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
March 2009
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 December 31, 2008 and 2007
(Free translation of original in Spanish)
Report of Independent Accountants
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
ThCh$
-
Thousands of Chilean pesos
US$
-
United States dollars
AR$
-
Argentine pesos
R$
-
Brazilian Reais
ThR$
-
Thousands Brazilian Reais
UF
-
Unidades de Fomento (Chilean inflation-indexed monetary units)
2
REPORT OF INDEPENDENT ACCOUNTANTS
(Translation of original in Spanish)
Santiago, January 27, 2009
To the Shareholders and Directors
Embotelladora Andina S.A.
We have audited the accompanying consolidated balance sheets of Embotelladora Andina S.A. and its subsidiaries (the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of income and of cash flows for the years then ended. These financial statements (including the corresponding notes) are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The analysis of the financial results and relevant facts attached are not part of these financial statements, and therefore this report is not related to them.
We conducted our audits in accordance with auditing standards generally accepted in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Embotelladora Andina S.A. and its subsidiaries as of December 31, 2008 and 2007, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in Chile.
Eduardo Vergara D.
Id N°: 6.810.153-0
/s/ PricewaterhouseCoopers
3
Consolidated Balance Sheets
(Figures in ThCh$ of December 31, 2008)
|
| For the year ended | |
ASSETS |
| December 31, | |
|
| 2008 | 2007 |
CURRENT ASSETS | NOTE | ThCh$ | ThCh$ |
Cash |
| 21,250,102 | 26,957,261 |
Time deposits | 34 | 81,721,481 | 53,457,247 |
Marketable securities | 4 | 26,281,107 | 52,853,048 |
Trade accounts receivable (net) | 5 | 46,751,190 | 48,221,953 |
Notes receivable (net) | 5 | 14,116,657 | 15,848,607 |
Other receivables (net) | 5 | 13,256,520 | 17,458,395 |
Accounts receivable from related companies | 6 | 2,942,896 | 2,011,437 |
Inventories (net) | 7 | 31,227,350 | 29,728,197 |
Recoverable taxes |
| 5,985,290 | 2,772,754 |
Prepaid expenses |
| 2,435,882 | 2,073,543 |
Deferred income taxes | 8 | 3,637,016 | 5,700,565 |
Other current assets | 9 | 6,936,682 | 24,585,281 |
TOTAL CURRENT ASSETS |
| 256,542,173 | 281,668,288 |
|
|
|
|
PROPERTY, PLANT & EQUIPMENT | 10 |
|
|
Land |
| 20,428,189 | 18,242,140 |
Buildings & improvements |
| 125,373,465 | 107,269,482 |
Machinery and equipment |
| 299,696,514 | 250,017,731 |
Other property, plant & equipment |
| 282,188,795 | 236,846,369 |
Technical reappraisal of property, plant & equipment |
| 2,404,632 | 2,404,632 |
Less: Accumulated depreciation |
| (502,897,614) | (431,192,834) |
TOTAL PROPERTY, PLANT & EQUIPMENT |
| 227,193,981 | 183,587,520 |
|
|
|
|
OTHER ASSETS |
|
|
|
Investments in unconsolidated affiliates | 11 | 29,529,778 | 27,183,280 |
Investments in other companies |
| 130,866 | 145,865 |
Goodwill (net) | 12 | 65,269,071 | 62,141,039 |
Long-term receivables | 5 | 19,862 | 40,849 |
Accounts receivable from related companies | 6 | 34,719 | 54,163 |
Intangibles |
| 363,969 | 454,113 |
Amortization |
| (200,184) | (277,174) |
Others | 13 | 24,072,320 | 25,719,700 |
TOTAL OTHER ASSETS |
| 119,220,401 | 115,461,835 |
TOTAL ASSETS |
| 602,956,555 | 580,717,643 |
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
4
Consolidated Balance Sheets
(Figures in ThCh$ of December 31, 2008)
|
|
|
|
|
| For the year ended | |
|
| December 31, | |
LIABILITIES AND SHAREHOLDERS' EQUITY | NOTE | 2008 | 2007 |
|
| ThCh$ | ThCh$ |
Short-term bank borrowings | 14 | 5,819,629 | 4,302,445 |
Current portion of long-term bank borrowings | 14 | 226,412 | 133,251 |
Current portion of bonds payable | 16 | 2,757,734 | 7,529,858 |
Dividends payable |
| 5,756,633 | 6,327,703 |
Trade accounts payable |
| 64,183,029 | 59,443,103 |
Other creditors |
| 4,736,526 | 5,432,448 |
Amounts payable to related companies | 6 | 17,408,733 | 20,862,345 |
Provisions | 17 | 3,785,264 | 3,784,518 |
Withholdings |
| 23,518,706 | 22,491,768 |
Income taxes payable |
| 3,937,065 | 10,928,616 |
Unearned income |
| 29,455 | 507,981 |
Other current liabilities |
| 1,243,745 | 1,453,824 |
TOTAL CURRENT LIABILITIES |
| 133,402,931 | 143,197,860 |
|
|
|
|
|
|
|
|
Long-term bank borrowings | 15 | 413,452 | 806,562 |
Bonds payable | 16 | 77,039,965 | 80,147,810 |
Other creditors |
| 55,018 | 86,641 |
Amounts payable to related companies | 6 | 3,137,348 | 3,637,916 |
Provisions | 17 | 16,762,461 | 18,434,541 |
Deferred income taxes | 8 | 11,502,194 | 13,476,959 |
Other long-term liabilities | 19 | 13,008,718 | 13,356,243 |
TOTAL LONG-TERM LIABILITIES |
| 121,919,156 | 129,946,672 |
|
|
|
|
Minority interest | 20 | 1,385,866 | 1,401,700 |
|
|
|
|
Paid-in capital | 21 | 236,327,716 | 236,327,716 |
Other reserves |
| 9,055,154 | (12,461,908) |
Retained earnings from prior years |
| 100,865,732 | 82,305,603 |
Accumulated earnings |
| 23,201,754 | 12,165,712 |
Net income for the year |
| 94,835,957 | 88,864,517 |
Interim dividends |
| (17,171,979) | (18,724,626) |
TOTAL SHAREHOLDERS’ EQUITY |
| 346,248,602 | 306,171,411 |
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY |
| 602,956,555 | 580,717,643 |
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
5
Consolidated Statements of Income
(Figures in ThCh$ of December 31, 2008)
|
| For the year ended | |
|
| December 31, | |
|
| 2008 | 2007 |
| NOTE | ThCh$ | ThCh$ |
|
|
|
|
Net sales |
| 847,301,262 | 693,354,354 |
Cost of sales |
| (470,650,678) | (382,730,941) |
Gross profit |
| 376,650,584 | 310,623,413 |
Administrative and selling expenses |
| (237,973,984) | (184,850,075) |
OPERATING INCOME |
| 138,676,600 | 125,773,338 |
|
|
|
|
|
|
|
|
Financial income |
| 11,884,239 | 24,976,389 |
Share of gain from unconsolidated affiliates | 11 | 1,957,017 | 1,115,622 |
Other non-operating income | 22 | 6,349,939 | 14,687,823 |
Share of loss from unconsolidated affiliates | 11 | (77,794) | (302,531) |
Amortization of goodwill | 12 | (7,612,137) | (7,081,410) |
Financial expense |
| (27,576,509) | (13,549,064) |
Other non-operating expense | 22 | (16,431,996) | (11,640,946) |
Price level restatement | 23 | (2,089,483) | (4,947,378) |
Exchange gains (losses),net | 24 | 14,988,633 | (10,858,860) |
NON OPERATING RESULTS |
| (18,608,091) | (7,600,355) |
|
|
|
|
Income before income tax expense and minority interest |
| 120,068,509 | 118,172,983 |
Income taxes | 8 | (25,248,075) | (29,261,856) |
Income before minority interest |
| 94,820,434 | 88,911,127 |
Minority interest | 20 | 15,523 | (46,610) |
NET INCOME FOR THE YEAR |
| 94,835,957 | 88,864,517 |
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
6
Consolidated Statements of Cash Flow
(Figures in ThCh$ of December 31, 2008)
| For the year ended | |
| December 31, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
|
|
|
Collection of trade receivables | 1,190,598,433 | 938,454,613 |
Financial income received | 32,946,033 | 22,808,454 |
Dividend & other distributions received | 2,610,500 | 3,605,338 |
Other income received | 82,504 | 63,748 |
Payments to suppliers and personnel | (857,618,760) | (656,566,632) |
Interest paid | (22,547,478) | (18,947,076) |
Income taxes paid | (30,570,348) | (23,236,665) |
VAT and other tax payments | (156,170,034) | (116,837,356) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 159,330,850 | 149,344,424 |
|
|
|
|
|
|
Borrowings from banks | 83,876,548 | 57,279,061 |
Dividend paid | (73,505,825) | (85,320,791) |
Payments of loans | (82,754,232) | (55,896,597) |
Repayments of bonds | (6,909,335) | (14,874,766) |
NET CASH USED IN FINANCING ACTIVITIES | (79,292,844) | (98,813,093) |
|
|
|
Proceeds from sales of property, plant and equipment | 757,650 | 760,476 |
Proceeds from sales of other investments | 1,060,242 | 117,971,161 |
Additions to property, plant & equipment | (67,074,398) | (61,010,625) |
Permanent investments | (1,530,709) | (3,976,701) |
Investments in financial instruments | (7,484,123) | (19,500,140) |
Other investment disbursements | (1,194,233) | 0 |
NET CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES | (75,465,571) | 34,244,171 |
|
|
|
TOTAL NET CASH FOR THE YEAR | 4,572,435 | 84,775,502 |
Effect of inflation on cash and cash equivalents | (7,491,133) | (1,224,618) |
Net (decrease) increase in cash and cash equivalents | (2,918,698) | 83,550,884 |
Cash and cash equivalents at beginning of period | 132,173,790 | 48,622,906 |
Cash and cash equivalents at end of year | 129,255,092 | 132,173,790 |
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
7
Reconciliation between Net Income and Net Cash Flows
Provided by Operating Activities
(Figures in ThCh$ of December 31, 2008)
| For the year ended | |
| December 31, | |
| 2008 | 2007 |
| ThCh$ | ThCh$ |
|
|
|
Net Income for the year | 94,835,957 | 88,864,517 |
Income on sale of assets: | (298,348) | 345,204 |
(Gain) loss on sale of property, plant and equipment | (274,757) | 159,758 |
Loss on sale of investments | - | 93,163 |
(Gain) loss on sale of other assets | (23,591) | 92,283 |
|
|
|
Adjustments to net income that do not represent movements of cash | 38,733,471 | 55,860,349 |
Depreciation | 38,057,388 | 31,742,138 |
Amortization of intangibles | 351,564 | 258,093 |
Write-offs and provisions | 940,029 | 1,185,592 |
Share of gain from unconsolidated affiliates | (1,957,017) | (1,115,622) |
Share of loss from unconsolidated affiliates | 77,794 | 302,531 |
Amortization of goodwill | 7,612,137 | 7,081,410 |
Price level restatement | 2,089,483 | 4,947,378 |
Foreign Exchange, net | (14,988,633) | 10,858,860 |
Other credits to income that do not represent cash flows | - | (3,298,942) |
Other debits to income that do not represent cash flows | 6,550,726 | 3,898,911 |
|
|
|
(Increase) decrease in operating assets | 36,193,655 | (35,532,960) |
Trade accounts receivable | 14,362,957 | (304,974) |
Inventories | 1,113,953 | (5,887,910) |
Other assets | 20,716,745 | (29,340,076) |
|
|
|
Increase (decrease) in operating liabilities | (10,118,362) | 39,760,704 |
Accounts payable related to operating income | (30,963,699) | 3,215,853 |
Interest payable | 30,553,274 | 10,170,891 |
Income taxes payable | (16,440,710) | 12,504,263 |
Other accounts payable related to non-operating income | (1,703,237) | 7,685,427 |
Valued added tax and other similar items | 8,436,010 | 6,184,270 |
|
|
|
Minority interest | (15,523) | 46,610 |
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES | 159,330,850 | 149,344,424 |
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2008 and 2007 (figures expressed in ThCh$ of December 31, 2008)
Note 1 - Incorporation in the Securities Register
Embotelladora Andina S.A. was incorporated in the Securities Register under No. 00124 and, in conformity with Law 18,046 is subject to the supervision of the Chilean Superintendence of Securities and Insurance Companies (the “SVS”).
Note 2 - Summary of Significant Accounting Principles
a)
Accounting period
The consolidated financial statements cover the period January 1 to December 31, 2008 and are compared to the same period in 2007.
b)
Basis of preparation
The consolidated financial statements have been prepared in conformity with generally accepted accounting principles issued by the Chilean Institute of Accountants, as well as rules and regulations of the SVS. In the event of discrepancy, the SVS regulations will prevail.
c)
Basis of presentation
For comparison purposes, the figures in the prior-year financial statements have been restated by 8.9% according to the variation of the Chilean Consumer Price Index (CPI)and in addition, some 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 minority shareholders participation in income 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 | 99.98 |
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 |
9
e)
Price-level restatement
The financial statements have been restated to reflect the effect of price-level changes on the purchasing power of the Chilean peso during the respective periods. Restatements have been determined on the basis of the percentage variation of the official Chilean Consumer Price Index, “CPI”, issued by the Chilean National Institute of Statistics, which amounted to 8.9% for the period December 1, 2007 to November 30, 2008 (7.4% 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 indexation, these have been restated by the corresponding restatement index or by the agreed upon terms.
Assets and liabilities in foreign currency and Unidades de Fomento have been translated into local currency at the following year end exchange rates:
|
| 2008 | 2007 |
|
| Ch$ | Ch$ |
Unidades de Fomento | (UF) | 21,452.57 | 19,622.66 |
United States dollars | (US$) | 636.45 | 496.89 |
Argentine pesos | (AR$) | 184.32 | 157.79 |
Brazilian Real | (R$) | 272.34 | 280.52 |
Euro | (€$) | 898.81 | 730.94 |
g)
Marketable securities
Marketable securities include investments in mutual funds and investment fund quotas, valued at the year end redemption value.
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 cost plus price-level restatements. For companies incorporated abroad it has been restated in terms of the variation of the U.S. dollar according to the criteria 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 are valued at the lower of the net realizable value and book value. Estimated 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 assets.
10
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 unconsolidated affiliates
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 these investments and to translate the financial statements of the foreign companies. Assets and liabilities 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, which do not exceed 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 market 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 aforementioned Bulletin, i.e. January 1, 2000, and not previously recognized, are recorded as gain or loss according to their estimated reversal period.
11
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 4.0% annual rate (7% for the previous year) 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 the required years of service.
s)
Deposits for containers
Corresponds to the liabilities constituted by cash guarantees received from clients for lending bottles to them.
For those loans for placement subsequent to January 31, 2001, an expiration date of five years as from the invoice date was established. In the event the client has not returned all or a portion of the containers and/or cases, the Company may, without delay, enforce the guarantee, in whole or in part, 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
12
Securities and Exchange Commission)the Company has considered cash equivalent to be investments in fixed-income, mutual funds, short term time deposits (less than 90 days), agreements and financial investments 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.
NOTE 4 - Marketable Securities
| Book-Value | |
| December 31, | |
| 2008 | 2007 |
Type of Instrument | ThCh$ | ThCh$ |
Bonds | 0 | 1,093,768 |
Mutual funds | 15,948,494 | 2,933,579 |
Investment funds | 10,332,613 | 48,825,701 |
Total marketable securities | 26,281,107 | 52,853,048 |
|
|
|
|
|
|
Mutual funds: |
|
|
Institution | ThCh$ |
|
Fondo Mutuo Banchile | 10,512,365 |
|
Fondo Mutuo Banco Estado | 5,210,000 |
|
Fondo Mutuo Royal Bank of Canada | 189,977 |
|
Fondo Mutuo Itaú Corporate | 36,152 |
|
Balance mutual funds | 15,948,494 |
|
|
|
|
Investment funds: |
|
|
Institution | ThCh$ |
|
Citi Institutional Liquid Reserves Limited - USA | 10,332,249 |
|
DWS Institutional USD Money Plus | 364 |
|
Balance investment funds | 10,332,613 |
|
13
Note 5 – Short and Long-Term Receivables
These balances correspond, almost entirely to the soft drinks category. The balance of other accounts receivable mainly corresponds to prepayment to our sugar suppliers.
| CURRENT MATURITIES |
|
| LONG TERM | |||||
|
|
|
|
|
|
| MATURITIES | ||
| 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 | 46,987,752 | 47,480,530 | 693,482 | 741,423 | 47,681,234 | 46,751,190 | 48,221,953 | - | - |
Allowance for doubtful accounts | - | - | - | - | 930,044 | - | - | - | - |
Notes receivable | 14,048,852 | 15,535,975 | 542,857 | 312,632 | 14,591,709 | 14,116,657 | 15,848,607 | - | 6,364 |
Allowance for doubtful accounts | - | - | - | - | 475,052 | - | - | - | - |
Other receivables | 12,903,683 | 17,013,443 | 507,722 | 444,952 | 13,411,405 | 13,256,520 | 17,458,395 | 19,862 | 34,485 |
Allowance for doubtful accounts | - | - | - | - | 154,885 | - | - | - | - |
|
|
|
|
| Total long term receivables | 19,862 | 40,849 |
Note 6 - Balances and Transactions with Related Companies
Receivable and payable balances with related companies correspond to the following concepts:
1) Accounts receivable from related companies.
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. | 2,152,900 | 1,414,359 | - | - |
EMBOTELLADORA COCA-COLA POLAR S.A. | 789,996 | 597,078 | - | - |
COCA-COLA DE CHILE S. A. | - | - | 34,719 | 54,163 |
Total | 2,942,896 | 2,011,437 | 34,719 | 54,163 |
14
2) Amounts payable to related companies:
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
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. | 6,361,373 | 6,472,492 | - | - |
RECOFARMA INDUSTRIAS DO AMAZONAS LTDA. | 4,171,314 | 8,037,866 | - | - |
ENVASES CMF S. A. | 3,646,434 | 3,017,602 | - | - |
SERVICIOS Y PRODUCTOS PARA BEBIDAS REFESCANTES S.R.L. | 1,966,127 | 1,944,621 | - | - |
ENVASES CENTRAL S. A. | 1,085,372 | 1,250,527 | - | - |
ENVASES DEL PACIFICO S. A. | 178,113 | 139,237 | - | - |
EMBONOR S.A. | - | - | 2,495,911 | 2,891,672 |
EMBOTELLADORA COCA-COLA POLAR S.A. | - | - | 641,437 | 746,244 |
Total | 17,408,733 | 20,862,345 | 3,137,348 | 3,637,916 |
15
3) Transactions with related companies
The following table includes the transactions with related companies that exceed ThCh$200,000.
Company | Relation | Transaction | 31-Dec-08 | 31-Dec-08 | ||
|
|
| Amount | Effect on income (charge) credit | Amount | Effect on income (charge) credit |
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
ENVASES CENTRAL S.A | Equity Investee | Finished product purchase | 16,884,635 | - | 18,367,877 | - |
|
| Sales of raw materials and supplies | 1,542,469 | 264,377 | 1,826,336 | 43,374 |
COCA-COLA DE CHILE S.A. | Shareholder | Concentrate purchases | 56,182,488 | - | 53,718,291 | - |
|
| Payment of advertising participation | 3,093,037 | (3,093,037) | 4,498,441 | (4,498,441) |
|
| Sales of advertisement | 1,741,288 | - | 3,866,329 | - |
|
| Water source rental | 2,106,957 | (2,106,957) | 1,840,945 | (1,840,945) |
|
| Other sales | 506,184 | - | 162,265 | - |
RECOFARMA INDUSTRIAS DO AMAZONAS LTDA. | Shareholder related | Concentrate purchases | 74,130,645 | - | 59,719,559 | - |
|
| Reimbursements and other purchases | 1,600,912 | 1,600,912 | 564,452 | 564,452 |
|
| Payment of advertising participation | 8,338,355 | 8,338,355 | 3,603,391 | 3,603,391 |
ENVASES CMF S.A. | Equity Investee | Container purchases | 16,178,976 | - | 17,556,709 | - |
|
| Finished product sale | - | - | 235,599 | - |
|
| Purchase of machinery and equipment | 753,032 | - | - | - |
|
| Dividend payment | 2,700,000 | - | 3,495,690 | - |
SERVICIOS Y PRODUCTOS PARA BEBIDAS REFRESCANTES | Shareholder related | Concentrate purchases | 36,047,961 | - | 29,528,611 | - |
ENVASES DEL PACIFICO S.A. | Director in common | Purchase of raw materials | 565,584 | - | 246,055 | - |
COCA-COLA EMBONOR S.A. | Shareholder related | Product purchase | 147,086 | - | 304,930 | - |
|
| Product sales | 155,877 | - | 304,930 | - |
EMBONOR S.A. | Shareholder related | Product sales | 9,930,915 | 2,213,915 | 9,486,954 | 2,172,482 |
EMBOTELLADORA COCA COLA POLAR S.A. | Shareholder related | Product sales | 5,597,478 | 648,855 | 5,623,544 | 1,128,148 |
CICAN S.A. | Shareholder related | Finished product purchase | - | - | 1,585,970 | - |
IANSAGRO S.A. | Director in common | Sugar purchases | 20,143,018 | - | 19,137,345 | - |
VENDOMATICA S.A. | Shareholder related | Sale of finished products | 1,569,773 | 470,932 | 1,592,767 | 477,830 |
BBVA ADMINISTRADORA GENERAL DE FONDOS | Shareholder related | Investment in mutual funds | 15,569,414 | - | 48,472,349 | - |
BBVA ADMINISTRADORA DE FONDOS |
| Redemption of mutual funds | 15,569,414 | - | 50,465,829 | - |
16
4) Other transactions
Within the normal course of business, in 2006 the Company entered into a future supply agreement with Iansagro S.A. for the purchase of sugar. This agreement will expire in January 2009.
Note 7 – Inventories
| 31-Dec-08 | 31-Dec-07 | ||||
| Gross Value | Obsolescence provision | Net value | Gross Value | Obsolescence provision | Net value |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
|
|
|
|
|
|
|
Raw materials | 15,696,004 | (294,555) | 15,401,449 | 12,658,853 | (271,496) | 12,387,357 |
Finished products | 13,161,294 | (188,802) | 12,972,492 | 16,066,578 | (609,553) | 15,457,025 |
Products in process | 1,528,753 | - | 1,528,753 | 1,473,884 | - | 1,473,884 |
Raw materials in transit | 1,324,656 | - | 1,324,656 | 409,931 | - | 409,931 |
Total | 31,710,707 | (483,357) | 31,227,350 | 30,609,246 | (881,049) | 29,728,197 |
Note 8 - Income Taxes and Deferred Income Taxes
At the 2008 year end the Company presented taxable retained earnings in the amount of ThCh$94,297,477 including profits with credit resulting form corporate income tax in the amount of ThCh$48,841,105 and profits without credit in the amount of ThCh$45,456,372.
At 2007, the Company did no presented taxable profit or non-taxable profit funds.
Short-term and long-term deferred tax assets and liabilities are shown as net balances in balance sheet.
| 31-Dec-08 | 31-Dec-07 | ||||||
| Assets | Liabilities | Assets | Liabilities | ||||
| Short term | Long term | Short term | Long term | Short term | Long term | Short term | Long term |
Temporary differences | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Allowance for doubtful accounts | 282,639 | 107,380 | - | - | 273,278 | 93,919 | - | - |
Vacation provision | 228,166 | - | - | - | 234,461 | - | - | - |
Production expenses | 14,441 | - | - | - | 3,675 | - | - | 107,228 |
Depreciation of property, plant & equipment | - | - | 229,643 | 6,458,230 | - | - | 176,444 | 6,249,664 |
Severance indemnities | 78,373 | - | 13,324 | 144,126 | 58,669 | - | 24,063 | 186,671 |
Others | 763,828 | 136,176 | 189 | - | 158,689 | 361,663 | 27 | - |
Provision for assets write off | 259,293 | 573,310 | - | 84,074 | 763,702 | 484,385 | - | - |
Provision for labor and commercial lawsuits | - | 1,489,338 | - | - | - | 1,466,320 | - | - |
Tax loss carry-forwards | 1,640,855 | - | - | - | 3,543,515 | 1,861,783 | - | - |
Local bond issue expenses | - | - | - | 89,026 | - | - | - | 160,113 |
Contingency allowance | - | 328,171 | - | - | - | 242,897 | - | - |
Obsolescence of inventories | - | - | - | - | 3,456 | - | - | - |
Provision for participation in income | 612,577 | - | - | - | 861,654 | - | - | - |
Exchange rate difference (FRN Debt-Brazil) | - | - | - | 8,307,796 | - | - | - | 13,725,941 |
Unearned income | - | 235,518 | - | - | - | 274,309 | - | - |
Temporary difference fiscal incentives-Brazil | - | - | - | 944,972 | - | - | - | - |
Others |
|
|
|
|
|
|
|
|
Complementary accounts, net of amortization | - | - |
| (1,656,137) | - | - | - | (2,167,382) |
Valuation provision |
|
|
|
| - | - |
|
|
Total | 3,880,172 | 2,869,893 | 243,156 | 14,372,087 | 5,901,099 | 4,785,276 | 200,534 | 18,262,235 |
17
b)
The following table contains information on income taxes at each year-end.
| 31-Dec-08 | 31-Dec-07 |
| ThCh$ | ThCh$ |
Current tax expense (tax allowance) | (24,098,843) | (25,651,015) |
Tax expense adjustment (previous period) | 475,296 | 407,184 |
Deferred income tax expense/effect over assets or liabilities | (370,733) | (3,074,002) |
Amortization of deferred income tax asset and liability complementary accounts | (426,728) | (1,154,338) |
Other charges or credits | (827,067) | 210,315 |
Total | (25,248,075) | (29,261,856) |
Note 9 - Other Current Assets
| 31-Dec-08 | 31-Dec-07 |
| ThCh$ | ThCh$ |
Supplies | 5,256,491 | 4,982,160 |
Cross currency swap | - | 18,943,008 |
Forward agreement over existing inventories | 1,039,841 | - |
Short term bonds discount | 251,601 | 399,755 |
Wachovia Investment Fund (restricted) | - | 99,060 |
Others | 388,749 | 161,298 |
Total | 6,936,682 | 24,585,281 |
Note 10 - Property, Plant and Equipment
Property, plant and equipment consist principally of land, buildings, improvements and machinery. Machinery and equipment includes 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 December 31, 2008 | Balances at December 31, 2007 | ||||
| Assets | Accumulated depreciation | Net property, plant and equipment | Assets | Accumulated depreciation | Net property, plant and equipment |
| ||||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Land | 20,428,189 | - | 20,428,189 | 18,242,140 | - | 18,242,140 |
Buildings and improvements | 125,373,465 | (48,630,648) | 76,742,817 | 107,269,482 | (39,514,435) | 67,755,047 |
Machinery and equipment | 299,696,514 | (230,646,026) | 69,050,488 | 250,017,731 | (194,875,303) | 55,142,428 |
Other property, plant and equipment | 282,188,795 | (222,888,898) | 59,299,897 | 236,846,369 | (196,072,404) | 40,773,965 |
Technical reappraisal of property, plant & equipment | 2,404,632 | (732,042) | 1,672,590 | 2,404,632 | (730,692) | 1,673,940 |
Total | 730,091,595 | (502,897,614) | 227,193,981 | 614,780,354 | (431,192,834) | 183,587,520 |
18
b) Other property, plant and equipment |
|
|
| 31-Dec-08 | 31-Dec-07 |
| ThCh$ | ThCh$ |
Containers | 165,293,135 | 136,721,552 |
Refrigerating equipment, promotional items and other minor assets | 68,965,582 | 60,297,712 |
Furniture and tools | 9,768,191 | 8,539,876 |
Other | 38,161,887 | 31,287,229 |
Total other property, plant and equipment | 282,188,795 | 236,846,369 |
c) Technical appraisal of property, plant and equipment |
|
|
|
| |||
|
|
|
|
|
|
| |
| Balances at December 31, 2008 | Balances at December 31, 2007 | |||||
| Assets |
| Accumulated depreciation | Net, property, plant and equipment | Assets | Accumulated depreciation | Net, property, plant and equipment |
| |||||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |
Land | 1,606,035 | - | 1,606,035 | 1,606,035 | - | 1,606,035 | |
Buildings and improvements | 224,844 | (163,426) | 61,418 | 224,844 | (162,516) | 62,328 | |
Machinery and equipment | 573,753 | (568,616) | 5,137 | 573,753 | (568,176) | 5,577 | |
Total | 2,404,632 | (732,042) | 1,672,590 | 2,404,632 | (730,692) | 1,673,940 |
d) Depreciation for the year
Depreciation charges for the period amounted to ThCh$ 38,057,388 (ThCh$ 31,742,138 in 2007) of which ThCh$ 27,940,166 (ThCh$ 23,382,788 in 2007) are included under Operating Costs and ThCh$ 10,117,222 (ThCh$ 8,359,350 in 2007) under Sales and Administrative Expenses in the income statement.
19
Note 11 - - Investment in Unconsolidated Affiliates
1.
Investments in unconsolidated affiliates 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 year | Accrued income | Accounting value | Unrealized income (loss) | Equity 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 | 39,925,454 | 40,862,049 | 4,463,405 | 3,913,408 | 1,183,591 | 891,417 | 19,962,727 | 20,431,022 | 1,063,703 | 1,148,800 | 18,899,024 | 19,282,222 |
HOLDFAB PARTIC. LTDA. | BRAZIL | US$ | 1,283,158,339 | 14.73 | 14.73 | 48,039,893 | 29,576,746 | 3,770,091 | 753,980 | 555,409 | 111,088 | 7,077,190 | 4,357,216 | - | - | 7,077,190 | 4,357,216 |
ENVASES CENTRAL S.A. | CHILE | Ch$ | 1,499,398 | 49.91 | 49.91 | 5,659,273 | 5,218,453 | 440,820 | 10,335 | 218,017 | 906 | 2,824,543 | 2,604,530 | 263,152 | 263,152 | 2,561,391 | 2,341,378 |
KAIK PARTIPACOES | BRAZIL | US$ | 16,098,919 | 11.32 | 11.32 | 8,765,020 | 10,622,756 | (687,242) | 991,284 | (77,794) | 112,211 | 992,173 | 1,202,464 | - | - | 992,173 | 1,202,464 |
CICAN S.A. | ARGENTINA | US$ | 3,040 | 0.00 | 0.00 | - | - | - | - | - | (302,531) | - | - | - | - | - | - |
Total |
|
|
|
|
|
|
|
|
|
|
| 30,856,633 | 28,595,232 | 1,326,855 | 1,411,952 | 29,529,778 | 27,183,280 |
20
Note 11 - Investment in Unconsolidated Affiliates (continued)
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$386,400 capital contribution to Embotelladoras del Sur S.A
The amounts disbursed by Embotelladora Andina S.A. in the acquisition of and loan to Embotelladoras del Sur S.A., were originally 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.
As of December 31, 2008, the Company recorded under Other Non-Operating Income all of the disbursements to Embotelladoras del Sur S.A. due to the fact that it is very difficult to measure future cash flows that the distribution of the water brand Benedictino generates and also because this brand belongs to The Coca-Cola Company.
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$12,831.63. In turn, Holdfab Participações Ltda. holds a 50% ownership interest in Amarantina Participações S.A.
Centralli Refrigerantes S.A. shows negative equity, which has been duly provided for.
The investment in Kaik Participações Ltda. (Brazil) where Embotelladora Andina S.A. holds an indirect ownership of 11.32% has been accounted for under the equity method, since the Company has a significant influence through one of its directors, who participates in the process of setting policies, operating and financial decision-making in accordance with the ownership structure which is exclusive owned by the Coca-Cola bottlers in Brazil
The investment in Envases Central S.A. is presented with a 48% reduction (the percentage share on the date of transaction) of the earnings generated during the sale to Envases Central during December 1996 for property located in Renca, because this transaction represents unrealized income for Embotelladora Andina S.A. The amount of the reduction is reflected in the following chart. This transaction will be realized once the property is transferred to a third party different from the group.
The investment in Envases CMF S.A. is presented with a 50% reduction of the earnings generated during the sale of machinery and equipment of our subsidiary Envases Multipack S.A. which took place in June, 2001, and that is recorded under Results during the remaining useful life period of the goods sold to Envases CMF S.A.
Unrealized income corresponds to transactions between subsidiaries and/or the parent company that have been deducted or added to the category of the originating asset with the following effect on income of the subsidiaries:
Envases CMF S.A. (purchase of property, plant and equipment: bottles): ThCh$ -1,133,210 in 2008 (ThCh$ -1,150,383 in 2007)
Envases Central S.A. (purchase of finished products): ThCh$ -1,997 in 2008 (ThCh$ -4,251 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$227 million.
21
Note 12 - - Goodwill
Company | 31-Dec-2008 | 31-Dec-2007 | ||
Amortization during the period | Goodwill balance | Amortization during the period | Goodwill balance | |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
RIO DE JANEIRO REFRESCOS LTDA. | 4,277,729 | 41,042,712 | 3,661,090 | 38,708,727 |
EMBOTELLADORA DEL ATLÁNTICO S.A. | 3,334,408 | 24,226,359 | 2,834,930 | 23,432,312 |
VITAL S. A. | - | - | 585,390 | - |
Total | 7,612,137 | 65,269,071 | 7,081,410 | 62,141,039 |
Note 13 - Other Long Term Assets
| 31-Dec-2008 | 31-Dec-2007 |
| ThCh$ | ThCh$ |
Judicial deposits (Brazil) | 8,053,225 | 7,567,714 |
Transfer fiscal credits (Brazil) | 5,545,258 | 5,937,180 |
Prepaid expenses | 3,303,265 | 3,592,041 |
Bond issuance and placement expenses | 2,863,744 | 3,156,095 |
Spare parts | 2,706,343 | 2,783,765 |
Non operating assets | 1,544,872 | 2,620,659 |
Others | 55,613 | 62,246 |
Total | 24,072,320 | 25,719,700 |
22
Note 14 - - Short-Term Bank Borrowings
a) SHORT TERM BANK BORROWINGS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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$ |
BANCO GALICIA | 3,742,361 | 1,820,798 | - | - | 3,742,361 | 1,820,798 |
BANCO DO BRASIL | - | 1,099,762 | - | - | - | 1,099,762 |
BANCO BBVA | - | - | - | 1,381,885 | - | 1,381,885 |
BANCO DE CHILE | - | - | 1,000 | - | 1,000 | - |
BANVO BBVA FRANCES | 2,076,268 | - | - | - | 2,076,268 | - |
Others | - | - | - | - | - | - |
Total | 5,818,629 | 2,920,560 | 1,000 | 1,381,885 | 5,819,629 | 4,302,445 |
Principal due | 5,429,478 | 2,885,996 | 1,000 | 1,381,885 | 5,430,478 | 4,267,881 |
|
|
|
|
|
|
|
Annual average interest rate | 17.64% | 13.47% | 8.58% | 9.36% |
|
|
Foreign currency liabilities | 99.98% |
|
|
|
|
|
Local currency liabilities | 0.02% |
|
|
|
|
|
b) LONG TERM BANK BORROWINGS (short term portion) |
|
|
|
| |||
|
|
|
| ||||
| Currency or indexation adjustment |
|
| ||||
Bank or Financial Institution | Other foreign currencies |
| TOTAL | ||||
| 2008 | 2007 |
|
| 2008 | 2007 | |
| ThCh$ | ThCh$ |
|
| ThCh$ | ThCh$ | |
BANCO ALFA | 114,657 | 128,789 |
|
| 3,742,361 | 1,820,798 | |
BANK BOSTON | - | 2,361 |
|
| - | 1,099,762 | |
BANCO VOTORATIM | 111,755 | 2,101 |
|
| - | 1,381,885 | |
Others | - | - |
|
| 1,000 | - | |
Total | 226,412 | 133,251 |
|
| 5,819,629 | 4,302,445 | |
Principal due | 225,756 | 129,810 |
|
| 5,430,478 | 4,267,881 | |
|
|
|
|
|
|
| |
Annual average interest rate | 10.51% | 11.89% |
|
|
|
| |
|
|
|
|
|
|
| |
Foreign currency liabilities | 99.98% |
|
|
|
|
| |
Local currency liabilities | - |
|
|
|
|
| |
|
|
|
|
|
|
|
23
Note 15 - Long-Term Bank Borrowings
| Currency | Years to maturity | Total long | Annual average interest rate | Total long | ||
Bank or Financial Institution | or indexation adjustment | More than 1 up to 2 | More than 2 up to 3 | More than 3 up to 5 | term at period end 2008 | term at period end 2007 | |
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
| ThCh$ |
BANCO VOTORANTIM | Other currencies | 110,460 | 112,130 | 28,116 | 250,706 | 9,86% | 495,268 |
BANCO ALFA | Other currencies | 114,764 | 47,982 | - | 162,746 | 11,2% | 311,294 |
TOTAL |
| 225,224 | 160,112 | 28,116 | 413,452 |
| 806,562 |
Note 16 – Long and Short-Term Bonds Payable
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, 2007 and 2008, 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$350 million of which US$200 million are outstanding and 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$75 million maturing in December 2012 and semiannual interest payments. At period end, all such bonds are wholly-owned by the subsidiary Abisa Corp. Consequently, the effects of such transactions have been eliminated from these consolidated financial statements, both in the balance sheet and in the consolidated statement of income.
24
Note 16 – Long and Short-Term Bonds Payable (continued)
The following table contains more information on Bonds Payable:
Instrument subscription or ID N° | Series | Current nominal value | Currency | Interest | Maturity | Term | Par value | Placement in Chile or abroad | ||
Interest paid | Amortization period | 2008 | 2007 | |||||||
Current portion of bonds payable |
|
|
|
|
|
|
| ThCh$ | ThCh$ |
|
Yankee bonds | B | - | US$ Exchange rate | 7.625% | 01-Oct-27 | Semiannual | Oct-27 | - | 20,630 | Abroad |
Register 254 SVS June 13, 2001 capital and interest | A | - | UF | 6.20% | 01-Jun-08 | Semiannual | Jun-08 | - | 7,087,698 | Chile |
Register 254 SVS June 13, 2001 capital and interest | B | 3,700,000 | UF | 6.50% | 01-Jun-26 | Semiannual | Dec-09 | 2,757,734 | 421,530 | Chile |
Total current maturities |
|
|
|
|
|
|
| 2,757,734 | 7,529,858 |
|
Long term portion of bonds payable |
|
|
|
|
|
|
|
|
|
|
Yankee bonds | B | - | US$ Exchange rate | 7.63% | 01-Oct-27 | Semiannual | Oct-27 | - | 1,082,226 | Abroad |
Register 254 SVS June 13, 2001 | B | 3,700,000 | UF | 6.50% | 01-Jun-26 | Semiannual | Dec-09 | 77,039,965 | 79,065,584 | Chile |
Total long term |
|
|
|
|
|
|
| 77,039,965 | 80,147,810 |
|
25
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) | 2,951,934 | 2,960,789 | 5,657,876 | 8,736,653 |
Staff severance indemnities | 789,890 | 771,827 | 8,398,043 | 6,996,957 |
Contingencies | 43,440 | 51,902 | 2,706,542 | 2,700,931 |
TOTAL | 3,785,264 | 3,784,518 | 16,762,461 | 18,434,541 |
Note 18 - Staff Severance Indemnities
As of December 31, 2008, the Company modified the discount rate of the current value of accrued staff benefits from 7% to 4% in order to adapt to current market conditions. The impact of this change was a ThCh$954,595 charge to results and is recorded under Other Non Operating Expenses.
| 31-Dec-2008 | 31-Dec-2007 |
Staff Severance Indemnities | ThCh$ | ThCh$ |
Beginning balance | 7,133,867 | 6,782,257 |
Provision for the period | 3,052,355 | 1,170,026 |
Payments | (998,289) | (183,499) |
Ending balance | 9,187,933 | 7,768,784 |
Note 19 – Other Long Term Liabilities
| 31-Dec-2008 | 31-Dec-2007 |
| ThCh$ | ThCh$ |
Guaranty on containers | 10,102,254 | 9,998,894 |
Participation acquisition of assets | 2,050,828 | 2,956,920 |
Advertising agreements | 277,787 | 355,473 |
Others | 577,849 | 44,956 |
Total | 13,008,718 | 13,356,243 |
Note 20 - Minority Interest
| 31-Dec-2008 | 31-Dec-2007 |
LIABILITIES | ThCh$ | ThCh$ |
Vital Aguas S. A. | 1,374,240 | 1,391,821 |
Embotelladora del Atlántico S. A. | 11,605 | 9,862 |
Andina Inversiones Societarias S.A. | 21 | 17 |
| 1,385,866 | 1,401,700 |
|
|
|
|
|
|
| 31-Dec-2008 | 31-Dec-2007 |
INCOME STATEMENT | ThCh$ | ThCh$ |
Vital Aguas S. A. | 17,583 | (45,786) |
Embotelladora del Atlántico S. A. | (2,056) | (817) |
Andina Inversiones Societarias S.A. | (4) | (7) |
| 15,523 | (46,610) |
26
Note 21 - - Changes in Shareholders’ Equity
The movement in Shareholders’ Equity, Dividend Distribution and Other Reserves is detailed in the following table:
| December 31,2008 |
| December 31,2007 | |||||||||
| Paid in Capital | Other Reserves | Accumulated Income | Interim Dividends | Net Income |
| Paid in Capital | Other Reserves | Accumulated Income | Interim Dividends | Net Income |
|
| 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 | 1,750,275 | 10,005,036 | (13,438,065) | 74,355,094 |
|
Distribution of prior year income | - | - | 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 | - | 21,517,062 | - | - | - |
| - | (13,323,239) | - | - | - |
|
Extraordinary dividend charge to accumulated income | - | - | (47,897,296) | - | - |
| - | - | (52,040,412) | - | - |
|
Price level restatement | 19,314,203 | (1,018,466) | 2,808,355 | (407,925) | - |
| 14,952,514 | 129,522 | 1,166,767 | (430,277) | - |
|
Income for the year | - | - | - | - | 94,835,957 |
| - | - | - | - | 81,601,944 |
|
Interim dividends | - | - | - | (16,764,054) | - |
| - | - | - | (16,764,054) | - |
|
Ending balance | 236,327,716 | 9,055,154 | 23,201,754 | (17,171,979) | 94,835,957 |
| 217,013,513 | (11,443,442) | 11,171,454 | (17,194,331) | 81,601,944 |
|
Price level restated balances |
|
|
|
|
|
| 236,327,716 | (12,461,908) | 12,165,712 | (18,724,626) | 88,864,517 |
|
27
Note 21 - - Changes in Shareholders’ Equity (continued)
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 | 118,163,858 | 118,163,858 |
B | 118,163,858 | 118,163,858 |
Other Reserves |
|
|
|
|
|
|
|
|
|
Balance of Other Reserves is composed as follows: |
|
|
|
|
|
|
| 2008 | 2007 |
|
|
| ThCh$ | ThCh$ |
|
|
|
|
|
Reserve for cumulative translation adjustments(1) |
|
| 7,875,000 | (13,642,062) |
Reserve for technical reappraisal of property, plant and equipment |
| 71,048 | 73,276 | |
Other |
|
| 1,109,106 | 1,106,878 |
Total |
|
| 9,055,154 | (12,461,908) |
(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 | Balance | ||
Company |
|
| 01-Jan-08 | Investment |
| 31-Dec-2008 |
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Rio de Janeiro Refrescos Ltda. |
|
| (8,248,960) | 12,621,279 | 127,703 | 4,500,022 |
Embotelladora del Atlántico S. A. |
|
| (5,393,102) | 6,440,485 | 2,327,595 | 3,374,978 |
Total |
|
| (13,642,062) | 19,061,764 | 2,455,298 | 7,875,000 |
(*) 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.
28
Note 22 - Other Non-Operating Income and Expenses
Other non-operating income during the period was as follows: | 2008 | 2007 |
| ThCh$ | ThCh$ |
Provision reversal | 5,221,075 | 6,317,108 |
Recovery of prior year taxes | - | 2,954,212 |
Reversal Pis/Cofins provision | - | 1,493,997 |
Guaranty deposits over containers realized | - | 382,263 |
Gain on sale of property, plant & equipment | 274,757 | - |
Other income | 854,107 | 241,301 |
Sub-total | 6,349,939 | 11,388,881 |
Translation of financial statements(1) | - | 3,298,942 |
Total | 6,349,939 | 14,687,823 |
|
|
|
Other non-operating expenses during the period was as follows: |
| |
Bank taxes(3) | (2,675,187) | (3,212,981) |
Conversion adjustment reserve realized(2) | (2,455,298) | (3,898,911) |
Write-off intangible Benedectino | (1,139,981) | - |
Obsolescence and write-offs of property, plant and equipment | (1,134,898) | (2,585,519) |
Effect of rate exchange over calculation of severance payments | (954,595) | - |
Provision for labor and commercial lawsuits | (949,984) | (765,653) |
Tax and legal fees | (929,253) | - |
One-time previous years territory taxes in Brazil | (405,624) | - |
Donations | (339,657) | - |
Provision loss of investment in Centralli | (113,628) | - |
Loss on sale of property, plant and equipment | - | (159,758) |
Others | (1,238,463) | (1,018,124) |
Sub-total | (12,336,568) | (11,640,946) |
Translation of financial statements(1) | (4,095,428) | - |
Total | (16,431,996) | (11,640,946) |
|
|
|
(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 and dividend distribution 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 obtainment of financial resources. |
29
Note 23- Price-Level Restatement
| Adjustment index | 31-Dec-08 | 31-Dec-07 |
Assets - (charges)/credits |
| ThCh$ | ThCh$ |
Inventories | CPI | 115,862 | (9,149) |
Property, plant and equipment | CPI | 9,031,134 | 6,667,223 |
Investments in related companies | CPI | 11,025,359 | 11,427,118 |
Short term accounts receivable from related companies | CPI | 4,189,009 | 813,207 |
Cash, Time Deposits, Marketable Securities | CPI | 3,427,778 | 1,482,259 |
Recoverable taxes | CPI | 32,877 | (37,454) |
Sales notes receivable | CPI | - | 224 |
Other current assets | UF | 2,015,402 | 1,121,719 |
Other current assets | CPI | 298,664 | 145,637 |
Other long term assets | UF | 30,347 | 15,915 |
Other long term assets | CPI | 508,783 | 3,666,479 |
Long term accounts receivable from related companies | CPI | - | 10,868 |
Cost and expense accounts | CPI | 11,791,606 | 8,139,905 |
Total (charges) credits |
| 42,466,821 | 33,443,951 |
|
|
|
|
Liabilities - (charges)/credits |
|
|
|
Shareholders’ equity | CPI | (20,696,167) | (17,226,375) |
Short and long term bonds payable | UF | (6,617,149) | (5,516,781) |
Short and long term bonds payable | CPI | - | (292,241) |
Short term accounts receivable from related companies | UF | - | (1,084,731) |
Short term accounts receivable from related companies | CPI | - | (1,028,039) |
Other current liabilities | UF | (37,477) | (739,502) |
Other current liabilities | CPI | (2,037,750) | (702,377) |
Long term accounts receivable from related companies | CPI | (60,622) | (1,128,873) |
Other long term liabilities | CPI | (373,822) | (233,848) |
Income accounts | CPI | (14,733,317) | (10,438,562) |
Total (charges) credits |
| (44,556,304) | (38,391,329) |
Price-level restatement (loss ) gain |
| (2,089,483) | (4,947,378) |
30
Note 24 - - Exchange Gains/Losses
| Currency | 31-Dec-08 | 31-Dec-07 |
Assets - (charges)/credits |
| ThCh$ | ThCh$ |
Cash | US$ | 60,943 | (108,090) |
Time deposits | US$ | 6,919,230 | (3,696) |
Marketable securities (net) | US$ | 2,670,157 | (4,392,844) |
Trade accounts receivable | US$ | 699 | (497) |
Other debtors (net) | US$ | 27,133 | (4,841) |
Accounts receivable related companies | US$ | 7,396,915 | (6,210,037) |
Recoverable taxes |
| 117 | - |
Prepaid expenses | US$ | 210 | (4,756) |
Other current assets | US$ | (194,180) | 351,146 |
Others | US$ | (63,602) | (6,958,272) |
Total (charges)/credits |
| 16,817,622 | (17,331,887) |
|
|
|
|
Liabilities - (Charges) / credits |
|
|
|
Bonds payable | US$ | 120,655 | 338,393 |
Dividends payable |
| 220,499 | - |
Accounts payable | US$ | (2,156,979) | 6,277,924 |
Provisions | US$ | (543,930) | 25,330 |
Prepaid income | US$ | 2,417 | 36,516 |
Other current liabilities |
| - | (445,580) |
Other creditors |
| 33,779 | - |
Accounts payable related companies | US$ | 494,570 | - |
Bonds payable long term | US$ | - | 240,444 |
Total (charges) credits |
| (1,828,989) | 6,473,027 |
Exchange gain (loss) on income | 14,988,633 | (10,858,860) |
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$3,115,345 and ThCh$3,555,850 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$529,699 and ThCh$429,294 in 2007.
31
Note 26 - - Consolidated Statement of Cash Flows
For the projection of future cash flows, there are no transactions and events to consider which have not been revealed in these financial statements and accompanying notes.
The following table presents an itemization of the movement of assets and liabilities not affecting the cash flow in the period, but compromising future cash flows.
| 31-Dec-08 | Maturity date | 31-Dec-07 | Maturity date |
| ThCh$ | ThCh$ | ||
Expected cash outflow |
|
|
|
|
Expenses |
|
|
|
|
Dividend payment | (5,588,018) | 28-Jan-09 | (6,085,352) | 24-Jan-08 |
Addition to property, plant and equipment | (796,771) | 31-Jan-09 | (659,349) | 31-Jan-08 |
Addition to property, plant and equipment | (314,156) | 15-Feb-09 | (5,845,154) | 28-Feb-08 |
Addition to property, plant and equipment | (16,560) | 31-Mar-09 | (10,919) | 31-Mar-08 |
Total expenses | (6,715,505) |
| (12,600,774) |
|
|
|
|
|
|
Expected cash inflow |
|
|
|
|
Income |
|
|
|
|
Sale of property, plant and equipment | 20,645 | 31-Jan-09 | 3,283 | 31-Jan-08 |
Total income | 20,645 |
| 3,283 |
|
|
|
|
|
|
Total net | (6,694,860) |
| (12,597,491) |
|
32
Note 27 - - Derivative Contracts
Derivative contracts at December 31, 2008 were as follows:
|
|
|
|
|
| Hedged item or Transaction |
| Assets / Liabilities | Effect on income | |||
Derivative | Contract | Value | Maturity period | Specific Item | Position Purchase / Sale | Concept | Amount | Hedged Item Value | Item | Amount | Realized | Unrealized |
|
| ThCh$ |
|
|
|
| ThCh$ | ThCh$ |
| ThCh$ | ThCh$ | ThCh$ |
FR | CCPE | 20,930,012 | 1st Quarter 2009 | US$ Exchange Rate | S | Foreign currency financial investment | 20,930,012 | 21,969,853 | Other current assets | 1,039,841 | 1,039,841 | 0 |
FR | CCTE | 10,250,917 | 1st Quarter 2009 | US$ Exchange Rate | P | Suppliers foreign currency | 9,289,170 | - | - | 0 | 781,647 | 180,101 |
FR | CCTE | 1,972,995 | 2nd Quarter 2009 | US$ Exchange Rate | P | Suppliers foreign currency | 1,979,885 | - | - | 0 | 0 | (6,890) |
33
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$1,592,099 (ThCh$1,675,693 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.
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$1,109,801 (ThCh$1,025,227 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.
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$8,047 (ThCh$22,242 in 2007). In accordance with its legal counsel’s opinion, the Company deems improbable that contingencies without provisions may affect the results or equity of the Company.
b.
Restrictions
The bond issue and placement on the US market for US$ 350 million is subject to certain restrictions against preventive attachments, sale and leaseback transactions, sale of assets, subsidiary debt and certain conditions in the event of a merger or consolidation.
The bond issue and placement in the Chilean market for UF 7,000,000 is subject to the following restrictions:
Leverage ratio, defined as the total financial debt/shareholder’s equity plus minority interest should be less than 1.20 times.
Financial debt shall be deemed Consolidated Finance Liabilities which include: (i) short-term bank liabilities, (ii) short-term portion of long-term bank liabilities, (iii) short-term bonds payable-promissory notes, (iv) short-term portion of bonds payable, (v) long-term bank liabilities, and (vi) long-term bonds payable. Consolidated equity means Total equity plus Minority Interest.
Consolidated assets are to be free of any pledge, mortgage or other encumbrance for an amount equal to at least 1.30 times the consolidated liabilities that are not guaranteed by the investee.
Andina must retain and, in no way, lose, sell, assign or dispose of to a third party the geographical zone denominated “Región Metropolitana”, as a franchised territory in Chile by The Coca-Cola Company for the preparation, production, sale and distribution of the products and brands in accordance with the respective Bottling agreement, renewable from time to time.
Andina shall not lose, sell, assign or dispose of to a third party any other territory in Brazil or Argentina that is currently franchised to Andina by The Coca-Cola Company for the preparation, production, sale and distribution of the products and brands of the franchisor, as long as the referred territory represents more than forty percent of the Company’s Consolidated Operating Cash Flows.
34
Note 28 - - Contingencies and Restrictions (continued)
c.
Direct guarantees
Guarantees at December 31, 2008 are presented on the following table:
|
|
|
|
| Balances pending at end of period |
|
| |
|
| Type of guaranty | Assets involved |
| Guaranty release | |||
Debtor | Relation |
| Type | Accounting Value | 2008 | 2007 | 2009 | 2011 |
|
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
RIO DE JANEIRO REFRESCOS LTDA. | Subsidiary | Mortgage | Real estate | 14,333,629 | 11,059,440 | 11,391,888 | - | - |
RIO DE JANEIRO REFRESCOS LTDA. | Subsidiary | Judicial Deposit | Judicial deposit | 11,064,316 | - | - | - | - |
EMBOTELLADORA DEL ATLANTICO S.A. | Subsidiary | Guaranty insurance | Temporary export of molds | 10,690 | - | - | - | - |
EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | - | - | - | - | 190,935 |
EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | - | - | - | 12,004 | - |
EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | - | - | - | 1,000 | - |
EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | - | - | - | 1,014 | - |
EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | - | - | - | 1,083 | - |
35
Note 29 - - Guarantees from Third Parties
Guarantees from Third Parties at December 31, 2008 were as follows:
Guarantor | Relationship | Type of Guarantee | Amount | Currency | Transaction |
|
|
|
|
|
|
RUSSEL W. COFFIN | Subsidiary | Letter of Credit | 39,498,853 | US$ | Purchase of Nitvitgov Refrigerantes S.A. |
CONFAB | Subsidiary | Mortgage | 30,000,000 | US$ | Purchase of Rio de Janeiro Refrescos Ltda. |
JUAN PABLO GALVEZ FIGUEROA Y CIA. LTDA. | Parent Company | Receipt | 202,400 | US$ | Supplier agreement |
SOC. COM. CHAMPFER | Subsidiary | Mortgage | 1,271,139 | US$ | Distributor credit |
ATANOR | Subsidiary | Guaranty Receipt | 1,186,492 | US$ | Supplier |
FRANCISCANA DIST. | Subsidiary | Mortgage | 1,159,606 | US$ | Distributor credit |
ATANOR | Subsidiary | Guaranty Receipt | 889,869 | US$ | Supplier |
ATANOR | Subsidiary | Guaranty Receipt | 889,869 | US$ | Supplier |
ATANOR | Subsidiary | Guaranty Receipt | 889,869 | US$ | Supplier |
MAC COKE DIST. BEB. | Subsidiary | Mortgage | 830,124 | US$ | Distributor credit |
MOTTA DISTRIBUIDORA DE BEBIDAS | Subsidiary | Mortgage | 663,243 | US$ | Distributor credit |
AGUIAR DIST. DE BEBIDAS | Subsidiary | Mortgage | 650,407 | US$ | Distributor credit |
DIST REAL COLA | Subsidiary | Mortgage | 603,338 | US$ | Distributor credit |
AGA S.A. | Parent Company | Receipt | 600,000 | US$ | Supplier agreement |
ZULEMAR COMERCIO DE BEBIDAS | Subsidiary | Mortgage | 588,361 | US$ | Distributor credit |
ASXT FLUMINENSE DIST. BEBIDAS | Subsidiary | Mortgage | 546,855 | US$ | Distributor credit |
ROSAS DE CASIMIRO | Subsidiary | Mortgage | 323,492 | US$ | Distributor credit |
SOBERANA DE CARMO DIST BEB | Subsidiary | Mortgage | 284,553 | US$ | Distributor credit |
ECOPRENEUR SA | Subsidiary | Guaranty Receipt | 212,653 | US$ | Supplier |
CATERING ARGENTINA S.A. | Subsidiary | Guaranty Receipt | 149,566 | US$ | Supplier |
TRANSPORTE RIGAR S.R.L. | Subsidiary | Guaranty Receipt | 92,159 | US$ | Supplier |
DISTRIBUIDORA DE BEBIDAS CAVARÚ | Subsidiary | Mortgage | 80,445 | US$ | Distributor credit |
36
Note 30 - - Local and Foreign Currency
Assets at each year end were composed of local and foreign currencies as follows:
|
| 31-Dec-08 | 31-Dec-07 |
Current Assets | Currency | ThCh$ | ThCh$ |
Cash | Non-indexed Ch$ | 10,055,638 | 8,169,011 |
- | US$ | 1,530,727 | 2,766,917 |
- | AR$ | 2,360,387 | 2,124,049 |
- | R$ | 7,303,350 | 13,897,284 |
Time Deposits | Indexed Ch$ | 50,362,710 | - |
- | Non-indexed Ch$ | 17,580,668 | 53,329,846 |
- | US$ | 13,746,768 | - |
- | R$ | 31,335 | 107,720 |
- | AR$ | - | 19,681 |
Marketable Securities (Net) | US$ | 10,272,390 | 47,632,428 |
- | AR$ | - | 1,957,438 |
- | Non-indexed Ch$ | 15,948,493 | 3,263,182 |
- | R$ | 60,224 | - |
Trade Accounts Receivable (Net) | Non-indexed Ch$ | 20,717,340 | 20,936,941 |
- | US$ | 846,632 | 31,363 |
- | AR$ | 4,153,781 | 3,784,799 |
- | R$ | 21,033,437 | 23,468,850 |
Notes Receivable | Non-indexed Ch$ | 10,539,242 | 10,704,319 |
- | AR$ | 809,799 | 799,204 |
- | R$ | 2,767,616 | 4,345,084 |
Other Debtors (Net) | Non-indexed Ch$ | 4,620,778 | 5,233,304 |
- | US$ | 118,809 | 105,465 |
- | AR$ | 3,863,836 | 2,424,822 |
- | R$ | 4,653,097 | 9,694,804 |
Notes Receivable Related Companies | Non-indexed Ch$ | 2,942,896 | 2,011,437 |
Inventories (Net) | Indexed Ch$ | 5,350,065 | 8,246,100 |
- | Non-indexed Ch$ | 2,932,137 | 643,260 |
- | US$ | 1,272,903 | 1,111,274 |
- | AR$ | 9,044,295 | 5,986,809 |
- | R$ | 12,627,950 | 13,740,754 |
Recoverable Taxes | Non-indexed Ch$ | 4,281,301 | 456,541 |
- | AR$ | 722,306 | 410,121 |
- | R$ | 224,776 | 1,906,092 |
- | Indexed Ch$ | 756,907 | - |
Prepaid Expenses | Non-indexed Ch$ | 1,292,325 | 1,131,043 |
- | US$ | - | 5,903 |
- | AR$ | 257,222 | 215,300 |
- | R$ | 886,335 | 721,297 |
Deferred Taxes | Non-indexed Ch$ | 504,165 | 830,572 |
- | AR$ | 603,255 | - |
- | R$ | 2,529,596 | 4,869,993 |
Other Current Assets | Indexed Ch$ | 734,295 | 364,476 |
- | Non-indexed Ch$ | 1,607,162 | 961,454 |
- | US$ | 1,284,604 | 19,580,228 |
- | AR$ | 1,018,330 | 798,437 |
- | R$ | 2,292,291 | 2,880,686 |
Property, Plant and Equipment |
|
|
|
Property, Plant and Equipment | Non-indexed Ch$ | 100,413,577 | 94,748,904 |
- | US$ | 126,780,404 | 88,838,616 |
Other Assets |
|
|
|
Investments in Related Companies | Indexed Ch$ | 21,460,416 | 21,623,604 |
- | R$ | 8,069,362 | 5,559,676 |
Investments in Other Companies | Indexed Ch$ | 57,335 | 49,783 |
- | US$ | 73,531 | 96,082 |
Goodwill | Non-indexed Ch$ | - | 1,181,913 |
- | US$ | 65,269,071 | 60,959,126 |
Long Term Debtors | Indexed Ch$ | 8,542 | 16,313 |
- | AR$ | 11,320 | 18,172 |
- | R$ | - | 6,364 |
Notes Receivable Related Companies | Non-indexed Ch$ | 34,719 | 54,163 |
Intangibles | US$ | 363,969 | 431,897 |
- | Indexed Ch$ | - | 22,216 |
Amortization | US$ | (200,184) | (277,174) |
Others | Non-indexed Ch$ | 2,928,034 | 3,969,640 |
- | Non-indexed Ch$ | 1,526,957 | 1,852,352 |
- | US$ | 10,880 | 432,981 |
- | AR$ | 3,465,720 | 3,227,327 |
- | R$ | 16,140,729 | 16,237,400 |
Total Assets | Non-indexed Ch$ | 194,997,398 | 205,508,242 |
| US$ | 221,370,504 | 221,715,106 |
| AR$ | 26,310,251 | 21,766,159 |
| R$ | 78,620,098 | 97,436,004 |
| Indexed Ch$ | 81,658,304 | 34,292,132 |
37
Note 30 - - Local and Foreign Currency (continued)
Current liabilities at each year end denominated in local and foreign currencies were as follows:
|
| Up to 90 days |
| 90 days to 1 year | |||||
|
| 31-Dec-08 | 31-Dec-07 | 31-Dec-08 | 31-Dec-07 | ||||
| Currency | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate |
Long term bank liabilities | Non-Indexed Ch$ | 1,000 | 8.58% | 1,381,885 | 9.36% | - |
| - |
|
- | AR$ | 3,742,361 | 17.93% | 1,820,798 | 11.55% | - |
| - |
|
- | R$ | - |
| - |
| 2,076,268 | 17.93% | 1,099,762 | 6.75% |
Long term bonds payable | R$ | - |
| - |
| 226,412 | 10.51% | 133,251 | 11.89% |
Bonds payable | Indexed-Ch$ | - |
| - |
| 2,757,734 | 6.50% | 7,509,228 | 6.20% |
- | US$ | - |
| 20,630 | 7.63% | - |
| - |
|
Dividends payable | Non-Indexed Ch$ | 5,750,359 |
| 6,323,012 |
| - |
| - |
|
- | AR$ | 6,274 |
| 4,691 |
| - |
| - |
|
Accounts payable | Non-Indexed Ch$ | 30,688,865 |
| 26,578,736 |
| - |
| - |
|
- | US$ | 3,643,944 |
| 2,783,063 |
| - |
| - |
|
- | AR$ | 14,303,242 |
| 12,630,585 |
| - |
| - |
|
- | R$ | 15,536,490 |
| 17,434,483 |
| - |
| - |
|
- | EURO$ | 10,488 |
| 16,236 |
| - |
| - |
|
Other creditors | US$ | 114,039 |
| 96,956 |
| - |
| - |
|
- | AR$ | 147,890 |
| 60,040 |
| 92,780 |
| 103,992 |
|
- | R$ | 4,379,364 |
| 5,171,460 |
| - |
| - |
|
- | Non-Indexed Ch$ | 2,453 |
| - |
| - |
| - |
|
Notes and accounts payable related companies | Non-Indexed Ch$ | 11,271,292 |
| 9,629,331 |
| - |
| - |
|
- | AR$ | 1,966,127 |
| 3,279,934 |
| - |
| - |
|
- | R$ | 4,171,314 |
| 7,953,080 |
| - |
| - |
|
Provisions | Non-Indexed Ch$ | 797,936 |
| 823,728 |
| - |
| - |
|
- | R$ | - |
| - |
| 2,987,328 |
| 2,960,790 |
|
Withholdings | Non-Indexed Ch$ | 11,250,895 |
| 8,704,310 |
| - |
| - |
|
- | US$ | - |
| - |
| - |
| - |
|
- | AR$ | 9,642,292 |
| 6,497,673 |
| - |
| - |
|
- | R$ | - |
| - |
| 2,625,519 |
| 7,289,785 |
|
Income taxes | Non-Indexed Ch$ | - |
| 8,294,337 |
| - |
| - |
|
- | Indexed-Ch$ | 922,210 |
| 369,755 |
| - |
| - |
|
- | AR$ | 1,638,214 |
| 1,595,535 |
| - |
| - |
|
- | R$ | - |
| - |
| 1,376,641 |
| 668,989 |
|
Unearned income | Non-Indexed Ch$ | 29,455 |
| 507,981 |
| - |
| - |
|
Other current liabilities | Non-Indexed Ch$ | 1,243,745 |
| 1,453,824 |
| - |
| - |
|
Total current liabilities | Non-Indexed Ch$ | 61,036,000 |
| 63,697,144 |
| - |
| - |
|
| AR$ | 31,446,400 |
| 25,889,256 |
| 92,780 |
| 103,992 |
|
| R$ | 24,087,168 |
| 30,559,023 |
| 9,292,168 |
| 12,152,577 |
|
| Indexed-Ch$ | 922,210 |
| 369,755 |
| 2,757,734 |
| 7,509,228 |
|
| US$ | 3,757,983 |
| 2,900,649 |
| - |
| - |
|
| EURO$ | 10,488 |
| 16,236 |
| - |
| - |
|
38
Note 30 - - Local and Foreign Currency (continued)
Long term liabilities at December 31, 2008 were composed of local and foreign currencies as follows:
Long term liabilities at December 31, 2007 were composed of local and foreign currencies as follows:
| Currency | 1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | ||||
| Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | |
|
| ThCh$ | % | ThCh$ | % | ThCh$ | % | ThCh$ | % |
Long term bank liabilities | $R | 806,562 |
| - |
| - |
| - |
|
Long term bonds payable | US$ | - |
| - |
| - |
| 1,082,226 | 7.63% |
Other creditors | Indexed Ch$ | 6,976,375 | 6.50% | 9,301,833 | 6.50% | 23,254,599 | 6.50% | 39,532,777 | 6.50% |
Notes and accounts payable related companies | $AR | 86,641 |
| - |
| - |
| - |
|
- | Non-indexed Ch$ | 3,637,916 |
| - |
| - |
| - |
|
Provisions | Indexed Ch$ | - |
| - |
| - |
| 6,166,592 |
|
- | Non-indexed Ch$ | 830,365 |
| - |
| - |
| - |
|
- | $AR | 1,675,692 |
| - |
| - |
| - |
|
- | $R | 9,761,892 |
| - |
| - |
| - |
|
Deferred taxes | Non-indexed Ch$ | 567,918 |
| - |
| - |
| - |
|
- | $R | 12,431,155 |
| - |
| - |
| - |
|
- | $AR | 477,886 |
| - |
| - |
| - |
|
Other liabilities | Non-indexed Ch$ | - |
| - |
| 6,015,610 |
| - |
|
- | $AR | - |
| 241,289 |
| 2,216,547 |
| - |
|
- | $R | 4,882,797 |
| - |
| - |
| - |
|
Total long term liabilities | $R | 27,882,406 |
| - |
| - |
| - |
|
| US$ | - |
| - |
| - |
| 1,082,226 |
|
| Indexed Ch$ | 6,976,375 |
| 9,301,833 |
| 23,254,599 |
| 45,699,369 |
|
| $AR | 2,240,219 |
| 241,289 |
| 2,216,547 |
| - |
|
| Non-indexed Ch$ | 5,036,199 |
| - |
| 6,015,610 |
| - |
|
39
Note 31 – Penalties
The Company has not been subject to penalties by the SVS or any other administrative authority.
Note 32- Subsequent Events
There are no financial or other matters to be reported which have occurred between the closing period of December 31, 2008 and the date of preparation of these financial statements that may have an impact over Company assets, liabilities and/or results.
Note 33 – Environment
The Company has disbursed ThCh$3,630,807 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$2,381,600.
Note 34 – Time Deposits
The Company and its subsidiaries have invested in time deposits that are valued at the restated cost plus accrued interests as of the closing date of these financial statements, according to the following table:
Financial Institution | Currency | Rate | 31-Dec-08 | 31-Dec-07 |
ThCh$ | ThCh$ | |||
BANCO SANTANDER | UF | 2.42% | 14,993,599 | - |
BANCO BCI | $ | 8.88% | 8,790,334 | - |
BANCO BCI | $ | 8.88% | 8,790,334 | - |
BANCO BBVA | UF | 2.90% | 8,256,963 | - |
BANCO BBVA | UF | 9.50% | 7,538,359 | - |
ROYAL BANK OF CANADA | US$ | 2.73% | 7,320,119 | - |
BANCO CHILE | US$ | 3.78% | 6,426,649 | - |
BANCO ITAÚ | UF | 6.50% | 6,235,414 | - |
BANCO CHILE | UF | 2.00% | 5,627,843 | - |
BANCO ITAÚ | UF | 9.50% | 3,311,459 | - |
BANCO CHILE | UF | 3.40% | 2,314,341 | - |
BANCO CHILE | UF | 1.20% | 2,084,732 | - |
BANCO VOTORANTIM | R$ | 13.61% | 31,335 | 107,063 |
BANCO Citibank | R$ | 0.00% | - | 657 |
BANCO SANTANDER | $ | 4.64% | - | 7,845,639 |
BANCO CHILE | $ | 4.70% | - | 14,542,665 |
BANCO CHILE | $ | 4.70% | - | 709,306 |
BANCO SANTANDER | $ | 4.64% | - | 7,407,267 |
BANCO SANTANDER | $ | 4.65% | - | 15,251,908 |
BANCO CHILE | $ | 4.70% | - | 7,573,061 |
BBVA BANCO FRANCÉS | AR$ |
| - | 19,681 |
|
| TOTAL | 81,721,481 | 53,457,247 |
40
Note 35 – Implementation of International Accounting Standards
It is of public knowledge that the country is committed to the development of a convergence plan to fully adopt International Financial Reporting Standards (IFRS), based on a progressive calendar as from year 2009. In accordance with the regulations established by the Chilean Institute of Accountants on this matter and what has been specifically established by circulars N°427 and N°485 of the Superintendencia de Valores y Seguros(Chilean Securities and Exchange Commission), the Company has chosen to present its financial statements for the year ended December 31, 2009 under the current norm, including only as pro-forma information within the 2009 the financial statements, the information adjusted in accordance to international accounting standards.
Consequently, 2010 will be the first year in which the Company will perform a complete application of IFRS. The Company is developing a plan to integrally face the impacts of this change.
41
Material Events
During the period between January 1, 2008 and December 31, 2008, the following material events were filed:
1.- 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.
2.- 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 as Final Dividend N° 160, on account of the fiscal year ending December 31, 2007:
•
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 beginning April 24, 2008. Regarding payment of this dividend, the Shareholders’ Registry will close on April 18, 2008.
2.
The distribution of an Additional Dividend N° 161 on account of retained earnings:
•
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 beginning May 14, 2008. Regarding payment of this
dividend, the Shareholders Registry will close on May 8, 2008.
3.- 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 new Vice-Chairman of the Board of the Company.
2.
The Executive Committee was elected, comprised of regular directors José Antonio Garcés Silva, Arturo Majlis Albala, Gonzalo Said Handal and Salvador 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 the Director’s Committee in accordance with Article 50-bis of Chilean Corporate Law, comprised of the regular directors Juan Claro González, Salvador Said Somavía and Heriberto Urzúa Sánchez. Mr. Claro will continue to be the Chairman of this Committee.
4.
Additionally, Juan Claro González, Salvador Said Somavía and Heriberto Urzúa Sánchez were appointed members of the U.S. Sarbanes-Oxley Audit Committee. Mr. Claro will continue to be the Chairman of this Committee.
42
4.- 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$753,581,576. Simultaneous to the Purchase Agreement, the Bottlers entered into a Shareholders’ Agreement in order to regulate their participation in Embotelladoras del Sur S.A.
5.- Changes in Management Corporate
Embotelladora Andina S.A. announced that as of March 1, 2009 the Company’s current Chief Operating Officer, Mr. Michael Cooper, will become Chief Development Officer. Mr. Renato Ramirez, current General Manager of the Company’s Bottling Operation in Chile will become the new Chief Operating Officer.
On January 27, 2009 the Company’s Board of Directors appointed Mr. Abel Bouchon Silva as General Manager of the Company’s Bottling Operation in Chile.
Dividends Distributed during the period ended December 31, 2008
Number | Payment date | Ch$ 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 |
163 | October 23 2008 | 7.00 | 7.70 |
164 | January 28 2009 | 7.00 | 7.71 |
43
Analysis of Results for the Fourth Quarter of 2008 and the Year Ended December 31, 2008
All figures are expressed under Chilean GAAP and in constant Chilean pesos as of December 2008, therefore all variations are in real terms over an 8.9% annual inflation (December 2007 through December 2008.)
Highlights
·
Operating Income reached Ch$41,822 million during the Fourth Quarter of 2008, an 11.4% increase in real terms compared to the same period of the previous year. Operating Margin was 18.5%.
·
Consolidated Sales Volume for the Fourth Quarter amounted to 132.1 million unit cases, remaining flat regarding the same period last year.
·
Fourth Quarter EBITDA totaled Ch$50,904 million, a 7.9% decrease in real terms compared to the Fourth Quarter of 2007. EBITDA Margin was 22.5%.
·
Net Income for the Fourth Quarter of 2008 reached Ch$39,348 million, 12.9% higher than the figure recorded in the Fourth Quarter of 2007.
·
Consolidated Operating Income reached Ch$138,677 million during the period ended December 31, 2008, 10.3% higher in real terms than the figure recorded as of September 30, 2007. Operating Margin was 16.4%.
·
Consolidated Sales Volume for the period ended December 31, 2008 totaled 454.6 million unit cases, an increase of 3.0% compared to 2007.
·
Consolidated EBITDA for the period ended December 31, 2008 amounted to Ch$176,734 million, an increase of 12.2% in real terms. EBITDA Margin was 20.9%.
·
Net Income for the Full Year ended December 31, 2008 reached Ch$94,836 million, 6.7% higher in real terms than the figure reported for the Full Year ended December 31, 2007.
Comments from the Chief Executive Officer, Mr. Jaime Garcia R.
“In spite of the effects triggering the world-wide economic contraction of our business during this last quarter, we are proud of the solid financial position reached by Embotelladora Andina in its operations. We have consolidated a market of over 37 million inhabitants, through strong leadership given by the best brand in the world, thorough knowledge of the local reality in each one of the countries in which we are present, a diversified portfolio of products supported by constant innovation in launchings and formats and, over six thousand employees committed to growth. We are confident that we will reach the goals established for the new year, and once this crisis ends, that we will continue with good growth rates.“
CONSOLIDATED SUMMARY
Fourth Quarter 2008 vs. Fourth Quarter 2007
Consolidated Sales Volume for the Fourth Quarter of 2008 reached 132.1 million unit cases, remaining flat with respect to the same period of last year.
Net Sales amounted to Ch$226,040 million, representing a 4.6% improvement in real terms compared to the Fourth Quarter of 2007, mainly due to price adjustments and a favorable exchange rate upon translation of figures in the case of Argentina.
Cost of Sales per unit case increased 10.9%, mainly explained by: (i) higher concentrate costs in our Brazilian and Argentine franchises due to price increases and in Chile given the new bottler incidence agreement; (ii) increased labor costs in Chile and Argentina; (iii) higher depreciation in the three of our operations, and (iv) increased costs of principal raw materials, mainly due to the devaluation of the three
44
currencies during the quarter. All of which was partially offset by the lower price of sugar in Chile and Brazil resulting from negotiations with suppliers.
SG&A expenses increased 7.5%, as a result of higher freight fees, increased labor costs in Chile and Argentina, increased advertising investments due to launchings during the quarter, in addition to the effect upon translation of figures of our Argentine operation.
Flat volumes and the previously explained effects over expenses and costs resulted in a Consolidated Operating Income of Ch$41,822 million, an 11.4% decrease in real terms compared to the Fourth Quarter of 2007. Operating Margin was 18.5%.
Consolidated EBITDA amounted to Ch$50,904 million, decreasing 7.9% in real terms compared to the same period of the previous year. EBITDA Margin was 22.5%.
Full Year ended December 31, 2008 vs. Full Year ended December 31, 2007
The average 6.5% and 0.4% appreciation of the Brazilian real and Chilean peso, respectively has had a positive impact over our U.S. dollar-denominated costs. The Argentine peso presented average 1.6% devaluation. The closing exchange rate of the Chilean peso presented a devaluation of 28.1% with respect to 2007, and had a positive impact upon the translation of figures for cash flows generated in Brazil and Argentina.
Consolidated Sales Volume amounted to 454.6 million unit cases, an increase of 3.0%. Soft Drinks increased 2.2%, while the other categories of, Juices, Waters and Beer together increased by 11.4%, driven by several launchings during the year.
Net Sales amounted to Ch$847,301 million, 22.2% 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 and Argentina, a favorable exchange rate upon translation of figures.
Cost of Sales per unit case increased 19.4% compared to the Full Year ended December 31, 2007, mainly explained by the previously-mentioned circumstances during the Quarter and the effect upon translation of figures for the cases of Brazil and Argentina.
On the other hand, SG&A expenses increased 29.2% as a result of higher volumes, a one-time effect over labor costs and increased freight fees, which rose due to higher labor costs and fuel prices as well as road blockages in Argentina due the agricultural workers’ strike. In addition these expenses were impacted by the effect upon translation of figures of our operations in Brazil and Argentina, and increased advertising investments in our Argentine operation.
Consolidated Operating Income amounted to Ch$138,677 million, a 10.3% increase in real terms compared to the Full Year ended December 31, 2007. Operating Margin was 16.4%, a decrease of 170 basis points.
Consolidated EBITDA amounted to Ch$176,734 million, an increase of 12.2% in real terms. EBITDA Margin was 20.9%.
45
SUMMARY BY COUNTRY
CHILE
Fourth Quarter 2008 vs. Fourth Quarter 2007
During the Fourth Quarter of 2008 Sales Volume amounted to 46.9 million unit cases, a 0.7% growth compared to the same period of the previous year.
Net Sales amounted to Ch$80,820 million, reflecting a growth of 0.7%, with a real average income per unit case remaining flat regarding 2007. During the quarter we launched Fanta Limón and Dasani Anti Ox
Cost of Sales per unit case increased 3.9%. This increased cost is mainly explained by increased concentrate costs (resulting from a higher incidence), increased depreciation (new Distribution Centers and blowing line) and by the negative effect of the 27.3% average devaluation of the Chilean peso during the period over all U.S. dollar-denominated raw materials. These factors were partially offset by lower prices of sugar and PET resin.
SG&A expenses increased 7.4%, due to increased freight fees and a one-time expense resulting from internal restructurings that in the long run will translate into benefits.
Flat volumes and the previously explained effects over expenses and costs, resulted in an Operating Income of Ch$19,527 million, an 11.7% decrease in real terms compared to the Fourth Quarter of 2007. Operating Margin was 24.2%.
EBITDA amounted to Ch$23,416 million representing an 8.8% decrease in real terms compared to the EBITDA figure recorded during the same period of the previous year. EBITDA Margin was 29.0%.
Full Year ended December 31, 2008 vs. Full Year ended December 31, 2007
For the Full Year ended December 31, 2008, Sales Volume amounted to 158.5 million unit cases, a 4.8% growth compared to the Full Year ended December 31, 2007. This growth was a result of increased soft drink volumes (+3.0.%) as well as an increase in the Juices and Waters segment (+13.0%). In addition to the volume contributed by the water brand Benedictino, launched in February, and by the energy drink BURN, launched in May, the Company also launched, Fanta Zero, seeking to modernize the brand, Nestea Green Tea, Fanta Limón and Dasani Anti-Ox during the last quarter.
Net Sales amounted to Ch$275,489 million, a 3.4% improvement in real terms compared to the previous year, as a result of higher volumes and offset by a 1.3% decrease in real terms of the average income per unit case.
Cost of Sales per unit case remained stable. SG&A expenses increased 10.2% due to the reasons previously–mentioned for the Quarter.
Operating Income was 6.8% lower in real terms than the figure reported in the same period of 2007, amounting to Ch$57,938 million. Operating Margin was 21.0%.
EBITDA amounted to Ch$73,569 million, a decrease of 3.3% compared to 2007. EBITDA Margin was 26.7%.
46
BRAZIL
Fourth Quarter 2008 vs. Fourth Quarter 2007
Sales Volume for the Fourth Quarter of 2008 amounted to 49.8 million unit cases, representing a 1.9% decrease compared to the Fourth Quarter of 2007. This lower volume growth reflects the change in weather conditions in Andina’s territories, where we had the heaviest rains of the last 20 years.
Net Sales reached Ch$85,096 million, representing a decrease of 8.8% and is mainly explained by lower volumes and a lower average income due to the effect of restatement of figures resulting from Chilean inflation, and partially offset by a slight increase of local prices.
Cost of Sales per unit case increased 1.7% mainly due to: (i) higher concentrate costs (due to price adjustments); (ii) increased prices for PET resin; (iii) increased aluminum costs; (iv) higher depreciation, and (v) an average 16.3% depreciation in real terms of the Brazilian real during the period, with a negative impact over U.S. dollar-denominated raw materials. All of these factors were partially offset by a decrease in sugar prices.
SG&A expenses decreased 9.1% due to lower labor costs resulting from restructurings which took place during the second quarter.
The decrease in volumes along with increased costs resulted in Operating Income of Ch$15,684 million, a 26.5% decrease compared to the same period of 2007 and Operating Margin was 18.4%.
Finally, EBITDA amounted to Ch$19,192 million, a decrease of 20.2% compared to the Fourth Quarter of 2007. EBITDA Margin was 22.6%.
Full Year ended December 31, 2008 vs. Full Year ended December 31, 2007
For the period ended December 31, 2008 the 34.6% appreciation of the Brazilian real to the Chilean peso had a positive impact over income and a negative impact over costs and expenses due to figure translation.
Sales Volume amounted to 174.0 million unit cases, remaining stable compared to 2007, strongly affected by the contraction in consumer demand and heavier rain in the territories within our franchise than those recorded during 2007.
Net Sales reached Ch$370,731 million, increasing 26.1% 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 27.5%, mainly due to the effect upon translation of figures, increased depreciation and an increase in the price of certain raw materials. All of these factors were partially offset by the lower price of sugar and a 6.5% average appreciation of the Brazilian real during the year, resulting in a positive impact over the costs of U.S. dollar-denominated raw materials.
Higher freight fees and labor costs, and particularly the effect upon translation of figures led to a 29.6% increase of SG&A expenses.
Operating Income increased 17.5% compared to 2007, amounting to Ch$61,443 million. Operating Margin was 16.6%.
EBITDA amounted to Ch$75,699 million, an increase of 20.0% in real terms, with an EBITDA Margin of 20.4%.
47
ARGENTINA
For the Fourth Quarter and Full Year ended December 31, 2008 the 22.2% and 26.5% appreciation of the Argentine peso to the Chilean peso respectively, had a positive impact over income and a negative impact over costs and expenses due to figure translation.
Fourth Quarter 2008 vs. Fourth Quarter 2007
Sales Volume for the Fourth Quarter of 2008 remained stable reaching 35.4 million unit cases.
Net Sales reached Ch$61,109 million, representing an increase of 40.6% in real terms compared to the Fourth Quarter of 2007. This improvement is explained by significant price adjustments, above costs’ inflation, and the effect upon translation of figures.
Cost of Sales per unit case increased 39.0% mainly explained by increased costs of concentrate (as a result of price increases), sugar and PET resin, higher labor costs and the effect upon translation of figures.
SG&A expenses increased 26.6%, mainly due to higher salaries, increased freight fees (resulting from labor costs, fuel prices and the agricultural strike that increased our distribution costs), and advertising investments in addition to the effect upon translation of figures.
Operating Income amounted to Ch$7,519 million, a 42.3% increase in real terms compared to the same period of 2007. Operating Margin was 12.3%, an increase of 10 basis points.
EBITDA reached Ch$9,205 million, an increase of 30.5%. EBITDA Margin was 15.1%
Full Year ended December 31, 2008 vs. Full Year ended December 31, 2007
Sales Volume reached 122.0 million unit cases, a 5.8% improvement compared to the Sales Volume reported in 2007, driven by the increase in salaries and private consumption observed during the period along with launchings of Cepita Light and Cepita 100% Jugo de Naranja that took place during August of 2008.
Net Sales reached Ch$204,751 million, representing an increase of 50.1% in real terms. This improvement is explained by higher volumes, significant price adjustments that took place during the period, in addition to the effects upon translation of figures.
Cost of Sales per unit case and SG&A expenses increased 38.4% and 55.4%, respectively explained by the same arguments given for the Fourth Quarter.
Operating Income amounted to Ch$22,153 million, a significant 56.2% increase. Operating Margin was 10.8%, 40 basis points higher than 2007.
EBITDA reached Ch$30,323 million, an increase of 42.5% in real terms compared. EBITDA Margin was 14.8%.
48
NON-OPERATING RESULTS
Full Year ended December 31, 2008 vs. Full Year ended December 31, 2007
Non-Operating Results totaled a loss of (Ch$18,608) million, which compares negatively to a lower accumulated loss of (Ch$7,600) million recorded during 2007. This increased loss in the non-operating result line is best explained by:
•
Financial Expense/Income (Net): Strongly affected by a negative variation basically resulting from losses in hedging operations (a 28.1% devaluation of the Chilean peso during 2008 compared to the 6.7% revaluation recorded during 2007.)
•
Price Level Restatement: Resulted in profits compared to a loss during 2007, mainly due to a higher exchange rate over our U.S. dollar asset position compensating the previously mentioned factor.
•
Other Non-Operating Income/Expenses: Resulted in a higher loss compared to the previous period given that provisions were reversed and taxes were recovered during 2007, which did not occur during 2008.
Finally, net income amounted to Ch$94,836 million, an increase of 6.7% in real terms compared to the figure recorded as of December 31, 2007.
49
ANALYSIS OF THE BALANCE SHEET
As of December 31, 2008, the Company’s Net Cash Position amounted to US$ 69.3 million. Accumulated excess cash is invested in short term time deposits with top of the line banks and money markets.
During 2008 the company carried out hedge operations for a portion of its U.S. dollar-denominated investments so as to match part of the debt denominated in UFs with the financial assets. Upon maturity of these hedging operations we have converted our financial assets to UFs or to Chilean pesos, permanently reducing our balance sheet exposure to the U.S. dollar. As a result, the Company holds 43.6% of its financial assets in Chilean pesos, 42.7% in UFs, 5.5% in Brazilian reais, and 2.7% in U.S. dollars. Total financial assets amounted to US$208.5 million.
Financial debt level as of December 31, 2008 amounted to US$139.1 million, 90.1% of which is UF-denominated, 6.6% in Argentine pesos, 2.6% in Chilean pesos, and 0.7% is in Brazilian reais.
II.
Main Indicators
The main indicators contained in the table reflect for both periods the solid financial position and profitability of Embotelladora Andina S.A.
INDICATORS | Unit | Dec-08 | Dec-07 | Variance | |
LIQUIDITY |
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| Current Ratio | Times | 1.92 | 1.97 | -0.04 |
| Acid Tests | Times | 1.69 | 1.76 | -0.07 |
| Working Capital | MCh$ | 16,735 | 29,844 | -13,108 |
ACTIVITY |
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| Investments | MCh$ | 67,074 | 61,011 | 6,064 |
| Inventory turnover | Times | 15.44 | 13.60 | 1.84 |
| Days of inventory on hand | Days | 23.31 | 26.46 | -3.15 |
INDEBTEDNESS |
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| Debt to equity ratio | % | 74.14% | 89.67% | -15.53% |
| Short-term liabilities to total liabilities | % | 51.97% | 52.16% | -0.19% |
| Long-term liabilities to total liabilities | % | 48.03% | 47.84% | 0.19% |
| Interest charges coverage ratio | Times | 37.10 | 42.67 | -5.58 |
PROFITABILITY |
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| Return over equity | % | 29.07% | 28.32% | 0.75% |
| Return over total assets | % | 16.02% | 15.67% | 0.35% |
| Return over operating assets | % | 32.43% | 32.80% | -0.37% |
| Operating income | MCh$ | 138,677 | 125,773 | 12,903 |
| Operating margin | % | 16.37% | 18.14% | -1.77% |
| EBITDA1 | MCh$ | 169,064 | 159,832 | 9,232 |
| EBITDA margin | % | 19.95% | 23.05% | -3.10% |
| Dividends payout ratio - Series A shares | % | 7.67% | 7.16% | 0.51% |
| Dividends payout ratio – Series B shares | % | 6.96% | 7.33% | -0.37% |
1Earnings before income taxes, interests, depreciation, amortization and extraordinary items.
The main indicators reflect the solid financial position and profitability held by the Company during both periods.
Liquidity indicators record a slight decrease due to an increase of short term indebtedness of our subsidiary in Argentina.
50
Indicators of indebtedness reflect a decrease due to an increase in shareholders’ equity resulting from the exchange rate difference over our foreign subsidiaries. During the period net financial expenses amounted to Ch$3,326 million and earnings before interests and taxes amounted to Ch$123,395 million, achieving an interest coverage of 37.10 times, significantly higher than the previous period.
At year end 2007, operating profitability indicators and profitability over equity benefited from the reasons mentioned in paragraph I.
Iii.
Analysis of Book Values and Present Value of Assets
With respect to the Company’s main assets the following should be noted:
Given the high rotation of the items that compose working capital, book values of current assets are considered to represent market values.
Fixed asset values in the Chilean companies are presented at restated acquisition cost. In the foreign companies, fixed assets are valued in accordance with Technical Bulletin N° 64 issued by the Chilean Institute of Accountants (controlled in historical dollars).
Depreciation is estimated over the restated value of assets along with the remaining useful economic life of each asset.
All fixed assets that are considered available for sale are held at their respective market values.
Investments in shares, in situations where the Company has a significant influence on the issuing company, are presented following the equity method. The Company’s participation in the results of the issuing company for each year has been recognized on an accrual basis, and unrealized results on transactions between related companies have been eliminated.
In summary, assets are valued in accordance with generally accepted accounting standards in Chile and the instructions provided by the Chilean Securities Commission, as shown in Note 2 of the Financial Statements.
Iv.
Analysis Of The Main Components Of Cash Flow
Cash Flow (MCh$) | Dec-08 MCh$ | Dec-07 MCh$ | Variation MCh$ | Variation % |
Operating | 159,331 | 149,344 | 9,987 | 7% |
Financing | -79,293 | -98,813 | 19,520 | 20% |
Investment | -75,466 | 34,244 | -109,710 | 320% |
Net cash flow for the Period | 4,572 | 84,775 | -80,203 | 95% |
The Company generated positive net cash flow of MCh$4,572 during the quarter, analyzed as follows:
Operating activities generated a positive cash flow of MCh$159,331 representing a positive variation of MCh$9,987 mainly explained by increased collections from clients and partially compensated by higher payments to suppliers and income taxes regarding the previous year. Additionally, during 2008 the Company recorded higher financial income due to the expiration of Cross Currency Swap agreements.
Financing activities generated a negative cash flow of MCh$79,293; with a positive variation of MCh$19,520 regarding the previous year, mainly because of lower bond payments according to pre-established maturities and lower dividend payments compared to the same period of 2007.
Investment activities generated a negative cash flow of MCh$75,466 with a negative variation of MCh$109,710 regarding the previous year, mainly explained by higher sales of investments in financial
51
instruments during the 2007 which did not occur in 2008, and additionally due to investments in property, plant and equipment, that were higher than those of 2007.
V.
Analysis Of Market Risk
Interest Rate Risk
As of December 31, 2007 and 2008, 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:
32%
Brazilian real:
44%
Argentine peso:
24%
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 U.S. 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 U.S. dollar, are only covered when it is foreseen that it will result in significant negative differences and when the associated cost of said coverage is deemed reasonable by management.
Commodity Risks
The Company faces the risk of price changes in the international markets for sugar, aluminum and PET resin, all of which are necessary raw materials for preparing beverages, and that altogether represent between 25% and 30% of our operating costs. In order to minimize and/or stabilize such risk, supply contracts and advanced purchases are negotiated when market conditions are favorable. Likewise commodity coverage instruments have also been utilized.
This document may contain forward-looking statements reflecting Embotelladora Andina SA’s good faith expectations and are based upon currently available data; however, actual results are subject to numerous uncertainties, many of which are beyond the control of the Company and any one or more of which could materially impact actual performance. Among the factors that can cause performance to differ materially are: political and economic conditions on consumer spending, pricing pressure resulting from competitive discounting by other bottlers, climatic conditions in the Southern Cone, and other risk factors applicable from time to time and listed in Andina’s periodic reports filed with relevant regulatory institutions.
52
Embotelladora Andina S.A. |
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Fourth Quarter Results for the period ended December 31, Chilean GAAP |
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(In millions of constant 12/31/08 Chilean Pesos, except per share) |
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| 31-12-2008 |
| 31-12-2007 |
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| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) |
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. | ||||
VOLUME TOTAL BEVERAGES (Million UC) | 46.9 | 49.8 | 35.4 | 132.1 |
| 46.6 | 50.7 | 35.2 | 132.6 | -0.4% | ||||
Soft Drink | 38.0 | 47.1 | 34.9 | 120.0 |
| 37.7 | 47.7 | 34.6 | 120.0 | -0.1% | ||||
Mineral Water | 4.8 | 0.6 | 0.2 | 5.6 |
| 4.7 | 0.9 | 0.5 | 6.1 | -9.5% | ||||
Juices | 4.2 | 1.0 | 0.3 | 5.5 |
| 4.2 | 0.9 | 0.1 | 5.2 | 5.4% | ||||
Beer | NA | 1.1 | NA | 1.1 |
| NA | 1.2 | NA | 1.2 | -9.0% | ||||
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NET SALES | 80,820 | 85,096 | 61,109 | 226,040 |
| 80,295 | 93,310 | 43,456 | 216,159 | 4.6% | ||||
COST OF SALES | (44,388) | (44,867) | (34,811) | (123,081) |
| (42,448) | (44,971) | (24,911) | (111,428) | 10.5% | ||||
GROSS PROFIT | 36,432 | 40,229 | 26,298 | 102,959 |
| 37,847 | 48,339 | 18,545 | 104,732 | -1.7% | ||||
Gross Margin | 45.1% | 47.3% | 43.0% | 45.5% |
| 47.1% | 51.8% | 42.7% | 48.5% |
| ||||
SELLING AND ADMINISTRATIVE EXPENSES | (16,904) | (24,546) | (18,779) | (60,229) |
| (15,744) | (27,014) | (13,263) | (56,022) | 7.5% | ||||
CORPORATE EXPENSES (4) | 0 | 0 | 0 | (908) |
| 0 | 0 | 0 | (1,494) | -39.2% | ||||
OPERATING INCOME | 19,527 | 15,684 | 7,519 | 41,822 |
| 22,103 | 21,325 | 5,282 | 47,216 | -11.4% | ||||
Operating Margin | 24.2% | 18.4% | 12.3% | 18.5% |
| 27.5% | 22.9% | 12.2% | 21.8% |
| ||||
EBITDA (1) | 23,416 | 19,192 | 9,205 | 50,904 |
| 25,673 | 24,053 | 7,054 | 55,285 | -7.9% | ||||
Ebitda Margin | 29.0% | 22.6% | 15.1% | 22.5% |
| 32.0% | 25.8% | 16.2% | 25.6% |
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NON OPERATIONAL RESULTS |
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FINANCIAL EXPENSE/INCOME (Net) |
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| (4,038) |
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| 5,056 | -179.9% | ||||
RESULTS FROM AFFILIATED |
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| 1,215 |
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| 412 | -195.0% | ||||
AMORTIZATION OF GOODWILL |
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| (1,903) |
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| (2,126) | -10.5% | ||||
OTHER INCOME/(EXPENSE) |
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| (2,480) |
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| 1,582 | -256.7% | ||||
PRICE LEVEL RESTATEMENT (3) |
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| 12,210 |
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| (4,810) | 353.8% | ||||
NON-OPERATING RESULTS |
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| 5,003 |
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| 113 | 4310.7% | ||||
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INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
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NEGATIVE GOODWILL AND MINORITY INTEREST |
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| 46,825 |
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| 47,329 | -1.1% | ||||
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INCOME TAXES |
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| (7,446) |
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| (12,467) | -40.3% | ||||
MINORITY INTEREST |
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| (31) |
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| (13) | NA | ||||
AMORTIZATION OF NEGATIVE GOODWILL |
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| 0 |
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| 0 | NA | ||||
NET INCOME |
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| 39,348 |
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| 34,849 | 12.9% | ||||
Net Margin |
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| 17.4% |
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| 16.1% |
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WEIGHTED AVERAGE SHARES OUTSTANDING |
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| 760.3 |
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| 760.3 |
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EARNINGS PER SHARE |
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| 51.8 |
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| 45.8 |
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EARNINGS PER ADS |
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| 310.5 |
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| 275.0 | 12.9% | ||||
(1) EBITDA: Operating Income + Depreciation |
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(2) Total may be different from the addition of the three countries because of intercountry eliminations | ||||||||||||||
(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts + Exchange rate gains & losses. | ||||||||||||||
(4) Corporate expenses partially reclassified to the operations. |
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53
Embotelladora Andina S.A. |
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Fourth Quarter Results for the period ended December 31, Chilean GAAP |
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(In millions US$, except per share) |
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| Exch. Rate : | $ 636.45 |
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| Exch. Rate : | $ 496.89 |
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| 31-12-2008 | 31-12-2007 |
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| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 46.9 | 49.8 | 35.4 | 132.1 | 46.6 | 50.7 | 35.2 | 132.6 | -0.4% |
Soft Drink | 38.0 | 47.1 | 34.9 | 120.0 | 37.7 | 47.7 | 34.6 | 120.0 | -0.1% |
Mineral Water | 4.8 | 0.6 | 0.2 | 5.6 | 4.7 | 0.9 | 0.5 | 6.1 | -9.5% |
Juices | 4.2 | 1.0 | 0.3 | 5.5 | 4.2 | 0.9 | 0.1 | 5.2 | 5.4% |
Beer | NA | 1.1 | NA | 1.1 | NA | 1.2 | NA | 1.2 | -9.0% |
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NET SALES | 127.0 | 133.7 | 96.0 | 355.2 | 148.4 | 172.4 | 80.3 | 399.5 | -11.1% |
COST OF SALES | (69.7) | (70.5) | (54.7) | (193.4) | (78.4) | (83.1) | (46.0) | (205.9) | -6.1% |
GROSS PROFIT | 57.2 | 63.2 | 41.3 | 161.8 | 69.9 | 89.3 | 34.3 | 193.5 | -16.4% |
Gross Margin | 45.1% | 47.3% | 43.0% | 45.5% | 47.1% | 51.8% | 42.7% | 48.5% |
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SELLING AND ADMINISTRATIVE EXPENSES | (26.6) | (38.6) | (29.5) | (94.6) | (29.1) | (49.9) | (24.5) | (103.5) | -8.6% |
CORPORATE EXPENSES (4) | 0.0 | 0.0 | 0.0 | (1.4) | 0.0 | 0.0 | 0.0 | (2.8) | -48.3% |
OPERATING INCOME | 30.7 | 24.6 | 11.8 | 65.7 | 40.8 | 39.4 | 9.8 | 87.3 | -24.7% |
Operating Margin | 24.2% | 18.4% | 12.3% | 18.5% | 27.5% | 22.9% | 12.2% | 21.8% |
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EBITDA (1) | 36.8 | 30.2 | 14.5 | 80.0 | 47.4 | 44.5 | 13.0 | 102.2 | -21.7% |
Ebitda Margin | 29.0% | 22.6% | 15.1% | 22.5% | 32.0% | 25.8% | 16.2% | 25.6% |
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NON OPERATIONAL RESULTS |
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FINANCIAL EXPENSE/INCOME (Net) |
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| (6.3) |
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| 9.3 | -167.9% |
RESULTS FROM AFFILIATED |
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| 1.9 |
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| 0.8 | -150.8% |
AMORTIZATION OF GOODWILL |
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| (3.0) |
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| (3.9) | -23.9% |
OTHER INCOME/(EXPENSE) |
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| (3.9) |
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| 2.9 | -233.3% |
PRICE LEVEL RESTATEMENT (3) |
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| 19.2 |
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| (8.9) | 315.8% |
NON-OPERATING RESULTS |
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| 7.9 |
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| 0.2 | 3650.0% |
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INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
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NEGATIVE GOODWILL AND MINORITY INTEREST |
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| 73.6 |
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| 87.5 | -15.9% |
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INCOME TAXES |
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| (11.7) |
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| (23.0) | -49.2% |
MINORITY INTEREST |
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| (0.0) |
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| (0.0) | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
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| 0.0 |
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| 0.0 | NA |
NET INCOME |
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| 61.8 |
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| 64.4 | -4.0% |
Net Margin |
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| 17.4% |
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| 16.1% |
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WEIGHTED AVERAGE SHARES OUTSTANDING |
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| 760.3 |
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| 760.3 |
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EARNINGS PER SHARE |
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| 0.08 |
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| 0.08 |
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EARNINGS PER ADS |
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| 0.49 |
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| 0.51 | -4.0% |
(1) EBITDA: Operating Income + Depreciation |
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(2) Total may be different from the addition of the three countries because of intercountry eliminations | |||||||||
(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts + Exchange rate gains & losses. | |||||||||
(4) Corporate expenses partially reclassified to the operations. |
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54
Embotelladora Andina S.A. |
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Twelve Months Results for the period ended December 31, Chilean GAAP |
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(In millions of constant 12/31/08 Chilean Pesos, except per share) |
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| 31-12-2008 | 31-12-2007 |
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| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 158.5 | 174.0 | 122.0 | 454.6 | 151.3 | 174.7 | 115.3 | 441.3 | 3.0% |
Soft Drink | 127.6 | 163.5 | 120.2 | 411.2 | 123.9 | 164.9 | 113.6 | 402.4 | 2.2% |
Mineral Water | 15.4 | 2.6 | 1.1 | 19.1 | 13.2 | 2.6 | 1.3 | 17.1 | 11.7% |
Juices | 15.5 | 3.7 | 0.8 | 20.1 | 14.2 | 3.2 | 0.4 | 17.8 | 13.1% |
Beer | NA | 4.2 | NA | 4.2 | NA | 4.1 | NA | 4.1 | 2.5% |
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NET SALES | 275,489 | 370,731 | 204,751 | 847,301 | 266,430 | 294,029 | 136,423 | 693,354 | 22.2% |
COST OF SALES | (155,740) | (197,432) | (121,148) | (470,651) | (148,146) | (155,416) | (82,698) | (382,731) | 23.0% |
GROSS PROFIT | 119,749 | 173,299 | 83,603 | 376,651 | 118,284 | 138,613 | 53,726 | 310,623 | 21.3% |
Gross Margin | 43.5% | 46.7% | 40.8% | 44.5% | 44.4% | 47.1% | 39.4% | 44.8% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (61,811) | (111,856) | (61,450) | (235,117) | (56,095) | (86,325) | (39,543) | (181,963) | 29.2% |
CORPORATE EXPENSES (4) | 0 | 0 | 0 | (2,857) | 0 | 0 | 0 | (2,887) | -1.0% |
OPERATING INCOME | 57,938 | 61,443 | 22,153 | 138,677 | 62,189 | 52,289 | 14,183 | 125,773 | 10.3% |
Operating Margin | 21.0% | 16.6% | 10.8% | 16.4% | 23.3% | 17.8% | 10.4% | 18.1% |
|
EBITDA (1) | 73,569 | 75,699 | 30,323 | 176,734 | 76,046 | 63,083 | 21,274 | 157,515 | 12.2% |
Ebitda Margin | 26.7% | 20.4% | 14.8% | 20.9% | 28.5% | 21.5% | 15.6% | 22.7% |
|
NON OPERATIONAL RESULTS |
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSE/INCOME (Net) |
|
|
| (15,692) |
|
|
| 11,427 | -237.3% |
RESULTS FROM AFFILIATED |
|
|
| 1,879 |
|
|
| 813 | 131.1% |
AMORTIZATION OF GOODWILL |
|
|
| (7,612) |
|
|
| (7,081) | 7.5% |
OTHER INCOME/(EXPENSE) |
|
|
| (5,987) |
|
|
| (252) | 2276.0% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| 8,804 |
|
|
| (12,507) | 170.4% |
NON-OPERATING RESULTS |
|
|
| (18,608) |
|
|
| (7,600) | 144.8% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
|
|
|
|
|
|
|
|
|
NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 120,069 |
|
|
| 118,173 | 1.6% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (25,248) |
|
|
| (29,262) | -13.7% |
MINORITY INTEREST |
|
|
| 16 |
|
|
| (47) | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0 |
|
|
| 0 | NA |
NET INCOME |
|
|
| 94,836 |
|
|
| 88,865 | 6.7% |
Net Margin |
|
|
| 11.2% |
|
|
| 12.8% |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 124.7 |
|
|
| 116.9 |
|
EARNINGS PER ADS |
|
|
| 748.4 |
|
|
| 701.3 | 6.7% |
(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. |
|
|
|
|
|
|
|
|
|
55
Embotelladora Andina S.A. |
|
|
|
|
|
|
|
|
|
Twelve Months Results for the period ended December 31, Chilean GAAP |
|
|
|
|
|
|
|
| |
(In millions US$, except per share) |
|
|
|
|
|
|
|
|
|
| Exch. Rate : | $ 636.45 |
|
|
| Exch. Rate : | $ 496.89 |
|
|
|
|
|
|
|
|
|
|
|
|
| 31-12-2008 | 31-12-2007 |
| ||||||
| Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. |
VOLUME TOTAL BEVERAGES (Million UC) | 158.5 | 174.0 | 122.0 | 454.6 | 151.3 | 174.7 | 115.3 | 441.3 | 3.0% |
Soft Drink | 127.6 | 163.5 | 120.2 | 411.2 | 123.9 | 164.9 | 113.6 | 402.4 | 2.2% |
Mineral Water | 15.4 | 2.6 | 1.1 | 19.1 | 13.2 | 2.6 | 1.3 | 17.1 | 11.7% |
Juices | 15.5 | 3.7 | 0.8 | 20.1 | 14.2 | 3.2 | 0.4 | 17.8 | 13.1% |
Beer | NA | 4.2 | NA | 4.2 | NA | 4.1 | NA | 4.1 | 2.5% |
|
|
|
|
|
|
|
|
|
|
NET SALES | 432.9 | 582.5 | 321.7 | 1,331.3 | 492.4 | 543.4 | 252.1 | 1,281.3 | 3.9% |
COST OF SALES | (244.7) | (310.2) | (190.4) | (739.5) | (273.8) | (287.2) | (152.8) | (707.3) | 4.6% |
GROSS PROFIT | 188.2 | 272.3 | 131.4 | 591.8 | 218.6 | 256.2 | 99.3 | 574.0 | 3.1% |
Gross Margin | 43.5% | 46.7% | 40.8% | 44.5% | 44.4% | 47.1% | 39.4% | 44.8% |
|
SELLING AND ADMINISTRATIVE EXPENSES | (97.1) | (175.8) | (96.6) | (369.4) | (103.7) | (159.5) | (73.1) | (336.3) | 9.9% |
CORPORATE EXPENSES (4) | 0.0 | 0.0 | 0.0 | (4.5) | 0.0 | 0.0 | 0.0 | (5.3) | -15.9% |
OPERATING INCOME | 91.0 | 96.5 | 34.8 | 217.9 | 114.9 | 96.6 | 26.2 | 232.4 | -6.3% |
Operating Margin | 21.0% | 16.6% | 10.8% | 16.4% | 23.3% | 17.8% | 10.4% | 18.1% |
|
EBITDA (1) | 115.6 | 118.9 | 47.6 | 277.7 | 140.5 | 116.6 | 39.3 | 291.1 | -4.6% |
Ebitda Margin | 26.7% | 20.4% | 14.8% | 20.9% | 28.5% | 21.5% | 15.6% | 22.7% |
|
NON OPERATIONAL RESULTS |
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSE/INCOME (Net) |
|
|
| (24.7) |
|
|
| 21.1 | -216.8% |
RESULTS FROM AFFILIATED |
|
|
| 3.0 |
|
|
| 1.5 | 96.5% |
AMORTIZATION OF GOODWILL |
|
|
| (12.0) |
|
|
| (13.1) | -8.6% |
OTHER INCOME/(EXPENSE) |
|
|
| (9.4) |
|
|
| (0.5) | 1920.1% |
PRICE LEVEL RESTATEMENT (3) |
|
|
| 13.8 |
|
|
| (23.1) | 159.8% |
NON-OPERATING RESULTS |
|
|
| (29.2) |
|
|
| (14.0) | 108.2% |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
|
|
|
|
|
|
|
|
|
NEGATIVE GOODWILL AND MINORITY INTEREST |
|
|
| 188.7 |
|
|
| 218.4 | -13.6% |
|
|
|
|
|
|
|
|
|
|
INCOME TAXES |
|
|
| (39.7) |
|
|
| (54.1) | -26.6% |
MINORITY INTEREST |
|
|
| 0.0 |
|
|
| (0.1) | NA |
AMORTIZATION OF NEGATIVE GOODWILL |
|
|
| 0.0 |
|
|
| 0.0 | NA |
NET INCOME |
|
|
| 149.0 |
|
|
| 164.2 | -9.3% |
Net Margin |
|
|
| 11.2% |
|
|
| 12.8% |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING |
|
|
| 760.3 |
|
|
| 760.3 |
|
EARNINGS PER SHARE |
|
|
| 0.20 |
|
|
| 0.22 |
|
EARNINGS PER ADS |
|
|
| 1.18 |
|
|
| 1.30 | -9.3% |
(1) : 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. |
|
|
|
|
|
|
|
|
|
56
Embotelladora Andina S.A. | ||||||||
|
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|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet | ||||||||
(In million of constant 31-Dec-08 Chilean Pesos) | ||||||||
|
|
|
|
|
|
|
|
|
ASSETS | 31-Dec-08 | 31-Dec-07 | %Ch |
| LIABILITIES & SHAREHOLDERS' EQUITY | 31-Dec-08 | 31-Dec-07 | %Ch |
|
|
|
|
|
|
|
|
|
Cash + Time deposits + market. Securit. | 129,253 | 133,268 | -3.0% |
| Short term bank liabilities | 5,820 | 4,302 | 35.3% |
Account receivables (net) | 77,067 | 75,732 | 1.8% |
| Current portion of long term bank liabilities | 226 | 133 | 0.0% |
Inventories | 31,227 | 29,728 | 5.0% |
| Current portion of bonds payable | 2,758 | 7,530 | -63.4% |
Other current assets | 18,995 | 42,941 | -55.8% |
| Trade accounts payable and notes payable | 92,085 | 92,066 | 0.0% |
Total Current Assets | 256,542 | 281,668 | -8.9% |
| Other liabilities | 32,514 | 39,167 | -17.0% |
|
|
|
|
| Total Current Liabilities | 133,403 | 143,198 | -6.8% |
Property, plant and equipment | 730,092 | 614,780 | 18.8% |
|
|
|
|
|
Depreciation | (502,898) | (431,193) | 16.6% |
| Long term bank liabilities | 413 | 807 | -48.7% |
Total Property, Plant, and Equipment | 227,194 | 183,588 | 23.8% |
| Bonds payable | 77,040 | 80,148 | -3.9% |
|
|
|
|
| Other long term liabilities | 44,466 | 48,992 | -9.2% |
Investment in related companies | 29,530 | 27,183 | 8.6% |
| Total Long Term Liabilities | 121,919 | 129,947 | -6.2% |
Investment in other companies | 131 | 146 | -10.3% |
|
|
|
|
|
Goodwill | 65,269 | 62,141 | 5.0% |
| Minority interest | 1,386 | 1,402 | -1.1% |
Other long term assets | 24,291 | 25,992 | -6.5% |
|
|
|
|
|
Total Other Assets | 119,220 | 115,462 | 3.3% |
| Stockholders' Equity | 346,249 | 306,171 | 13.1% |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS | 602,957 | 580,718 | 3.8% |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 602,957 | 580,718 | 3.8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Highlights |
| |||||||
(In million of constant 31-Dec-08 Chilean Pesos) |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONS TO FIXED ASSETS | 31-Dec-08 | 31-Dec-07 |
|
| DEBT RATIOS | 31-Dec-08 | 31-Dec-07 |
|
|
|
|
|
|
|
|
|
|
Chile | 25,842 | 38,487 |
|
| Financial Debt / Total Capitalization | 0.20 | 0.28 |
|
Brazil | 33,844 | 16,888 |
|
| Financial Debt / EBITDA L12M | 0.53 | 0.66 |
|
Argentina | 7,389 | 5,636 |
|
| EBITDA L12M / Interest Expense (net) L12M | 18.63 | 16.23 |
|
| 67,074 | 61,011 |
|
| L12M: Last twelve months |
|
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|
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|
|
|
|
|
|
|
|
|
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|
|
* As of December 31, 2008, the Company registered a positive net cash position of US$ 69 million. Total debt amounted to US$ 139 million. |
|
|
| |||||
Total Cash amounted to US$ 208 million. |
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57
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Santiago, Chile.
EMBOTELLADORA ANDINA S.A.
By:/s/ Osvaldo Garay
Name: Osvaldo Garay
Title: Chief Financial Officer
Santiago, March 12, 2009
58