 7.16% | 5.83% | 1.12 |
| Dividends payout ratio - Series B shares | % | 7.11% | 7.33% | 5.80% | 1.31 |
1Earnings before income taxes, interests, depreciation, amortization and extraordinary items.
Liquidity indicators improved due to (i) the sale of long term corporate bond portfolios which were reinvested in marketable securities and short term time deposits, and (ii) the maturity of Series A Yankee bonds in October of 2007 in the amount of US$32 million that as of March 2007 was classified as short term.
Indicators of indebtedness reflect a slight improvement mainly due to a decrease in shareholders’ equity resulting from the payment of an additional dividend during July 2007. During the period net financial expenses amounted to Ch$628 million and earnings before interest and taxes amounted to Ch$29,232 million, achieving an interest coverage of 46.58 times, significantly higher than the previous period.
At the closing of the period ended March 31, 2008, operating profitability indicators benefited from the factors mentioned in paragraph I. Net income was impacted mainly by higher tax payments and the revaluation of the Chilean peso which had an impact on profitability over shareholders’ equity resulting from the extraordinary dividend payment during July 2007.
III.
Analysis of Book Values and Present Value of Assets
With respect to the Company’s main assets the following should be noted:
45
Given the high rotation of the items that compose working capital, book values of current assets are considered to represent market values.
Fixed asset values in the Chilean companies are presented at restated acquisition cost. In the foreign companies, fixed assets are valued in accordance with Technical Bulletin N° 64 issued by the Chilean Institute of Accountants (controlled in historical dollars).
Depreciation is estimated over the restated value of assets along with the remaining useful economic life of each asset.
All fixed assets that are considered available for sale are held at their respective market values.
Investments in shares, in situations where the Company has a significant influence on the issuing company, are presented following the equity method. The Company’s participation in the results of the issuing company for each year has been recognized on an accrual basis, and unrealized results of transactions between related companies have been eliminated.
In summary, assets are valued in accordance with generally accepted accounting standards in Chile and the instructions provided by the Chilean Securities Commission, as shown in Note 2 of the Financial Statements.
IV.
Analysis of the Main Components of Cash Flow
| Mar-2008 | Mar-2007 | Variation MCh$ | Variation % |
MCh$ | MCh$ | |||
Operating | 52,188 | 40,574 | 11,614 | 29 |
Financing | (7,654) | (8,486) | 832 | 10 |
Investment | (10,923) | (7,319) | (3,604) | (49) |
Net cash flow for the Period | 33,611 | 24,769 | 8,842 | (36) |
The Company generated positive net cash flow of MCh$33,611 during the quarter, analyzed as follows:
Operating activities generated a positive cash flow of MCh$52,188 representing a positive variation of MCh$11,614 mainly explained by higher financial income resulting from the liquidation of cross currency swap agreements that was partially offset by lower dividends received.
Financing activities generated a negative cash flow of MCh$7,654; with a positive variation of MCh$832 compared to the prior year, mainly because of lower net payments of bank liabilities during the 2008 period compared to the same period of 2007.
Investment activities generated a negative cash flow of MCh$10,923 with a negative variation of MCh$3,604 compared to the prior year, mainly because during the first quarter of 2007 income was collected from the sale of financial investments which did not occur during the first quarter of 2008, partially offset by lower additions to property, plant and equipment during 2008 compared to the same period of 2008.
46
V.
Analysis Of Market Risk
Interest Rate Risk
As of March 31, 2008 and 2007, the Company held 100% of its debt obligations at fixed rates of interest. Consequently, the risk of fluctuation of market interest rates affecting 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:
39%
Brazilian real:
41%
Argentine peso:
20%
Since the Company’s sales are not linked to the U.S. dollar, the policy adopted for managing foreign exchange risk, which 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 consist of payments 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 30% and 35% of our operating costs. In order to minimize and/or stabilize such risk, supply contracts and advance purchases are negotiated when market conditions are favorable. Likewise commodity coverage instruments have also been utilized.
47
Embotelladora Andina S.A.
First Quarter Results for the period ended March 31 (Chilean GAAP)
(In millions of constant 03/31/08 Chilean Pesos, except per share and per ADS data)
| 3/31/2008 | 3/31/2007 | % Ch. | ||||||
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | |
VOLUME TOTAL BEVERAGES (Million UC) | 42.3 | 45.3 | 33.0 | 120.6 | 38.9 | 44.3 | 30.9 | 114.1 | 5.7% |
Soft Drink | 33.6 | 42.5 | 32.5 | 108.5 | 31.8 | 42.1 | 30.5 | 104.4 | 3.9% |
Mineral Water | 5.3 | 0.9 | 0.4 | 6.6 | 4.1 | 0.5 | 0.3 | 4.9 | 34.6% |
Juices | 3.4 | 0.8 | 0.1 | 4.4 | 3.0 | 0.7 | 0.1 | 3.8 | 15.2% |
Beer | NA | 1.1 | NA | 1.1 | NA | 1.0 | NA | 1.0 | 8.3% |
|
|
|
|
|
|
|
|
|
|
NET SALES | 67,069 | 69,823 | 35,147 | 171,515 | 64,358 | 71,734 | 37,005 | 172,169 | (0.4)% |
COST OF SALES | (37,635) | (34,330) | (20,634) | (92,075) | (35,477) | (40,799) | (22,500) | (97,848) | (5.9)% |
GROSS PROFIT | 29,434 | 35,493 | 14,513 | 79,440 | 28,881 | 30,935 | 14,505 | 74,321 | 6.9% |
Gross Margin | 43.9% | 50.8% | 41.3% | 46.3% | 44.9% | 43.1% | 39.2% | 43.2% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (14,383) | (22,543) | (9,278) | (46,204) | (13,011) | (20,488) | (9,237) | (42,736) | 8.1% |
CORPORATE EXPENSES (4) |
|
|
| (638) |
|
|
| (573) | 11.3% |
OPERATING INCOME | 15,052 | 12,949 | 5,235 | 32,598 | 15,870 | 10,447 | 5,267 | 31,012 | 5.1% |
Operating Margin | 22.4% | 18.5% | 14.9% | 19.0% | 24.7% | 14.6% | 14.2% | 18.0% |
|
EBITDA (1) | 18,610 | 15,326 | 6,680 | 39,978 | 18,932 | 13,196 | 7,216 | 38,771 | 3.1% |
Ebitda Margin | 27.7% | 21.9% | 19.0% | 23.3% | 29.4% | 18.4% | 19.5% | 22.5% |
|
NON OPERATIONAL RESULTS FINANCIAL EXPENSE/INCOME (Net) |
|
|
| 4,028 |
|
|
| (973) | 514.1% |
RESULTS FROM AFFILIATED |
|
|
| 261 |
|
|
| 353 | (26.2)% |
AMORTIZATION OF GOODWILL |
|
|
| (1,318) |
|
|
| (1,783) | (26.1)% |
OTHER INCOME/(EXPENSE) |
|
|
| 2,510 |
|
|
| (1,588) | 258.0% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| (9,473) |
|
|
| 1,746 | (642.6)% |
NON(OPERATING RESULTS |
|
|
| (3,994) |
|
|
| (2,245) | 77.9% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 28,604 |
|
|
| 28,768 | (0.6)% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (7,732) |
|
|
| (4,647) | 66.4% |
MINORITY INTEREST |
|
|
| (28) |
|
|
| (59) | (52.5)% |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0 |
|
|
| 0 | NA |
NET INCOME |
|
|
| 20,844 |
|
|
| 24,062 | (13.4)% |
Net Margin |
|
|
| 12.2% |
|
|
| 14.0% |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 27.4 |
|
|
| 31.6 |
|
EARNINGS PER ADS |
|
|
| 164.5 |
|
|
| 189.9 | (13.4)% |
(1)
EBITDA: Operating Income + Depreciation
(2)
Total may be different from the addition of the three countries because of intercountry eliminations
(3)
Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts
(4)
Corporate expenses partially reclassified to the operations.
48
Embotelladora Andina S.A.
First Quarter Results for the period ended March 31 (Chilean GAAP)
(In millions of US$, except per share and per ADS data)
Pesos restated to March 31, 2008 currency converted into U.S. dollars at the eop exchange rate
| Exch. Rate: 437.71 | Exch. Rate: 437.71 |
| ||||||
| 3/31/2008 | 3/31/2007 | % Ch. | ||||||
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | |
VOLUME TOTAL BEVERAGES (Million UC) | 42.3 | 45.3 | 33.0 | 120.6 | 38.9 | 44.3 | 30.9 | 114.1 | 5.7% |
Soft Drink | 33.6 | 42.5 | 32.5 | 108.5 | 31.8 | 42.1 | 30.5 | 104.4 | 3.9% |
Mineral Water | 5.3 | 0.9 | 0.4 | 6.6 | 4.1 | 0.5 | 0.3 | 4.9 | 34.6% |
Juices | 3.4 | 0.8 | 0.1 | 4.4 | 3.0 | 0.7 | 0.1 | 3.8 | 15.2% |
Beer | NA | 1.1 | NA | 1.1 | NA | 1.0 | NA | 1.0 | 8.3% |
NET SALES | 153.2 | 159.5 | 80.3 | 391.8 | 147.0 | 163.9 | 84.5 | 393.3 | (0.4)% |
COST OF SALES | (86.0) | (78.4) | (47.1) | (210.4) | (81.1) | (93.2) | (51.4) | (223.5) | (5.9)% |
GROSS PROFIT | 67.2 | 81.1 | 33.2 | 181.5 | 66.0 | 70.7 | 33.1 | 169.8 | 6.9% |
Gross Margin | 43.9% | 50.8% | 41.3% | 46.3% | 44.9% | 43.1% | 39.2% | 43.2% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (32.9) | (51.5) | (21.2) | (105.6) | (29.7) | (46.8) | (21.1) | (97.6) | 8.1% |
CORPORATE EXPENSES (4) |
|
|
| (1.5) |
|
|
| (1.3) | 11.3% |
OPERATING INCOME | 34.4 | 29.6 | 12.0 | 74.5 | 36.3 | 23.9 | 12.0 | 70.9 | 5.1% |
Operating Margin | 22.4% | 18.5% | 14.9% | 19.0% | 24.7% | 14.6% | 14.2% | 18.0% |
|
EBITDA (1) | 42.5 | 35.0 | 15.3 | 91.3 | 43.3 | 30.1 | 16.5 | 88.6 | 3.1% |
Ebitda Margin | 27.7% | 21.9% | 19.0% | 23.3% | 29.4% | 18.4% | 19.5% | 22.5% |
|
NON OPERATIONAL RESULTS FINANCIAL EXPENSE/INCOME (Net) |
|
|
| 9.2 |
|
|
| (2.2) | 514.1% |
RESULTS FROM AFFILIATED |
|
|
| 0.6 |
|
|
| 0.8 | (26.2)% |
AMORTIZATION OF GOODWILL |
|
|
| (3.0) |
|
|
| (4.1) | (26.1)% |
OTHER INCOME (EXPENSE) |
|
|
| 5.7 |
|
|
| (3.6) | 258.0% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| (21.6) |
|
|
| 4.0 | (642.6)% |
NON-OPERATING RESULTS |
|
|
| (9.1) |
|
|
| (5.1) | 77.9% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 65.3 |
|
|
| 65.7 | (0.6)% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (17.7) |
|
|
| (10.6) | 66.4% |
MINORITY INTEREST |
|
|
| (0.1) |
|
|
| (0.1) | (52.5)% |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0.0 |
|
|
| 0.0 | NA |
NET INCOME |
|
|
| 47.6 |
|
|
| 55.0 | (13.4)% |
Net Margin |
|
|
| 12.2% |
|
|
| 14.0% |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 0.06 |
|
|
| 0.07 |
|
EARNINGS PER ADS |
|
|
| 0.38 |
|
|
| 0.43 | (13.4)% |
(1)
EBITDA: Operating Income + Depreciation
(2)
Total may be different from the addition of the three countries because of intercountry eliminations
(3)
Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts
(4)
Corporate expenses partially reclassified to the operations.
49
Embotelladora Andina S.A.
First Quarter Results for the period ended March 31, Chilean GAAP
(In millions nominal of US$, except per share and per ADS data)
| Exch. Rate: 437.71 | Exch. Rate: 539.21 |
| ||||||
| 3/31/2008 | 3/31/2007 |
| ||||||
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 42.3 | 45.3 | 33.0 | 120.6 | 389 | 44.3 | 30.9 | 114.1 | 5.7% |
Soft Drink | 33.6 | 42.5 | 32.5 | 108.5 | 31.8 | 42.1 | 30.5 | 104.4 | 3.9% |
Mineral Water | 5.3 | 0.9 | 0.4 | 6.6 | 4.1 | 0.5 | 0.3 | 4.9 | 34.6% |
Juices | 3.4 | 0.8 | 0.1 | 4.4 | 3.0 | 0.7 | 0.1 | 3.8 | 15.2% |
Beer | NA | 1.1 | NA | 1.1 | NA | 1.0 | NA | 1.0 | 8.3% |
NET SALES | 153.2 | 159.5 | 80.3 | 391.8 | 110.4 | 123.1 | 63.5 | 295.4 | 32.7% |
COST OF SALES | (86.0) | (78.4) | (47.1) | (210.4) | (60.9) | (70.0) | (38.6) | (167.9) | 25.3% |
GROSS PROFIT | 67.2 | 81.1 | 33.2 | 181.5 | 49.5 | 53.1 | 24.9 | 127.5 | 42.3% |
Gross Margin | 43.9% | 50.8% | 41.3% | 46.3% | 44.9% | 43.1% | 39.2% | 43.2% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (32.9) | (51.5) | (21.2) | (105.6) | (22.3) | (35.1) | (15.8) | (73.3) | 44.0% |
CORPORATE EXPENSES (4) |
|
|
| (1.5) |
|
|
| (1.0) | 48.3% |
OPERATING INCOME | 34.4 | 29.6 | 12.0 | 74.5 | 27.2 | 17.9 | 9.0 | 53.2 | 40.0% |
Operating Margin | 22.4% | 18.5% | 14.9% | 19.0% | 24.7% | 14.6% | 14.2% | 18.0% |
|
EBITDA (1) | 42.5 | 35.0 | 15.3 | 91.3 | 32.5 | 22.6 | 12.4 | 66.5 | 37.3% |
Ebitda Margin | 27.7% | 21.9% | 19.0% | 23.3% | 29.4% | 18.4% | 19.5% | 22.5% |
|
NON OPERATIONAL RESULTS FINANCIAL EXPENSE/INCOME (Net) |
|
|
| 9.2 |
|
|
| (1.7) | 651.5% |
RESULTS FROM AFFILIATED |
|
|
| 0.6 |
|
|
| 0.6 | (1.8)% |
AMORTIZATION OF GOODWILL |
|
|
| (3.0) |
|
|
| (3.1) | (1.5)% |
OTHER INCOME/(EXPENSE) |
|
|
| 5.7 |
|
|
| (2.7) | 310.4% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| (21.6) |
|
|
| 3.0 | (822.6)% |
NON(OPERATING RESULTS |
|
|
| (9.1) |
|
|
| (3.9) | 137.0% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 65.3 |
|
|
| 49.4 | 324% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (17.7) |
|
|
| (8.0) | 121.6% |
MINORITY INTEREST |
|
|
| (0.1) |
|
|
| (0.1) | (36.7)% |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0.0 |
|
|
| 0.0 | NA |
NET INCOME |
|
|
| 47.6 |
|
|
| 41.3 | 15.4% |
Net Margin |
|
|
| 12.2% |
|
|
| 14.0% |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 0.06 |
|
|
| 0.05 |
|
EARNINGS PER ADS |
|
|
| 0.38 |
|
|
| 0.33 | 15.4% |
(1)
EBITDA: Operating Income + Depreciation
(2)
Total may be different from the addition of the three countries because of intercountry eliminations
(3)
Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts.
(4)
Corporate expenses partially reclassified to the operations.
50
Embotelladora Andina S.A.
Consolidated Balance Sheet
(In million of constant 03/31/08 Chilean Pesos)
ASSETS | 3/31/2008 | 3/31/2007 | %Ch | LIABILITIES & SHAREHOLDERS' EQUITY | 3/31/2008 | 3/31/2007 | %Ch |
|
|
|
|
|
|
|
|
Cash + Time deposits + market. Securit. | 147,588 | 74,344 | 98.5% | Short term bank liabilities | 1,361 | 0 | — |
Account receivables (net) | 55,682 | 53,055 | 5.0% | Current portion of long term bank liabilities | 107 | 489 | (78.1)% |
Inventories | 22,184 | 24,099 | (7.9)% | Current portion of bonds payable | 8,239 | 33,772 | (75.6)% |
Other current assets | 17,467 | 32,792 | (46.7)% | Trade accounts payable and notes payable | 62,039 | 54,322 | 14.2)% |
Total Current Assets | 242,920 | 184,289 | 31.8% | Other liabilities | 24,309 | 27,454 | (11.5)% |
|
|
|
| Total Current Liabilities | 96,055 | 116,037 | (17.2)% |
Property, plant and equipment | 545,139 | 580,150 | (6.0)% |
|
|
|
|
Depreciation | (379,213) | (423,421) | (10.4)% | Long term bank liabilities | 635 | 356 | 78.2% |
Total Property, Plant, and Equipment | 165,926 | 156,729 | 5.9% | Bonds payable | 74,219 | 82,372 | (9.9)% |
|
|
|
| Other long term liabilities | 41,840 | 38,259 | 9.4% |
Investment in related companies | 24,834 | 23,166 | 7.2% | Total Long Term Liabilities | 116,694 | 120,987 | (3.5)% |
Investment in other companies | 125 | 61 | 105.2% |
|
|
|
|
Goodwill | 49,086 | 72,521 | (32.3)% | Minority interest | 1,324 | 1,327 | (0.2)% |
Other long term assets | 20,794 | 125,044 | (83.4)% |
|
|
|
|
Total Other Assets | 94,839 | 220,792 | (57.0)% | Shareholders’ Equity | 289,612 | 323,459 | (10.5)% |
|
|
|
|
|
|
|
|
TOTAL ASSETS | 503,684 | 561,811 | (10.3)% | TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 503,684 | 561,811 | (10.3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights | |||||||
(in million of constant 03/31/08 Chilean Pesos) | |||||||
| |||||||
ADDITIONS TO FIXED ASSETS | 3/31/2008 | 3/31/2007 |
| DEBT RATIOS | 3/31/2008 | 3/31/2007 |
|
|
|
|
|
|
|
|
|
Chile | 7,990 | 7,354 |
| Financial Debt / Total Capitalization | 023 | 0.26 |
|
Brazil | 2,068 | 4,192 |
| Financial Debt / EBITDA L12M | 0.58 | 0.85 |
|
Argentina | 1,011 | 792 |
| EBITDA L12M+Interest Income / Interest Expense | 15.30 | 11.88 |
|
| 11,070 | 12,338 |
| L12M: Last twelve months |
|
|
|
* As of March 31, 2008, the Company registered a positive net cash position of US$ 145.8 million. Total debt amounted to US$ 193.2 million Total cash amounted to US$ 339.0 million, which includes cash investments accounted for under Other Current Assets.
51
Material Events
During the period between January 1, 2008 and March 31, 2008, the following material events were filed:
New Bottler Agreement with Coca-Cola
Embotelladora Andina S.A. signed a new Bottler Agreement for its Chilean operations for a term of 5 years beginning January 1, 2008.
The new agreement, called NEWBA, does not significantly differ from the agreement previously signed by Andina´s bottlers in the other countries where it has operations.
Special Meeting of the Board of Directors
The following was approved at a special meeting of the Company’s Board of Directors held March 13, 2008:
1.
Propose to the Shareholders’ Meeting, the distribution of aFinal Dividend, on account of the fiscal year ending December 31, 2007, (that along with the interim dividends already distributed totals 30% of earnings for the period) for the following amounts:
a)
Ch$9.13 (nine pesos and 13/100) per Series A Shares and;
b)
Ch$10.043 (ten pesos and 043/100) per Series B Shares
If the Shareholders’ Meeting approves the payment of this dividend it will be available to shareholders beginning April 24, 2008. The Shareholders’ Registry will close on April 18, 2008 for payment of this dividend.
2.
Propose to the Shareholders’ Meeting, in addition to the Final Dividend for the fiscal year 2007 the payment of anAdditional Dividend from of the Retained Earnings Fund, for the following amounts:
a)
Ch$60 (sixty pesos) per Series A share; and
b)
Ch$66 (sixty-six pesos) per Series B share.
If approved by the Shareholders Meeting, this Additional Dividend would be paid starting May 14, 2008 and the Shareholders’ Registry will close May 8, 2008 for determining the recipients of this payment.
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 affecting 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.
52
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, May 27, 2008
53