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
September 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 June 30, 2008
(Free translation of original in Spanish)
CONTENTS
Report of Independent Auditors
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Ch$
-
Chilean pesos
ThCh$
-
Thousands of Chilean pesos
US$
-
United States dollars
ThUS$
-
Thousands of United States dollars
R$
-
Brazilian Reais
ThR$
-
Thousands of Brazilian Reais
AR$
-
Argentine pesos
ThAR$
-
Thousands of Argentine pesos
UF
-
Unidades de Fomento (Chilean government inflation-indexed monetary units)
REPORT OF INDEPENDENT AUDITORS
(Translation of original in Spanish)
Santiago, July 22, 2008
To the Shareholders and Directors
Embotelladora Andina S.A.
We have reviewed the accompanying Consolidated Balance Sheets of Embotelladora Andina S.A. and its subsidiaries (the “Company”) as of June 30, 2008 and 2007, and the related Consolidated Statements of Income and of Cash Flows for each of the six-month periods then ended. These interim financial statements (including the corresponding notes thereto) are the responsibility of the Company’s management. The analysis of results and relevant facts attached are not part of these financial statements and, therefore this report is not related to them.
We conducted our review in accordance with auditing standards established in Chile for the review of interim financial information. A review of interim financial information consists principally of applying analytical procedures to the financial statements and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, the interim consolidated financial statements as of June 30, 2008 and 2007 have not been audited and therefore, we cannot, nor do we express, such an opinion.
Based on our review, we are not aware of any significant adjustments that should be made to the accompanying consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in Chile.
Juan Carlos Pitta De C.
Id No. 14.709.125-7
2
Consolidated Balance Sheets
(Figures in ThCh$ of June 30, 2008)
| For the period ended | |
ASSETS | June 30, | |
| 2008 | 2007 |
CURRENT ASSETS | ThCh$ | ThCh$ |
Cash | 8,410,939 | 33,955,602 |
Time deposits | 30,522,600 | 21,210,397 |
Marketable securities (net) | 64,158,558 | 29,313,765 |
Trade accounts receivable (net) | 28,452,799 | 25,118,179 |
Notes receivable (net) | 7,815,012 | 7,798,546 |
Other receivables (net) | 16,362,695 | 8,402,242 |
Notes and accounts receivable from related companies | 1,292,800 | 1,010,418 |
Inventories (net) | 27,102,120 | 25,331,253 |
Recoverable taxes | 3,022,769 | 2,808,242 |
Prepaid expenses | 3,141,814 | 2,506,453 |
Deferred income taxes | 6,201,511 | 551,173 |
Other current assets | 6,257,040 | 27,512,047 |
TOTAL CURRENT ASSETS | 202,740,657 | 185,518,317 |
|
|
|
PROPERTY, PLANT & EQUIPMENT |
|
|
Land | 18,294,152 | 17,893,137 |
Buildings & improvements | 107,225,708 | 97,088,996 |
Machinery and equipment | 246,701,079 | 237,948,442 |
Other property, plant & equipment | 243,010,457 | 236,294,953 |
Technical reappraisal of property, plant & equipment | 2,278,657 | 2,281,682 |
Depreciation | (428,228,839) | (429,423,960) |
TOTAL PROPERTY, PLANT & EQUIPMENT | 189,281,214 | 162,083,250 |
|
|
|
OTHER ASSETS |
|
|
Investments in related companies | 24,232,910 | 22,369,518 |
Investments in other companies | 149,621 | 61,655 |
Goodwill | 57,226,609 | 69,192,200 |
Long-term receivables | 25,516 | 70,775 |
Long-term notes and accounts receivable from related companies | 45,890 | 39,396 |
Intangibles | 1,499,576 | 457,947 |
Amortization | (157,939) | (285,689) |
Others | 25,969,138 | 104,970,174 |
TOTAL OTHER ASSETS | 108,991,321 | 196,875,976 |
TOTAL ASSETS | 501,013,192 | 544,477,543 |
The accompanying Notes 1 to 34 are an integral part of these consolidated financial statements.
3
Consolidated Balance Sheets
(Figures in ThCh$ of June 30, 2008)
| For the period ended | |
| June 30, | |
LIABILITIES AND SHAREHOLDERS' EQUITY | 2008 | 2007 |
| ThCh$ | ThCh$ |
Short-term bank liabilities | 7,298,572 | 368,753 |
Current portion of long-term bank liabilities | 141,251 | - |
Current portion of bonds payable | 419,563 | 32,623,589 |
Dividends payable | 5,804,056 | 62,992,550 |
Accounts payable | 44,336,573 | 32,500,498 |
Other creditors | 6,183,800 | 4,648,255 |
Notes and accounts payable to related companies | 7,705,393 | 4,235,840 |
Provisions | 4,254,350 | 3,510,609 |
Withholdings | 15,792,610 | 10,376,982 |
Income taxes payable | 2,194,852 | 1,395,281 |
Unearned income | 128 | 595,010 |
Other current liabilities | 4,461,948 | 4,721,060 |
TOTAL CURRENT LIABILITIES | 98,593,096 | 157,968,427 |
|
|
|
|
|
|
Long-term bank liabilities | 770,489 | 847,707 |
Bonds payable | 75,987,127 | 77,337,370 |
Other creditors | 90,107 | 146,265 |
Long-term notes and accounts payable to related companies | 3,200,259 | 3,706,935 |
Provisions | 17,891,301 | 18,702,711 |
Deferred income taxes | 17,646,097 | 7,688,038 |
Other long-term liabilities | 13,452,246 | 10,991,251 |
TOTAL LONG-TERM LIABILITIES | 129,037,626 | 119,420,277 |
Minority interest | 1,318,969 | 1,341,095 |
|
|
|
Paid-in capital | 217,013,513 | 220,044,428 |
Reserve capital revalued | 6,944,432 | 4,180,844 |
Other reserves | (6,747,124) | (2,089,385) |
Retained earnings | 54,852,680 | 43,611,857 |
Accumulated earnings | 21,984,144 | 11,566,482 |
Net income for the period | 38,456,554 | 38,130,727 |
Interim dividends | (5,588,018) | (6,085,352) |
TOTAL SHAREHOLDERS’ EQUITY | 272,063,501 | 265,747,744 |
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 501,013,192 | 544,477,543 |
The accompanying Notes 1 to 34 are an integral part of these consolidated financial statements.
4
Consolidated Statements of Income
(Figures in ThCh$ of June 30, 2008)
| For the period ended | |
| June 30, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
|
|
|
Net sales | 359,348,683 | 323,284,566 |
Cost of sales | (196,198,543) | (184,029,596) |
Gross margin | 163,150,140 | 139,254,970 |
Administrative and selling expenses | (105,032,951) | (86,097,317) |
OPERATING INCOME | 58,117,189 | 53,157,653 |
|
|
|
|
|
|
Financial income | 7,448,263 | 8,466,032 |
Equity in earnings of equity investments | 427,059 | 560,334 |
Other non-operating income | 5,479,575 | 4,533,064 |
Equity in losses of equity investments | (78,576) | (356,246) |
Amortization of goodwill | (3,155,620) | (3,516,232) |
Financial expenses | (14,464,535) | (7,280,413) |
Other non-operating expenses | (6,827,177) | (3,524,296) |
Price level restatement | (886,385) | 91,050 |
Foreign exchange gains | 4,140,418 | (3,477,387) |
NON OPERATING INCOME AND EXPENSE | (7,916,978) | (4,504,094) |
|
|
|
Income before income taxes and extraordinary items | 50,200,211 | 48,653,559 |
Income tax expense | (11,752,030) | (10,480,416) |
Income before minority interest | 38,448,181 | 38,173,143 |
Minority interest | 8,373 | (42,416) |
NET INCOME FOR THE PERIOD | 38,456,554 | 38,130,727 |
The accompanying Notes 1 to 34 are an integral part of these consolidated financial statements.
5
Consolidated Statements of Cash Flow
(Figures in ThCh$ of June 30, 2008)
| For the period ended | |
| June 30, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
|
|
|
Collection of trade receivables | 537,556,212 | 459,008,202 |
Financial income received | 25,171,526 | 7,411,243 |
Dividend & other distributions received | 1,759,000 | 2,653,123 |
Other income received | 64,078 | 51,506 |
Payments to suppliers and personnel | (392,181,279) | (330,483,947) |
Interest paid | (11,040,503) | (7,035,688) |
Income taxes paid | (15,724,113) | (11,188,166) |
VAT and other tax payments | (75,087,617) | (61,725,779) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 70,517,304 | 58,690,494 |
|
|
|
|
|
|
Borrowings | 45,947,567 | 462,110 |
Dividend distribution | (59,259,429) | (15,228,417) |
Loan payments | (43,349,638) | (3,125,589) |
Bond payments | (6,553,184) | (6,629,082) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (63,214,684) | (24,520,978) |
|
|
|
Proceeds from sales of property, plant and equipment | 308,675 | 480,766 |
Proceeds from sales of other investments | 1,005,585 | 24,144,952 |
Additions to property, plant & equipment | (30,880,665) | (25,046,636) |
Investments in financial instruments | (16,270) | (222,166) |
Other investment disbursements | (835,181) | - |
NET CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES | (30,417,856) | (643,084) |
| - | - |
TOTAL NET CASH FOR THE PERIOD | (23,115,236) | 33,526,432 |
Effect of inflation on cash and cash equivalents | 951,731 | 652,598 |
Net (decrease) increase in cash and cash equivalents | (22,163,505) | 34,179,030 |
Cash and cash equivalents at beginning of period | 125,255,602 | 45,529,054 |
Cash and cash equivalents at end of period | 103,092,097 | 79,708,084 |
The accompanying Notes 1 to 34 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 June 30, 2008)
| For the period ended | |
| June 30, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
|
|
|
Net Income | 38,456,554 | 38,130,727 |
Income on sale of assets: | (64,693) | 232,839 |
Loss (Gain) on sale of property, plant and equipment | (56,823) | 247,040 |
Gain on sale of other assets | (7,870) | (14,201) |
|
|
|
Adjustments to net income that do not represent movements of cash | 20,979,299 | 22,708,790 |
Depreciation | 16,789,515 | 15,815,018 |
Amortization of intangibles | 57,937 | 126,947 |
Write-offs and provisions | 496,574 | 772,238 |
Equity in earnings of equity investments | (427,059) | (560,334) |
Equity in losses of equity investments | 78,576 | 356,246 |
Amortization of goodwill | 3,155,620 | 3,516,232 |
Price level restatement | 886,385 | (91,050) |
Foreign exchange gains, net | (4,140,418) | 3,477,387 |
Other credits to income that do not represent cash flows | (432,797) | (1,224,634) |
Other charges to income that do not represent cash flows | 4,514,966 | 520,740 |
|
|
|
Changes in operating assets | 24,936,301 | 18,140,529 |
(Increase) decrease in trade accounts receivable | 28,313,939 | 26,512,096 |
(Increase) decrease in inventories | 1,235,602 | (734,541) |
(Increase) decrease in other assets | (4,613,240) | (7,637,026) |
|
|
|
Changes in operating liabilities | (13,781,784) | (20,564,807) |
Increase (decrease) in accounts payable related to operating income | (20,675,524) | (26,348,235) |
Increase (decrease) in interest payable | 25,819,819 | 7,396,963 |
Increase (decrease) in income taxes payable | (18,756,563) | 1,235,514 |
Increase (decrease) in other accounts payable related to non-operating income | 2,813,296 | 3,548,242 |
Increase (decrease) in valued added tax and other similar items | (2,982,812) | (6,397,291) |
|
|
|
Minority interest | (8,373) | 42,416 |
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES | 70,517,304 | 58,690,494 |
The accompanying Notes 1 to 34 are an integral part of these consolidated financial statements.
7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2008 and 2007 (figures in ThCh$ of June 30, 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 June 30, 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 8.9% according to CPI and minor reclassifications have been made.
d)
Basis of consolidation
The accompanying financial statements include assets, liabilities, income and cash flows of the Parent Company and its subsidiaries. The equity and income accounts of the Parent Company and its subsidiaries have been combined, eliminating investments and current accounts between consolidated companies, transactions between them and the unrealized income from inter-company transactions.
In addition, for proper presentation of consolidated net income, the participation in income by minority shareholders is shown in the consolidated statements of income under Minority interest.
Holding percentages
The subsidiaries included in the consolidated financial statements and Andina’s direct and indirect holding percentages are as follows:
Company Name | Ownership Interest | |||
| 2008 | 2007 | ||
| Direct | Indirect | Total | Total |
Abisa Corp S.A. | - | 99.99 | 99.99 | 99.99 |
Andina Bottling Investments S.A. | 99.90 | 0.09 | 99.99 | 99.99 |
Andina Inversiones Societarias S.A. | 99.99 | - | 99.99 | 99.99 |
Andina Bottling Investments Dos S.A. | 99.90 | 0.09 | 99.99 | 99.99 |
Embotelladora del Atlántico S.A. | - | 99.98 | 99.98 | 99.96 |
Rio de Janeiro Refrescos Ltda. | - | 99.99 | 99.99 | 99.99 |
Servicios Multivending Ltda. | 99.90 | 0.09 | 99.99 | 99.99 |
Transportes Andina Refrescos Ltda. | 99.90 | 0.09 | 99.99 | 99.99 |
Vital S.A. | - | 99.99 | 99.99 | 99.99 |
RJR Investments Corp S.A. | - | 99.99 | 99.99 | 99.99 |
Vital Aguas S.A. | 56.50 | - | 56.50 | 56.50 |
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
8
the official Chilean Consumer Price Index, “CPI”, issued by the Chilean National Institute of Statistics, which amounted to 3.2% for the period December 1, 2007 to May 31, 2008 (1.9% 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) | 20,252.71 | 18,624.17 |
United States dollars | (US$) | 526.05 | 526.86 |
Argentine pesos | (AR$) | 173.90 | 171.11 |
Brazilian Real | (R$) | 330.45 | 273.52 |
Euro | (€$) | 826.16 | 713.03 |
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.
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.
9
l)
Containers
Inventories of containers, bottles and plastic containers at plants, warehouses, and with third parties are stated at cost plus price-level restatements and are included in Other property, plant and equipment. Broken or damaged containers at plants and warehouses are expensed in each accounting period.
m)
Investments in related companies
Investments in shares or rights in companies in which the Company has a significant holding in the investee are accounted for using the equity method. The Company’s proportionate share of net income and losses of related companies is recognized in the consolidated statements of income, after eliminating any unrealized profits or losses from transactions between related companies.
Investments in foreign companies are valued in conformity with Technical Bulletin No. 64 issued by the Chilean Institute of Accountants. The United States (“US”) dollar is the currency used to control investments and to translate financial statements of foreign companies. Assets and liabilities from these investments are translated into Chilean pesos at year end exchange rate, except that non-monetary assets and liabilities and shareholders’ equity are first expressed at their equivalent value in historical US dollars. Income and expense items are first translated into US dollars at the average exchange rate during the month.
n)
Intangibles
Intangibles include franchise rights and licenses that are amortized over the terms of the contracts, not in excess of 20 years.
o)
Goodwill
Goodwill represents the difference between purchase cost of the shares acquired and the proportional equity value of investment on the purchase date. These differences are amortized based on the expected period of return of the investment, estimated at 20 years.
p)
Bonds payable
Bonds payable includes the placement of Yankee Bonds on the US markets and placement of bonds in UF in Chile, which are carried at the issue rate. The difference in valuation as compared to the effective placement rate is recorded as a deferred asset. This asset is amortized using the straight-line method over the term of the respective obligations, 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.
10
s)
Deposits for containers
Corresponds to the liabilities constituted by cash guarantees received from clients for lending bottles to them.
For those loans for placement subsequent to January 31, 2001, an expiration date of five years as from the invoice date was established. In the event the client has not returned all or a portion of the containers and/or cases, the Company may, without delay, enforce the guarantee, in whole or in part, in cash and record that effect in operating income of the Company.
This liability is presented in Other long-term liabilities, considering that the number of new containers in circulation in the market during the year is historically greater than the number of containers returned by clients during the same period.
t)
Revenue recognition
Given the nature of its operations, the Company records revenue based on the physical delivery of finished products to its clients, based on the realization principle and in accordance with Technical Bulletin No. 70 issued by the Chilean Institute of Accountants.
u)
Derivative contracts
Derivative contracts include 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.
11
Note 4 - Marketable Securities
Type of Instrument | Accounting value for the period ended June 30, | ||
| 2008 | 2007 | |
| ThCh$ | ThCh$ | |
Bonds | - | 2,375,900 | |
Mutual funds | 6,619,798 | 2,472,126 | |
Investment funds | 57,538,760 | 24,465,739 | |
Total marketable securities | 64,158,558 | 29,313,765 | |
|
|
| |
|
|
| |
|
|
| |
Mutual funds: |
| Accounting value for the period ended June 30, 2008 | |
Institution |
| ThCh$ | |
| |||
Fondo Mutuo Celfin Capital |
| 6,398,889 | |
Fondo Mutuo Scotiabank |
| 186,000 | |
Fondo Mutuo Itaú |
| 34,909 | |
Balance mutual funds |
| 6,619,798 | |
|
|
| |
Investment funds: |
|
| |
Institution |
| ThCh$ | |
| |||
DWS Institutional USD Money Plus |
| 34,030,765 | |
Citi Institutional Liquid Reserves Limited - USA | 23,507,995 | ||
Balance investment funds |
| 57,538,760 |
12
Note 5 – Short and Long-Term Receivables
Almost all of said accounts correspond to the soft drinks category. The balance of other accounts receivable mainly corresponds to prepayment to our sugar suppliers.
|
| CURRENT |
|
|
|
| LONG TERM | ||
| Up to 90 days | More than 90 days up to 1 year | Subtotal | Total current (net) |
|
| |||
| 2008 | 2007 | 2008 | 2007 | 2008 | 2008 | 2007 | 2008 | 2007 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Trade receivables | 28,634,498 | 24,220,777 | 794,191 | 897,402 | 29,428,689 | 28,452,799 | 25,118,179 | - | - |
Allowance for doubtful accounts |
|
|
|
| (975,890) |
|
|
|
|
Notes receivable | 7,735,369 | 7,352,313 | 657,260 | 446,233 | 8,392,629 | 7,815,012 | 7,798,546 | - | - |
Allowance for doubtful accounts |
|
|
|
| (577,617) |
|
|
|
|
Other receivables | 15,347,257 | 7,930,827 | 1,259,845 | 471,415 | 16,607,102 | 16,362,695 | 8,402,242 | 25,516 | 70,775 |
Allowance for doubtful accounts |
|
|
|
| (244,407) |
|
|
|
|
|
|
|
|
| Total long term receivables | 25,516 | 70,775 |
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$ |
EMBONOR S.A. | 703,779 | 520,744 | - | - |
EMBOTELLADORA COCA-COLA POLAR S.A. | 589,021 | 489,674 | - | - |
COCA-COLA DE CHILE S. A. | - | - | 45,890 | 39,396 |
Total | 1,292,800 | 1,010,418 | 45,890 | 39,396 |
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.
2) Notes and accounts payable:
Coca-Cola de Chile S.A.: Concentrate purchases
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$ |
COCA-COLA DE CHILE S.A. | 2,188,694 | 182,197 | - | - |
SERVICIOS Y PRODUCTOS PARA BEBIDAS REFRESCANTES S.R.L. | 1,972,882 | 1,358,465 | - | - |
ENVASES CMF S. A. | 1,606,381 | 688,973 | - | - |
RECOFARMA INDUSTRIAS DO AMAZONAS LTDA. | 1,486,655 | 1,617,826 | - | - |
ENVASES CENTRAL S. A. | 397,924 | 248,725 | - | - |
ENVASES DEL PACIFICO S. A. | 52,857 | 17,677 | - | - |
CICAN S.A. | - | 121,977 | - | - |
EMBONOR S.A. | - | - | 2,544,093 | 2,949,824 |
EMBOTELLADORA COCA-COLA POLAR S.A. | - | - | 656,166 | 757,111 |
Total | 7,705,393 | 4,235,840 | 3,200,259 | 3,706,935 |
14
3) Transactions with related companies
The following table includes transactions with related companies that exceed ThCh$200,000.
Company | Relation | Transaction | June 30, 2008 | June 30, 2007 | ||
|
|
| Amount | Effect on income (charge) credit | Amount | Effect on income (charge) credit |
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
ENVASES CENTRAL S.A. | Equity Investee | Finished product | 7,129,199 | - | 8,176,494 | - |
- | - | Sales of raw materials | 754,882 | 51,349 | 830,697 | 57,891 |
COCA-COLA DE CHILE S.A. | Shareholder | Concentrate purchases | 25,358,814 | - | 24,651,397 | - |
- | - | Payment of advertising | 690,811 | (690,811) | 3,191,662 | (3,191,662) |
- | - | Sales of advertisement | 793,103 | - | 1,171,133 | - |
- | - | Water source rental | 1,186,125 | (1,186,125) | 883,594 | (883,594) |
COCA-COLA DE ARGENTINA S.A. | Shareholder | Payment of advertising | 1,120,435 | (1,120,435) | 1,201,818 | (1,201,818) |
SERVICIOS Y PRODUCTOS PARA | Shareholder | Concentrate purchases | 14,217,012 | - | 13,921,131 | - |
RECOFARMA INDUSTRIAS DO | Shareholder | Concentrate purchases | 25,065,307 | - | 30,925,853 | - |
- | - | Payment of advertising | 1,606,052 | (1,606,052) | 1,504,211 | (1,504,211) |
ENVASES CMF S.A. | Equity Investee | Container purchases | 7,205,814 | - | 7,837,577 | - |
- | - | Services rendered | - | - | 124,558 | - |
- | - | Dividend payment | 2,560,000 | - | 3,316,031 | - |
EMBONOR S.A. | Shareholder | Sale of finished products | 4,442,364 | 973,492 | 4,153,556 | 843,915 |
| - | Finished product | - | - | 211,853 | - |
EMBOTELLADORA COCA-COLA | Shareholder | Sale of finished | 2,657,022 | 284,645 | 2,460,494 | 440,769 |
CICAN S.A. | Equity Investee | Finished product | - | - | 809,112 | - |
| - | Sales of raw materials | - | - | 195,692 | 55,028 |
IANSAGRO S.A. | Director in | Sugar purchases | 8,285,114 | - | 5,740,654 | - |
BBVA ADMINISTRADORA GENERAL DE FONDOS | Director related | Redemption of mutual | 6,890,000 | - | 48,580,770 | - |
BBVA ADMINISTRADORA GENERAL DE FONDOS S.A. | Director related | Investment in mutual | 6,890,000 | - | - | - |
VENDOMATICA S.A. | Director related | Sale of finished products | 648,252 | 194,475 | 686,190 | 205,857 |
15
Note 7 – Inventories
| June 30, 2008 | June 30, 2007 | ||||
| Gross Value | Obsolesence provision | Net value | Gross Value | Obsolesence provision | Net value |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
|
|
|
|
|
|
|
Finished products | 13,569,171 | (185,277) | 13,383,894 | 11,284,780 | (441,668) | 10,843,112 |
Raw materials | 10,954,644 | (147,041) | 10,807,603 | 12,662,280 | (180,035) | 12,482,245 |
Products in process | 2,203,371 | - | 2,203,371 | 1,306,998 | - | 1,306,998 |
Raw materials in transit | 716,959 | (9,707) | 707,252 | 702,810 | (3,912) | 698,898 |
|
|
|
|
|
|
|
Total | 27,444,145 | (342,025) | 27,102,120 | 25,956,868 | (625,615) | 25,331,253 |
Note 8 - Deferred Taxes and Income Taxes
a)
At period end 2008 and 2007, the Company did no present taxable profit or non-taxable profit funds.
Short-term and long-term assets and liabilities must be netted out to compose the general balance sheet on deferred taxes.
b) The following table contains information on deferred taxes:
| June 30, 2008 | June 30, 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 | 148,692 | 42,659 | - | - | 284,503 | 38,404 | - | - |
Vacation provision | 168,440 | - | - | - | 149,952 | - | - | - |
Production expenses | 16,103 | - | - | - | 3,216 | - | - | - |
Depreciation of property, plant & equipment | - | - | 156,313 | 6,593,249 | 2,985 | - | 117,443 | 3,938,023 |
Severance indmenities | 54,463 | - | 29,029 | 217,569 | 72,489 | - | 34,987 | 225,180 |
Others | 975,303 | 704,119 | 28 | - | 582,493 | 860,601 | 11,574 | - |
Provision for assets write off | 233,726 | 1,201,836 | - | - | 381,530 | 817,096 | - | - |
Provision for labor lawsuits | - | 1,552,152 | - | - | - | 1,355,378 | - | - |
Tax loss carry-forwards | 4,322,508 | - | - | - | 3,455,095 | 4,197,819 | - | - |
Guarantee deposit | - | - | - | - | - | - | - | 1,089,000 |
Local bond issue expenses | - | - | - | 141,219 | - | - | - | 160,049 |
Contingency allowance | - | 337,468 | - | - | - | 260,206 | - | - |
Accrued interests abroad | - | - | - | - | - | - | 4,611,986 | - |
Exchange rate difference | - | - | - | 16,359,366 | - | - | - | 12,206,885 |
Income participation provision | 467,646 | - | - |
| 394,900 | - | - |
|
Complementary accounts, net of amortization | - | - | - | (1,827,072) | - | - | - | (2,401,595) |
Total | 6,386,881 | 3,838,234 | 185,370 | 21,484,331 | 5,327,163 | 7,529,504 | 4,775,990 | 15,217,542 |
c) The following table contains information on income taxes at each period-end.
16
Note 9 - Other Current Assets
| June 30, 2008 | June 30, 2007 |
| ThCh$ | ThCh$ |
Supplies | 5,541,492 | 3,930,574 |
Cross currency swap effects | - | 21,513,708 |
Short term bonds discount | 186,910 | 203,222 |
Accrued interest on long-term bonds | - | 1,067,858 |
Wachovia Investment Fund (restricted) | - | 297,740 |
Others | 528,638 | 498,945 |
Total | 6,257,040 | 27,512,047 |
Note 10 - 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) Main components of property, plant and equipment | Balances at June 30, 2008 | Balances at June 30, 2007 | ||||
| Assets | Accumulated depreciation | Net, property, plant and equipment | Assets | Accumulated depreciation | Net, property, plant and equipment |
| ||||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Land | 18,294,152 | - | 18,294,152 | 17,893,137 | - | 17,893,137 |
Buildings and improvements | 107,225,708 | (39,789,446) | 67,436,262 | 97,088,996 | (38,051,203) | 59,037,793 |
Machinery and equipment | 246,701,079 | (193,925,770) | 52,775,309 | 237,948,442 | (192,463,897) | 45,484,545 |
Other property, plant and equipment | 243,010,457 | (193,820,207) | 49,190,250 | 236,294,953 | (198,216,487) | 38,078,466 |
Technical reappraisal of property, plant & equipment | 2,278,657 | (693,416) | 1,585,241 | 2,281,682 | (692,373) | 1,589,309 |
Total | 617,510,053 | (428,228,839) | 189,281,214 | 591,507,210 | (429,423,960) | 162,083,250 |
b) Other property, plant and equipment |
|
| |
|
|
|
|
|
| June 30, 2008 | June 30, 2007 |
|
| ThCh$ | ThCh$ |
|
|
|
|
Containers |
| 139,205,272 | 134,907,065 |
Refrigerating equipment, promotional items and other minor assets | 59,563,566 | 63,263,169 | |
Furniture and tools |
| 8,599,063 | 8,446,541 |
Other |
| 35,642,556 | 29,678,178 |
|
|
|
|
Total other property, plant and equipment |
| 243,010,457 | 236,294,953 |
17
c) Technical reappraisal of property, plant and equipment |
|
|
|
| ||
|
|
|
|
|
|
|
| Balances at June 30, 2008 | Balances at June 30, 2007 | ||||
| Assets | Accumulated depreciation | Net, property, plant and equipment | Assets | Accumulated depreciation | Net, property, plant and equipment |
| ||||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Land | 1,521,972 | - | 1,521,972 | 1,523,789 | - | 1,523,789 |
Buildings and improvements | 213,075 | (156,336) | 56,739 | 213,330 | ( 151,670) | 61,660 |
Machinery and equipment | 543,610 | (537,080) | 6,530 | 544,563 | ( 540,703) | 3,860 |
Total | 2,278,657 | (693,416) | 1,585,241 | 2,281,682 | ( 692,373) | 1,589,309 |
d) Depreciation for the period
Depreciation charges for the period amounted to ThCh$ 16,789,515 (ThCh$ 15,815,018 in 2007) of which ThCh$ 13,382,508 (ThCh$ 11,831,312 in 2007) are included under Operating Costs and ThCh$ 3,407,007 (ThCh$ 3,983,706 in 2007) under Sales and Administrative Expenses in the income statement.
18
Note 11 - 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% | 35,055,987 | 37,096,329 | 1,452,723 | 2,038,505 | 248,712 | 537,695 | 17,527,994 | 18,548,165 | 1,048,348 | 1,130,338 | 16,479,646 | 17,417,827 |
ENVASES CENTRAL S.A. | CHILE | Ch$ | 1,499,398 | 49.91% | 49.91% | 4,925,001 | 4,767,335 | (20,310) | (174,074) | (15,432) | (89,567) | 2,458,068 | 2,379,377 | 249,378 | 249,677 | 2,208,690 | 2,129,700 |
KAIK PARTIPACOES | BRAZIL | US$ | 16,098,919 | 11.32% | 11.32% | 10,923,434 | 16,568,078 | (557,828) | 199,997 | (63,144) | 22,639 | 1,236,500 | 1,875,454 | - | - | 1,236,500 | 1,875,454 |
CICAN S.A. | ARGENTINA | US$ | 3,040 | - | 15.00% | - | 6,227,215 | - | (17,544) | - | (266,679) | - | 946,537 | - | - | - | 946,537 |
HOLDFAB PARTIC. LTDA. | BRAZIL | US$ | 1,283,158,339 | 14.73% | - | 29,243,166 | - | 1,210,617 | - | 178,347 | - | 4,308,074 | - | - | - | 4,308,074 | - |
Total |
|
|
|
|
|
|
|
|
|
|
| 25,530,636 | 23,749,533 | 1,297,726 | 1,380,015 | 24,232,910 | 22,369,518 |
19
The main changes occurred in the reported periods are described below:
In June, 2008 Embotelladora Andina S.A. acquired a 48% ownership interest in Embotelladoras del Sur S.A. for ThCh$753,582. Subsequent to the acquisition Embotelladora Andina S.A. made a ThCh$81,600 loan to Embotelladoras del Sur S.A. As of June 30, 2008 Embotelladoras del Sur S.A. records a negative equity of ThCh$714,928 which has been provisioned by Embotelladora Andina S.A. in accordance with its ownership interest.
The amounts disbursed by Embotelladora Andina S.A. in the acquisition of and loan to Embotelladoras del Sur S.A., as well as the recording of the proportionate loss of the negative equity of the latter has been recorded as an intangible since the final purpose is not that of acquiring the company but that of acquiring the rights of distribution of products of the water segment that were previously marketed by Embotelladoras del Sur S.A.
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$12,831.63. In turn, Holdfab Participações Ltda. holds a 50% ownership interest in Amarantina Participações S.A.
Centralli Refrigerantes S.A. records a negative equity, which has been provisioned accordingly.
The investment in Kaik Participações Ltda. (Brazil) where Embotelladora Andina S.A. holds an indirect ownership of 11.32% has been accounted for under the equity method, since the Company has a significant influence through one of its directors, who participates in the process of setting policies, operating and financial decision-making in accordance with the ownership structure which is exclusive owned by the Coca-Cola bottlers in Brazil
The investment in Envases Central S.A. is presented with a 48% reduction (the percentage share on the date of transaction) of the earnings generated during the sale to Envases Central during December 1996 for property located in Renca, because this transaction represents unrealized income for Embotelladora Andina S.A. The amount of the reduction is reflected in the following chart. This transaction will be realized once the property is transferred to a third party different from the group.
The investment in Envases CMF S.A. is presented with a 50% reduction of the earnings generated during the sale of machinery and equipment of our subsidiary Envases Multipack S.A. which took place in June, 2001, and will be recorded under Results during the remaining useful life period of the goods sold to Envases CMF S.A.
Unrealized income corresponds to transactions between subsidiaries and/or the parent company that have been deducted or added to the category of the originating asset with the following effect on income of the subsidiaries:
Envases CMF S.A. (purchase of property, plant and equipment): ThCh$ -1,048,348 in 2008 (ThCh$ -1,130,338 in 2007)
Envases Central S.A. (purchase of finished products): ThCh$ -5,295 in 2008 (ThCh$ -2,686 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$260 million.
Note 12 - Goodwill and Negative Goodwill
Company | June 30, 2008 | June 30, 2007 | ||
Amortization during the period | Goodwill balance | Amortization during the period | Goodwill balance | |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
RIO DE JANEIRO REFRESCOS LTDA. | 1,777,613 | 35,824,600 | 1,931,968 | 42,843,603 |
EMBOTELLADORA DEL ATLÁNTICO S.A. | 1,378,007 | 21,402,009 | 1,502,960 | 26,348,597 |
VITAL S. A. | - | - | 81,304 | - |
Total | 3,155,620 | 57,226,609 | 3,516,232 | 69,192,200 |
20
Note 13 - Other Long Term Assets
| June 30, 2008 | June 30, 2007 |
| ThCh$ | ThCh$ |
Bonds: |
|
|
Celulosa Arauco S.A. | - | 13,088,309 |
Enap S.A. | - | 10,091,283 |
Endesa S.A. | - | 2,880,156 |
Chile Soberano | - | 8,208,532 |
Petróleos Mexicanos S.A. | - | 6,738,784 |
Compañía Manufacturera de Papeles y Cartones S.A. | - | 7,952,490 |
Teléfonos de México S.A. | - | 3,359,872 |
Codelco S.A. | - | 5,814,596 |
México Soberano | - | 5,307,311 |
Brasil Telecom S.A. | - | 2,260,107 |
Raytheon Company | - | 2,327,163 |
International Paper Company | - | 2,295,002 |
Altria Group | - | 1,303,626 |
Alcoa Inc. | - | 1,167,901 |
|
|
|
Judicial deposits (Brazil) | 8,766,667 | 6,731,946 |
Transfer fiscal credits (Brazil) | 6,534,416 | 5,660,168 |
Prepaid expenses | 3,871,705 | 3,204,184 |
Bond issuance and placement expenses | 2,834,243 | 3,135,058 |
Spare parts | 2,595,570 | 3,133,892 |
Non operating assets | 1,305,912 | 480,580 |
Cross currency swaps | - | 9,181,705 |
Others | 60,625 | 647,509 |
|
|
|
Total | 25,969,138 | 104,970,174 |
21
Note 14 - Short-Term and Long-Term Bank Liabilities
a) SHORT TERM BANK LIABILITIES |
|
|
|
|
|
|
| Currency or indexation adjustment |
|
| |||
Bank or Financial Institution | Other foreign currencies | Indexed Ch$ | TOTAL | |||
| 2008 | 2007 | 2008 | 2007 | 2008 | 2007 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
BOSTON-FINAME | - | 197,382 | - | - | - | 197,382 |
SANTANDER FINAME | - | 140,655 | - | - | - | 140,655 |
ALFA FINAME | - | 30,716 | - | - | - | 30,716 |
BILBAO VISCAYA ARGENTARIA | - | - | 62,001 | - | 62,001 | - |
BANCO DE CHILE | - | - | 149,950 | - | 149,950 | - |
GALICIA | 3,529,202 | - | - | - | 3,529,202 | - |
NVO SANTA FE | 1,766,947 | - | - | - | 1,766,947 | - |
BBVA FRANCES | 1,790,472 | - | - | - | 1,790,472 | - |
Total | 7,086,621 | 368,753 | 211,951 | - | 7,298,572 | 368,753 |
Principal due | 7,086,621 | 368,753 | 211,951 | - | 7,298,572 | 368,753 |
|
|
|
|
|
|
|
Annual average interest rate | 17.64% | 13.47% | 8.58% |
|
|
|
Foreign currency liabilities | 97.10% |
|
|
|
|
|
Local currency liabilities | 2.90% |
|
|
|
|
|
|
|
|
|
|
|
|
b) LONG TERM BANK LIABILITIES (short term portion) |
| |||
|
| |||
| Currency or indexation adjustment | |||
Bank or Financial Institution | Other foreign currencies | TOTAL | ||
| 2008 | 2007 | 2008 | 2007 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
ALFA | 139,052 | - | 139,052 | - |
VOTORANTIM | 2,199 | - | 2,199 | - |
TOTAL | 141,251 | - | 141,251 | - |
Principal due | 141,251 | - | 141,251 | - |
|
|
|
|
|
Annual average interest rate | 11.89% |
|
|
|
|
|
|
|
|
Foreign currency liabilities | 100% |
|
|
|
Local currency liabilities | - |
|
|
|
Note 15 - Long-Term Bank Liabilities
22
Note 16 – 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$198 million of the US$200 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$75 million maturing in December 2012 and semiannual interest payments. At period end, all such bonds are wholly-owned by the subsidiary Abisa Corp. Consequently, the effects of such transactions have been eliminated from these consolidated financial statements, both in the balance sheet and in the consolidated statement of income.
The following table contains more information on Bonds Payable:
Instrument subscription or ID N° | Series | Current nominal value | Currency | Interest rate | Maturity date | Term | Par value | Placement in Chile or abroad | ||
Interest paid | Amortization period | 2008 | 2007 | |||||||
Current portion of bonds payable |
|
|
|
|
|
|
| ThCh$ | ThCh$ |
|
Yankee bonds interests | A | - | US$ Exchange rate | 7.00% | Oct. 1, 2007 | Semiannual | October 2007 | - | 18,725,686 | Abroad |
Yankee bonds interests | B | 2,000,000 | US$ Exchange rate | 7.63% | Oct. 1, 2027 | Semiannual | October 2027 | 20,055 | 43,748 | Abroad |
Register 254 SVS June 13, 2001 capital | A | - | UF | 6.20% | June 1, 2008 | Semiannual | June 2008 | - | 13,454,057 | Chile |
Register 254 SVS June 13, 2001 capital | B | 3,700,000 | UF | 6.50% | June 1, 2026 | Semiannual | December 2009 | 399,508 | 400,098 | Chile |
Total current maturities |
|
|
|
|
|
|
| 419,563 | 32,623,589 |
|
|
|
|
|
|
|
|
|
|
|
|
Long term portion of bonds payable |
|
|
|
|
|
|
|
|
|
|
Yankee bonds | B | 2,000,000 | US$ Exchange rate | 7.63% | Oct. 1, 2027 | Semiannual | October 2027 | 1,052,100 | 2,295,002 | Abroad |
Register 254 SVS June 13, 2001 | B | 3,700,000 | UF | 6.50% | June 1, 2026 | Semiannual | December 2009 | 74,935,027 | 75,042,368 | Chile |
Total long term |
|
|
|
|
|
|
| 75,987,127 | 77,337,370 |
|
Note 17 - 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) | 3,485,575 | 2,686,181 | 8,133,007 | 9,540,357 |
Staff severance indemnities | 711,674 | 736,320 | 6,700,709 | 6,373,795 |
Contingencies | 57,101 | 88,108 | 2,714,420 | 2,788,559 |
Others | - | - | 343,165 | - |
TOTAL | 4,254,350 | 3,510,609 | 17,891,301 | 18,702,711 |
23
Note 18 - Staff Severance Indemnities
Staff Severance Indemnities | June 30, 2008 | June 30, 2007 |
| ThCh$ | ThCh$ |
Beginning balance | 7,133,869 | 6,782,253 |
Provision for the period | 819,147 | 426,514 |
Payments | ( 540,633) | ( 98,652) |
Ending balance | 7,412,383 | 7,110,115 |
Note 19 – Other Long Term Liabilities
| June 30, 2008 | June 30, 2007 |
| ThCh$ | ThCh$ |
Guaranty on containers | 9,478,750 | 9,239,332 |
Participation acquisition of assets | 2,957,703 | 1,648,530 |
Advertising agreements | 108,723 | 103,389 |
Others | 907,070 | - |
Total | 13,452,246 | 10,991,251 |
Note 20 - Minority Interest
| June 30, 2008 | June 30,2007 |
LIABILITIES | ThCh$ | ThCh$ |
|
|
|
Vital Aguas S. A. | 1,310,121 | 1,318,948 |
Embotelladora del Atlántico S. A. | 8,830 | 22,102 |
Andina Inversiones Societarias S.A. | 18 | 45 |
| 1,318,969 | 1,341,095 |
|
|
|
|
|
|
| June 30,2008 | June 30,2007 |
INCOME STATEMENT | ThCh$ | ThCh$ |
|
|
|
Vital Aguas S. A. | 8,851 | (41,842) |
Embotelladora del Atlántico S. A. | (476) | (570) |
Andina Inversiones Societarias S.A. | (2) | (4) |
| 8,373 | (42,416) |
24
Note 21 - Changes in Shareholders’ Equity
The activity in Shareholders’ Equity, Dividend Distribution and Other Reserves is detailed in the following tables:
| June 30,2008 |
| June 30,2007 | ||||||||||
| Paid in | Reserve | Other | Accumulated Income | Interim | Net |
| Paid in | Reserve | Other | Accumulated Income | Interim Dividends | Net |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Beginning balance | 217,013,513 | - | (11,443,442) | 11,171,454 | (17,194,331) | 81,601,944 |
| 202,060,999 | - | - | 10,005,036 | (13,438,065) | 74,355,094 |
Distribution of prior | - | - | - | 64,407,613 | 17,194,331 | (81,601,944) |
| - | - | - | 60,917,029 | 13,438,065 | (74,355,094) |
Final dividend prior year | - | - | - | (7,288,372) | - | - |
| - | - | - | (8,876,966) | - | - |
Translation adjustment reserve | - | - | 5,062,516 | - | - | - |
| - | - | (1,951,883) | - | - | - |
Extraordinary dividend | - | - | - | (47,897,296) | - | - |
| - | - | - | (52,040,412) | - | - |
Capital revalued | - | 6,944,432 | (366,198) | 1,590,745 | - | - |
| - | 3,839,159 | 33,256 | 616,509 | - | - |
Income for the period | - | - | - | - | - | 38,456,554 |
| - | - | - | - | - | 35,014,442 |
Interim dividends | - | - | - | - | (5,588,018) | - |
| - | - | - | - | (5,588,018) | - |
Ending balance | 217,013,513 | 6,944,432 | (6,747,124) | 21,984,144 | (5,588,018) | 38,456,554 |
| 202,060,999 | 3,839,159 | (1,918,627) | 10,621,196 | (5,588,018) | 35,014,442 |
Price level restated balances |
|
|
|
|
|
|
| 220,044,428 | 4,180,844 | (2,089,385) | 11,566,482 | (6,085,352) | 38,130,727 |
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 |
25
Other Reserves |
|
|
|
|
|
|
|
|
|
Balance of Other Reserves is composed as follows: |
|
|
|
|
|
|
| 2008 | 2007 |
|
|
| ThCh$ | ThCh$ |
|
|
|
|
|
Reserve for cumulative translation adjustments(1) |
|
| ( 7,865,497) | ( 3,209,103) |
Reserve for technical reappraisal of property, plant and equipment |
| 69,440 | 84,046 | |
Other |
|
| 1,048,933 | 1,035,672 |
Total |
|
| ( 6,747,124) | ( 2,089,385) |
|
|
|
|
|
(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 | Reserve release / realized(*) | Balance June 30, 2008 | |
|
|
| Balance | ||||
Company |
|
| January 1, 2007 | Investment | Liabilities | ||
|
|
| ThCh$ | ThCh$ | ThCh$ |
| ThCh$ |
Rio de Janeiro Refrescos Ltda. |
|
| (7,817,197) | (31,668) | - | 2,601,802 | (5,247,063) |
Embotelladora del Atlántico S. A. |
|
| (5,110,816) | 579,218 | - | 1,913,164 | (2,618,434) |
Total |
|
| (12,928,013) | 547,550 | - | 4,514,966 | (7,865,497) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(*) Reserve realized resulted from dividends paid by our subsidiary Río de Janeiro Refrescos Ltda. and by the capital decrease and dividend distribution of our subsidiary Embotelladora del Atlántico S.A. | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Note 22 - Other Non-Operating Income and Expenses
| 2008 | 2007 |
|
|
| ThCh$ | ThCh$ |
|
|
Other non-operating income during the period was as follows: |
|
|
|
|
|
|
|
|
|
Reverse provision | 4,297,131 | 792,278 |
|
|
Recovery of prior year taxes | 477,677 | 2,192,186 |
|
|
Earnings on sale of property, plant & equipment | 56,823 | - |
|
|
Other income | 215,147 | 323,966 |
|
|
Sub-total | 5,046,778 | 3,308,430 |
|
|
Translation of financial statements(1) | 432,797 | 1,224,634 |
|
|
Total | 5,479,575 | 4,533,064 |
|
|
|
|
|
|
|
|
|
|
|
|
Other non-operating expenses during the period was as follows: |
|
|
| |
|
|
|
|
|
|
|
|
|
|
Conversion adjustment reserve realized(2) | (4,514,966) | (520,740) |
|
|
Bank taxes(3) | (1,053,228) | (1,402,157) |
|
|
Provision for labor and commercial lawsuits | (414,052) | (283,280) |
|
|
Obsolescence and write-offs of property, plant and equipment | - | (472,028) |
|
|
Provision loss of investment in Centralli | (54,991) | (46,993) |
|
|
Loss on sale of property, plant and equipment | - | (247,040) |
|
|
Others | (789,940) | (552,058) |
|
|
|
|
|
|
|
Total | (6,827,177) | (3,524,296) |
|
|
|
|
|
|
|
|
|
|
|
|
(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 2007 period, respectively. |
|
| ||
(3)This refers to taxes charged in the normal course of business due to banking accounts movements in our foreign subsidiaries and are not related to the obtention of financial resources. |
|
|
27
Note 23 - Price-Level Restatement
| Adjustment index | June 30,2008 | June 30,2007 |
Assets - (charges)/credits |
| ThCh$ | ThCh$ |
Inventories | CPI | (34,587) | (84,741) |
Property, plant and equipment | CPI | 3,199,168 | 1,570,228 |
Investments in related companies | CPI | 4,422,376 | 4,399,847 |
Cash, Time Deposits, Marketable Securities | UF | 635,358 | - |
Cash, Time Deposits, Marketable Securities | CPI | 1,406,711 | 238,563 |
Short term accounts receivable from related companies | UF | 218,830 | - |
Short term accounts receivable from related companies | CPI | 277,142 | 588,454 |
Recoverable taxes | CPI | 9,337 | 71,458 |
Other current assets | UF | 520,853 | 266,430 |
Other current assets | CPI | 87,470 | (27,342) |
Other long term assets | UF | 14,331 | 6,868 |
Other long term assets | CPI | 80,292 | 1,473,923 |
Cost and expense accounts | CPI | 2,306,691 | 1,269,979 |
Total (charges) credits |
| 13,143,972 | 9,773,667 |
|
|
|
|
Liabilities - (charges)/credits |
|
|
|
Shareholders’ equity | CPI | (8,168,979) | (4,888,439) |
Short and long term bonds payable | UF | (2,275,470) | (1,336,638) |
Short and long term bonds payable | CPI | (67,885) | (353,005) |
Other current liabilities | UF | (220,392) | (100,208) |
Other current liabilities | CPI | (295,578) | (229,674) |
Other long term liabilities | CPI | (126,325) | (78,431) |
Long term accounts payable to related companies | UF | - | (260,078) |
Short term accounts payable to related companies | CPI | - | (704,034) |
Income accounts | CPI | (2,875,728) | (1,732,110) |
Total (charges) credits |
| (14,030,357) | (9,682,617) |
Price-level restatement (loss ) gain |
| (886,385) | 91,050 |
28
Note 24 - Foreign Exchange Gains/Losses
| Currency | June 30, 2008 | June 30,2007 |
Assets - (charges)/credits |
| ThCh$ | ThCh$ |
Cash | US$ | (29,720) | 25,537 |
Time deposits | US$ | (1,647) | (457) |
Marketable securities (net) | US$ | 3,183,328 | (761,498) |
Sales receivable | US$ | 447 | - |
Other debtors (net) | US$ | 41,812 | (138) |
Accounts receivable related companies | US$ | 1,352,341 | (1,498,027) |
Inventories (net) | US$ | - | (10,360) |
Recoverable taxes | US$ | 83 | - |
Prepaid expenses | US$ | 210 | - |
Other current assets | US$ | 465,950 | 187,991 |
Property, plant and equipment | US$ | 210 | (6,250) |
Others | US$ | (63,600) | (1,933,635) |
Total (charges)/credits |
| 4,949,414 | (3,996,837) |
|
|
|
|
Liabilities - (Charges) / credits |
|
|
|
Bonds payable | US$ | 149,388 | (42,542) |
Accounts payable | US$ | (51,131) | (1,899) |
Provisions | US$ | (503,871) | (4,003) |
Prepaid income | US$ | 2,417 | - |
Other current liabilities | US$ | (379,280) | (46,764) |
Bonds payable long term | US$ | (26,519) | 614,658 |
Total (charges) credits |
| (808,996) | 519,450 |
Foreign exchange gain (loss) on income |
| 4,140,418 | (3,477,387) |
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 16.
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$3,210,384 and ThCh$3,527,737 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$193,627 and ThCh$208,512 in 2007.
29
Note 26 - Consolidated Statement of Cash Flows
For the projection of future cash flows, there are no transactions and events to consider which have not been revealed in these financial statements and accompanying notes.
The following table presents an itemization of the movement of assets and liabilities not affecting the cash flow in the period, but compromising future cash flows.
| June 30, 2008 | Maturity date | June 30, 2007 | Maturity date |
| ThCh$ | M$ | ||
Expected cash outflow |
|
|
|
|
Expenses |
|
|
|
|
Dividend payment | (5,588,018) | 31-Jul-08 | ( 56,672,009) | 5-Jul-07 |
Dividend payment | - |
| ( 6,085,352) | 26-Jul-07 |
Addition to property, plant and equipment | (3,166,935) | 15-Aug-08 | ( 1,315,321) | 31-Aug-07 |
Addition to property, plant and equipment | (437,058) | 31-Jul-08 | ( 676,579) | 31-Jul-07 |
Addition to property, plant and equipment | ( 14,360) | 30-Sep-08 | ( 69,489) | 30-Sep-07 |
Total expenses | ( 9,206,371) |
| ( 64,818,750) |
|
|
|
|
|
|
Expected cash inflow |
|
|
|
|
Income |
|
|
|
|
Sale of property, plant and equipment | 20,207 | 31-Jul-08 | 10,729 | 15-Aug-07 |
Total income | 20,207 |
| 10,729 |
|
|
|
|
|
|
Total net | ( 9,186,164) |
| ( 64,808,021) |
|
30
Note 27 - Derivative Contracts
Derivative contracts at June 30, 2008 were as follows:
|
|
|
|
|
| Hedged item or Transaction |
| Assets / Libailities | Effect on income | |||
Derivative | Contract | Value | Maturity period | Specific Item | Position Purchase / Sale | Concept | Amount | Hedged Item Value | Item | Amount | Realized | Unrealized |
|
| ThCh$ |
|
|
|
| ThCh$ | ThCh$ |
| ThCh$ | ThCh$ | ThCh$ |
FR | CCPE | 37,751,060 | 3rd Quarter 2008 | US$ | P | Foreign currency investment | 37,751,060 | 39,866,992 | Other current | - | (2,115,933) | - |
FR | CCTE | 19,643,730 | 3rd Quarter 2008 | US$ | P | Suppliers foreign currency | 19,639,681 | - | Other current assets | 773,133 | (315,401) | (457,732) |
FR | CCTE | 2,208,173 | 3rd Quarter 2008 | US$ | S | Suppliers foreign currency | 2,229,926 | - | Other current assets | 88,502 | - | (88,502) |
FR | CCTE | 23,296,732 | 4th Quarter 2008 | US$ | P | Suppliers foreign currency | 23,301,660 | - | Other current assets | 777,668 | - | (777,668) |
FR | CCTE | 3,311,986 | 4th Quarter 2008 | US$ | S | Suppliers foreign currency | 3,324,636 | - | Other current assets | 140,034 | - | (140,034) |
FR | CCTE | 5,587,340 | 1st Quarter 2009 | US$ | P | Suppliers foreign currency | 5,587,242 | - | Other current assets | 377,751 | - | (383,991) |
31
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$1,521,597 (ThCh$1,625,117 in 2007). In accordance with its legal counsel’s opinion, the Company deems improbable that unstipulated contingencies may affect the results or equity of the Company.
2)
Rio de Janeiro Refrescos Ltda. faces labor, tax and other lawsuits. Accounting provisions to back any probable loss contingency arising from these lawsuits, amounts to ThCh$1,187,207 (ThCh$1,061,956 in 2007). In accordance with its legal counsel’s opinion, the Company deems improbable that unstipulated contingencies may affect the results or equity of the Company.
3)
Embotelladora Andina S.A. faces, labor, tax, commercial and other lawsuits. Accounting provisions to back any probable loss contingency stemming from these lawsuits, amounts to ThCh$15,082 (ThCh$70,454 in 2007). In accordance with its legal counsel’s opinion, the Company deems improbable that contingencies without provisions may affect the results or equity of the Company.
b.
Restrictions
The bond issue and placement on the US market for US$ 200 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 3,700,000 is subject to the following restrictions:
Leverage ratio, defined as the total financial debt/shareholder’s equity plus minority interest should be less than 1.20 times.
Financial debt shall be deemed Consolidated Finance Liabilities which include: (i) short-term bank liabilities, (ii) short-term portion of long-term bank liabilities, (iii) short-term bonds payable-promissory notes, (iv) short-term portion of bonds payable, (v) long-term bank liabilities, and (vi) long-term bonds payable. Consolidated equity means Total equity plus Minority Interest.
Consolidated assets are to be free of any pledge, mortgage or other encumbrance for an amount equal to at least 1.30 times the consolidated liabilities that are not guaranteed by the investee.
Andina must retain and, in no way, lose, sell, assign or dispose of to a third party the geographical zone denominated “Región Metropolitana”, as a franchised territory in Chile by The Coca-Cola Company for the preparation, production, sale and distribution of the products and brands in accordance with the respective Bottling agreement, renewable from time to time.
Andina shall not lose, sell, assign or dispose of to a third party any other territory in Brazil or Argentina that is currently franchised to Andina by The Coca-Cola Company for the preparation, production, sale and distribution of the products and brands of the franchisor, as long as the referred territory represents more than forty percent of the Company’s Consolidated Operating Cash Flows.
32
c.
Direct guarantees
Guarantees at June 30, 2008 are presented on the following table:
|
|
|
| Assets involved | Balances pending at end of period |
|
|
| ||
Guarantee creditor | Debtor |
| Type of | Guaranty release | ||||||
| Name | Relation |
| Type | Accounting | 2008 | 2007 | 2009 | 2010 | 2011 |
|
|
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
AGA S.A. | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty | Agreement | - | 157,815 | 172,125 | - | - | 157,815 |
MUNICIPALIDAD DE SANTIAGO | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty | Guaranty | - | 11,333 | 11,358 | - | 11,333 | - |
ESCUELA MILITAR | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty | Guaranty | - | 1,304 | - | 304 | 1,000 | - |
MUNICIPALIDAD DE MAIPU | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty | Guaranty | - | 101,324 | - | - | - | - |
ESTADO RIO DE JANEIRO | RIO DE JANEIRO REFRESCOS LTDA. | Subsidiary | Mortgage | Real estate | 11,847,287 | 13,419,576 | 11,107,630 | - | - | - |
PODER JUDICIARIO | RIO DE JANEIRO REFRESCOS LTDA. | Subsidiary | Judicial | Long term | 12,184,138 | - | - | - | - | - |
ADUANA DE EZEIZA | EMBOTELLADORA DEL ATLANTICO S.A. | Subsidiary | Guaranty | Temporary | 10,086 | - | - | - | - | - |
Note 29 - Guarantees from Third Parties
Guarantees from Third Parties at June 30, 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 | 57,986,569 | US$ | Purchase of Nitvitgov Refrigerantes S.A. |
CONFAB | Subsidiary | Mortgage | 30,000,000 | US$ | Purchase of Rio de Janeiro Refrescos Ltda. |
SEVERAL CLIENTS | Subsidiary | Deposits | 3,852,058 | US$ | Guaranty over containers |
CONSTRUCTORA PRECON S.A. | Parent Company | Receipt | 9,329 | UF | Construction agreement |
33
Note 30 - Local and Foreign Currency
Assets at each period end were composed of local and foreign currencies as follows:
| Amount | June 30, 2008 | June 30, 2007 |
|
| ThCh$ | ThCh$ |
Current Assets |
|
|
|
Cash | Indexed Ch$ | 621,172 | - |
- | Non-indexed Ch$ | 3,300,132 | 5,454,108 |
- | US$ | 159,914 | 22,993,083 |
- | $AR | 1,173,849 | 914,869 |
- | $R | 3,155,872 | 4,593,542 |
Time Deposits | Non-indexed Ch$ | 30,486,498 | 17,439,298 |
- | US$ | 6 | 3,602,796 |
- | $AR | 36,096 | - |
- | $R | - | 168,303 |
Marketable Securities (Net) | Non-indexed Ch$ | 6,619,798 | 954,851 |
- | US$ | 57,450,173 | 26,837,485 |
- | $AR | - | 1,521,429 |
- | $R | 88,587 | - |
Trade Accounts Receivable (Net) | Non-indexed Ch$ | 12,612,860 | 11,063,883 |
- | Indexed Ch$ | 120,011 | - |
- | US$ | 677,974 | 609,164 |
- | $AR | 1,835,638 | 1,784,039 |
- | $R | 13,206,316 | 11,661,093 |
Notes Receivable | Non-indexed Ch$ | 5,100,340 | 4,761,118 |
- | $AR | 577,724 | 360,347 |
- | $R | 2,136,948 | 2,677,081 |
Other Debtors (Net) | Non-indexed Ch$ | 4,002,585 | 2,196,149 |
- | Indexed Ch$ | 928,848 | - |
- | US$ | 71,253 | 488,058 |
- | $AR | 1,373,762 | 462,587 |
- | $R | 9,986,247 | 5,255,448 |
Notes Receivable Related Companies | Non-indexed Ch$ | 1,292,800 | 1,010,418 |
Inventories (Net) | Non-indexed Ch$ | 4,344,412 | 5,598,289 |
- | Indexed Ch$ | 2,102,087 | - |
- | US$ | 3,516,133 | 2,297,547 |
- | $AR | 5,589,578 | 4,833,514 |
- | $R | 11,549,910 | 12,601,903 |
Recoverable Taxes | Non-indexed Ch$ | 778,895 | 1,384,892 |
- | Indexed Ch$ | 1,589,360 | - |
- | US$ | - | 282,158 |
- | $AR | 455,445 | 846,939 |
- | $R | 199,069 | 294,253 |
Prepaid Expenses | Non-indexed Ch$ | 1,608,573 | 1,436,922 |
- | US$ | 123,643 | 79,808 |
- | $AR | 273,771 | 265,487 |
- | $R | 1,135,827 | 724,236 |
Deferred Taxes | Indexed Ch$ | 65,663 | - |
- | Non-indexed Ch$ | 698,916 | - |
- | $AR | 359,010 | 271,065 |
- | $R | 5,077,922 | 280,108 |
Other Current Assets | Indexed Ch$ | 1,477,169 | 974,959 |
- | Non-indexed Ch$ | 227,914 | 486,796 |
- | US$ | 440,881 | 23,019,275 |
- | $AR | 951,455 | 762,398 |
- | $R | 3,159,621 | 2,268,619 |
Property, Plant and Equipment |
|
|
|
Property, Plant and Equipment | Indexed Ch$ | 93,187,776 | 74,701,866 |
- | US$ | 96,093,438 | 87,381,384 |
Other Assets |
|
|
|
Investments in Related Companies | Indexed Ch$ | 18,688,336 | 19,547,525 |
- | US$ | - | 946,537 |
- | $R | 5,544,574 | 1,875,456 |
Investments in Other Companies | US$ | 102,444 | 14,422 |
- | Indexed Ch$ | 47,177 | 47,233 |
Goodwill | Indexed Ch$ | 1,043,684 | 1,197,845 |
- | US$ | 56,182,925 | 67,994,355 |
Long Term Debtors | Indexed Ch$ | 11,021 | 11,315 |
- | $R | - | 43,537 |
- | $AR | 14,495 | 15,923 |
Notes Receivable Related Companies | Indexed Ch$ | 45,890 | 39,396 |
Intangibles | Non-indexed Ch$ | 1,198,742 | - |
- | US$ | 300,834 | - |
- | $AR | - | 457,947 |
Amortization | US$ | (157,939) | (285,689) |
Others | Indexed Ch$ | 285,481 | - |
- | Non-indexed Ch$ | 4,308,277 | 3,245,381 |
- | US$ | (802,123) | 85,005,809 |
- | $AR | 3,229,419 | 2,423,601 |
- | $R | 18,948,084 | 14,295,383 |
Total Assets | Indexed Ch$ | 120,213,675 | 96,520,139 |
| Non-indexed Ch$ | 76,580,742 | 55,032,105 |
| US$ | 214,159,556 | 321,266,192 |
| $AR | 15,870,242 | 14,920,145 |
| $R | 74,188,977 | 56,738,962 |
34
Note 30 - Local and Foreign Currency (continuation)
Current liabilities for the period ended June 30, 2008 and 2007, denominated in local and foreign currencies were as follows:
|
| Up to 90 days |
| 90 days to 1 year | |||||
|
| June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 | ||||
| Currency | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate |
Short term bank liabilities | Non-indexed Ch$ | 211,951 | 8.58% | - |
| - |
| - |
|
- | $AR | - |
| - |
| 7,086,621 | 17.64% | - |
|
- | $R | - |
| - |
| - |
| 368,753 | 13.47% |
Long term bank liabilities | US$ | - |
| - |
| - |
| - |
|
- | $R | - |
| - |
| 141,251 | 11.89% | - |
|
Long term bonds payable | Indexed Ch$ | - |
| 7,161,155 | 6.20% | 399,508 | 6.50% | 6,693,000 | 6.20% |
- | US$ | - |
| 365,811 | 7.35% | 20,055 | 7.63% | 18,403,623 | 7.35% |
Dividends payable | Non-indexed Ch$ | 5,798,456 |
| 62,992,550 |
| - |
| - |
|
- | $AR | 5,600 |
| - |
| - |
| - |
|
Accounts payable | Non-indexed Ch$ | 21,758,231 |
| 15,663,629 |
| - |
| - |
|
- | US$ | 1,908,758 |
| 2,580,151 |
| - |
| - |
|
- | $AR | 10,705,535 |
| 5,307,826 |
| - |
| - |
|
- | $R | 9,953,918 |
| 8,946,516 |
| - |
| - |
|
- | EUROS$ | 10,131 |
| 2,376 |
| - |
| - |
|
Other crecitors | $AR | 167,132 |
| 86,215 |
| 44,474 |
| 37,751 |
|
- | $R | 5,877,936 |
| 4,331,793 |
| - |
| - |
|
- | US$ | 94,258 |
| 192,496 |
| - |
| - |
|
Notes and accounts payable related companies | Non-indexed Ch$ | 4,245,856 |
| 1,137,573 |
| - |
| - |
|
- | US$ | - |
| 1,480,442 |
| - |
| - |
|
- | $AR | 1,972,882 |
| - |
| - |
| - |
|
- | $R | 1,486,655 |
| 1,617,825 |
| - |
| - |
|
Provisions | Non-indexed Ch$ | 726,753 |
| 788,221 |
| - |
| - |
|
- | $R | - |
| 2,722,388 |
| 3,527,597 |
| - |
|
Withholdings | Non-indexed Ch$ | 6,018,193 |
| 4,314,420 |
| - |
| - |
|
- | $AR | 6,624,215 |
| 4,186,046 |
| - |
| - |
|
- | $R | - |
| - |
| 3,150,202 |
| 1,876,516 |
|
- | EUROS$ | - |
| - |
| - |
| - |
|
Income tax provision | Non-indexed Ch$ | 5,272 |
| 708,184 |
| 311,241 |
| - |
|
- | $AR | 1,445,633 |
| - |
| - |
| 175,602 |
|
- | $R | - |
| 511,495 |
| 432,706 |
| - |
|
Unearned income | Non-indexed Ch$ | 128 |
| 595,010 |
| - |
| - |
|
Other current liabilities | Non-indexed Ch$ | 2,346,015 |
| 4,721,060 |
| - |
| - |
|
- | US$ | 2,115,933 |
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities | Non-indexed Ch$ | 41,110,855 |
| 90,920,647 |
| 311,241 |
| - |
|
| $AR | 20,920,997 |
| 9,580,087 |
| 7,131,095 |
| 213,353 |
|
| $R | 17,318,509 |
| 18,130,017 |
| 7,251,756 |
| 2,245,269 |
|
| US$ | 4,118,949 |
| 4,618,900 |
| 20,055 |
| 18,403,623 |
|
| Indexed Ch$ | - |
| 7,161,155 |
| 399,508 |
| 6,693,000 |
|
| EUROS$ | 10,131 |
| 2,376 |
| - |
| - |
|
35
Note 30 - Local and Foreign Currency (continuation)
Long term liabilities at June 30, 2008 were composed of local and foreign currencies as follows:
Long term liabilities at June 30, 2007 were composed of local and foreign currencies as follows:
36
Note 31 – Penalties
The Company has not been subject to penalties by the SVS or any other administrative authority.
Note 32 - Subsequent Events
Changes in Management Corporate Legal and Communications Officer
Embotelladora Andina S.A. announced that Mr. Pedro Pellegrini, Corporate Legal and Communications Manager, will leave his position as of July 31, 2008, after 13 years of outstanding performance at the Company. Mr. Pellegrini's decision was internally communicated some months ago and is based on his interest in dedicating himself to private practice and corporate advisor roles and in this sense Mr. Pellegrini will continue as an external advisor of Andina. The name of the new Corporate Legal Officer will be timely informed.
Note 33 – Companies subject to special regulations
The Company and its subsidiaries are not subject to special regulations.
Note 34 – Environment
The Company has disbursed ThCh$1,720,698 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$483,711.
37
I.
Analysis of Results for the Second Quarter of 2008 and the Period ended June 30, 2008
All figures are expressed under Chilean GAAP and in constant Chilean pesos as of June 2008, therefore all variations are in real terms.
Highlights
·
Operating Income reached Ch$21,430 million during the Second Quarter of 2008, a 2.8% decrease in real terms compared to the same period of the previous year. Operating Margin was 13.0%.
·
Consolidated Sales Volume for the Second Quarter amounted to 97.2 million unit cases, an increase of 1.7% during the quarter.
·
Second Quarter EBITDA totaled Ch$29,983 million, remaining stable in real terms compared to the Second Quarter of 2007. EBITDA Margin was 18.2%.
·
Net Income for the Second Quarter of 2008 reached Ch$17,612 million, 26.8% higher than the figure recorded in the Second Quarter of 2007.
·
Consolidated Operating Income reached Ch$58,117 million during the period ended June 30, 2008, 9.3% higher in real terms than the figure recorded as of June 30, 2007. Operating Margin was 16.2%.
·
Consolidated Sales Volume for the period ended June 30, 2008 totaled 217.8 million unit cases, an increase of 3.9% compared to 2007.
·
Consolidated EBITDA for the period ended June 30, 2008 amounted to Ch$74,907 million, an increase of 8.6% in real terms. EBITDA Margin was 20.8%.
·
Net Income for the First Half of 2008 reached Ch$38,457 million, 0.9% higher than the First Half of 2007.
Comments from the Chief Executive Officer, Mr. Jaime Garcia R.
“The results obtained during the first half of 2008 reflect our ability to face the complex inflationary scenarios in the different markets where we operate, keeping our Consolidated Operating Margin stable. Appreciation of the Chilean and Brazilian currencies were beneficial to our business and we increased by 4% our consolidated volume, where the 24% growth in the juices and waters categories stands out. As always we remain enthusiastic to face the challenges of the second half of the year. “
CONSOLIDATED SUMMARY
First Half ended June 30, 2008 vs. First Half ended June 30, 2007
During the First Half of 2008, the Company’s results were due to growth in volume, increases in prices in line with local inflation and the complex macroeconomic environment. Inflation has particularly had a negative impact over the food and beverage industry in the three countries where we operate, and to an extent has had an effect over volume increases. The average 17% and 11.5% appreciation of the Brazilianreal and Chileanpeso respectively has had a positive impact over our dollar-denominated cost and the translation of figures for those cash flows generated in Brazil. The Argentinepeso remained relatively stable, with an average depreciation of 1.6%.
Consolidated Sales Volume amounted to 217.8 million unit cases, an increase of 3.9%. Soft Drinks increased 2.2%, while the other categories of, Juices, Waters and Beer together increased by 22.8%.
38
Net Sales amounted to Ch$359,349 million, 11.2% higher than 2007 in real terms. Resulting from higher volumes, price adjustments in the three countries where we operate and in the case of Brazil, a favorable exchange rate upon translation of figures.
Cost of Sales per unit case increased 2.6% compared to the First Half of 2007, mainly due to: (i) higher concentrate costs specifically in Chile given the new bottler agreement; and in the three countries where the Company operates due to price increases, (ii) increased depreciation (resulting from significant investments carried out during the last year); and (iii) increased labor costs. All of which was partially offset by the appreciation of the Brazilianreal and Chileanpeso, thus decreasing the costs of U.S. dollar-denominated raw materials, and the lower price of sugar in Chile and Brazil resulting from good negotiations with suppliers.
On the other hand, SG&A expenses increased 22.2% as a result of higher volumes and increased freight fees, which rose due to higher labor costs and fuel prices, in addition to the effect upon translation of figures of our Brazilian operation.
Consolidated Operating Income amounted to Ch$58,117 million, a 9.3% increase compared to the First Half of 2007. Operating Margin was 16.2%, a decrease of 20 basis points.
Consolidated EBITDA amounted to Ch$74,907 million, an increase of 8.6%. EBITDA Margin was 20.8%.
Second Quarter 2008 vs. Second Quarter 2007
Consolidated Sales Volume for the Second Quarter of 2008 reached 97.2 million unit cases, a 1.7% increase compared to the same period of the previous year. This growth resulted from the development of “other categories” which achieved a 20.3% increase in volumes; soft drink volumes remained stable.
Net Sales amounted to Ch$165,145 million, representing a 9.2% improvement in real terms compared to the Second Quarter of 2007, mainly due to increased volumes, stable average income in real terms in the three countries where the Company operates and a favorable exchange rate upon translation of figures in the case of Brazil.
Cost of Sales per unit case increased 5.0%, mainly explained by the previously-mentioned circumstances during the First Half of 2008.
SG&A expenses increased 20.2%, as a result of increased volumes, higher freight fees and the increase in advertising expenses, in addition to the effect upon translation of figures of our Brazilian operation.
Consolidated Operating Income amounted to Ch$21,430 million, a 2.8% decrease in real terms compared to the Second Quarter of 2007. Operating Margin was 13.0%.
Finally, Consolidated EBITDA amounted to Ch$29,983 million, remaining stable in real terms compared to the same period of the previous year. EBITDA Margin was 18.2%.
39
SUMMARY BY COUNTRY
CHILE
First Half ended June 30, 2008 vs. First Half ended June 30, 2007
During the First Half of 2008, Sales Volume amounted to 75.7 million unit cases a significant 7.0% growth compared to the First Half of 2007. This growth was a result of increased soft drink volumes (+3.9%) as well as an increase in the Juices and Waters segment (+21.9%).
Net Sales amounted to Ch$125,859 million, a 4.6% improvement in real terms compared to the previous year, as a result of higher volumes and offset by a 2.3% decrease in real terms of the average income per unit case.
Operating Income was 6.0% lower in real terms than the figure reported in the same period of 2007, amounting to Ch$25,913 million. Operating Margin was 20.6%.
EBITDA amounted to Ch$33,402 million, 1.7% lower in real terms than the EBITDA figure recorded in 2007. EBITDA Margin was 26.5%.
Second Quarter 2008 vs. Second Quarter 2007
During the Second Quarter of 2008 Sales Volume amounted to 33.4 million unit cases, a 5.0% growth compared to the same period of the previous year, where “other categories” were a strong growth driver recording a 19.8% increase. In addition to water volumes ofBenedictino (launched in the month of February this year), during the month of May we introducedBurn, the Coca-Cola brand for energy drinks already positioned in the international markets. In Chile this category has a good growth potential.
Net Sales amounted to Ch$57,180 million, reflecting a growth of 5.0%, with a real average income per unit case remaining stable.
Cost of Sales per unit case increased 2.0%. This higher cost is mainly explained by an increase in concentrate costs (resulting from price increases and a higher incidence), cost of PET resin and increased labor costs. These factors were partially offset by a decrease in the costs of sugar and the positive effect of the average 12.5% revaluation of the Chileanpeso over our U.S. dollar-denominated raw materials.
Operating Income amounted to Ch$10,919 million, a 3.5% decrease in real terms compared to the Second Quarter of 2007. Operating Margin was 19.1%.
EBITDA amounted to Ch$14,764 million, a 1.0% increase in real terms regarding the EBITDA figure recorded during the same period of the previous year. EBITDA Margin was 25.8%.
BRAZIL
For the second quarter and first half of 2008 the appreciation of the Brazilian real had a positive impact over income and a negative impact over costs and expenses due to figure translation.
First Half ended June 30, 2008 vs. First Half ended June 30, 2007
40
Sales Volume amounted to 83.8 million unit cases, compared to the 84.2 million unit cases recorded as of June 30, 2007, strongly affected by the contraction in consumer demand and lower temperatures than those registered last year.
Net Sales reached Ch$157,826 million, increasing 13.8% in real terms compared to the previous year. This increase was as a result of price adjustments and the favorable exchange rate upon the translation of figures.
Cost of Sales per unit case increased 3.0%. Higher freight fees along with the effect upon translation of figures (revaluation of the Brazilianreal) led to a 28.8% increase of SG&A expenses.
Operating Income increased 26.2%, amounting to Ch$25,090 million. Operating Margin was 15.9%, an improvement of 160 basis points.
EBITDA amounted to Ch$30,804 million, an increase of 21.0% in real terms, with an EBITDA Margin of 19.5%, increasing 110 basis points compared to the previous period.
Second Quarter 2008 vs. Second Quarter 2007
Sales Volume for the Second Quarter of 2008 amounted to 38.4 million unit cases, representing a 3.6% decrease compared to the Second Quarter of 2007. This volume decrease reflects the contraction in consumer demand and a consumer pattern shift towards durable goods, less available wages in low income families (as a result of the inflation recorded in the food and beverage segment, tripling that of general inflation) and lower temperatures than those recorded during the same period last year.
Net Sales reached Ch$73,911 million, representing a significant increase of 8.5%. This growth is explained by price adjustments during the period, as well as the appreciation of the Brazilian exchange rate which had a positive impact upon translating figures into US dollars.
Cost of Sales per unit case grew 6.2% mainly explained by the increase in concentrate (resulting from price adjustments) and PET resin, in addition to an increased depreciation along with the figure conversion effect (that negatively impacts the costs). These factors were partially offset by the decrease in the cost of sugar and the positive effect of the appreciation of the Brazilianreal over U.S. dollar-denominated raw material costs.
Operating Income reached Ch$9,219 million, representing a 4.1% decrease in real terms and Operating Margin was 12.5%.
Finally, EBITDA amounted to Ch$12,077 million, a decrease of 3.3% in real terms compared to the Second Quarter of 2007. EBITDA Margin was 16.3%.
ARGENTINA
First Half ended June 30, 2008 vs. First Half ended June 30, 2007
Sales Volume reached 58.3 million unit cases, a 6.5% improvement compared to the Sales Volume reported in 2007, driven by the increase in salaries observed during the period.
Net Sales reached Ch$76,759 million, representing an increase of 15.9% in real terms. This increase is explained by higher volumes and price adjustments that took place during the period, partially offset by the effect of the figure translation due the devaluation of the Argentine peso (1.6% on average).
41
Cost of Sales per unit case increased 5.0%, mainly explained by increased costs of sugar, PET resin, concentrate (as a result of price increases), and increased labor costs.
SG&A expenses increased 23.0% mainly due to higher salaries, and the impact of the agricultural strike over our logistic and distribution operations.
Operating Income amounted to Ch$8,826 million, a significant 21.5% increase. Operating Margin was 10.8%, 50 basis points higher than 2007.
EBITDA reached Ch$11,873 million, an increase of 11.8% in real terms compared to the same period of 2007. EBITDA Margin was 15.5%.
Second Quarter 2008 vs. Second Quarter 2007
Sales Volume for the Second Quarter of 2008 increased 6.4% reaching 25.4 million unit cases.
Net Sales reached Ch$34,519 million, representing an increase of 15.8% in real terms compared to the Second Quarter of 2007. This improvement is explained by higher volumes and price adjustments during the period, partially offset by the effect of the devaluation of the Argentine peso upon translation of figures.
Cost of Sales per unit case increased 5.0%, explained by the same arguments given for the First Half analysis.
Operating Income amounted to Ch$1,811 million, a 10.3% increase in real terms compared to the same period of 2007. Operating Margin was 5.2%, a decrease of 30 basis points compared to the Second Quarter of 2007.
Finally, EBITDA reached Ch$3,661 million, an increase of 3.7%. EBITDA Margin was 10.6%
NON-OPERATING RESULTS
First Half ended June 30, 2008 vs. First Half ended June 30, 2007
Non-Operating Results totaled a loss of (Ch$7,917) million, which compares negatively to a lower accumulated loss of (Ch$4,504) million recorded during 2007. This increased loss in the non-operating result line is best explained by:
·
Price Level Restatement: Resulted in a profit compared to a loss recorded in the same period of 2007, due to an increase of the exchange rate during the period (Ch$526.05 per US$ as of June 30, 2008 vs. Ch$496.89 per US$ as of December 30, 2007; and Ch$526.86 per US$ as of June 30, 2007 vs. Ch$532.39 per US$ as of December 30, 2006); over the Company’s U.S. Dollar asset position.
·
Financial Expense/Income (Net): Reflecting a negative variation due to losses in financial hedging agreements, resulting from the devaluation of the exchange rate recorded during the First Half of 2008 compared to the revaluation in the First Half of 2007.
Finally, net income amounted to Ch$38,457 million, remaining stable in real terms compared to the figure recorded in the First Half of 2007.
42
ANALYSIS OF THE BALANCE SHEET
As of June 30, 2008, the Company’s financial assets amounted to Ch$103,092 million. These represent cash, investments in mutual funds and time deposits. 76.8% of total financial investments are denominated in Chilean pesos, 18.9% in U.S. dollars, 3.1% in Brazilian reais and 1.2% in Argentine pesos.
On the other hand, the Company’s total debt was Ch$86,733 million, with an average annual rate of 6.5% on Chileanpeso-denominated debt and 7.6% on U.S. dollar denominated debt. The Chileanpeso-denominated debt represents 89.6% of total debt.
As a result, the Company holds a positive net cash position of Ch$16,359 million.
II.
Main Indicators
The main indicators contained in the table reflect for both periods the solid financial position and profitability of Embotelladora Andina S.A.
Main Indicators | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INDICATORS | Unit | June-2008 | Dec-2007 | June 2007} | Variance | |
LIQUIDITY |
|
|
|
|
| |
| Current Ratio | Times | 2.06 | 1.92 | 1.17 | 0.88 |
| Acid Tests | Times | 1.78 | 1.72 | 1.01 | 0.77 |
| Working Capital | MCh$ | 39,211 | 28,282 | 61,059 | -21,848 |
ACTIVITY |
|
|
|
|
| |
| Investments | MCh$ | 30,881 | 57,817 | 25,047 | 5,834 |
| Inventory turnover | Times | 7.10 | 13.60 | 7.29 | -0.19 |
| Days of inventory on hand | Days | 50.71 | 26.46 | 49.39 | 1.32 |
INDEBTEDNESS |
|
|
|
|
| |
| Debt to equity ratio | % | 84.15% | 92.22% | 104.89% | -20.73% |
| Short-term liabilities to total liabilities | % | 43.06% | 53.48% | 56.67% | -13.61% |
| Long-term liabilities to total liabilities | % | 56.94% | 46.52% | 43.33% | 13.61% |
| Interest charges coverage ratio | Times | 36.06 | 60.47 | 50.46 | -14.41 |
PROFITABILITY |
|
|
|
|
| |
| Return over equity | % | 13.68% | 28.32% | 13.36% | 0.32% |
| Return over total assets | % | 7.26% | 14.94% | 6.83% | 0.43% |
| Return over operating assets | % | 14.06% | 32.80% | 13.96% | 0.10% |
| Operating income | MCh$ | 58,117 | 119,190 | 53,158 | 4,960 |
| Operating margin | % | 16.17% | 18.14% | 16.44% | -0.27% |
| EBITDA (1) | MCh$ | 71,577 | 153,707 | 70,371 | 1,207 |
| EBITDA margin | % | 19.92% | 22.93% | 21.33% | -1.42% |
| Dividends payout ratio - Serie A shares | % | 12.43% | 7.16% | 1.65% | 10.77% |
| Dividends payout ratio - Serie B shares | % | 12.75% | 7.33% | 1.69% | 11.06% |
1Earnings before income taxes, interests, depreciation, amortization and extraordinary items.
Liquidity indicators improved due to (i) the sale of long term corporate bond portfolio 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 june 2007 was classified as short term.
43
Indicators of indebtedness reflect a slight decrease mainly due to the maturity of the previously mentioned Yankee Bond During the period net financial expenses amounted to Ch$1,432 million and earnings before interests and taxes amounted to Ch$51,632 million, achieving an interest coverage of 36.06 times.
At the closing of the period ended June 30, 2008, operating profitability indicators were affected by the reasons explained in paragraph I.
III.
Analysis of Book Values and Present Value of Assets
With respect to the Company’s main assets the following should be noted:
Given the high rotation of the items that compose working capital, book values of current assets are considered to represent market values.
Fixed asset values in the Chilean companies are presented at restated acquisition cost. In the foreign companies, fixed assets are valued in accordance with Technical Bulletin N° 64 issued by the Chilean Institute of Accountants (controlled in historical dollars).
Depreciation is estimated over the restated value of assets along with the remaining useful economic life of each asset.
All fixed assets that are considered available for sale are held at their respective market values.
Investments in shares, in situations where the Company has a significant influence on the issuing company, are presented following the equity method. The Company’s participation in the results of the issuing company for each year has been recognized on an accrual basis, and unrealized results on transactions between related companies have been eliminated.
In summary, assets are valued in accordance with generally accepted accounting standards in Chile and the instructions provided by the Chilean Securities Commission, as shown in Note 2 of the Financial Statements.
IV.
Analysis of the Main Components of Cash Flow
| Jun-2008 | Jun-2007 | Variation MCh$ | Variation % |
MCh$ | MCh$ | |||
Operating | 70,517 | 58,690 | 11,827 | 20% |
Financing | (63,215) | 24,251 | (38,694) | -158% |
Investment | (30,418) | (643) | (29,775) | -4,631% |
Net cash flow for the Period | (23,116) | 33,526 | (56,642) | 169% |
The Company generated positive net cash flow of MCh$23,116 during the quarter, analyzed as follows:
Operating activities generated a positive cash flow of MCh$70,517 representing a positive variation of MCh$11,827 mainly explained by higher financial income resulting form the liquidation of cross currency swap agreements that was partially offset by lower dividends received and higher income tax payments.
Financing activities generated a negative cash flow of MCh$63,215; with a negative variation of MCh$38,694 regarding the previous year, mainly due to the additional dividend paid during June of 2008, and during last year the payment of the additional dividend was carried out during the month of July 2007.
Investment activities generated a negative cash flow of MCh$30,418 with a negative variation of MCh$29,775 regarding the previous year, mainly because during the first half of 2007 income was collected from the sale of financial investments which did not occur during the first half of 2008 and also additions to property, plant and equipment during 2008 are greater than those recoreded during the same period of 2007.
44
V.
Analysis Of Market Risk
Interest Rate Risk
As of June 30, 2008 and 2007, the Company held 100% of its debt obligations at fixed-rates. Consequently, the risk fluctuation of market interest rates regarding the Company’s cash flow remains low.
Foreign Currency Risk
Income generated by the Company is linked to the currencies of the markets in which it operates. For the period the breakdown for each is the following:
Chilean peso:
35%
Brazilian real:
44%
Argentine peso:
21%
Since the Company’s sales are not linked to the United States dollar, the policy adopted for managing foreign exchange risk, this is the mismatch between assets and liabilities denominated in a given currency, has been to maintain financial investments in dollar-denominated instruments, for an amount at least equivalent to the dollar-denominated liabilities.
Additionally, it is Company policy to maintain foreign currency hedge agreements to lessen the effects of exchange risk in cash expenditures expressed in US dollars which mainly correspond to payment to suppliers for raw materials.
Accounting exposure of foreign subsidiaries (Brazil and Argentina) for the difference between monetary assets and liabilities, those denominated in local currency, and therefore, exposed to risks upon translation to the US dollar, are only covered when it is foreseen that it will result in significant negative differences and when the associated cost of said coverage is deemed reasonable by management.
Commodity Risks
The Company faces the risk of price changes in the international markets for sugar, aluminum and PET resin, all of which are necessary raw materials for preparing beverages, and that altogether represent between 30% and 35% of our operating costs. In order to minimize and/or stabilize such risk, supply contracts and advanced purchases are negotiated when market conditions are favorable. Likewise commodity coverage instruments have also been utilized.
Material Events
During the period between January 1, 2008 and June 30, 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.
Regular Shareholders’ Meeting Resolutions
The following was resolved at the Regular General Shareholders’ Meeting of Embotelladora Andina S.A., held yesterday, April 15, 2008 (hereinafter the “Meeting”), among other matters:
1.
The distribution of the following amounts asFinal Dividend N° 160, on account of the fiscal year ending December 31, 2007:
45
·
Ch$9.130 (nine pesos and one hundred and thirty cents) per Series A shares; and
·
Ch$10.043 (ten pesos and forty three cents) per Series B shares.
This dividend will be available to shareholders beginningApril 24, 2008. Regarding payment of this dividend, the Shareholders’ Registry will close on April 18, 2008.
2.
The distribution of anAdditionalDividend N° 161 on account of retained earnings:
·
Ch$60.00 (sixty pesos) per Series A shares; and
·
Ch$66.00 (sixty six pesos) per Series B shares.
This dividend will be available to shareholders beginningMay 14, 2008. Regarding payment of this
dividend, the Shareholders Registry will close on May 8, 2008.
Board Appointments and Committees
The following resolutions were adopted at the Regular Board of Directors Meeting held April 22, 2008:
1.
Mr. Arturo Majlis Albala was appointed newVice-Chairman of the Board of the Company.
2.
TheExecutive Committee was elected, comprised of regular directorsJosé Antonio Garcés Silva, Arturo Majlis Albala, Gonzalo Said HandalandSalvador Said Somavía.
This Committee is also comprised, by virtue of office, by Mr.Juan Claro González, Chairman of the Board, and Mr.Jaime García Rioseco, Chief Executive Officer of the Company.
3.
Also elected was theDirector’s Committee in accordance with Article 50-bis of Chilean Corporate Law, comprised of the regular directorsJuan Claro González, Salvador Said SomaviaandHeriberto Urzúa Sánchez. Mr. Claro will continue to be the Chairman of this Committee.
4.
Additionally,Juan Claro González, Salvador Said Somavía andHeriberto Urzúa Sánchez were appointed members of theU.S. Sarbanes-Oxley Audit Committee. Mr. Claro will continue to be the Chairman of this Committee.
Acquisition or Sale of Assets or Shares
On June 3, 2008 Embotelladora Andina S.A. together with Coca-Cola Embonor S.A. and Coca-Cola Polar S.A. (hereinafter the “Bottlers”) acquired 100% of the shares of Embotelladoras del Sur S.A. by means of a Stock Purchase Agreement among the Bottlers, Malterías Unidas S.A. and Mr. Eduardo Chadwick Claro. Of the total percentage, Embotelladora Andina S.A. acquired 48% of the shares of Embotelladoras del Sur S.A. for a total of Ch$753,581,576. Simultaneous to the Purchase Agreement, the Bottlers entered into a Shareholders’ Agreement in order to regulate their participation in Embotelladoras del Sur S.A.
46
Dividends Distributed during the period ended June 30, 2008
Number | Payment date | Ch$ per Series A shares | Ch$ per Series B shares |
159
January 24 2008
7.00
7.70
160
April 24 2008
9.13
10.043
161
May 14 2008
60.00
66.00
162
July 31 2008
7.00
7.70
This document may contain forward-looking statements reflecting Embotelladora Andina SA’s good faith expectations and are based upon currently available data; however, actual results are subject to numerous uncertainties, many of which are beyond the control of the Company and any one or more of which could materially impact actual performance. Among the factors that can cause performance to differ materially are: political and economic conditions on consumer spending, pricing pressure resulting from competitive discounting by other bottlers, climatic conditions in the Southern Cone, and other risk factors applicable from time to time and listed in Andina’s periodic reports filed with relevant regulatory institutions.
47
Embotelladora Andina S.A. |
|
|
|
|
|
|
|
|
|
Second Quarter Results for the period ended June 30, Chilean GAAP |
|
|
|
|
|
|
|
| |
(In millions of constant 06/30/08 Chilean Pesos, except per share) |
|
|
|
|
|
|
|
|
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|
|
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|
|
|
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|
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|
| 6/30/2008 | 6/30/2007 |
| ||||||
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 33.4 | 38.4 | 25.4 | 97.2 | 31.9 | 39.9 | 23.8 | 95.6 | 1.7% |
Soft Drink | 27.0 | 35.8 | 25.0 | 87.9 | 26.5 | 37.7 | 23.6 | 87.8 | 0.1% |
Mineral Water | 2.5 | 0.6 | 0.2 | 3.4 | 2.0 | 0.5 | 0.2 | 2.7 | 26.9% |
Juices | 3.9 | 0.9 | 0.1 | 4.9 | 3.4 | 0.8 | 0.1 | 4.2 | 16.4% |
Beer | NA | 1.0 | NA | 1.0 | NA | 0.9 | NA | 0.9 | 19.2% |
|
|
|
|
|
|
|
|
|
|
NET SALES | 57,180 | 73,911 | 34,519 | 165,145 | 54,465 | 68,094 | 29,798 | 151,292 | 9.2% |
COST OF SALES | (33,347) | (38,088) | (21,263) | (92,233) | (31,154) | (37,199) | (19,036) | (86,325) | 6.8% |
GROSS PROFIT | 23,833 | 35,823 | 13,256 | 72,912 | 23,311 | 30,895 | 10,762 | 64,967 | 12.2% |
Gross Margin | 41.7% | 48.5% | 38.4% | 44.2% | 42.8% | 45.4% | 36.1% | 42.9% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (12,914) | (26,604) | (11,445) | (50,963) | (11,994) | (21,282) | (9,120) | (42,397) | 20.2% |
CORPORATE EXPENSES (4) | 0 | 0 | 0 | (519) | 0 | 0 | 0 | (517) | 0.4% |
OPERATING INCOME | 10,919 | 9,219 | 1,811 | 21,430 | 11,317 | 9,612 | 1,641 | 22,054 | -2.8% |
Operating Margin | 19.1% | 12.5% | 5.2% | 13.0% | 20.8% | 14.1% | 5.5% | 14.6% |
|
EBITDA (1) | 14,764 | 12,077 | 3,661 | 29,983 | 14,614 | 12,484 | 3,529 | 30,111 | -0.4% |
Ebitda Margin | 25.8% | 16.3% | 10.6% | 18.2% | 26.8% | 18.3% | 11.8% | 19.9% |
|
NON OPERATIONAL RESULTS |
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSE/INCOME (Net) |
|
|
| (10,929) |
|
|
| 2,216 | -593.2% |
RESULTS FROM AFFILIATED |
|
|
| 1,946 |
|
|
| (455) | 528.1% |
AMORTIZATION OF GOODWILL |
|
|
| (1,578) |
|
|
| (1,758) | -10.3% |
OTHER INCOME/(EXPENSE) |
|
|
| (4,218) |
|
|
| 1,267 | -433.0% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| 13,927 |
|
|
| (3,540) | 493.5% |
NON-OPERATING RESULTS |
|
|
| (851) |
|
|
| (2,270) | -62.5% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
|
|
|
|
|
|
|
|
|
NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 20,579 |
|
|
| 19,784 | 4.0% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (3,004) |
|
|
| (5,911) | -49.2% |
MINORITY INTEREST |
|
|
| 37 |
|
|
| 18 | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0 | z |
|
| 0 | NA |
NET INCOME |
|
|
| 17,612 |
|
|
| 13,891 | 26.8% |
Net Margin |
|
|
| 10.7% |
|
|
| 9.2% |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 23.2 |
|
|
| 18.3 |
|
EARNINGS PER ADS |
|
|
| 139.0 |
|
|
| 109.6 | 26.8% |
(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 + Exchange rate gains & losses. |
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|
|
|
| ||||
(4) Corporate expenses partially reclassified to the operations. |
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48
Embotelladora Andina S.A. |
|
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|
|
|
|
|
|
|
Second Quarter Results for the period ended June 30, Chilean GAAP |
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|
|
|
|
|
|
| |
(In million nominal US$, except per share) |
|
|
|
|
|
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| Exch. Rate : | $ 526.05 eop |
|
|
| Exch. Rate : | $ 526.86 eop |
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|
|
|
|
|
|
|
|
|
|
| 6/30/2008 | 6/30/2007 |
| ||||||
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 33.4 | 38.4 | 25.4 | 97.2 | 31.9 | 39.9 | 23.8 | 95.6 | 1.7% |
Soft Drink | 27.0 | 35.8 | 25.0 | 87.9 | 26.5 | 37.7 | 23.6 | 87.8 | 0.1% |
Mineral Water | 2.5 | 0.6 | 0.2 | 3.4 | 2.0 | 0.5 | 0.2 | 2.7 | 26.9% |
Juices | 3.9 | 0.9 | 0.1 | 4.9 | 3.4 | 0.8 | 0.1 | 4.2 | 16.4% |
Beer | NA | 1.0 | NA | 1.0 | NA | 0.9 | NA | 0.9 | 19.2% |
|
|
|
|
|
|
|
|
|
|
NET SALES | 108.7 | 140.5 | 65.6 | 313.9 | 94.9 | 118.7 | 51.9 | 263.7 | 19.1% |
COST OF SALES | (63.4) | (72.4) | (40.4) | (175.3) | (54.3) | (64.8) | (33.2) | (150.5) | 16.5% |
GROSS PROFIT | 45.3 | 68.1 | 25.2 | 138.6 | 40.6 | 53.8 | 18.8 | 113.2 | 22.4% |
Gross Margin | 41.7% | 48.5% | 38.4% | 44.2% | 42.8% | 45.4% | 36.1% | 42.9% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (24.5) | (50.6) | (21.8) | (96.9) | (20.9) | (37.1) | (15.9) | (73.9) | 31.1% |
CORPORATE EXPENSES (4) | 0.0 | 0.0 | 0.0 | (1.0) | 0.0 | 0.0 | 0.0 | (0.9) | 9.5% |
OPERATING INCOME | 20.8 | 17.5 | 3.4 | 40.7 | 19.7 | 16.8 | 2.9 | 38.4 | 6.0% |
Operating Margin | 19.1% | 12.5% | 5.2% | 13.0% | 20.8% | 14.1% | 5.5% | 14.6% |
|
EBITDA (1) | 28.1 | 23.0 | 7.0 | 57.0 | 25.5 | 21.8 | 6.2 | 52.5 | 8.6% |
Ebitda Margin | 25.8% | 16.3% | 10.6% | 18.2% | 26.8% | 18.3% | 11.8% | 19.9% |
|
NON OPERATIONAL RESULTS |
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSE/INCOME (Net) |
|
|
| (20.8) |
|
|
| 3.9 | -637.9% |
RESULTS FROM AFFILIATED |
|
|
| 3.7 |
|
|
| (0.8) | 566.9% |
AMORTIZATION OF GOODWILL |
|
|
| (3.0) |
|
|
| (3.1) | -2.1% |
OTHER INCOME/(EXPENSE) |
|
|
| (8.0) |
|
|
| 2.2 | -463.2% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| 26.5 |
|
|
| (6.2) | 529.1% |
NON-OPERATING RESULTS |
|
|
| (1.6) |
|
|
| (4.0) | -59.1% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
|
|
|
|
|
|
|
|
|
NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 39.1 |
|
|
| 34.5 | 13.5% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (5.7) |
|
|
| (10.3) | -44.6% |
MINORITY INTEREST |
|
|
| 0.1 |
|
|
| 0.0 | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0.0 |
|
|
| 0.0 | NA |
NET INCOME |
|
|
| 33.5 |
|
|
| 24.2 | 38.3% |
Net Margin |
|
|
| 10.7% |
|
|
| 9.2% |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 0.04 |
|
|
| 0.03 |
|
EARNINGS PER ADS |
|
|
| 0.26 |
|
|
| 0.19 | 38.3% |
(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 + Exchange rate gains & losses. |
|
|
|
|
| ||||
(4) Corporate expenses partially reclassified to the operations. |
|
|
|
|
|
|
|
|
|
49
Embotelladora Andina S.A. |
|
|
|
|
|
|
|
|
|
Six Months Results for the period ended June 30, Chilean GAAP |
|
|
|
|
|
|
|
|
|
(In millions of constant 06/30/08 Chilean Pesos, except per share) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
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|
|
| 6/30/2008 | 6/30/2007 |
| ||||||
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 75.7 | 83.8 | 58.3 | 217.8 | 70.7 | 84.2 | 54.8 | 209.7 | 3.9% |
Soft Drink | 60.6 | 78.4 | 57.5 | 196.4 | 58.3 | 79.8 | 54.1 | 192.2 | 2.2% |
Mineral Water | 7.8 | 1.5 | 0.6 | 10.0 | 6.0 | 1.0 | 0.5 | 7.5 | 31.9% |
Juices | 7.3 | 1.8 | 0.2 | 9.3 | 6.4 | 1.5 | 0.1 | 8.0 | 16.4% |
Beer | NA | 2.1 | NA | 2.1 | NA | 1.9 | NA | 1.9 | 13.3% |
|
|
|
|
|
|
|
|
|
|
NET SALES | 125,859 | 157,826 | 76,759 | 359,349 | 120,337 | 138,703 | 66,223 | 323,285 | 11.2% |
COST OF SALES | (71,885) | (79,347) | (46,062) | (196,199) | (67,466) | (77,358) | (41,184) | (184,030) | 6.6% |
GROSS PROFIT | 53,974 | 78,479 | 30,698 | 163,150 | 52,871 | 61,345 | 25,039 | 139,255 | 17.2% |
Gross Margin | 42.9% | 49.7% | 40.0% | 45.4% | 43.9% | 44.2% | 37.8% | 43.1% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (28,061) | (53,389) | (22,411) | (103,861) | (25,310) | (41,462) | (18,222) | (84,994) | 22.2% |
CORPORATE EXPENSES (4) | 0 | 0 | 0 | (1,172) | 0 | 0 | 0 | (1,103) | 6.2% |
OPERATING INCOME | 25,913 | 25,090 | 8,286 | 58,117 | 27,561 | 19,883 | 6,818 | 53,158 | 9.3% |
Operating Margin | 20.6% | 15.9% | 10.8% | 16.2% | 22.9% | 14.3% | 10.3% | 16.4% |
|
EBITDA (1) | 33,402 | 30,804 | 11,873 | 74,907 | 33,992 | 25,460 | 10,623 | 68,973 | 8.6% |
Ebitda Margin | 26.5% | 19.5% | 15.5% | 20.8% | 28.2% | 18.4% | 16.0% | 21.3% |
|
NON OPERATIONAL RESULTS |
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSE/INCOME (Net) |
|
|
| (7,016) |
|
|
| 1,186 | -691.8% |
RESULTS FROM AFFILIATED |
|
|
| 348 |
|
|
| 204 | 70.7% |
AMORTIZATION OF GOODWILL |
|
|
| (3,156) |
|
|
| (3,516) | -10.3% |
OTHER INCOME/(EXPENSE) |
|
|
| (1,780) |
|
|
| (216) | 724.8% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| 3,687 |
|
|
| (2,162) | 270.6% |
NON-OPERATING RESULTS |
|
|
| (7,917) |
|
|
| (4,504) | 75.8% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
|
|
|
|
|
|
|
|
|
NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 50,200 |
|
|
| 48,654 | 3.2% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (11,752) |
|
|
| (10,480) | 12.1% |
MINORITY INTEREST |
|
|
| 8 |
|
|
| (42) | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0 |
|
|
| 0 | NA |
NET INCOME |
|
|
| 38,457 |
|
|
| 38,131 | 0.9% |
Net Margin |
|
|
| 10.7% |
|
|
| 11.8% |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 50.6 |
|
|
| 50.2 |
|
EARNINGS PER ADS |
|
|
| 303.5 |
|
|
| 300.9 | 0.9% |
(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 + Exchange rate gains & losses. |
|
|
|
|
| ||||
(4) Corporate expenses partially reclassified to the operations. |
|
|
|
|
|
|
|
|
|
50
Embotelladora Andina S.A. |
|
|
|
|
|
|
|
|
|
Six Months Results for the period ended June 30, Chilean GAAP |
|
|
|
|
|
|
|
|
|
(In million nominal US$, except per share) |
|
|
|
|
|
|
|
|
|
| Exch. Rate : | $ 526.05 eop |
|
|
| Exch. Rate : | $ 526.86 eop |
|
|
|
|
|
|
|
|
|
|
|
|
| 6/30/2008 | 6/30/2007 |
| ||||||
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 75.7 | 83.8 | 58.3 | 217.8 | 70.7 | 84.2 | 54.8 | 209.7 | 3.9% |
Soft Drink | 60.6 | 78.4 | 57.5 | 196.4 | 58.3 | 79.8 | 54.1 | 192.2 | 2.2% |
Mineral Water | 7.8 | 1.5 | 0.6 | 10.0 | 6.0 | 1.0 | 0.5 | 7.5 | 31.9% |
Juices | 7.3 | 1.8 | 0.2 | 9.3 | 6.4 | 1.5 | 0.1 | 8.0 | 16.4% |
Beer | NA | 2.1 | NA | 2.1 | NA | 1.9 | NA | 1.9 | 13.3% |
|
|
|
|
|
|
|
|
|
|
NET SALES | 239.3 | 300.0 | 145.9 | 683.1 | 209.7 | 241.7 | 115.4 | 563.5 | 21.2% |
COST OF SALES | (136.7) | (150.8) | (87.6) | (373.0) | (117.6) | (134.8) | (71.8) | (320.7) | 16.3% |
GROSS PROFIT | 102.6 | 149.2 | 58.4 | 310.1 | 92.1 | 106.9 | 43.6 | 242.7 | 27.8% |
Gross Margin | 42.9% | 49.7% | 40.0% | 45.4% | 43.9% | 44.2% | 37.8% | 43.1% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (53.3) | (101.5) | (42.6) | (197.4) | (44.1) | (72.3) | (31.8) | (148.1) | 33.3% |
CORPORATE EXPENSES (4) | 0.0 | 0.0 | 0.0 | (2.2) | 0.0 | 0.0 | 0.0 | (1.9) | 15.8% |
OPERATING INCOME | 49.3 | 47.7 | 15.8 | 110.5 | 48.0 | 34.7 | 11.9 | 92.6 | 19.2% |
Operating Margin | 20.6% | 15.9% | 10.8% | 16.2% | 22.9% | 14.3% | 10.3% | 16.4% |
|
EBITDA (1) | 63.5 | 58.6 | 22.6 | 142.4 | 59.2 | 44.4 | 18.5 | 120.2 | 18.5% |
Ebitda Margin | 26.5% | 19.5% | 15.5% | 20.8% | 28.2% | 18.4% | 16.0% | 21.3% |
|
NON OPERATIONAL RESULTS |
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSE/INCOME (Net) |
|
|
| (13.3) |
|
|
| 2.1 | -745.4% |
RESULTS FROM AFFILIATED |
|
|
| 0.7 |
|
|
| 0.4 | 86.2% |
AMORTIZATION OF GOODWILL |
|
|
| (6.0) |
|
|
| (6.1) | -2.1% |
OTHER INCOME/(EXPENSE) |
|
|
| (3.4) |
|
|
| (0.4) | 799.5% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| 7.0 |
|
|
| (3.8) | 286.0% |
NON-OPERATING RESULTS |
|
|
| (15.0) |
|
|
| (7.9) | 91.7% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
|
|
|
|
|
|
|
|
|
NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 95.4 |
|
|
| 84.8 | 12.5% |
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|
INCOME TAXES |
|
|
| (22.3) |
|
|
| (18.3) | 22.3% |
MINORITY INTEREST |
|
|
| 0.0 |
|
|
| (0.1) | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0.0 |
|
|
| 0.0 | NA |
NET INCOME |
|
|
| 73.1 |
|
|
| 66.5 | 10.0% |
Net Margin |
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| 10.7% |
|
|
| 11.8% |
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|
WEIGHTED AVERAGE SHARES OUTSTANDING |
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|
| 760.3 |
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|
| 760.3 |
|
EARNINGS PER SHARE |
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|
| 0.10 |
|
|
| 0.09 |
|
EARNINGS PER ADS |
|
|
| 0.58 |
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|
| 0.52 | 10.0% |
(1) : Operating Income + Depreciation |
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|
(2) Total may be different from the addition of the three countries because of intercountry eliminations |
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(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts + Exchange rate gains & losses. |
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(4) Corporate expenses partially reclassified to the operations. |
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51
Embotelladora Andina S.A. | ||||||||
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Consolidated Balance Sheet | ||||||||
(In million of constant 06/30/08 Chilean Pesos) | ||||||||
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|
ASSETS | 6/30/2008 | 6/30/2007 | %Ch |
| LIABILITIES & SHAREHOLDERS' EQUITY | 6/30/2008 | 6/30/2007 | %Ch |
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|
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|
Cash + Time deposits + market. Securit. | 103,092 | 84,480 | 22.0% |
| Short term bank liabilities | 7,299 | 369 | 1879.2% |
Account receivables (net) | 53,923 | 42,329 | 27.4% |
| Current portion of long term bank liabilities | 141 | 0 | 0.0% |
Inventories | 27,102 | 25,331 | 7.0% |
| Current portion of bonds payable | 420 | 32,624 | -98.7% |
Other current assets | 18,623 | 33,378 | -44.2% |
| Trade accounts payable and notes payable | 64,030 | 104,377 | -38.7% |
Total Current Assets | 202,741 | 185,518 | 9.3% |
| Other liabilities | 26,704 | 20,599 | 29.6% |
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|
|
|
| Total Current Liabilities | 98,593 | 157,969 | -37.6% |
Property, plant and equipment | 617,510 | 591,507 | 4.4% |
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|
|
Depreciation | (428,229) | (429,424) | -0.3% |
| Long term bank liabilities | 770 | 848 | -9.1% |
Total Property, Plant, and Equipment | 189,281 | 162,083 | 16.8% |
| Bonds payable | 75,987 | 77,337 | -1.7% |
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|
|
| Other long term liabilities | 52,280 | 41,235 | 26.8% |
Investment in related companies | 24,233 | 22,370 | 8.3% |
| Total Long Term Liabilities | 129,038 | 119,420 | 8.1% |
Investment in other companies | 150 | 62 | 142.7% |
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|
Goodwill | 57,227 | 69,192 | -17.3% |
| Minority interest | 1,319 | 1,341 | -1.6% |
Other long term assets | 27,382 | 105,253 | -74.0% |
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|
Total Other Assets | 108,991 | 196,876 | -44.6% |
| Stockholders' Equity | 272,064 | 265,748 | 2.4% |
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|
TOTAL ASSETS | 501,013 | 544,478 | -8.0% |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 501,013 | 544,478 | -8.0% |
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Financial Highlights |
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(In million of constant 06/30/08 Chilean Pesos) |
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ADDITIONS TO FIXED ASSETS | 6/30/2008 | 6/30/2007 |
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| DEBT RATIOS | 6/30/2008 | 6/30/2007 |
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Chile | 16,034 | 15,591 |
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| Financial Debt / Total Capitalization | 0.24 | 0.29 |
|
Brazil | 12,695 | 7,872 |
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| Financial Debt / EBITDA L12M | 0.55 | 0.81 |
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Argentina | 2,152 | 1,583 |
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| EBITDA L12M / Interest Expense (net) L12M | 17.74 | 13.19 |
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| 30,881 | 25,047 |
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| L12M: Last twelve months |
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* As June 30, 2008, the company's registered a positive net cash position of US$ 31 million. Total debt amounted to US$ 165 million. |
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Total Cash amounted to US$ 196 million. |
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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
53