UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 6-K
__________________________
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
June 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 March 31, 2009 and 2008
(Free translation of original in Spanish)
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)
1
Consolidated Balance Sheets
(Figures in ThCh$ of March 31, 2009)
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
2
Consolidated Balance Sheets
(Figures in ThCh$ of March 31, 2009)
| For the period ended | |
| March 31, | |
LIABILITIES AND SHAREHOLDERS' EQUITY | 2009 | 2008 |
| ThCh$ | ThCh$ |
Short-term bank liabilities | 1,853,457 | 1,436,280 |
Current portion of long-term bank liabilities | 208,502 | 113,087 |
Current portion of bonds payable | 3,934,739 | 8,691,810 |
Dividends payable | 165,210 | 248,143 |
Accounts payable | 52,797,982 | 48,734,035 |
Other creditors | 3,896,932 | 5,074,717 |
Notes and accounts payable to related companies | 11,758,025 | 9,652,677 |
Provisions | 3,742,236 | 3,530,347 |
Withholdings | 15,181,286 | 13,561,284 |
Income taxes payable | 4,272,008 | 6,541,032 |
Unearned income | 0 | 546,691 |
Other current liabilities | 1,243,745 | 1,389,180 |
TOTAL CURRENT LIABILITIES | 99,054,122 | 99,519,283 |
| ||
| ||
Long-term bank liabilities | 331,260 | 669,648 |
Bonds payable | 75,270,233 | 78,300,828 |
Other creditors | 47,530 | 74,676 |
Long-term notes and accounts payable to related companies | 2,923,935 | 3,432,456 |
Provisions | 15,665,400 | 16,138,129 |
Deferred income taxes | 11,093,836 | 12,555,302 |
Other long-term liabilities | 11,500,308 | 11,907,785 |
TOTAL LONG-TERM LIABILITIES | 116,832,502 | 123,078,824 |
Minority interest | 11,463 | 8,948 |
| ||
Paid-in capital | 236,327,716 | 228,949,256 |
Reserve capital revalued | (5,435,537) | 1,831,594 |
Other reserves | (768,882) | (27,604,602) |
Accumulated earnings | 98,545,817 | 80,373,803 |
Net income for the period | 22,681,030 | 21,990,539 |
TOTAL SHAREHOLDERS’ EQUITY | 351,350,144 | 305,540,590 |
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 567,248,231 | 528,147,645 |
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
3
Consolidated Statements of Income
(Figures in ThCh$ of March 31, 2009)
| For the period ended | |
| March 31, | |
| 2009 | 2008 |
| ThCh$ | ThCh$ |
|
|
|
Net sales | 85,685,864 | 83,618,187 |
Cost of sales | 195,497,976 | 179,011,541 |
Gross margin | (109,812,112) | (95,393,354) |
Administrative and selling expenses | (52,065,142) | (49,325,782) |
OPERATING INCOME | 33,620,722 | 34,292,405 |
| ||
| ||
Financial income | 3,059,766 | 6,903,780 |
Equity in earnings of equity investments | 380,844 | 392,757 |
Other non-operating income | 682,583 | 5,305,568 |
Equity in losses of equity investments | (50,532) | (86,409) |
Amortization of goodwill | (1,753,814) | (1,390,882) |
Financial expenses | (2,107,585) | (2,657,823) |
Other non-operating expenses | (1,263,870) | (3,314,028) |
Price level restatement | 848,202 | 46,051 |
Foreign exchange losses | (3,496,529) | (9,357,122) |
NON OPERATING INCOME AND EXPENSE | (3,700,935) | (4,158,108) |
| ||
Income before income taxes and extraordinary items | 29,919,787 | 30,134,297 |
Income tax expense | (7,237,948) | (8,143,242) |
Income before minority interest | 22,681,839 | 21,991,055 |
Minority interest | (809) | (516) |
NET INCOME FOR THE PERIOD | 22,681,030 | 21,990,539 |
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
4
Consolidated Statements of Cash Flow
(Figures in ThCh$ of March 31, 2009)
| For the period ended | |
| March 31, | |
| 2009 | 2008 |
| ThCh$ | ThCh$ |
|
|
|
Collection of trade receivables | 288,832,505 | 268,010,517 |
Financial income received | 2,786,376 | 24,780,090 |
Other income received | 7,475 | 25,256 |
Payments to suppliers and personnel | (208,275,545) | (195,572,456) |
Interest paid | (2,932,975) | (2,157,306) |
Income taxes paid | (6,800,386) | (3,397,912) |
VAT and other tax payments | (37,056,761) | (36,869,059) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 36,560,689 | 54,819,130 |
|
|
|
|
|
|
Borrowings | 5,118,548 | 8,165,423 |
Dividend distribution | (5,327,454) | (5,683,670) |
Loan payments | (8,516,041) | (10,556,506) |
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (8,724,947) | (8,074,753) |
|
|
|
Proceeds from sales of property, plant and equipment | 400,403 | 154,200 |
Proceeds from sales of other investments | 0 | 16,763 |
Additions to property, plant & equipment | (10,200,910) | (11,641,850) |
Permanent investments | (211,904) | (16,763) |
Investments in financial instruments | (76,218) | 0 |
NET CASH PROVIDED BY (USED IN) INVESTMENT ACTIVITIES | (10,088,629) | (11,487,650) |
|
|
|
TOTAL NET CASH FOR THE PERIOD | 17,747,113 | 35,256,727 |
Effect of inflation on cash and cash equivalents | (353,006) | (5,749,518) |
Net increase in cash and cash equivalents | 17,394,107 | 29,507,209 |
Cash and cash equivalents at beginning of period | 126,246,838 | 125,126,489 |
Cash and cash equivalents at end of period | 143,640,945 | 154,633,698 |
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
5
Reconciliation between Net Income and Net Cash Flows
Provided by Operating Activities
(Figures in ThCh$ of March 31, 2009)
The accompanying Notes 1 to 35 are an integral part of these consolidated financial statements.
6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2009 and 2008 (figures expressed in ThCh$ of March 31, 2009)
Note 1 - Incorporation in the Securities Register
Embotelladora Andina S.A. was incorporated in the Securities Register under No. 00124 and, in conformity with Law 18,046 is subject to the supervision of the Chilean Superintendence of Securities and Insurance Companies (the “SVS”).
Note 2 - Summary of Significant Accounting Principles
a)
Accounting period
The consolidated financial statements cover the period January 1 to March 31, 2009 and are compared to the same period in 2008.
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 5.5% 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 | |||
| 2009 | 2008 | ||
| Direct | Indirect | Total | Total |
Abisa Corp. | - | 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 |
7
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 - -2.3% for the period December 1, 2008 to February 28, 2009 (0.8% 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:
|
| 2009 | 2008 |
|
| Ch$ | Ch$ |
Unidades de Fomento | (UF) | 20,959.77 | 19,822.53 |
United States dollars | (US$) | 583.26 | 437.71 |
Argentine pesos | (AR$) | 156.79 | 138.17 |
Brazilian Real | (R$) | 251.93 | 250.25 |
Euro | (€$) | 775.41 | 690.94 |
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”.
8
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.
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 markets and placement of bonds in UF in Chile, which are carried at the issue rate. The difference in valuation as compared to the effective placement rate is recorded as a deferred asset. This asset is amortized using the straight-line method over the term of the respective obligations, under Financial Expenses.
q)
Income taxes and deferred income taxes
The companies have recognized its current tax obligations in conformity with current legislation. The effects of deferred income taxes arising from temporary differences between the basis of assets and liabilities for tax and financial statement purposes are recorded on the basis of the enacted tax rate that will be in effect at the estimated date of reversal, in conformity with Technical Bulletin No. 60 issued by the Chilean Institute of Accountants. The effects of deferred income taxes
9
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.
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, which 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
10
For purposes of preparation of the statement of cash flows, in accordance with Technical Bulletin N°50 of the Chilean Institute of Accountants and circular N°1,501 of the Superintendencia de Valores y Seguros (Chilean Securities and Exchange Commission)the Company has considered cash equivalent to be investments in fixed-income, mutual funds, 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
| Accounting value for the period | |
| ended March 31, | |
| 2009 | 2008 |
Type of Instrument | ThCh$ | ThCh$ |
Bonds | 0 | 947,252 |
Mutual funds | 29,367,580 | 7,776,826 |
Investment funds | 9,792,584 | 57,402,989 |
Total marketable securities | 39,160,164 | 66,127,067 |
| Accounting value |
Mutual funds: |
|
Institution | ThCh$ |
Fondo Mutuo Royal Bank of Canada | 10,011,280 |
Fondo Mutuo BBVA | 8,051,000 |
Fondo Mutuo Itaú Corporate | 4,141,300 |
Fondo Mutuo BCI | 3,143,000 |
Fondo Mutuo Banchile | 3,075,000 |
Fondo Mutuo Santander | 946,000 |
Balance mutual funds | 29,367,580 |
Investment funds: |
|
Institution | ThCh$ |
Citi Institutional Liquid Reserves Limited - USA | 9,792,584 |
Balance investment funds | 9,792,584 |
11
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 |
|
|
| LONG TERM | ||||||||
| Up to 90 days | More than 90 days up to 1 year | Subtotal | Total current (net) | For the period ended | ||||||||
| 2009 | 2008 | 2009 | 2008 | 2009 | 2009 | 2008 | 2009 | 2008 | ||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||||
Trade receivables | 35,028,348 | 31,309,394 | 627,139 | 681,849 | 35,655,487 | 34,635,712 | 31,991,243 | - | - | ||||
Allowance for doubtful | - | - | - | - | (1,019,775) | - | - | - | - | ||||
Notes receivable | 10,531,800 | 9,342,869 | 639,885 | 558,067 | 11,171,685 | 10,635,990 | 9,900,936 | - | - | ||||
Allowance for doubtful | - | - | - | - | (535,695) | - | - | - | - | ||||
Other receivables | 14,044,713 | 13,761,708 | 1,179,984 | 1,160,256 | 15,224,697 | 15,091,731 | 14,921,964 | 11,826 | 33,244 | ||||
Allowance for doubtful | - | - | - | - | (132,966) | - | - | - | - | ||||
|
|
|
|
| Total long term receivables | 11,826 | 33,244 |
12
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
Envases CMF S.A.: Corresponds to net balance of dividends receivable net from accounts payable resulting from purchase of raw materials.
| Short Term | Long Term | ||
| 2009 | 2008 | 2009 | 2008 |
Company | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
COCA-COLA DE CHILE S.A. | 0 | 0 | 35,979 | 60,447 |
EMBONOR S.A. | 559,582 | 643,322 | 0 | 0 |
EMBOTELLADORA COCA COLA POLAR S.A. | 310,891 | 270,373 | 0 | 0 |
ENVASES CMF S.A. | 56,553 | 0 | 0 | 0 |
EMBOTELLADORA IQUIQUE S.A. | 117,150 | 0 | 0 | 0 |
TOTAL | 1,044,176 | 913,695 | 35,979 | 60,447 |
2) Accounts payable to related companies:
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
Vital Aguas S.A.: Purchase of finished products
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.
| Short Term | Long Term | ||
| 2009 | 2008 | 2009 | 2008 |
Company | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
RECOFARMA INDUSTRIAS DO AMAZONAS LTDA. | 1,683,699 | 2,652,065 | 0 | 0 |
ENVASES CMF S.A. | 0 | 1,476,690 | 0 | 0 |
COCA-COLA DE CHILE S.A. | 6,153,154 | 2,001,462 | 0 | 0 |
SERVICIOS Y PRODUCTOS PARA BEBIDAS REFRESCANTES S.R.L. | 1,875,576 | 1,550,651 | 0 | 0 |
ENVASES CENTRAL S.A. | 994,425 | 1,117,040 | 0 | 0 |
ENVASES DEL PACIFICO S.A. | 266,486 | 95,591 | 0 | 0 |
VITAL AGUAS S.A. | 784,685 | 759,178 | 0 | 0 |
EMBONOR S.A. | 0 | 0 | 2,324,903 | 2,725,955 |
EMBOTELLADORA COCA-COLA POLAR S.A. | 0 | 0 | 599,032 | 706,501 |
TOTAL | 11,758,025 | 9,652,677 | 2,923,935 | 3,432,456 |
13
3) Transactions with related companies
The following table includes the transactions with related companies that exceed ThCh$200,000.
During the normal course of business, the Company entered into an agreement with IANSAGRO S.A. in 2006 for the future supply of sugar in order to cover its needs and these will expire during the year 2009.
|
|
| March 31, 2009 | March 31, 2008 | ||
|
|
| Amount | Effect on income (charge) credit | Amount | Effect on income (charge) credit |
Company | Relation | Transaction | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
ENVASES CENTRAL S.A | Equity Investee | Sales of raw materials and supplies | 637,026 | 142,732 | 441,461 | 18,500 |
- | - | Purchase of finished products | 5,096,066 | 0 | 3,981,450 | 0 |
COCA-COLA DE CHILE S.A. | Shareholder | Concentrate purchases | 12,962,938 | 0 | 13,607,461 | 0 |
- | - | Payment of advertising participation | 1,196,727 | (1,196,727) | 660,159 | (660,159) |
- | - | Water source rental | 645,341 | (645,341) | 762,822 | (762,822) |
- | - | Sales of advertisement | 42,276 | 0 | 205,928 | 0 |
- | - | Other sales | 922,708 | 0 | 0 | 0 |
- |
| Other purchases | 770,197 | 0 | 485,803 | 0 |
ENVASES CMF S.A. | Equity Investee | Container purchases | 2,657,141 | 0 | 3,533,689 | 0 |
ENVASES DEL PACIFICO S.A. | Director in common | Purchase of raw materials | 288,261 | 0 | 103,332 | 0 |
SERVICIOS Y PRODUCTOS PARA BEBIDAS REFRESCANTES | Shareholder related | Concentrate purchases | 10,616,289 | 0 | 8,325,182 | 0 |
RECOFARMA INDUSTRIAS DO AMAZONAS LTDA. | Shareholder related | Concentrate purchases | 13,521,256 | 0 | 15,429,109 | 0 |
- | - | Payment of advertising participation | 2,711,299 | (2,711,299) | 1,136,748 | 1,136,748 |
- | - | Reimbursements and other purchases | 161,004 | (161,004) | 8,616,396 | (8,616,396) |
EMBONOR S.A. | Shareholder related | Sales of finished products | 2,799,292 | 751,441 | 2,750,725 | 562,402 |
EMBOTELLADORA COCA-COLA POLAR S.A. | Shareholder related | Sales of finished products | 1,474,294 | 264,600 | 1,589,571 | 290,599 |
IANSAGRO S.A. | Director in common | Purchase of raw materials | 0 | 0 | 3,026,911 | 0 |
COCA-COLA DE ARGENTINA S.A. | Director in common | Advertising expenses | 1,006,043 | (1,006,043) | 649,840 | (649,840) |
BBVA ADMINISTRADORA GENERAL DE FONDOS | Shareholder related | Investments in mutual funds | 12,895,544 | 0 | 7,268,950 | 0 |
- | - | Redemption of mutual funds | 0 | 0 | 7,268,950 | 38,525 |
VENDOMATICA S.A. | Shareholder related | Sales of finished products | 316,368 | 107,565 | 317,628 | 95,289 |
VITAL AGUAS S.A. | Equity Investee | Purchase of finished products | 1,816,753 | 0 | 1,846,041 | 0 |
EMBOTELLADORA IQUIQUE S.A. | Shareholder related | Sales of finished products | 173,065 | 53,229 | 105,012 | 24,570 |
14
Note 7 – Inventories
| 31-March-09 | 31-March-08 | ||||
| Gross Value | Obsolescence provision | Net value | Gross Value | Obsolescence provision | Net value |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
|
|
|
|
|
|
|
Finished products | 13,229,657 | (76,811) | 13,152,846 | 10,902,343 | (521,777) | 10,380,566 |
Raw materials | 12,774,635 | (244,336) | 12,530,299 | 10,270,552 | (218,878) | 10,051,674 |
Products in process | 1,510,973 | 0 | 1,510,973 | 2,001,425 | 0 | 2,001,425 |
Raw materials in transit | 897,335 | 0 | 897,335 | 640,035 | 0 | 640,035 |
Total | 28,412,600 | (321,147) | 28,091,453 | 23,814,355 | (740,655) | 23,073,700 |
Note 8 - Income Taxes and Deferred Income Taxes
For period ended March 31, 2009 the Company presented taxable retained earnings in the amount of ThCh$122,116,270 including profits with credit resulting from corporate income tax in the amount of ThCh$54,411,500 and profits without credit in the amount of ThCh$67,704,770. For the period ended March 31, 2008, the Company presented taxable retained earnings in the amount ThCh$23,137,145 including profits with credit resulting from corporate income tax in the amount of ThCh$9,880,648 and profits without credit in the amount of ThCh$13,256,497.
Short-term and long-term deferred tax assets and liabilities are shown as net balances in balance sheet.
| 31-March-09 | 31-March-08 | ||||||
| Assets | Liabilities | Assets | Liabilities | ||||
| Short term | Long term | Short term | Long term | Short term | Long term | Short term | Long term |
Temporary differences | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Allowance for doubtful accounts | 348,923 | 91,343 | 0 | 0 | 281,551 | 21,047 | 0 | 0 |
Vacation provision | 129,656 | 0 | 0 | 0 | 136,649 | 0 | 0 | 0 |
Production expenses | 13,933 | 0 | 0 | 0 | 73,032 | 0 | 0 | 0 |
Depreciation of property, plant & | 0 | 0 | 186,201 | 5,761,376 | 0 | 0 | 140,115 | 5,664,334 |
Severance indemnities | 88,970 | 0 | 10,626 | 86,437 | 5,103 | 0 | 23,311 | 190,517 |
Provision for assets write off | 180,685 | 519,029 | 0 | 0 | 221,722 | 1,058,759 | 0 | 0 |
Provision for labor and commercial | 0 | 1,311,419 | 0 | 0 | 0 | 1,279,569 | 0 | 0 |
Tax loss carry-forwards | 193,383 | 0 | 0 | 0 | 2,510,717 | 0 | 0 | 0 |
Others | 630,273 | 117,461 | 161 | 200,000 | 559,144 | 617,668 | 24 | 0 |
Local bond issue expenses | 0 | 0 | 0 | 91,007 | 0 | 0 | 0 | 150,967 |
Contingency allowance | 0 | 327,433 | 0 | 0 | 0 | 256,188 | 0 | 0 |
Social contributions | 637,172 | 0 | 0 | 0 | 1,490,082 | 0 | 0 | 0 |
Provision for participation in income | 365,997 | 0 | 0 | 0 | 212,136 | 0 | 0 | 0 |
Exchange rate difference (FRN Debt- | 0 | 0 | 0 | 7,825,225 | 0 | 0 | 0 | 12,011,391 |
Temporary difference fiscal incentives | 0 | 0 | 0 | 1,257,886 | 0 | 0 | 0 | 0 |
Unearned income | 0 | 225,192 | 0 | 0 | 0 | 258,950 | 0 | 0 |
Others |
|
|
|
|
|
|
|
|
Complementary accounts, net of | 0 | 0 | 0 | (1,536,218) | 0 | 0 | 0 | (1,969,726) |
Total | 2,588,992 | 2,591,877 | 196,988 | 13,685,713 | 5,490,136 | 3,492,181 | 163,450 | 16,047,483 |
15
The following table contains information on income taxes at each year-end.
| 31-March-09 | 31-March-08 |
| ThCh$ | ThCh$ |
Current tax expense (tax allowance) | (5,623,963) | (7,576,874) |
Deferred income tax expense/effect over assets or liabilities | (1,498,921) | 326,575 |
Amortization of deferred income tax asset and liability complementary | (102,270) | (88,555) |
Other charges or credits | (12,794) | (804,388) |
Total | (7,237,948) | (8,143,242) |
Note 9 - Other Current Assets
| 31-March-09 | 31-March-08 |
| ThCh$ | ThCh$ |
Supplies | 4,463,843 | 5,055,755 |
Forward agreement effects over existing inventories | 179,471 | 760,523 |
Short term bonds discount | 339,901 | 535,685 |
Wachovia Investment Fund (restricted) | 0 | 95,966 |
Others | 873,342 | 696,798 |
Total | 5,856,557 | 7,144,727 |
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 March 31, 2009 | Balances at March 30, 2008 | ||||
| Assets | Accumulated depreciation | Net, property, plant and equipment | Assets | Accumulated depreciation | Net, property, plant and equipment |
| ||||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Land | 19,356,665 | 0 | 19,356,665 | 17,669,090 | 0 | 17,669,090 |
Buildings and improvements | 117,775,655 | (46,483,198) | 71,292,457 | 98,177,315 | (36,625,580) | 61,551,735 |
Machinery and equipment | 278,887,237 | (218,140,150) | 60,747,087 | 224,679,670 | (175,528,875) | 49,150,795 |
Other property, plant and equipment | 271,998,657 | (215,439,798) | 56,558,859 | 228,446,473 | (186,589,486) | 41,856,987 |
Technical reappraisal of property, plant & equipment | 2,350,481 | (717,415) | 1,633,066 | 2,348,162 | (714,010) | 1,634,152 |
Total | 690,368,695 | (480,780,561) | 209,588,134 | 571,320,710 | (399,457,951) | 171,862,759 |
16
b) Other property, plant and equipment |
|
|
| 31-March-09 | 31-March-08 |
| ThCh$ | ThCh$ |
Containers | 159,711,937 | 133,091,191 |
Refrigerating equipment, promotional items and other minor assets | 64,944,719 | 55,937,465 |
Furniture and tools | 11,371,743 | 7,824,374 |
Other | 35,970,258 | 31,593,443 |
Total other property, plant and equipment | 271,998,657 | 228,446,473 |
c) Technical reappraisal of property, plant and equipment |
|
|
|
| ||
|
|
|
|
|
|
|
| Balances at March 31, 2009 | Balances at March 31, 2008 | ||||
| Assets | Accumulated depreciation | Net, property, plant and equipment | Assets | Accumulated depreciation | Net, property, plant and equipment |
| ||||||
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Land | 1,569,096 | 0 | 1,569,096 | 1,568,339 | 0 | 1,568,339 |
Buildings and improvements | 219,673 | (160,349) | 59,324 | 219,567 | (159,901) | 59,666 |
Machinery and equipment | 561,712 | (557,066) | 4,646 | 560,256 | (554,109) | 6,147 |
Total | 2,350,481 | (717,415) | 1,633,066 | 2,348,162 | (714,010) | 1,634,152 |
d) Depreciation for the year
Depreciation charges for the period amounted to ThCh$ 8,476,357 (ThCh$ 7,718,629 in 2008) of which ThCh$ 5,797,062 (ThCh$ 6,132,454 in 2008) are included under Operating Costs and ThCh$ 2,679,295 (ThCh$ 1,586,174 in 2008) under Sales and Administrative Expenses in the income statement.
17
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 | N° of Shares | Ownership Interest | Equity of companies | Income (loss) for the period | Accrued income | Partic. in net income (loss) | Unrealized income (loss) | Accounting value of investment | |||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | 2008 | 2007 | ||||
|
| Currency |
| % | % | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
ENVASES CMF S.A. | CHILE | Ch$ | 28,000 | 50% | 50% | 35,814,128 | 40,844,739 | 806,959 | 941,766 | 240,531 | 190,183 | 17,907,064 | 20,422,369 | 1,016,646 | 1,101,061 | 16,890,418 | 19,321,308 |
ENVASES CENTRAL S.A. | CHILE | Ch$ | 1,499,398 | 49% | 49% | 5,534,472 | 5,062,462 | 5,361 | (33,509) | (4,330) | (23,158) | 2,762,255 | 2,526,674 | 257,100 | 255,956 | 2,505,155 | 2,270,718 |
KAIK PARTIPACOES LTDA. | BRAZIL | US$ | 16,098,919 | 11% | 11% | 9,221,013 | 8,411,350 | 1,117,697 | (558,765) | 126,520 | (63,251) | 1,043,791 | 952,140 | 0 | 0 | 1,043,791 | 952,140 |
HOLDFAB PARTIC. LTDA. | BRAZIL | US$ | 1,283,158,339 | 14% | 14% | 45,308,502 | 248,125,391 | (313,617) | 1,161,880 | (46,202) | 171,166 | 6,674,846 | 3,655,359 | 0 | 0 | 6,674,846 | 3,655,359 |
VITAL AGUAS S.A. | CHILE | Ch$ | 5,650 | 56% | 56% | 3,120,112 | 3,191,073 | 33,602 | 66,580 | 13,793 | 31,408 | 1,762,863 | 1,802,956 | 0 | 0 | 1,762,863 | 1,802,956 |
Total |
|
|
|
|
|
|
|
|
|
|
| 30,150,819 | 29,359,498 | 1,273,746 | 1,357,017 | 28,877,073 | 28,002,481 |
18
Note 11 - Investment in Unconsolidated Affiliates (continued)
The main changes occurred in the reported periods are described below:
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$ -186.102 in 2009 (ThCh$ -280,701 in 2008)
Vital Aguas S.A. (purchase of finished products): ThCh$-5,192 in 2009 (ThCh$-6,209 in 2008)
Envases Central S.A. (purchase of finished products): ThCh$ -7,006 in 2009 (ThCh$ -6,434 in 2008)
2.
No liabilities have been designated as hedging instruments for investments abroad.
3.
Income likely to be remitted by subsidiaries abroad amounts to US$304 million.
19
Note 12 - Goodwill
Company | 31-March-2009 | 31-March-2008 | ||
Amortization during the period | Goodwill balance | Amortization during the period | Goodwill balance | |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
RIO DE JANEIRO REFRESCOS LTDA. | 989,878 | 36,684,603 | 786,052 | 32,393,368 |
EMBOTELLADORA DEL ATLÁNTICO S.A. | 763,936 | 21,437,755 | 604,830 | 19,392,220 |
Total | 1,753,814 | 58,122,358 | 1,390,882 | 51,785,588 |
Note 13 - Other Long Term Assets
| 31-March-2009 | 31-March-2008 |
| ThCh$ | ThCh$ |
Transfer fiscal credits (Brazil) | 6,828,639 | 5,185,035 |
Judicial deposits (Brazil) | 6,402,637 | 6,634,842 |
Prepaid expenses | 2,881,267 | 3,390,717 |
Bond issuance and placement discounts and expenses | 2,636,306 | 2,997,815 |
Spare parts | 2,218,431 | 2,141,270 |
Non operating assets | 1,442,841 | 1,218,437 |
Others | 101,892 | 64,315 |
Total | 22,512,013 | 21,632,431 |
20
Note 14 - Short-Term Bank Borrowings
Note 15 - Long-Term Bank Borrowings
| Currency | Years to maturity | Total long term | Annual average interest rate | Total long term | |
Bank or Financial Institution | or indexation adjustment | More than 1 up to 2 | More than 2 up to 3 | at March 31, 2009 | at March 31, 2008 | |
|
| ThCh$ | ThCh$ | ThCh$ | % | ThCh$ |
BANCO ALFA | Other currencies | 106,290 | 17,765 | 124,055 | 10.79 | 239,785 |
BANCO VOTORANTIM | Other currencies | 103,355 | 103,850 | 207,205 | 9.40 | 429,863 |
TOTAL |
| 209,645 | 121,615 | 331,260 |
| 669,648 |
Foreign currency liabilities | 100% |
|
|
|
|
|
21
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$75 million maturing in December 2012 and semiannual interest payments. At period end, all such bonds are wholly-owned by the subsidiary Abisa Corp. Consequently, the effects of such transactions have been eliminated from these consolidated financial statements, both in the balance sheet and in the consolidated statement of income.
22
Note 16 – Long and Short-Term Bonds Payable (continued)
The following table contains more information on Bonds Payable:
Instrument subscription or ID N° | Series | Current nominal value | Currency | Interest rate | Maturity date | Term | Par value | Placement in Chile or abroad | ||
Interest paid | Amortization period | 2009 | 2008 | |||||||
Current portion of bonds payable |
|
|
|
|
|
|
| ThCh$ | ThCh$ |
|
Register 254 SVS June 13, 2001 capital and interest | A | - | UF | 6.20% | 01-Jun-08 | Semiannual | Jun-08 | 0 | 7,041,695 | Chile |
Register 254 SVS June 13, 2001 capital and interest | B | 3,700,000 | UF | 6.50% | 01-Jun-26 | Semiannual | Dec-09 | 3,934,739 | 1,650,115 | Chile |
Total current maturities |
|
|
|
|
|
|
| 3,934,739 | 8,691,810 |
|
Long term portion of bonds payable |
|
|
|
|
|
|
|
|
|
|
Yankee bonds | B | - | US$ Exchange rate | 7.63% | 01-Oct-27 | Semiannual | Oct-27 | 0 | 923,568 | Abroad |
Register 254 SVS June 13, 2001 | B | 3,700,000 | UF | 6.50% | 01-Jun-26 | Semiannual | Dec-09 | 75,270,233 | 77,377,260 | Chile |
Total long term |
|
|
|
|
|
|
| 75,270,233 | 78,300,828 |
|
23
Note 17 - Provisions and Write-Offs
| Short term | Long term | ||
| ||||
| 2009 | 2008 | 2009 | 2008 |
Provisions | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Taxation on banking transactions and social contributions (Brazil) | 2,789,249 | 2,751,747 | 4,648,747 | 7,022,910 |
Staff severance indemnities | 912,471 | 728,318 | 8,720,991 | 6,788,907 |
Contingencies | 40,516 | 50,282 | 2,295,662 | 2,326,312 |
TOTAL | 3,742,236 | 3,530,347 | 15,665,400 | 16,138,129 |
Note 18 - Staff Severance Indemnities
| March 31, 2009 | March 31, 2008 |
Staff Severance Indemnities | ThCh$ | ThCh$ |
Beginning balance | 9,179,042 | 7,519,518 |
Provision for the period | 640,517 | 98,208 |
Payments | (186,097) | (100,501) |
Ending balance | 9,633,462 | 7,517,225 |
Note 19 - Minority Interest
| March 31, 2009 | March 31, 2008 |
LIABILITIES | ThCh$ | ThCh$ |
Embotelladora del Atlántico S.A. | 11,442 | 8,929 |
Andina Inversiones Societarias S.A. | 21 | 19 |
| 11,463 | 8,948 |
|
|
|
|
|
|
| March 31, 2009 | March 31, 2008 |
INCOME STATEMENT | ThCh$ | ThCh$ |
Embotelladora del Atlántico S.A. | (809) | (514) |
Andina Inversiones Societarias S.A. | 0 | (2) |
| (809) | (516) |
24
Note 20 - Changes in Shareholders’ Equity
The movement in Shareholders’ Equity, Dividend Distribution and Other Reserves is detailed in the following table:
| March 31,2009 | March 31,2008 | ||||||||||
| Paid in Capital | Capital revalued reserve | Other Reserves | Accumulated Income | Interim Dividends | Net Income | Paid in Capital | Capital revalued reserve | Other Reserves | Accumulated Income | Interim Dividends | Net Income |
| ThCh$ |
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Beginning balance | 236,327,716 | 0 | 9,055,154 | 23,201,754 | (17,171,979) | 94,835,957 | 217,013,513 | 0 | (11,443,442) | 11,171,454 | (17,194,331) | 81,601,944 |
Distribution of prior year income | 0 | 0 | 0 | 77,663,978 | 17,171,979 | (94,835,957) | 0 | 0 | 0 | 64,407,613 | 17,194,331 | (81,601,944) |
Translation adjustment reserve | 0 | 0 | (9,615,766) | 0 | 0 | 0 | 0 | 0 | (14,630,510) | 0 | 0 | 0 |
Capital revalued | 0 | (5,435,537) | (208,270) | (2,319,915) | 0 | 0 | 0 | 1,736,108 | (91,548) | 604,633 | 0 | 0 |
Income for the period | 0 | 0 | 0 | 0 | 0 | 22,681,030 | 0 | 0 | 0 | 0 | 0 | 20,844,113 |
Ending balance | 236,327,716 | (5,435,537) | (768,882) | 98,545,817 | 0 | 22,681,030 | 217,013,513 | 1,736,108 | (26,165,500) | 76,183,700 | 0 | 20,844,113 |
Price level restated balances |
|
|
|
|
|
| 228,949,256 | 1,831,594 | (27,604,602) | 80,373,803 | 0 | 21,990,539 |
25
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: |
|
|
| 2009 | 2008 |
| ThCh$ | ThCh$ |
|
|
|
Reserve for cumulative translation adjustments(1) | (1,921,862) | (28,757,058) |
Reserve for technical reappraisal of property, plant and equipment | 69,362 | 71,555 |
Other | 1,083,618 | 1,080,901 |
Total | (768,882) | (27,604,602) |
(1) The Reserve for cumulative translation adjustments was established in accordance with Technical Bulletin No. 64 issued by the Chilean Institute of Accountants and regulations specified under Circular letter No. 5,294 from the SVS.
The activity in the Reserve for cumulative translation adjustments was as follows:
| Balance | Foreign exchange rate generated during the period | Reserve release / realized(*) | Balance |
Company | 01-Jan-08 | Investment |
| March 31, 2009 |
| ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Rio de Janeiro Refrescos Ltda. | 4,396,518 | (6,225,593) | (19,892) | (1,848,967) |
Embotelladora del Atlántico S.A. | 3,297,357 | (3,370,252) | 0 | (72,895) |
Total | 7,693,875 | (9,595,845) | (19,892) | (1,921,862) |
(*) Reserve realized resulted from dividends paid by our subsidiary Río de Janeiro Refrescos Ltda.
26
Note 22 - Other Non-Operating Income and Expenses
Other non-operating income during the period was as follows: | 2009 | 2008 |
| ThCh$ | ThCh$ |
Reverse provision property, plant & equipment devalued | 0 | 5,164,636 |
Conversion adjustment reserve realized(2) | 19,892 | 0 |
Other income | 559,063 | 140,932 |
Sub-total | 578,955 | 5,305,568 |
Translation of financial statements(1) | 103,628 | 0 |
Total | 682,583 | 5,305,568 |
|
|
|
Other non-operating expenses during the period was as follows: |
| |
Conversion adjustment reserve realized(2) | 0 | (1,677,731) |
Bank taxes(3) | (649,528) | (500,814) |
Provision for labor and commercial lawsuits | (133,298) | (173,827) |
Provision loss of investment in Centralli | (23,726) | (10,554) |
Loss on sale of property, plant and equipment | (10,494) | (18,374) |
Effect of rate exchange over calculation of severance payments | (276,002) | 0 |
Others | (170,822) | (277,131) |
Sub-total | (1,263,870) | (2,658,431) |
Translation of financial statements(1) | 0 | (655,597) |
Total | (1,263,870) | (3,314,028) |
|
|
|
(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 obtaining of financial resources.
27
Note 23- Price-Level Restatement
| Adjustment index | March 31, 2009 | March 31, 2008 |
Assets - (charges)/credits |
| ThCh$ | ThCh$ |
Inventories | CPI | (234,250) | (33,181) |
Property, plant and equipment | CPI | (2,366,714) | 774,990 |
Investments in related companies | CPI | (4,160,711) | 1,552,546 |
Cash, Time Deposits, Marketable Securities | CPI | (317,176) | 243,688 |
Cash, Time Deposits, Marketable Securities | UF | (1,231) | 562,893 |
Short term accounts receivable from related companies | UF | (595,972) | 76,686 |
Short term accounts receivable from related companies | CPI | (487,072) | 388,778 |
Recoverable taxes | CPI | (24,475) | 2,368 |
Other current assets | UF | (1,300,334) | 189,845 |
Other current assets | CPI | (153,930) | (17,034) |
Other long term assets | UF | (7,253) | 17 |
Other long term assets | CPI | (36,903) | 18,129 |
Cost and expense accounts | CPI | (258,758) | 122,125 |
Total (charges) credits |
| (9,944,779) | 3,881,850 |
|
|
|
|
Liabilities - (charges)/credits |
|
|
|
Shareholders’ equity | CPI | 7,963,722 | (2,372,899) |
Short and long term bonds payable | UF | 1,816,008 | (844,523) |
Short and long term bonds payable | CPI | 0 | (28,885) |
Short term accounts receivable from related companies | UF | 483,740 | (276,360) |
Short term accounts receivable from related companies | CPI | 108,409 | (114,859) |
Other current liabilities | UF | (3,822) | 127,157 |
Other current liabilities | CPI | (80,518) | (47,119) |
Other long term liabilities | CPI | 134,351 | (113,015) |
Income accounts | CPI | 371,091 | (165,296) |
Total (charges) credits |
| 10,792,981 | (3,835,799) |
Price-level restatement (loss) gain |
| 848,202 | 46,051 |
28
Note 24 - Exchange Gains/Losses
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$2,976,207 (ThCh$3,533,500 in 2008). Disbursements for risk rating reports, legal and financial advisory services, printing and placement fees are included as Debt issue costs.
Amortization for the period 2009 amounted to ThCh$58,929 (ThCh$103,698 in 2008).
29
Note 26 - Consolidated Statement of Cash Flows
For the projection of future cash flows, there are no transactions and events to consider which have not been revealed in these financial statements and accompanying notes.
The following table presents an itemization of the movement of assets and liabilities not affecting the cash flow in the period, but compromising future cash flows.
| 31-Mar-09 | Maturity date | 31-Mar-08 | Maturity date |
| ThCh$ | ThCh$ | ||
Expected cash outflow |
|
|
|
|
Expenses |
|
|
|
|
Dividend payment | (11,279,813) | 30-Apr-09 | (7,689,232) | 24-Apr-08 |
Dividend payment | (34,326,396) | 28-May-09 | (50,513,647) | 15-May-08 |
Addition to property, plant and equipment | (402,950) | 30-Apr-09 | (357,083) | 30-Apr-08 |
Addition to property, plant and equipment | (991,930) | 15-May-09 | (2,457,078) | 15-May-08 |
Addition to property, plant and equipment | (133,518) | 31-May-09 | (268,284) | 31-May-08 |
Addition to property, plant and equipment | 0 |
| (14,459) | 30-Jun-08 |
Total expenses | (47,134,607) |
| (61,299,783) |
|
|
|
|
|
|
Expected cash inflow |
|
|
|
|
Income |
|
|
|
|
Sale of property, plant and equipment | 24,422 | 30-Apr-09 | 10,316 | 30-Apr-08 |
Total income | 24,422 |
| 10,316 |
|
Total net | (47,110,185) |
| (61,289,467) |
|
30
Note 27 - Derivative Contracts
Derivative contracts at March 31, 2009 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 | 6,238,290 | 2nd Quarter 2009 | US$ Exchange Rate | S | Foreign currency financial investment | 6,238,290 | 6,417,762 | Other current assets | 179,471 | 179,471 | 0 |
FR | CCTE | 4,724,406 | 2nd Quarter 2009 | US$ Exchange Rate | P | Suppliers foreign currency | 4,691,778 | 0 | Other current assets & liabilities | 32,628 | 0 | 32,628 |
FR | CCTE | 5,249,340 | 3rd Quarter 2009 | US$ Exchange Rate | P | Suppliers foreign currency | 5,440,742 | 0 | Other current assets & liabilities | 191,402 | 0 | (191,402) |
FR | CCTE | 5,249,340 | 4th Quarter 2009 | US$ Exchange Rate | P | Suppliers foreign currency | 5,632,692 | 0 | Other current assets & liabilities | 383,352 | 0 | (383,352) |
31
Note 28 - Contingencies and Restrictions
a.
Litigation and other legal actions:
There are various judicial actions and other out-of-court claims pending against the Company incidental to its business and operations. Management believes, based on the opinion of its legal counsel, that none of these proceedings will have a material adverse effect on the Company’s financial position or result of operations.
Current lawsuits and other legal actions are described below.
1)
Embotelladora del Atlántico S.A. faces labor and other lawsuits. Accounting provisions to back any probable loss contingency stemming from these lawsuits, amounts to ThCh$1,344,447 (ThCh$1,407,421 in 2008). 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$946,894 (ThCh$918,891 in 2008). 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$7,423 (ThCh$50,282 in 2008). In accordance with its legal counsel’s opinion, the Company deems improbable that contingencies without provisions may affect the results or equity of the Company.
b.
Restrictions
The bond issue and placement on the US market for US$ 200 million is subject to certain restrictions against preventive attachments, sale and leaseback transactions, sale of assets, subsidiary debt and certain conditions in the event of a merger or consolidation.
The bond issue and placement in the Chilean market for UF 3,700,000 is subject to the following restrictions:
Leverage ratio, defined as the total financial debt/shareholder’s equity plus minority interest should be less than 1.20 times.
Financial debt shall be deemed Consolidated Finance Liabilities which include: (i) short-term bank liabilities, (ii) short-term portion of long-term bank liabilities, (iii) short-term bonds payable-promissory notes, (iv) short-term portion of bonds payable, (v) long-term bank liabilities, and (vi) long-term bonds payable. Consolidated equity means Total equity plus Minority Interest.
Consolidated assets are to be free of any pledge, mortgage or other encumbrance for an amount equal to at least 1.30 times the consolidated liabilities that are not guaranteed by the investee.
Andina must retain and, in no way, lose, sell, assign or dispose of to a third party the geographical zone denominated “Región Metropolitana”, as a franchised territory in Chile by The Coca-Cola Company for the preparation, production, sale and distribution of the products and brands in accordance with the respective Bottling agreement, renewable from time to time.
Andina shall not lose, sell, assign or dispose of to a third party any other territory in Brazil or Argentina that is currently franchised to Andina by The Coca-Cola Company for the preparation, production, sale and distribution of the products and brands of the franchisor, as long as the referred territory represents more than forty percent of the Company’s Consolidated Operating Cash Flows.
32
Note 28 - Contingencies and Restrictions (continued)
c.
Direct guarantees
Guarantees at March 31, 2009 are presented on the following table:
|
|
|
|
|
| Balances pending at March 31, | Guaranty release March 31, | |||||
Guarantee creditor |
|
| Type of guaranty | Assets involved | ||||||||
| Debtor | Relation |
| Type | Accounting Value | 2009 | 2008 | 2010 | 2011 | |||
|
|
|
|
| ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |||
ESTADO RIO DE JANEIRO | RIO DE JANEIRO REFRESCOS LTDA. | Subsidiary | Mortgage | Real estate | 13,135,726 | 10,230,603 | 10,721,224 | 0 | 0 | |||
PODER JUDICIARIO | RIO DE JANEIRO REFRESCOS LTDA. | Subsidiary | Judicial Deposit | Judicial deposit | 10,897,806 | 0 | 0 | 0 | 0 | |||
ADUANA DE EZEIZA | EMBOTELLADORA DEL ATLANTICO S.A. | Subsidiary | Guaranty insurance | Inventories | 29,947 | 0 | 0 | 0 | 0 | |||
AGA S.A. | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Agreement | 0 | 0 | 0 | 0 | 174,978 | |||
MUNICIPALIDAD DE SANTIAGO | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | 0 | 11,728 | 11,702 | 0 | 0 | |||
ESCUELA MILITAR | EMBOTELLADORA ANDINA S.A. | Parent company | Guaranty receipt | Guaranty Receipt | 0 | 0 | 0 | 1,525 | 0 |
33
Note 29 - Guarantees from Third Parties
Guarantees from Third Parties at March 31, 2009 were as follows:
Guarantor | Relationship | Type of Guarantee | Amount | Currency | Transaction |
|
|
|
|
|
|
RUSSEL W. COFFIN | Subsidiary | Letter of Credit | 39,870,775 | US$ | Purchase of Nitvitgov Refrigerantes S.A. |
CONFAB | Subsidiary | Mortgage | 30,000,000 | US$ | Purchase of Rio de Janeiro Refrescos Ltda. |
SEVERAL CLIENTS | Subsidiary | Deposits | 2,799,689 | US$ | Guaranty over containers |
SOC. COM. CHAMPFER | Subsidiary | Mortgage | 1,283,109 | US$ | Distributor credit |
ATANOR | Subsidiary | Guaranty Receipt | 1,009,291 | US$ | Supplier |
MAC COKE DIST. BEB. | Subsidiary | Mortgage | 837,941 | US$ | Distributor credit |
ATANOR | Subsidiary | Guaranty Receipt | 756,968 | US$ | Supplier |
ATANOR | Subsidiary | Guaranty Receipt | 756,968 | US$ | Supplier |
ATANOR | Subsidiary | Guaranty Receipt | 756,968 | US$ | Supplier |
FRANCISCANA DIST. | Subsidiary | Mortgage | 630,615 | US$ | Distributor credit |
DIST REAL COLA | Subsidiary | Mortgage | 609,019 | US$ | Distributor credit |
AGA S.A. | Parent Company | Receipt | 600,000 | US$ | Supplier agreement |
ZULEMAR COMERCIO DE BEBIDAS | Subsidiary | Mortgage | 507,516 | US$ | Distributor credit |
ECOPRENEUR SA | Subsidiary | Guaranty Receipt | 439,427 | US$ | Supplier |
ASXT FLUMINENSE DIST. BEBIDAS | Subsidiary | Mortgage | 370,594 | US$ | Distributor credit |
BEST SELECT CHILE S.A. | Parent Company | Receipt | 202,083,656 | Ch$ | Supermarket resupplying agreement |
MOTTA DISTRIBUIDORA DE BEBIDAS | Subsidiary | Mortgage | 323,946 | US$ | Distributor credit |
ROSAS DE CASIMIRO | Subsidiary | Mortgage | 304,077 | US$ | Distributor credit |
AGUIAR DIST. DE BEBIDAS | Subsidiary | Mortgage | 295,871 | US$ | Distributor credit |
SOBERANA DE CARMO DIST BEB | Subsidiary | Mortgage | 265,636 | US$ | Distributor credit |
ECOPRENEUR SA | Subsidiary | Guaranty Receipt | 194,881 | US$ | Supplier |
CATERING ARGENTINA S.A. | Subsidiary | Guaranty Receipt | 137,066 | US$ | Supplier |
34
Note 30 - Local and Foreign Currency
Assets at March 31, 2009 and 2008 were composed of local and foreign currencies as follows:
|
| March 31, 2009 | March 31, 2008 |
Current Assets | Currency | ThCh$ | ThCh$ |
Cash | Non-indexed Ch$ | 2,573,901 | 3,951,039 |
- | Indexed Ch$ | 0 | 847,552 |
- | US$ | 6,584,380 | 3,738,005 |
- | AR$ | 1,210,357 | 606,594 |
- | R$ | 8,046,970 | 11,448,749 |
Time Deposits | Indexed Ch$ | 75,235,593 | 0 |
- | Non-indexed Ch$ | 7,020,942 | 68,716,754 |
- | AR$ | 0 | 19,068 |
- | R$ | 3,808,638 | 95,595 |
Marketable Securities (Net) | Non-indexed Ch$ | 29,367,581 | 7,813,119 |
- | US$ | 9,792,583 | 58,027,323 |
- | AR$ | 0 | 286,625 |
Trade Accounts Receivable (Net) | Non-indexed Ch$ | 16,838,448 | 15,817,263 |
- | Indexed Ch$ | 0 | 89,485 |
- | US$ | 459,279 | 402,526 |
- | AR$ | 2,891,056 | 2,202,618 |
- | R$ | 14,446,929 | 13,479,351 |
Notes Receivable | Non-indexed Ch$ | 8,084,758 | 7,225,791 |
- | AR$ | 609,371 | 462,651 |
- | R$ | 1,941,861 | 2,212,494 |
Other Debtors (Net) | Non-indexed Ch$ | 7,985,981 | 4,741,756 |
- | Indexed Ch$ | 0 | 698,896 |
- | US$ | 117,325 | 52,204 |
- | AR$ | 3,240,441 | 2,152,737 |
- | R$ | 3,747,984 | 7,276,371 |
Notes Receivable Related Companies | Non-indexed Ch$ | 1,044,176 | 913,695 |
Inventories (Net) | Non-indexed Ch$ | 2,938,889 | 262,296 |
- | Indexed Ch$ | 4,772,055 | 4,949,531 |
- | US$ | 1,104,289 | 3,280,593 |
- | AR$ | 7,700,668 | 4,897,124 |
- | R$ | 11,575,552 | 9,684,156 |
Recoverable Taxes | Indexed Ch$ | 749,961 | 1,695,338 |
- | Non-indexed Ch$ | 1,910,857 | 179,880 |
- | AR$ | 386,484 | 1,124,127 |
- | R$ | 201,031 | 157,707 |
Prepaid Expenses | Non-indexed Ch$ | 1,698,650 | 1,456,654 |
35
|
| March 31, 2009 | March 31, 2008 |
Current Assets | Currency | ThCh$ | ThCh$ |
- | Indexed Ch$ | 0 | 55,216 |
- | US$ | 0 | 20,705 |
- | AR$ | 258,961 | 210,784 |
- | R$ | 899,130 | 765,146 |
Deferred Taxes | Non-indexed Ch$ | 353,227 | 659,756 |
- | Indexed Ch$ | 0 | 61,502 |
- | AR$ | 533,195 | 0 |
- | R$ | 1,505,582 | 4,605,428 |
Other Current Assets | Indexed Ch$ | 200,061 | 140,811 |
- | Non-indexed Ch$ | 1,779,715 | 1,892,229 |
- | US$ | 2,802,303 | 1,559,739 |
- | AR$ | 1,074,478 | 710,822 |
- | R$ | 0 | 2,841,126 |
Property, Plant and Equipment |
|
|
|
Property, Plant and Equipment | Indexed Ch$ | 94,335,732 | 92,918,416 |
- | US$ | 115,252,402 | 78,944,343 |
Other Assets |
|
|
|
Investments in Related Companies | Indexed Ch$ | 21,158,436 | 23,394,983 |
- | R$ | 7,718,637 | 4,607,498 |
Investments in Other Companies | Indexed Ch$ | 56,016 | 48,614 |
- | US$ | 68,020 | 82,889 |
Goodwill | Indexed Ch$ | 950,520 | 1,114,827 |
- | US$ | 57,171,838 | 50,670,761 |
Long Term Debtors | AR$ | 7,255 | 13,307 |
- | Indexed Ch$ | 4,571 | 14,437 |
- | R$ | 0 | 5,500 |
Notes Receivable Related Companies | Indexed Ch$ | 35,979 | 60,447 |
Intangibles | US$ | 333,551 | 368,579 |
- | Non-indexed Ch$ | 337,242 | 21,523 |
Amortization | US$ | (187,623) | (239,841) |
Others | Non-indexed Ch$ | 1,298,635 | 2,040,690 |
- | Indexed Ch$ | 2,636,308 | 3,281,601 |
- | US$ | 10,065 | 1,109,858 |
- | AR$ | 3,054,940 | 2,719,767 |
- | R$ | 15,512,065 | 12,480,515 |
|
|
|
|
Total Assets | Non-indexed Ch$ | 83,233,002 | 115,692,445 |
| Indexed Ch$ | 200,135,232 | 129,371,656 |
| US$ | 193,508,412 | 198,017,684 |
| AR$ | 20,967,206 | 15,406,224 |
| R$ | 69,404,379 | 69,659,636 |
36
Note 30 - Local and Foreign Currency (continued)
Current liabilities at March 31, 2009 and 2008 denominated in local and foreign currencies were as follows:
|
| Up to 90 days |
| 90 days to 1 year | |||||
|
| March 31, 2009 | March 31, 2008 | March 31, 2009 | March 31, 2008 | ||||
| Currency | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate |
Short term bank liabilities | R$ | 0 |
| 1,436,280 | 6.75% | 0 |
| 0 |
|
- | AR$ | 1,853,457 | 18.00% | 0 |
| 0 |
| 0 |
|
Long term bank liabilities | R$ | 0 |
| 113,087 | 11.89% | 208,502 | 10.51% | 0 |
|
Bonds payable | Indexed-Ch$ | 3,934,739 | 6.50% | 8,691,810 | 6.26% | 0 |
| 0 |
|
Dividends payable | Non-Indexed Ch$ | 159,873 |
| 244,163 |
| 0 |
| 0 |
|
- | AR$ | 5,337 |
| 3,980 |
| 0 |
| 0 |
|
Accounts payable | Non-Indexed Ch$ | 25,743,687 |
| 30,544,196 |
| 0 |
| 0 |
|
- | US$ | 1,703,380 |
| 3,337,881 |
| 0 |
| 0 |
|
- | AR$ | 11,181,907 |
| 6,792,531 |
| 0 |
| 0 |
|
- | R$ | 14,150,938 |
| 8,059,427 |
| 0 |
| 0 |
|
- | EURO$ | 18,070 |
| 0 |
| 0 |
| 0 |
|
Other creditors | US$ | 104,508 |
| 82,743 |
| 0 |
| 0 |
|
- | AR$ | 134,798 |
| 55,015 |
| 76,192 |
| 102,897 |
|
- | R$ | 3,581,434 |
| 4,834,062 |
| 0 |
| 0 |
|
Notes and accounts payable related companies | Non-Indexed Ch$ | 8,198,750 |
| 5,449,961 |
| 0 |
| 0 |
|
- | AR$ | 1,875,576 |
| 1,550,651 |
| 0 |
| 0 |
|
- | R$ | 1,683,699 |
| 2,652,065 |
| 0 |
| 0 |
|
Provisions | Non-Indexed Ch$ | 919,894 |
| 778,601 |
| 0 |
| 0 |
|
- | R$ | 0 |
| 0 |
| 2,822,342 |
| 2,751,746 |
|
Withholdings | Non-Indexed Ch$ | 8,098,941 |
| 6,802,300 |
| 0 |
| 0 |
|
- | AR$ | 6,496,104 |
| 4,008,102 |
| 0 |
| 0 |
|
- | R$ | 0 |
| 0 |
| 586,241 |
| 2,750,882 |
|
Income taxes | Non-Indexed Ch$ | 967,179 |
| 3,038,647 |
| 0 |
| 0 |
|
- | AR$ | 2,423,638 |
| 2,903,395 |
| 0 |
| 0 |
|
- | R$ | 0 |
| 0 |
| 881,191 |
| 598,990 |
|
Unearned income | Non-Indexed Ch$ | 0 |
| 546,691 |
| 0 |
| 0 |
|
Other current liabilities | Non-Indexed Ch$ | 1,243,745 |
| 1,389,180 |
| 0 |
| 0 |
|
Total current liabilities | R$ | 19,416,071 |
| 17,094,921 |
| 4,498,276 |
| 6,101,618 |
|
| AR$ | 23,970,817 |
| 15,313,674 |
| 76,192 |
| 102,897 |
|
| Indexed-Ch$ | 3,934,739 |
| 8,691,810 |
| 0 |
| 0 |
|
| US$ | 1,807,888 |
| 3,420,624 |
| 0 |
| 0 |
|
| Non-Indexed Ch$ | 45,332,069 |
| 48,793,739 |
| 0 |
| 0 |
|
| EURO$ | 18,070 |
| 0 |
| 0 |
| 0 |
|
37
Note 30 - Local and Foreign Currency (continued)
Long term liabilities at March 31, 2009 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$ | 331,260 | 9.92% | 0 |
| 0 |
| 0 |
|
Bonds payable long term | Indexed Ch$ | 9,123,665 | 6.50% | 9,123,665 | 6.50% | 9,123,665 | 6.50% | 47,899,238 | 6.50% |
Other creditors | AR$ | 47,530 |
| 0 |
| 0 |
| 0 |
|
Notes and accounts payable related companies | Non-indexed Ch$ | 2,923,935 |
| 0 |
| 0 |
| 0 |
|
Provisions | Non-indexed Ch$ | 1,068,931 |
| 0 |
| 0 |
| 0 |
|
- | Indexed Ch$ | 0 |
| 0 |
| 0 |
| 7,652,060 |
|
- | AR$ | 1,344,447 |
| 0 |
| 0 |
| 0 |
|
- | R$ | 5,599,962 |
| 0 |
| 0 |
| 0 |
|
Deferred taxes | Non-indexed Ch$ | 993,097 |
| 0 |
| 0 |
| 0 |
|
- | AR$ | 0 |
| 1,422,475 |
| 0 |
| 0 |
|
- | R$ | 8,678,264 |
| 0 |
| 0 |
| 0 |
|
Other liabilities | Non-indexed Ch$ | 0 |
| 0 |
| 4,310,121 |
| 0 |
|
- | AR$ | 0 |
| 319,388 |
| 2,874,494 |
| 0 |
|
- | R$ | 3,996,305 |
| 0 |
| 0 |
| 0 |
|
Total long term liabilities | R$ | 18,605,791 |
| 0 |
| 0 |
| 0 |
|
- | Indexed Ch$ | 9,123,665 |
| 9,123,665 |
| 9,123,665 |
| 55,551,298 |
|
| AR$ | 1,391,977 |
| 1,741,863 |
| 2,874,494 |
| 0 |
|
| Non-indexed Ch$ | 4,985,963 |
| 0 |
| 4,310,121 |
| 0 |
|
38
Long term liabilities at March 31, 2008 were composed of local and foreign currencies as follows:
| Currency | 1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | ||||
| Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | |
|
| ThCh$ | % | ThCh$ | % | ThCh$ | % | ThCh$ | % |
Long term bank liabilities | $R | 669,648 |
| 0 |
| 0 |
| 0 |
|
Long term bonds payable | Indexed Ch$ | 9,103,205 | 6.5% | 9,103,205 | 6.5% | 9,103,205 | 6.5% | 50,067,630 | 6.50% |
- | US$ | 0 |
| 0 |
| 0 |
| 923,583 | 7.63% |
Other creditors | AR$ | 74,676 |
| 0 |
| 0 |
| 0 |
|
Notes and accounts payable related companies | Non-indexed Ch$ | 3,432,456 |
| 0 |
| 0 |
| 0 |
|
- | R$ | 0 |
| 0 |
| 0 |
| 0 |
|
Provisions | Non-indexed Ch$ | 792,207 |
| 0 |
| 0 |
| 0 |
|
- | Indexed Ch$ | 0 |
| 0 |
| 0 |
| 5,996,698 |
|
- | AR$ | 1,407,421 |
| 0 |
| 0 |
| 0 |
|
- | R$ | 7,941,803 |
| 0 |
| 0 |
| 0 |
|
Deferred taxes | R$ | 12,555,302 |
| 0 |
| 0 |
| 0 |
|
Other liabilities | Non-indexed Ch$ | 498,270 |
| 0 |
| 5,086,132 |
| 0 |
|
- | AR$ | 0 |
| 216,609 |
| 1,949,484 |
| 0 |
|
- | R$ | 4,157,290 |
| 0 |
| 0 |
| 0 |
|
Total long term liabilities | R$ | 25,324,043 |
| 0 |
| 0 |
| 0 |
|
- | Indexed Ch$ | 9,103,205 |
| 9,103,205 |
| 9,103,205 |
| 56,064,328 |
|
- | US$ | 0 |
| 0 |
| 0 |
| 923,583 |
|
- | AR$ | 1,482,097 |
| 216,609 |
| 1,949,484 |
| 0 |
|
- | Non-indexed Ch$ | 4,722,933 |
| 0 |
| 5,086,132 |
| 0 |
|
39
Note 31 – Penalties
The Company has not been subject to penalties by the SVS or any other administrative authority.
Note 32- Subsequent Events
Regular Shareholders’ Meeting Agreements
The following resolutions were adopted at the Shareholders’ Meeting held April 14, 2009:
1)
Renewal of the Board of Directors:
SERIES A SHARES DIRECTORS:
DIRECTOR | ALTERNATE DIRECTOR |
HERIBERTO URZÚA SÁNCHEZ | GONZALO PAROT PALMA |
JOSÉ ANTONIO GARCÉS SILVA (HIJO) | PATRICIO PARODI GIL |
ARTURO MAJLIS ALBALA | CRISTIAN ALLIENDE ARRIAGADA |
BRYAN J. SMITH | JORGE HURTADO GARRETÓN |
GONZALO SAID HANDAL | JOSE MARIA EYZAGUIRRE BAEZA |
SALVADOR SAID SOMAVIA | JOSÉ DOMINGO ELUCHANS URENDA |
SERIES B SHARES DIRECTORS: |
|
|
|
DIRECTOR | ALTERNATE DIRECTOR |
JUAN CLARO GONZÁLEZ | ERNESTO BERTELSEN REPETTO |
2)
The distribution of a Final Dividend Nº 165 on account of the fiscal year ending December 31, 2008.
a) Ch$14.13 (fourteen pesos and 13/100) per each Series A share and;
b) Ch$15.543 (fifteen pesos and 543/100) per each Series B share.
This dividend will be available to shareholders beginning April 30, 2009.
The Shareholders’ Registry will close on April 24, 2009.
3)
The distribution of an Additional Dividend Nº 166 on account of the Retained Earnings Fund.
a) Ch$43.00 (forty three pesos) per each Series A share and;
b) Ch$47.30 (forty seven pesos and 30/100) per each Series B share.
This dividend will be available to shareholders beginning May 28, 2009.
The Shareholders’ Registry will close on May 22, 2009.
40
Note 33 – Environment
Disbursements and commitments for this period related to environmental issues were according to the following table:
Name of the project associated with the disbursement | Concept for which disbursement was realized or will be realized | Accounting register Cost of Asset/ Expense | Description of asset or expense item | Amount Disbursed ThCh$ | Certain or expected date of disbursement |
Disbursements that are part of assets |
|
|
|
|
|
Argentina |
|
|
|
|
|
Effluents Plant | Investments in refurbishment of Effluents Plant (in the process of execution) | Property, plant & equipment | Works in progress | 219,046 | 1° Quarter 2009 |
Effluents Plant | Investments in refurbishment of Effluents Plant (in the process of execution) | Property, plant & equipment | Works in progress | 1,069,249 | 2°, 3° and 4° Quarter year 2009 |
Total Argentina |
|
|
| 1,288,295 |
|
Brazil |
|
|
|
|
|
Improvements in water quality | Improvements in water quality | Cost of Asset | Bomba Dosadora para ETA | 26,221 | 2°, 3° and 4° Quarter year 2009 |
Improvements in water quality | Improvements in water quality | Cost of Asset | Extension project for capturing water from rain | 600 | 2°, 3° and 4° Quarter year 2009 |
Improvements in water quality | Improvements in water quality | Cost of Asset | Remodeling of CEDAE - ETA water system | 19,465 | 2°, 3° and 4° Quarter year 2009 |
Improvements in water quality | Improvements in water quality | Cost of Asset | Extension project for capturing water from rain | 37,018 | 2°, 3° and 4° Quarter year 2009 |
Total Brazil |
|
|
| 83,304 |
|
Chile |
|
|
|
|
|
Hand Held Equipments Sales force (110) | Avoid printing paper | Cost of Asset | Hand Held equipment | 88,962 | 2°, 3° and 4° Quarter year 2009 |
Air conditioning equipments (SA) | Avoid air pollution | Cost of Asset | Air conditioning equipments | 1,98 | 2°, 3° and 4° Quarter year 2009 |
41
Replacement of air compressors | Save energy | Cost of Asset | Latest technology compressors | 2,352 | 2°, 3° and 4° Quarter year 2009 |
Total Chile |
|
|
| 93,294 |
|
Total Assets |
|
|
| 1,464,893 |
|
Disbursements charged to expenses |
|
|
|
|
|
Argentina |
|
|
|
|
|
Ecological Island | Service of selective residue collection | Expense | Services | 63,681 | 1° Quarter 2009 |
Ecological Island | Collection of residues | Expense | Services | 9,638 | 1° Quarter 2009 |
Ecological Island | Crushing boxes | Expense | Services | 3,92 | 1° Quarter 2009 |
Ecological Island | AE rental | Expense | Rentals | 1,76 | 1° Quarter 2009 |
Effluents Plant | External analysis of effluents in Cordoba | Expense | Services | 716 | 1° Quarter 2009 |
Waste Managements | Anti-spill containers and kits | Expense | Materials | 267 | 1° Quarter 2009 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 470 | 1° Quarter 2009 |
Legal obligations | Rates / Taxes | Expense | Taxes | 61 | 1° Quarter 2009 |
Legal obligations | External analysis of effluents in Cordoba | Expense | Services | 464 | 1° Quarter 2009 |
42
Legal obligations | Emissions and noise control AE and trucks Distribution Centers | Expense | Services | 657 | 1° Quarter 2009 |
Travel expenses | Travel expenses to Distribution Centers | Expense | Travel expenses | 127 | 1° Quarter 2009 |
Waste Managements | Desagotes CD | Expense | Services | 1,411 | 1° Quarter 2009 |
Ecological Island | Service of selective residue collection | Expense | Services | 219,012 | 2°, 3° and 4° Quarter year 2009 |
Ecological Island | Collection of residues | Expense | Services | 21,952 | 2°, 3° and 4° Quarter year 2009 |
Waste Managements | Absorbing materials | Expense | Materials | 376 | 2°, 3° and 4° Quarter year 2009 |
Waste Managements | Containers | Expense | Materials | 941 | 2°, 3° and 4° Quarter year 2009 |
Waste Managements | Anti-spill containers and kits | Expense | Materials | 110 | 2°, 3° and 4° Quarter year 2009 |
Effluents Plant | External analysis of effluents in Cordoba | Expense | Services | 2,42 | 2°, 3° and 4° Quarter year 2009 |
Effluents Plant | Maintenance of fish habitat | Expense | Services | 376 | 2°, 3° and 4° Quarter year 2009 |
Effluents Plant | Mud extraction effluents plant | Expense | Services | 26,341 | 2°, 3° and 4° Quarter year 2009 |
43
Legal counseling | Counseling on environment legislation | Expense | Fees | 1,223 | 2°, 3° and 4° Quarter year 2009 |
Waste Managements | Collection of dangerous residues at distribution centers | Expense | Services | 627 | 2°, 3° and 4° Quarter year 2009 |
Travel expenses | Travel expenses to Distribution Centers | Expense | Travel expenses | 1,029 | 2°, 3° and 4° Quarter year 2009 |
Environment management systems | SGA - Maintenance audits ISO 14001 | Expense | Services | 4,39 | 2°, 3° and 4° Quarter year 2009 |
Hydric resource | SGA-Water fountain protection campaign (CSR) | Expense | Services | 1,411 | 2°, 3° and 4° Quarter year 2009 |
Waste Managements | Desagotes DC/ Unforeseen events | Expense | Services | 3,516 | 2°, 3° and 4° Quarter year 2009 |
Total Argentina |
|
|
| 366,896 |
|
Brazil |
|
|
|
|
|
Interaction - Operation of Materials Treatment Area | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Interaction - Operation of Materials Treatment Area | 251,642 | 1° Quarter 2009 |
Lixo disposal | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Lixo disposal | 32,929 | 1° Quarter 2009 |
Mud disposal | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Mud disposal | 1,556 | 1° Quarter 2009 |
ETE operation/maintenance costs | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | ETE operation/maintenance costs | 41,598 | 1° Quarter 2009 |
44
IBAMA quarterly rate | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | IBAMA quarterly rate | 454 | 1° Quarter 2009 |
Biological treatment esgoto sanitário Prédio Administrativo e Industrial | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Biological treatment esgoto sanitário Prédio Administrativo e Industrial | 1,764 | 1° Quarter 2009 |
Collection/disposal of ambulatory residues | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Collection/disposal of ambulatory residues | 719 | 1° Quarter 2009 |
Acquisition of anaerobic mud for ETE | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Acquisition of anaerobic mud for ETE | 6,509 | 1° Quarter 2009 |
Environment Consultancy - Customize ETE according to FEEMA and IEMA patterns | Improvements and/or investments in production processes | Expense | Environment Consultancy - Customize ETE according to FEEMA and IEMA patterns | 7,078 | 1° Quarter 2009 |
Disposal of non-useful products | Improvements and/or investments in production processes | Expense | Disposal of non-useful products | 3,192 | 1° Quarter 2009 |
Total Brazil |
|
|
| 347,441 |
|
Chile |
|
|
|
|
|
AGA gasification project | Save energy | Expense | Improvement of productive process capacity | 96,351 | 39814 |
Blowing equipments | Save energy | Expense | Improve energy efficiency | 16,004 | 39814 |
Increase generating capacity-2nd stage | Save energy | Expense | Improve energy efficiency | 7,224 | 39814 |
Equipments for the increase of cold capacity | Save energy | Expense | Reduces energy consumption in the cooling process | 16,076 | 39873 |
Increase capacity of cooling equipments | Save energy | Expense | Reduces energy consumption in the cooling process | 43,014 | 39845 |
Total Chile |
|
|
| 178,669 |
|
Total Expenses |
|
|
| 893,006 |
|
45
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 | March 31, 2009 | March 31, 2008 |
ThCh$ | ThCh$ | |||
BANCO SANTANDER | UF | 2.42%` | 14,737,143 | 0 |
BANCO BBVA | UF | 2.90% | 8,125,257 | 0 |
BANCO BBVA | UF | 1.00% | 7,531,224 | 0 |
ROYAL BANK OF CANADA | Ch$ | 2.80% | 7,020,942 | 0 |
BANCO BCI | UF | 2.00% | 17,802,376 | 0 |
BANCO ITAÚ | R$ | 0.00% | 3,778,945 | 0 |
BANCO ITAÚ | UF | 6.50% | 6,190,430 | 0 |
BANCO CHILE | UF | 2.00% | 5,525,731 | 0 |
BANCO ITAÚ | UF | 0.17% | 3,301,975 | 0 |
BANCO CHILE | UF | 3.40% | 2,280,219 | 0 |
BANCO CHILE | UF | 1.20% | 2,042,921 | 0 |
BANCO VOTORANTIM | R$ | 13.61% | 29,693 | 95,103 |
BANCO ESTADO | UF | 9.50% | 7,698,317 | 0 |
BANCO CITIBANK | R$ | 0.00% | 0 | 492 |
BANCO BBVA FRANCES | AR$ | 9.50% | 0 | 19,068 |
BANCO CHILE | Ch$ | 2.90% | 0 | 3,714,723 |
BANCO CHILE | Ch$ | 0.58% | 0 | 2,413,648 |
BANCO SANTANDER | Ch$ | 0.59% | 0 | 1,618,436 |
BANCO BBVA | Ch$ | 0.58% | 0 | 8,133,745 |
BANCO SANTANDER | Ch$ | 0.59% | 0 | 15,112,251 |
BANCO BBVA | Ch$ | 0.580% | 0 | 15,109,435 |
BANCO CHILE | Ch$ | 0.580% | 0 | 22,614,516 |
TOTAL |
|
| 86,065,173 | 68,831,417 |
46
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.
47
Material Events
During the period between January 1, 2009 and March 31, 2009, the following material events were filed:
New Subsidiary Incorporated
The Board of Directors of Embotelladora Andina S.A. has agreed to incorporate a new subsidiary corporation to be engaged in the industrial and commercial areas. Its corporate capital will be Ch$10,000.000, and 99% of its capital stock will be owned by Embotelladora Andina S.A.
Appointment of new General Manager of Chilean Soft Drinks Operation
The Board of Directors of Embotelladora Andina S.A. has appointed Mr. Abel Bouchon Silva as new General Manager of the Chilean Soft Drink Operation. Mr. Bouchon will begin office on March 1, 2009.
Regular Shareholders’ Meeting
The Board of Directors of Embotelladora Andina resolved the following:
I.
To convene aRegular Shareholders’ Meeting for April 14, 2009, at 10:30 a.m., at the Company’s offices located at Av. Carlos Valdovinos Nº560, Borough of San Joaquín.
II.
The following matters will be discussed at the Regular Shareholders’ Meeting:
1.
The Annual Report, Balance and Financial Statements for the year 2008; as well as the Report of Independent Auditors with respect to the Financial Statements;
2.
Earnings distribution and dividend payments;
3.
Present Company dividend distribution policy and inform about the distribution and payment procedures utilized;
4.
Renewal of the Board of Directors
5.
Determine the compensation for directors and committee members pursuant to Law N° 19,705; and the Audit Committee established by the Sarbanes Oxley Act.
6.
Appoint the Company’s independent auditors for the year 2009;
7.
Appoint the Company’s rating agencies;
8.
Report on Board agreements which took place after that last Shareholders’ Meeting, relating to operations referred to by Article 44 of Law N° 18,046; and
9.
In general, to resolve every other matter under its competency and any other matter of Company interest.
III.
Propose to the Meeting, the distribution of a final dividend, on account of the fiscal year ending December 31, 2008.
a) Ch$14.13 (Fourteen pesos and 13/100) per Series A Shares and;
b) Ch$15.543 (Fifteen pesos and 543/100) per Series B Shares
48
If the Shareholders’ Meeting approves payment of this dividend, it will be paid on account of income from the 2008 fiscal year and will be available to shareholders beginning April 30, 2009. The Shareholders’ Registry will close on April 24, 2009 for payment of this dividend.
49
Analysis of Results for the First Quarter ended March 31, 2009
Highlights
All figures are expressed under Chilean GAAP and in constant Chilean pesos as of March 31, 2009, therefore all variations are in real terms over a 5.5% annual inflation (March 2008 through March 2009.)
·
Operating Income reached Ch$33,621 million during the First Quarter of 2009, a 2.0% decrease in real terms compared to the same period of the previous year. Operating Margin was 17.2%.
·
Consolidated Sales Volume for the First Quarter amounted to 120 million unit cases, representing a 1.8% increase regarding the same period last year.
·
First Quarter EBITDA totaled Ch$42,097 million, remaining stable in real terms compared to the First Quarter of 2008. EBITDA Margin was 21.5%.
·
Net Income for the First Quarter of 2009 reached Ch$22,681 million, 3.1% higher than the figure recorded in the First Quarter of 2008.
Comments from the Chief Executive Officer, Mr. Jaime Garcia R.
“Despite the worldwide financial crisis triggered 6 months ago, we believe that the solid position we have reached has enabled us to grow during this quarter, in terms of sales volume and net income. The foundations of our business remain strong and therefore we are confident that we will continue reaching the goals established for the short, medium and long term.”
Consolidated Summary
Currencies devalued in the three countries where we operate. The Brazilianreal presented a slight devaluation with respect to the Chileanpeso, resulting in a minor negative impact upon translation of figures. The Argentinepeso had a significantly lower devaluation than the Chilean peso, resulting in a positive effect upon translation of figures.
First Quarter 2009 vs. First Quarter 2008
Consolidated Sales Volume for the First Quarter of 2009 reached 120 million unit cases, representing a 1.8% growth with respect to the same period of last year, mainly driven by operation in Brazil.
Net Sales amounted to Ch$195,498 million, representing a 9.2% improvement in real terms compared to the First Quarter of 2008, mainly due to increased volumes, price adjustments and a favorable exchange rate upon translation of figures in the case of Argentina.
Cost of Sales per unit case increased 13.1%, mainly explained by: (i) increased costs of principal raw materials, mainly due to the significant devaluation of the three currencies during the quarter; (ii) increased concentrate costs in Argentina due to higher prices; (iii) increased labor costs in Argentina, and (iv) the effect upon translation of figures for the case of Argentina. All of which was partially offset by the lower price of sugar in Chile and Brazil resulting from negotiations with suppliers, and lower PET resin prices in the three countries.
SG&A expenses increased 5.2%, as a result of higher freight fees, increased labor costs in Argentina, increased advertising investments due to launchings during the quarter, expense efficiencies during the second half of 2008, in addition to the effect upon translation of figures of our Argentine operation.
Increased volumes and prices and the impacts over costs and expenses previously explained, resulted in a Consolidated Operating Income of Ch$33,621 million, a 2.0% decrease in real terms compared to the First Quarter of 2008. Operating Margin was 17.2%.
50
Consolidated EBITDA amounted to Ch$42,097 million, remaining stable in real terms compared to the same period of the previous year. EBITDA Margin was 21.5%.
Summary by Country
CHILE
First Quarter 2009 vs. First Quarter 2008
During the First Quarter of 2009 Sales Volume amounted to 39.9 million unit cases, a 1.0% growth compared to the same period of the previous year. This volume was driven by the juices and waters categories (+6.7%) due to launchings of new products Nestea Durazno Light (peach), Powerade in the 250 cc tetrapak format, Powerade grape flavor, Kapo Zero and Quatro Guaraná in the soft drinks category
Net Sales amounted to Ch$70,060 million, reflecting a growth of 1.8%, with a real average income per unit case 0.8% higher than that of 2008.
Cost of Sales per unit case increased 4.1%. This increased cost is mainly explained by the negative effect of the 31.0% average devaluation of the Chileanpeso during the period over all U.S. dollar-denominated raw materials and partially offset by lower prices of sugar and PET resin.
SG&A expenses remained stable despite increased freight fees and advertising investments, due to efficiencies that took place during 2008.
Increased volumes and the previously explained effects over costs, resulted in an Operating Income of Ch$14,919 million, a 5.5% decrease in real terms compared to the First Quarter of 2008. Operating Margin was 21.3%.
EBITDA amounted to Ch$18,693 million representing a 4.0% decrease in real terms compared to the EBITDA figure recorded during the same period of the previous year. EBITDA Margin was 26.7%.
BRAZIL
First Quarter 2009 vs. First Quarter 2008
Sales Volume for the First Quarter of 2009 amounted to 47.1 million unit cases, representing a 3.8% increase compared to the First Quarter of 2008. This volume growth was driven mainly by the soft drinks category (+4.1%).
Net Sales reached Ch$75,143 million, representing an increase of 2.0% and is mainly explained by higher 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 12.5% mainly due to: (i) higher concentrate costs (due to price adjustments); (ii) increased aluminum costs, and; (iii) an average 33.0% depreciation of the Brazilianreal 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 and PET resin prices.
SG&A expenses decreased 13.8% due to lower labor costs resulting from expense efficiencies which took place during the second half of 2008.
51
The increase in volumes along with increased costs resulted in Operating Income of Ch$12,360 million, a 9.5% decrease compared to the same period of 2008 and Operating Margin was 16.4%.
Finally, EBITDA amounted to Ch$15,136 million, a decrease of 6.4% compared to the First Quarter of 2008. EBITDA Margin was 20.1%.
ARGENTINA
For the First Quarter ended March 31, 2009 the 16.5% 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.
First Quarter 2009 vs. First Quarter 2008
Sales Volume for the First Quarter of 2009 remained stable reaching 33.0 million unit cases.
Net Sales reached Ch$50,738 million, representing an increase of 37.0% in real terms compared to the First Quarter of 2008. 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 29.1% mainly explained by increased costs of concentrate (as a result of price increases), the effect of the devaluation of the Argentine peso over U.S. dollar-denominated raw materials, higher labor costs and the effect upon translation of figures.
SG&A expenses increased 57.9%, mainly due to higher salaries, increased freight fees (resulting from labor costs and fuel prices), and advertising investments due to launchings during the period, in addition to the effect upon translation of figures.
Operating Income amounted to Ch$7,240 million, a 31.1% increase in real terms compared to the same period of 2008. Operating Margin was 14.3%.
EBITDA reached Ch$9,166 million, an increase of 30.1%. EBITDA Margin was 18.0%.
Non-Operating Results
First Quarter ended March 31, 2009 vs. First Quarter ended March 31, 2008
Non-Operating Results totaled a loss of Ch$3,701 million, which compares positively to the accumulated loss of Ch$4,158 million recorded during 2008. This decreased loss in the non-operating result line is best explained by:
·
Financial Expense/Income (Net): Strongly affected by a negative variation basically resulting from profits in hedging operations.
·
Price Level Restatement: Resulted in profits compared to a loss during 2008, mainly due to a higher exchange rate over our U.S. dollar asset position.
·
Other Non-Operating Income/Expenses: Resulted in a loss compared to the previous period resulting from non-recurring income obtained during 2008.
Finally, net income amounted to Ch$22,681 million, an increase of 3.1% in real terms compared to the figure recorded as of March 31, 2008.
ANALYSIS OF THE BALANCE SHEET
52
As of March 31, 2009, the Company’s Net Cash Position amounted to US$ 107 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 46.4% of its financial assets in Chilean pesos, 37.5% in UFs, 8.2% in Brazilian reais, and 5.7% in U.S. dollars, and 2.1% in Argentine pesos. Total financial assets amounted to US$246.9 million.
Financial debt level as of March 31, 2009 amounted to US$139.9 million, 97.1% of which is UF-denominated, 2.3% in Argentine pesos, and 0.7% is in Brazilian reais.
II.
Main Indicators
The main indicators contained in the table reflect for both periods the solid financial position and profitability of Embotelladora Andina S.A.
INDICATORS | Unit | Mar-09 | Dec-08 | Mar-08 | Variance | |
LIQUIDITY |
|
|
|
|
|
|
| Current Ratio | Times | 2,50 | 1,94 | 2,56 | -0,06 |
| Acid Tests | Times | 2,21 | 1,71 | 2,33 | -0,11 |
| Working Capital | MCh$ | 24.133 | 16.649 | 17.783 | 6.349 |
ACTIVITY |
|
|
|
|
|
|
| Investments | MCh$ | 10.201 | 65.068 | 11.642 | (1.441) |
| Inventory turnover | Times | 3,77 | 14,91 | 3,68 | 0,09 |
| Days of inventory on hand | Days | 95,47 | 24,15 | 97,71 | -2,24 |
INDEBTEDNESS |
|
|
|
|
| |
| Debt to equity ratio | % | 61,45% | 73,06% | 72,86% | -11,41% |
| Short-term liabilities to total liabilities | % | 45,88% | 51,83% | 44,71% | 1,17% |
| Long-term liabilities to total liabilities | % | 54,12% | 48,17% | 55,29% | -1,17% |
| Interest charges coverage ratio | Times | 125,92 | 37,01 | 46,31 | 79,61 |
PROFITABILITY |
|
|
|
|
| |
| Return over equity | % | 6,58% | 29,07% | 7,28% | -0,70% |
| Return over total assets | % | 3,94% | 16,01% | 3,98% | -0,04% |
| Return over operating assets | % | 7,68% | 32,53% | 8,59% | -0,91% |
| Operating income | MCh$ | 33.621 | 135.458 | 34.292 | -672 |
| Operating margin | % | 17,20% | 16,09% | 19,16% | -1,96% |
| EBITDA (1) | MCh$ | 40.389 | 164.871 | 40.016 | 374 |
| EBITDA margin | % | 20,66% | 19,58% | 22,29% | -1,63% |
| Dividends payout ratio - Series A shares | % | 7,21% | 7,67% | 6,95% | 0,26% |
| Dividends payout ratio - Series B shares | % | 6,99% | 6,96% | 7,11% | -0,12% |
|
|
|
|
|
|
|
(1)EBITDA | Earnings 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 a 7.7% decrease in cash, basically resulting from an additional dividend payment during may of 208 amounting to Ch$47,900 million.
Indicators of indebtedness reflect a decrease due to an increase in shareholders’ equity resulting from the exchange rate difference over our foreign subsidiaries and amortizations of the local bond. During the period net financial expenses amounted to Ch$240 million and earnings before interests and taxes amounted to Ch$30,159 million, achieving an interest coverage of 125.9 times.
As of March 31, 2009, operating profitability indicators and profitability over equity benefited from the reasons mentioned in paragraph I.
III.
Analysis of Book Values and Present Value of Assets
53
With respect to the Company’s main assets the following should be noted:
Given the high rotation of the items that compose working capital, book values of current assets are considered to represent market values.
Fixed asset values in the Chilean companies are presented at restated acquisition cost. In the foreign companies, fixed assets are valued in accordance with Technical Bulletin N° 64 issued by the Chilean Institute of Accountants (controlled in historical dollars).
Depreciation is estimated over the restated value of assets along with the remaining useful economic life of each asset.
All fixed assets that are considered available for sale are held at their respective market values.
Investments in shares, in situations where the Company has a significant influence on the issuing company, are presented following the equity method. The Company’s participation in the results of the issuing company for each year has been recognized on an accrual basis, and unrealized results on transactions between related companies have been eliminated.
In summary, assets are valued in accordance with generally accepted accounting standards in Chile and the instructions provided by the Chilean Securities Commission, as shown in Note 2 of the Financial Statements.
IV.
Analysis Of The Main Components Of Cash Flow
Cash Flow (MCh$) | March 2009 MCh$ | March 2008 Ch$ | Variation MCh$ | Variation % |
Operating | 36,561 | 54,819 | -18,258 | -33% |
Financing | -8,725 | -8,075 | -650 | -8% |
Investment | -10,089 | -11,487 | 1,389 | 12% |
Net cash flow for the Period | 17,747 | 35,257 | -17,510 | -50% |
The Company generated positive net cash flow of MCh$17,747 during the quarter, analyzed as follows:
Operating activities generated a positive cash flow of MCh$36,561 representing a negative variation of MCh$18,258 mainly explained by higher financial income resulting from the expiration of Cross Currency Swaps during 2008, which did not occur in 2009.
Financing activities generated a negative cash flow of MCh$8,725; with a negative variation of MCh$650 regarding the previous year, mainly because of lower net bank loans during 2009 regarding the same period of 2008.
Investment activities generated a negative cash flow of MCh$10,089 with a positive variation of MCh$1,398 regarding the previous year, mainly explained by lower additions of property, plant and equipment during 2009 with respect to 2008.
V.
Analysis of Market Risk
Interest Rate Risk
As of March 31, 2008 and 2009 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
54
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:
36%
Brazilian real:
38%
Argentine peso:
26%
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.
55
Embotelladora Andina S.A. |
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First Quarter Results for the period ended March 31, Chilean GAAP |
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(In million constant 03/31/09 Chilean Pesos, except per share) |
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| 03/31/2009 | 03/31/2008 |
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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) | 39,9 | 47,1 | 33,0 | 120,0 | 39,5 | 45,4 | 33,0 | 117,8 | 1,8% |
Soft Drink | 33,6 | 44,2 | 32,4 | 110,2 | 33,6 | 42,5 | 32,5 | 108,5 | 1,5% |
Mineral Water | 2,5 | 0,6 | 0,2 | 3,4 | 2,5 | 0,9 | 0,4 | 3,8 | -11,0% |
Juices | 3,8 | 1,0 | 0,3 | 5,2 | 3,4 | 0,9 | 0,1 | 4,4 | 18,3% |
Beer | NA | 1,2 | NA | 1,2 | NA | 1,1 | NA | 1,1 | 8,5% |
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NET SALES | 70.060 | 75.143 | 50.783 | 195.498 | 68.821 | 73.663 | 37.080 | 179.012 | 9,2% |
COST OF SALES | (39.935) | (42.281) | (28.084) | (109.812) | (37.959) | (36.219) | (21.769) | (95.393) | 15,1% |
GROSS PROFIT | 30.125 | 32.862 | 22.699 | 85.686 | 30.862 | 37.445 | 15.311 | 83.618 | 2,5% |
Gross Margin | 43,0% | 43,7% | 44,7% | 43,8% | 44,8% | 50,8% | 41,3% | 46,7% |
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SELLING AND ADMINISTRATIVE EXPENSES | (15.206) | (20.502) | (15.460) | (51.168) | (15.082) | (23.783) | (9.788) | (48.653) | 5,2% |
CORPORATE EXPENSES (4) |
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| (898) |
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| (673) | 33,4% |
OPERATING INCOME | 14.919 | 12.360 | 7.240 | 33.621 | 15.780 | 13.662 | 5.523 | 34.292 | -2,0% |
Operating Margin | 21,3% | 16,4% | 14,3% | 17,2% | 22,9% | 18,5% | 14,9% | 19,2% |
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EBITDA (1) | 18.693 | 15.136 | 9.166 | 42.097 | 19.468 | 16.169 | 7.047 | 42.011 | 0,2% |
Ebitda Margin | 26,7% | 20,1% | 18,0% | 21,5% | 28,3% | 21,9% | 19,0% | 23,5% |
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NON OPERATIONAL RESULTS |
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FINANCIAL EXPENSE/INCOME (Net) |
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| 952 |
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| 4.246 | -77,6% |
RESULTS FROM AFFILIATED |
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| 330 |
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| 306 | 7,8% |
AMORTIZATION OF GOODWILL |
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| (1.754) |
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| (1.391) | 26,1% |
OTHER INCOME/(EXPENSE) |
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| (685) |
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| 2.647 | -125,9% |
PRICE LEVEL RESTATEMENT (3) |
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| (2.545) |
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| (9.967) | -74,5% |
NON-OPERATING RESULTS |
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| (3.701) |
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| (4.158) | -11,0% |
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INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
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NEGATIVE GOODWILL AND MINORITY INTEREST |
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| 29.920 |
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| 30.134 | -0,7% |
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INCOME TAXES |
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| (7.238) |
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| (8.143) | -11,1% |
MINORITY INTEREST |
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| (1) |
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| (1) | 56,5% |
AMORTIZATION OF NEGATIVE GOODWILL |
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| 0 |
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| 0 | NA |
NET INCOME |
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| 22.681 |
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| 21.991 | 3,1% |
Net Margin |
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| 11,6% |
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| 12,3% |
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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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| 29,8 |
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| 28,9 |
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EARNINGS PER ADS |
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| 179,0 |
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| 173,5 | 3,1% |
(1) EBITDA: Operating Income + Depreciation |
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(2) Total may be different from the addition of the three countries because of intercountry eliminations |
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56
(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts. |
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(4) Corporate expenses partially reclassified to the operations. |
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57
Embotelladora Andina S.A. |
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First Quarter Results for the period ended March 31, Chilean GAAP |
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(In million nominal US$, except per share) |
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| Exch. Rate : | 583,26 |
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| Exch. Rate : | 437,71 |
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| 03/31/2009 | 03/31/2008 |
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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) | 39,9 | 47,1 | 33,0 | 120,0 | 39,5 | 45,4 | 33,0 | 117,8 | 1,8% |
Soft Drink | 33,6 | 44,2 | 32,4 | 110,2 | 33,6 | 42,5 | 32,5 | 108,5 | 1,5% |
Mineral Water | 2,5 | 0,6 | 0,2 | 3,4 | 2,5 | 0,9 | 0,4 | 3,8 | -11,0% |
Juices | 3,8 | 1,0 | 0,3 | 5,2 | 3,4 | 0,9 | 0,1 | 4,4 | 18,3% |
Beer | NA | 1,2 | NA | 1,2 | NA | 1,1 | NA | 1,1 | 8,5% |
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NET SALES | 120,1 | 128,8 | 87,1 | 335,2 | 149,0 | 159,5 | 80,3 | 387,7 | -13,5% |
COST OF SALES | (68,5) | (72,5) | (48,2) | (188,3) | (82,2) | (78,4) | (47,1) | (206,6) | -8,9% |
GROSS PROFIT | 51,6 | 56,3 | 38,9 | 146,9 | 66,8 | 81,1 | 33,2 | 181,1 | -18,9% |
Gross Margin | 43,0% | 43,7% | 44,7% | 43,8% | 44,8% | 50,8% | 41,3% | 46,7% |
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SELLING AND ADMINISTRATIVE EXPENSES | (26,1) | (35,2) | (26,5) | (87,7) | (32,7) | (51,5) | (21,2) | (105,4) | -16,7% |
CORPORATE EXPENSES (4) |
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| (1,5) |
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| (1,5) | 5,6% |
OPERATING INCOME | 25,6 | 21,2 | 12,4 | 57,6 | 34,2 | 29,6 | 12,0 | 74,3 | -22,4% |
Operating Margin | 21,3% | 16,4% | 14,3% | 17,2% | 22,9% | 18,5% | 14,9% | 19,2% |
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EBITDA (1) | 32,0 | 26,0 | 15,7 | 72,2 | 42,2 | 35,0 | 15,3 | 91,0 | -20,7% |
Ebitda Margin | 26,7% | 20,1% | 18,0% | 21,5% | 28,3% | 21,9% | 19,0% | 23,5% |
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NON OPERATIONAL RESULTS |
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FINANCIAL EXPENSE/INCOME (Net) |
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| 1,6 |
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| 9,2 | -82,2% |
RESULTS FROM AFFILIATED |
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| 0,6 |
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| 0,7 | -14,6% |
AMORTIZATION OF GOODWILL |
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| (3,0) |
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| (3,0) | -0,2% |
OTHER INCOME/(EXPENSE) |
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| (1,2) |
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| 5,7 | -120,5% |
PRICE LEVEL RESTATEMENT (3) |
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| (4,4) |
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| (21,6) | -79,8% |
NON-OPERATING RESULTS |
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| (6,3) |
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| (9,0) | -29,5% |
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INCOME BEFORE INCOME TAXES; AMORTIZATION OF |
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NEGATIVE GOODWILL AND MINORITY INTEREST |
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| 51,3 |
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| 65,3 | -21,4% |
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INCOME TAXES |
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| (12,4) |
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| (17,6) | -29,6% |
MINORITY INTEREST |
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| (0,0) |
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| (0,0) | 23,9% |
AMORTIZATION OF NEGATIVE GOODWILL |
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| 0,0 |
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| 0,0 | NA |
NET INCOME |
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|
| 38,9 |
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| 47,6 | -18,3% |
Net Margin |
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| 11,6% |
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| 12,3% |
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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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| 0,05 |
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| 0,06 |
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EARNINGS PER ADS |
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| 0,31 |
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| 0,38 | -18,3% |
(1) EBITDA: Operating Income + Depreciation |
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(2) Total may be different from the addition of the three countries because of intercountry eliminations |
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(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts. |
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(4) Corporate expenses partially reclassified to the operations. |
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59
Embotelladora Andina S.A. | ||||||||
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Consolidated Balance Sheet | ||||||||
(In million constant 03/31/09 Chilean Pesos) | ||||||||
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ASSETS | 03/31/2009 | 03/31/2008 | %Ch |
| LIABILITIES & SHAREHOLDERS' EQUITY | 03/31/2009 | 03/31/2008 | %Ch |
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Cash + Time deposits + market. Securit. | 143.641 | 155.550 | -7,7% |
| Short term bank liabilities | 1.853 | 1.436 | 29,0% |
Account receivables (net) | 61.408 | 57.728 | 6,4% |
| Current portion of long term bank liabilities | 209 | 113 | 84,4% |
Inventories | 28.091 | 23.074 | 21,7% |
| Current portion of bonds payable | 3.935 | 8.692 | -54,7% |
Other current assets | 14.354 | 18.137 | -20,9% |
| Trade accounts payable and notes payable | 68.618 | 63.710 | 7,7% |
Total Current Assets | 247.494 | 254.489 | -2,7% |
| Other liabilities | 24.439 | 25.569 | -4,4% |
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| Total Current Liabilities | 99.054 | 99.519 | -0,5% |
Property, plant and equipment | 690.369 | 571.321 | 20,8% |
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Depreciation | (480.781) | (399.458) | 20,4% |
| Long term bank liabilities | 331 | 670 | -50,5% |
Total Property, Plant, and Equipment | 209.588 | 171.863 | 22,0% |
| Bonds payable | 75.270 | 78.301 | -3,9% |
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| Other long term liabilities | 41.231 | 44.108 | -6,5% |
Investment in related companies | 28.877 | 28.002 | 3,1% |
| Total Long Term Liabilities | 116.833 | 123.079 | -5,1% |
Investment in other companies | 124 | 132 | -5,7% |
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Goodwill | 58.122 | 51.786 | 12,2% |
| Minority interest | 11 | 9 | 28,1% |
Other long term assets | 23.043 | 21.876 | 5,3% |
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Total Other Assets | 110.166 | 101.796 | 8,2% |
| Stockholders' Equity | 351.350 | 305.541 | 15,0% |
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TOTAL ASSETS | 567.248 | 528.148 | 7,4% |
| TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 567.248 | 528.148 | 7,4% |
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Financial Highlights |
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(In million constant 03/31/09 Chilean Pesos) |
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ADDITIONS TO FIXED ASSETS | 3/3/2009 | 03/31/2008 |
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| DEBT RATIOS | 03/31/2009 | 03/31/2008 |
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Chile | 5.757 | 8.393 |
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| Financial Debt / Total Capitalization | 0,19 | 0,23 |
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Brazil | 2.698 | 2.182 |
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| Financial Debt / EBITDA L12M | 0,47 | 0,58 |
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Argentina | 1.746 | 1.067 |
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| EBITDA L12M+Interest Income / Interest Expense L12M | 19,00 | 15,27 |
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| 10.201 | 11.642 |
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| L12M: Last twelve months |
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* As March 31, 2009, the Company registered a positive net cash position of US$ 106.7 million. Total debt amounted to US$ 139.9 million. |
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Total Cash amounted to US$ 246.6 million, which includes cash investments accounted for under Other Current Assets. |
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60
SIGNATURE
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
61