UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________
FORM 6-K
__________________________
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
March 2010
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)
__________________________
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____
1
(Translation of a report originally issued in Spanish – see Note 2)
CONSOLIDATED FINANCIAL STATEMENTS
EMBOTELLADORA ANDINA S.A.
As of December 31, 2009
CONTENTS
Report of Independent Auditors |
Consolidated Balance Sheets |
Consolidated Statements of Income |
Consolidated Statements of Cash Flows |
Notes to the Consolidated Financial Statements |
Analysis of Results for the Fourth Quarter of 2009 and Year ended December 31, 2009
Material Events
Ch$ | - | Chilean pesos | |
ThCh$ | - | Thousands of Chilean pesos | |
US$ | - | United States dollars | |
ThUS$ | - | Thousands of United States dollars | |
R$ | - | Brazilian reais | |
ThR$ | - | Thousands of Brazilian reais | |
AR$ | - | Argentine pesos | |
ThAR$ | - | Thousands of Argentine pesos | |
UF | - | Unidades de Fomento (An inflation indexed, Chilean peso denominated monetary unit. The UF rate is set daily in advance, based on the change in the consumer price index of the previous month.) |
2
(Translation of a report originally issued in Spanish – see Note 2)
REPORT OF INDEPENDENT AUDITORS
Ernst & Young Ltda.
Id. N° 77.802.430-6
Santiago, January 26, 2010
To the Chairman of the Board, Directors and Shareholders
Embotelladora Andina S.A.
We have audited the accompanying consolidated balance sheets of Embotelladora Andina S.A. (“the Company”) and its subsidiaries, as of December 31, 2009, and the related consolidated statements of income and of cash flows for the year then ended. These financial statements are the responsibility of Company management. Our responsibility is to express an opinion on these financial statements based on our audit. Other auditors, who issued their report without any observations on January 27, 2009, reviewed the Consolidated Financial Statements of Embotelladora Andina S.A. and its subsidiaries for the year ended December 31, 2008. The analysis of the financial results and relevant facts attached are not part of these financial statements, and therefore this report does not relate to them.
We conducted our audit in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Company management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements as of December 31, 2009 present fairly, in all material respects, the financial position of Embotelladora Andina S.A. and its subsidiaries as of December 31, 2009 and the results of their operations and their cash flows for the year then ended, in conformity with generally accepted accounting principles in Chile.
As indicated in Note 35 the Company will adopt International Financial Reporting Standards (“IFRS”) beginning January 1, 2010.
Víctor Zamora Q.
Id No. 7.446.815-2
3
Consolidated Balance Sheets
(Figures in ThCh$ as of December 31, 2009)
(Translation of a report originally issued in Spanish – see Note 2)
CONSOLIDATED BALANCE SHEETS | ||
As of | ||
ASSETS | December 31, | |
2009 | 2008 | |
CURRENT ASSETS | ThCh$ | ThCh$ |
Cash | 20,217,244 | 20,725,965 |
Time deposits | 96,377,995 | 79,841,888 |
Marketable securities (net) | 18,541,092 | 25,676,642 |
Trade accounts receivable (net) | 53,698,650 | 45,571,697 |
Notes receivable (net) | 13,975,488 | 13,791,974 |
Other receivables (net) | 11,194,554 | 12,911,477 |
Notes and accounts receivable from related companies | 1,051,015 | 1,686,892 |
Inventories (net) | 36,222,020 | 30,153,113 |
Recoverable taxes | 4,254,255 | 5,802,226 |
Prepaid expenses | 2,793,157 | 2,379,830 |
Deferred income taxes | 2,573,818 | 3,546,792 |
Other current assets | 10,076,161 | 6,686,960 |
TOTAL CURRENT ASSETS | 270,975,449 | 248,775,456 |
PROPERTY, PLANT & EQUIPMENT | ||
Land | 18,356,668 | 19,866,217 |
Buildings & improvements | 113,806,749 | 120,742,853 |
Machinery and equipment | 270,383,074 | 290,480,475 |
Other property, plant & equipment | 261,202,767 | 275,611,681 |
Technical reappraisal of property, plant & equipment | 2,349,325 | 2,349,325 |
Depreciation | (461,601,328) | (490,519,058) |
TOTAL PROPERTY, PLANT & EQUIPMENT | 204,497,255 | 218,531,493 |
OTHER ASSETS | ||
Investments in related companies | 31,165,243 | 30,594,472 |
Investments in other companies | 134,650 | 127,856 |
Goodwill | 46,093,855 | 63,767,882 |
Long-term receivables | 5,819,796 | 19,405 |
Long-term notes and accounts receivable from related companies | 37,869 | 33,920 |
Intangibles | 651,230 | 355,598 |
Amortization | (173,999) | (195,580) |
Others | 26,051,144 | 23,422,434 |
TOTAL OTHER ASSETS | 109,779,788 | 118,125,987 |
TOTAL ASSETS | 585,252,492 | 585,432,936 |
4
(Figures in ThCh$ as of December 31, 2009)
(Translation of a report originally issued in Spanish – see Note 2)
As of | ||
December 31, | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | 2009 | 2008 |
ThCh$ | ThCh$ | |
Short-term bank liabilities | 373,178 | 5,685,778 |
Current portion of long-term bank liabilities | 242,259 | 221,205 |
Current portion of bonds payable | 3,117,629 | 1,707,460 |
Dividends payable | 5,800,444 | 5,624,230 |
Accounts payable | 63,211,417 | 61,404,215 |
Other creditors | 5,495,421 | 4,627,586 |
Notes and accounts payable to related companies | 13,758,172 | 16,148,401 |
Provisions | 3,323,356 | 3,698,203 |
Withholdings | 26,536,006 | 22,895,075 |
Income taxes payable | 5,421,349 | 3,846,513 |
Unearned income | 4,316 | 28,778 |
Other current liabilities | - | 1,215,138 |
TOTAL CURRENT LIABILITIES | 127,283,547 | 127,102,582 |
Long-term bank liabilities | 200,572 | 403,943 |
Bonds payable | 73,484,258 | 76,254,892 |
Other creditors | 6,720 | 53,753 |
Long-term notes and accounts payable to related companies | 2,565,767 | 3,065,189 |
Provisions | 15,368,396 | 16,368,238 |
Deferred income taxes | 18,487,127 | 11,178,579 |
Other long-term liabilities | 11,267,167 | 12,709,517 |
TOTAL LONG-TERM LIABILITIES | 121,380,007 | 120,034,111 |
Minority interest | 10,432 | 11,359 |
Paid-in capital | 230,892,178 | 230,892,178 |
Other reserves | (17,510,850) | 8,846,885 |
Retained earnings | 53,076,427 | 22,668,115 |
Net income for the period | 86,918,333 | 92,654,729 |
Interim dividends | (16,797,582) | (16,777,023) |
TOTAL SHAREHOLDERS’ EQUITY | 336,578,506 | 338,284,884 |
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 585,252,492 | 585,432,936 |
5
Consolidated Statements of Income
(Figures in ThCh$ as of December 31, 2009)
(Translation of a report originally issued in Spanish – see Note 2)
For the years ended | ||
December 31, | ||
2009 | 2008 | |
ThCh$ | ThCh$ | |
Net sales | 743,115,988 | 822,570,900 |
Cost of sales | (413,356,479) | (454,966,815) |
Gross margin | 329,759,509 | 367,604,085 |
Administrative and selling expenses | (199,698,228) | (232,146,150) |
OPERATING INCOME | 130,061,281 | 135,457,935 |
Interest income | 5,418,767 | 11,602,468 |
Equity in earnings of equity investments | 1,853,268 | 1,912,005 |
Other non-operating income | 9,593,979 | 6,169,882 |
Equity in losses of equity investments | - | (100,822) |
Amortization of goodwill | (6,094,120) | (7,437,058) |
Interest expenses | (7,897,359) | (26,940,298) |
Other non-operating expenses | (5,331,956) | (16,051,004) |
Price-level restatement | 546,494 | (2,035,746) |
Foreign exchange gains | (8,864,168) | 14,691,242 |
NON OPERATING INCOME AND EXPENSE | (10,775,095) | (18,189,331) |
Income before income taxes and extraordinary items | 119,286,186 | 117,268,604 |
Income tax expense | (32,365,904) | (24,611,862) |
Income before minority interest | 86,920,282 | 92,656,742 |
Minority interest | (1,949) | (2,013) |
NET INCOME FOR THE YEAR | 86,918,333 | 92,654,729 |
6
Consolidated Statements of Cash Flows
(Figures in ThCh$ as of December 31, 2009)
(Translation of a report originally issued in Spanish – see Note 2)
For the years ended | ||
December 31, | ||
2009 | 2008 | |
ThCh$ | ThCh$ | |
Collection of trade receivables | 1,030,740,956 | 1,156,785,529 |
Interest income received | 915,827 | 32,187,950 |
Dividends received | 1,987,500 | 2,550,459 |
Other income received | 85,804 | 80,606 |
Payments to suppliers and personnel | (752,954,479) | (832,096,983) |
Interest paid | (8,719,041) | (22,026,968) |
Income taxes paid | (25,639,527) | (29,906,898) |
VAT and other tax payments | (124,365,400) | (152,394,002) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 122,051,640 | 155,179,693 |
Borrowings | 18,076,402 | 81,384,451 |
Dividend distribution | (62,146,430) | (71,815,191) |
Loan payments | (22,143,823) | (80,290,091) |
Bond payments | (1,317,843) | (6,750,420) |
NET CASH USED IN FINANCING ACTIVITIES | (67,531,694) | (77,471,251) |
Proceeds from sales of property, plant and equipment | 434,848 | 740,224 |
Proceeds from sales of other investments | - | 1,035,856 |
Collection of other loans to related companies | 239,381 | - |
Additions to property, plant & equipment | (49,762,563) | (65,068,289) |
Permanent investments | (904,924) | (1,495,503) |
Investments in financial instruments | (21,904,527) | (7,311,988) |
Other loans to related companies | (238,665) | - |
Other investment disbursements | - | (1,166,766) |
NET CASH USED IN INVESTMENT ACTIVITIES | (72,136,450) | (73,266,466) |
TOTAL NET CASH FOR THE YEAR | (17,616,504) | 4,441,976 |
Effect of inflation on cash and cash equivalents | 3,814,675 | (7,267,547) |
Net decrease in cash and cash equivalents | (13,801,829) | (2,825,571) |
Cash and cash equivalents at beginning of year | 126,246,838 | 129,072,409 |
Cash and cash equivalents at end of year | 112,445,009 | 126,246,838 |
7
Reconciliation of Net Income and Net Cash Flows
Provided by Operating Activities
(Figures in ThCh$ as of December 31, 2009)
(Translation of a report originally issued in Spanish – see Note 2)
For the years ended | ||
December 31, | ||
2009 | 2008 | |
ThCh$ | ThCh$ | |
Net Income | 86,918,333 | 92,654,729 |
Income on sale of assets: | (297,477) | (301,804) |
Gain on sale of property, plant and equipment | (296,775) | (268,438) |
Gain on sale of other assets | (702) | (33,366) |
Charges (credits) to net income that do not represent cash flows | 41,265,606 | 37,482,912 |
Depreciation | 30,852,043 | 36,909,135 |
Amortization of intangibles | 14,500 | 285,245 |
Write-offs and provisions | 3,150,736 | 918,093 |
Equity in earnings of equity investments | (1,853,268) | (1,912,005) |
Equity in losses of equity investments | - | 100,822 |
Amortization of goodwill | 6,094,120 | 7,437,058 |
Price-level restatement | (546,494) | 2,035,746 |
Foreign exchange losses, net | 8,864,168 | (14,691,242) |
Other credits to income that do not represent cash flows | (5,371,504) | - |
Other charges to income that do not represent cash flows | 61,305 | 6,400,060 |
Changes in operating assets | (10,409,377) | 36,044,217 |
Decrease in trade accounts receivable | 5,755,529 | 14,356,783 |
(Increase) decrease in inventories | (10,035,573) | 1,492,564 |
(Increase) decrease in other assets | (6,129,333) | 20,194,870 |
Changes in operating liabilities | 4,572,606 | (10,702,374) |
Decrease in accounts payable related to operating income | (3,692,906) | (31,022,534) |
Increase (decrease) in interest payable | (3,082,694) | 29,848,614 |
Increase (decrease) in income taxes payable | 6,505,766 | (16,157,750) |
Decrease in other accounts payable related to non-operating income | (2,548,066) | (1,664,063) |
Increase in valued added tax and other similar items | 7,390,506 | 8,293,359 |
Minority interest | 1,949 | 2,013 |
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES | 122,051,640 | 155,179,693 |
8
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
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 Superintendency of Securities and Insurance ( “SVS”).
Note 2 - Summary of Significant Accounting Principles
a) Periods covered
The consolidated financial statements cover the period from January 1 to December 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 in Chile (“Chilean GAAP”), issued by the Chilean Association of Accountants, as well as with the rules and regulations of the SVS. In the event of discrepancy, the SVS regulations will prevail.
Certain accounting practices applied by the Company that conform to Chilean GAAP may not conform to International Financial Reporting Standards (“IFRS”) or generally accepted accounting principles in the United States (“US GAAP”). For the convenience of the reader, these financial statements and their accompanying notes have been translated from Spanish to English.
c) Basis of presentation
For comparison purposes, the figures in the prior-year financial statements have been restated by -2.3% according to the variation of the Chilean Consumer Price Index (“CPI”). 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. 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 detailed as follows:
Ownership interest | |||||
Company name | 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 Atlantico 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 |
Note 2 - Summary of Significant Accounting Principles (continued)
d) Basis of consolidation (continued)
Transportes Andina Refrescos Ltda. | 99.90 | 0.09 | 99.99 | 99.99 |
Vital S.A. | - | 99.99 | 99.99 | 99.99 |
RJR Investments Corp. | - | - | - | 99.99 |
Embotelladora Andina Chile S.A. | 99.90 | 0.09 | 99.99 | - |
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, issued by the Chilean National Institute of Statistics, which amounted to -2.3% for the period from December 1, 2008 to November 30, 2009 (8.9% for the same period of the previous year).
f) Currency translation
Balances in foreign currency are considered as non-monetary items and are translated at the exchange rate prevailing at year-end. Regarding balances subject to 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:
Unidad de Fomento (UF) Ch$20,942.88 for 2009 and Ch$21,452.57 for 2008
US dollar (US$) Ch$507.10 for 2009 and Ch$636.45 for 2008
Argentine peso (A$) Ch$133.45 for 2009 and Ch$184.32 for 2008
Brazilian real (R$) Ch$291.24 for 2009 and Ch$272.34 for 2008
Euro Ch$726.82 for 2009 and Ch$898.81 for 2008
g) Time deposits
Time deposits are valued at investment cost plus readjustments and accrued interest as of the end of each period.
h) Marketable securities
Marketable securities include investments in mutual funds and investment fund quotas, valued at period-end redemption value.
i) 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 for obsolescence are made based on turnover of raw materials and finished products.
The stated values of inventories do not exceed their estimated net realizable value.
j) Allowance for doubtful accounts
The allowance for doubtful accounts consists of a general provision based on the aging of accounts receivable and on a case-by-case analysis where collection is doubtful. In the opinion of the Company’s management, the allowances are reasonable, and the net balances are recoverable.
9
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
k) 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 US dollar according to the criteria described in Note 2n. 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.”
k) Property, plant and equipment (continued)
Property, plant and equipment to be disposed of is valued at the lower of the net realizable value and book value. Estimated losses are reflected in the consolidated statements of income under other non-operating expenses.
l) Depreciation
Depreciation of property, plant, and equipment is determined by the straight-line method based on the estimated useful lives of the assets.
m) 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.
n) 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 Association of Accountants. The 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 the year-end exchange rate, except for non-monetary assets and liabilities and shareholders’ equity which 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.
o) Intangibles
Intangibles include franchise rights and licenses that are amortized over the terms of the contracts, which do not exceed of 20 years.
p) 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.
q) Bonds payable
Bonds payable includes the placement of Yankee Bonds on the US markets and the 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 interest expenses.
10
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
r) Income taxes and deferred income taxes
r) 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
r) Income taxes and deferred income taxes (continued)
purposes are recorded based on 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 Association of Accountants. The effects of deferred income taxes existing at the time of the enforcement of the aforementioned Bulletin, i.e. January 1, 2000, and not previously recognized, are recorded as gain or loss according to their estimated reversal period.
s) 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 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 they have fulfilled the required years of service.
t) 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 its operating income.
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.
u) 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 Association of Accountants.
v) 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.
w) Computer software
11
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
Corresponds to computer packages currently in use, which have a future economic benefit, and are amortized over a period equal to their useful life.
x) 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.
y) Consolidated statements of cash flows
For purposes of preparation of the statements of cash flows, in accordance with Technical Bulletin N°50 of the Chilean Association of Accountants and circular N°1,501 issued by the SVS, the Company has considered cash equivalents to be investments with 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, interest 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 Statements of Income.
z) Use of estimates
The preparation of the financial statements in accordance with Chilean GAAP requires that management carry out estimates and assumptions that affect the asset and liability figures reported and the disclosure of contingent assets and liabilities as well as income and expense figures for the period. Actual results may differ from these estimates.
Note 3 - Accounting Changes
There are no changes in the application of Chilean GAAP in relation to the previous year that could significantly affect the comparability of these financial statements.
12
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
Note 4 - Marketable Securities
Time Deposits
Balance as of December 31, 2009 | |||
Bank or financial institution | Currency | Rate | Amount |
ThCh$ | |||
Banco HSBC | Indexed Ch$ | 0.49% | 11,336,038 |
Banco Santander | Indexed Ch$ | 2.50% | 10,996,285 |
Banco Itaú | R$ | 8.45% | 8,895,193 |
Banco Deutsche Bank | Non-indexed Ch$ | 0.48% | 8,819,737 |
Banco Itaú | Indexed Ch$ | 1.20% | 7,804,537 |
Banco BCI | Non-indexed Ch$ | 1.32% | 6,619,385 |
Banco Estado | Indexed Ch$ | 0.23% | 5,816,009 |
Banco BCI | Non-indexed Ch$ | 1.80% | 4,735,902 |
Banco Santander | Indexed Ch$ | 2.40% | 4,600,859 |
Banco Estado | Indexed Ch$ | 0.42% | 4,382,178 |
Banco Itaú | Indexed Ch$ | 2.00% | 4,197,177 |
Banco Chile | Indexed Ch$ | 2.70% | 3,368,735 |
Banco Chile | Indexed Ch$ | 3.20% | 3,050,270 |
Banco Itau | Indexed Ch$ | 1.40% | 2,678,396 |
Banco BBVA | Indexed Ch$ | 1.50% | 2,759,342 |
Banco Santander | Indexed Ch$ | 3.30% | 1,877,662 |
Banco Bradesco | R$ | 8.43% | 1,410,005 |
Banco BCI | Indexed Ch$ | 4.50% | 1,249,422 |
Banco Estado | Indexed Ch$ | 3.30% | 1,003,445 |
Banco Santander | Indexed Ch$ | 4.70% | 729,305 |
Banco Votorantim | R$ | 8.63% | 31,955 |
BBVA Banco Francés | AR$ | 10.00% | 16,158 |
Total | 96,377,995 |
Time Deposits
Balance as of December 31, 2008 | |||
Bank or financial institution | Currency | Rate | Amount |
ThCh$ | |||
Banco Santander | Indexed Ch$ | 2.42% | 14,648,747 |
Banco BCI | Non-indexed Ch$ | 8.88% | 8,588,156 |
Banco BCI | Non-indexed Ch$ | 8.88% | 8,588,156 |
Banco BBVA | Indexed Ch$ | 2.90% | 8,067,053 |
Banco BBVA | Indexed Ch$ | 9.50% | 7,364,977 |
Royal Bank of Canada | US$ | 2.73% | 7,151,757 |
Banco Chile | US$ | 3.78% | 6,278,836 |
Banco Itaú | Indexed Ch$ | 6.50% | 6,092,000 |
Banco Chile | Indexed Ch$ | 2.00% | 5,498,403 |
Banco Itaú | Indexed Ch$ | 9.50% | 3,235,295 |
Banco Chile | Indexed Ch$ | 3.40% | 2,261,111 |
Banco Chile | Indexed Ch$ | 1.20% | 2,036,783 |
Banco Votorantim | R$ | 13.61% | 30,614 |
TOTAL | 79,841,888 |
13
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
Note 4 - Marketable Securities (continued)
Marketable Securities
Accounting value for the year | ||
ended December 31, | ||
2009 | 2008 | |
Type of instrument | ThCh$ | ThCh$ |
Mutual funds | 16,061,717 | 15,581,679 |
Investment funds | 2,479,375 | 10,094,963 |
Total marketable securities | 18,541,092 | 25,676,642 |
Mutual Funds
Accounting value for the year | ||
ended December 31, | ||
Mutual funds: | 2009 | 2008 |
Financial Institution | ThCh$ | ThCh$ |
Fondo Mutuo BBVA | 2,844,000 | - |
Fondo Mutuo Banco Scotiabank | 3,641,000 | - |
Fondo Mutuo BCI | 2,348,000 | - |
Fondo Mutuo Santander | 1,896,000 | - |
Fondo Mutuo Itaú Corporate | 1,574,370 | 35,321 |
Fondo Mutuo Royal Bank of Canada | - | 185,608 |
Fondo Mutuo Banchile | 3,758,347 | 10,270,581 |
Fondo Mutuo Banco Estado | - | 5,090,169 |
Mutual funds balance | 16,061,717 | 15,581,679 |
Investment Funds
Financial Institution | 2009 | 2008 |
ThCh$ | ThCh$ | |
Citi Institutional Liquid Reserves Limited - USA | 2,478,908 | 10,094,607 |
Dreyfus Global Fund Universal Liquidity Plus | 467 | 356 |
Investment funds balance | 2,479,375 | 10,094,963 |
Note 5 – Short and Long-Term Receivables
Almost all accounts in this heading correspond to the soft drinks category. The balance of other accounts receivable mainly corresponds to prepayment to our sugar suppliers.
CURRENT | Long-term | ||||||||
Up to 90 days | More than 90 days up to 1 year | Subtotal | Total current (net) | For the year ended December 31, | |||||
2009 | 2008 | 2009 | 2008 | 2009 | 2009 | 2008 | 2009 | 2008 | |
ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |
Trade receivables | 53,941,206 | 45,421,960 | 733,673 | 149,737 | 54,674,879 | 53,698,650 | 45,571,697 | - | - |
Allowance for doubtful accounts | - | - | - | - | (976,229) | - | - | - | - |
Notes receivable | 14,122,061 | 13,446,172 | 372,773 | 345,802 | 14,494,834 | 13,975,488 | 13,791,974 | 192,022 | - |
Allowance for doubtful accounts | - | - | - | - | (519,346) | - | - | - | - |
Other receivables | 10,221,717 | 12,509,659 | 1,166,250 | 401,818 | 11,387,967 | 11,194,554 | 12,911,477 | 5,627,774 | 19,405 |
Allowance for doubtful accounts | - | - | - | - | (193,413) | - | - | - | - |
Total long-term receivables | 5,819,796 | 19,405 |
14
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 6 - Balances and Transactions with Related Companies
Receivable and payable balances with related companies correspond mainly to the purchase and sale of products, carried out pursuant to conditions prevailing in the market, valued in local currency and at a term that does not exceed 45 days.
The main concepts involved are the following:
1) Notes and accounts receivable
Embonor S.A.: Sale of products |
Embotelladora Coca-Cola Polar S.A.: Sale of products |
Coca-Cola de Chile S.A.: Advertising agreements |
Embotelladora Iquique S.A.: Sale of products |
Short-term | Long-term | |||
2009 | 2008 | 2009 | 2008 | |
Company | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Embonor S.A. | 559,884 | 1,304,779 | - | - |
Embotelladora Coca-Cola Polar S.A. | 444,063 | 382,113 | - | - |
Embotelladora Iquique S.A. | 47,068 | - | - | - |
Coca-Cola de Chile S.A. | - | - | 37,869 | 33,920 |
1,051,015 | 1,686,892 | 37,869 | 33,920 |
2) Notes and accounts payable
Coca-Cola de Chile S.A.: Concentrate purchases |
Recofarma Indústrias do Amazonas Ltda.: Concentrate purchases |
Envases CMF S.A.: Raw material purchases |
Servicios y Productos para Bebidas Refrescantes S.R.L.: Concentrate purchases |
Envases Central S.A.: Net balance corresponds to raw materials and finished products transactions |
Envases del Pacífico S.A.: Raw material purchases |
Embonor S.A. and Embotelladora Coca-Cola Polar S.A.: Corresponds to unearned income expressed in UF due to commitments of sale of Vital S.A. products to those companies, which will be realized in accordance with future deliveries |
Vital Aguas S.A.: Finished products purchases |
Short-term | Long-term | |||
2009 | 2008 | 2009 | 2008 | |
Company | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Coca-Cola de Chile S.A. | 5,367,733 | 5,453,924 | - | - |
Recofarma Indústrias do Amazonas Ltda. | 3,914,755 | 4,075,374 | - | - |
Envases CMF S.A. | 1,153,607 | 2,431,167 | - | - |
Servicios y Productos para Bebidas Refrescantes S.R.L. | 1,716,164 | 1,920,906 | - | - |
Envases Central S.A. | 632,281 | 1,060,411 | - | - |
Envases del Pacifico S.A. | 59,831 | 172,754 | - | - |
Vital Aguas S.A. | 913,801 | 1,033,865 | - | - |
Embonor S.A. | - | - | 2,047,047 | 2,438,505 |
Embotelladora Coca-Cola Polar S.A. | - | - | 518,720 | 626,684 |
TOTAL | 13,758,172 | 16,148,401 | 2,565,767 | 3,065,189 |
15
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 6 - Balances and Transactions with Related Companies (continued)
3) Transactions with related companies
The following table includes transactions with related companies that exceed ThCh$200,000.
December 31, 2009 | December 31, 2008 | |||||
Amount | (Charge) / credit to income | Amount | (Charge) / credit to income | |||
Company | Relationship | Transaction | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Envases Central S.A | Equity investee | Purchase of finished products | 18,361,212 | - | 16,496,288 | - |
- | - | Sales of raw materials and supplies | 2,432,955 | 344,596 | 1,506,992 | 258,296 |
Coca-Cola de Chile S.A. | Shareholder | Concentrate purchases | 79,166,075 | - | 54,890,291 | - |
- | - | Payment of advertising participation | 5,734,098 | (5,734,098) | 3,021,897 | (3,021,897) |
- | - | Sale of advertising | 3,627,587 | - | 1,701,238 | - |
- | - | Other sales | 1,036,370 | - | 494,542 | - |
Recofarma Industrias do Amazonas Ltda. | Related shareholder | Concentrate purchases | 56,859,868 | - | 72,425,640 | - |
- | - | Reimbursments and other purchases | 2,118,745 | - | 1,564,091 | - |
- | - | Payment of advertising participation | 11,333,220 | (11,333,220) | 8,146,573 | (8,146,573) |
Envases CMF S.A. | Equity investee | Container purchases | 9,693,910 | - | 11,626,963 | - |
- | - | Dividend payment | 2,000,000 | - | 2,637,900 | - |
- | - | Machinery purchases | - | - | 735,712 | - |
Servicios y Productos para Bebidas Refrescantes | Shareholder | Concentrate purchases | 35,498,256 | - | 35,218,858 | - |
Envases del Pacifico S.A. | Related shareholder | Purchase of raw materials | 496,303 | - | 457,301 | - |
Embonor S.A. | Related shareholder | Sales of finished products | 6,887,687 | 1,723,547 | 6,657,709 | 1,549,973 |
Embotelladora Iquique S.A. | Related shareholder | Purchase of finished products | 707,819 | 138,319 | - | - |
Embotelladoras Coca-Cola Polar S.A. | Related shareholder | Sale of products | 4,199,630 | 779,541 | 3,206,246 | 160,494 |
Iansagro S.A. | Common director | Sales of finished products | 60,722 | - | 52,394 | - |
Vendomatica S.A. | Common director | Purchase of sugar | 6,506,542 | - | 19,679,729 | - |
BBVA Administradora General de Fondos | Related shareholder | Sales of finished products | 1,639,692 | 557,495 | 1,533,668 | 460,101 |
- | - | Investments in mutual funds | 43,045,413 | - | 15,211,317 | - |
Vital Aguas S.A. | Equity investee | Redemption of mutual funds | 40,176,629 | 124,832 | 15,211,317 | 79,099 |
Purchase of finished products | 5,415,866 | - | 5,386,523 | - |
Note 6 - Balances and Transactions with Related Companies (continued)
4) Other transactions
Within the normal course of operations, the Company entered into an agreement in 2009 with IANSAGRO S.A., for the future supply of sugar at a fixed price for 48,000 tons of sugar to cover the Company’s needs. This agreement will expire during 2010.
At the same time, and in order to maintain a variable price of sugar, the Company signed an agreement in the London Stock Exchange for the future sale of sugar for the same amounts (tons) and expiring on the same date as the agreements mentioned in the previous paragraph, thereby these operations have been matched.
Both operations have been considered as a single operation that seeks to maintain a variable price for sugar, and therefore they have not been considered as a derivative operation.
Note 7 – Inventories
December 31, 2009 | December 31, 2008 | |||||
Gross value | Obsolescence provision | Net value | Gross value | Obsolescence provision | Net value | |
ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |
Raw materials | 20,800,029 | (150,881) | 20,649,148 | 14,991,312 | (285,710) | 14,705,602 |
Finished products | 14,467,913 | (39,563) | 14,428,350 | 12,820,074 | (184,460) | 12,635,614 |
Products in process | 779,744 | - | 779,744 | 1,493,592 | - | 1,493,592 |
Raw materials in transit | 364,778 | - | 364,778 | 1,318,305 | - | 1,318,305 |
Total | 36,412,464 | (190,444) | 36,222,020 | 30,623,283 | (470,170) | 30,153,113 |
Note 8 - Deferred Taxes and Income Taxes
For the year ended December 31, 2009 the Company presented taxable retained earnings in the amount of ThCh$67,087,788 including profits with credit resulting from corporate income tax in the amount of ThCh$33,021,224 and profits without credit in the amount of ThCh$34,066,564. The previous period it did not present balances for this concept.
a) | Short-term and long-term deferred tax assets and liabilities are shown as net balances in the balance sheet. |
December 31, 2009 | December 31, 2008 | |||||||
Assets | Liabilities | Assets | Liabilities | |||||
Short-term | Long-term | Short-term | Long-term | Short-term | Long-term | Short-term | Long-term | |
Temporary differences | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Allowance for doubtful accounts | 108,120 | 94,194 | - | - | 276,138 | 104,910 | - | - |
Vacation provision | 224,837 | - | - | - | 217,105 | - | - | - |
Production expenses | 18,518 | - | - | - | 13,702 | - | - | - |
Depreciation of property, plant & equipment | - | - | 182,251 | 6,601,258 | - | - | 224,362 | 6,249,147 |
Severance indemnities | 71,685 | - | 5,232 | 29,806 | 76,571 | - | 13,018 | 142,288 |
Other | 1,069,012 | 494,080 | 1,743 | 54,154 | 746,262 | 133,044 | 185 | - |
Provision for assets write-off | 152,166 | 612,677 | - | - | 252,977 | 560,124 | - | 82,140 |
Provision for labor lawsuits | - | 1,400,491 | - | - | - | 1,398,716 | - | - |
Tax loss carry-forwards | - | 1,821 | - | - | 1,603,114 | - | - | - |
Local bond issue expenses | - | - | - | 83,436 | - | - | - | 86,979 |
Contingency allowance | - | 240,134 | - | - | - | 376,990 | - | - |
Provision for participation in income | 1,118,706 | - | - | - | 598,488 | - | - | - |
Exchange rate difference (FRN debt-Brazil) | - | - | - | 13,309,062 | - | - | - | 8,116,718 |
Unrealized earnings | - | 200,786 | - | - | - | 230,101 | - | - |
Temporary difference fiscal incentives-Brazil | - | - | - | 2,683,002 | - | - | - | 923,237 |
Other | ||||||||
Complementary accounts, net of amortization | - | - | (1,229,408) | - | - | - | (1,618,045) | |
Total | 2,763,044 | 3,044,183 | 189,226 | 21,531,310 | 3,784,357 | 2,803,885 | 237,565 | 13,982,464 |
16
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 8 - Deferred Taxes and Income Taxes (continued)
b) The following table contains information on income taxes at each year-end. |
December 31, 2009 | December 31, 2008 | |
ThCh$ | ThCh$ | |
Current tax allowance | (25,202,316) | (23,538,379) |
Adjustments tax expense (previous period) | (32,148) | 464,364 |
Deferred income tax expense/effect over assets or liabilities | (7,369,187) | (318,086) |
Amortization of deferred income tax asset and liability complementary accounts | (383,809) | (416,913) |
Other charges or credits | 621,556 | (802,848) |
Total | (32,365,904) | (24,611,862) |
December 31, 2009 | December 31, 2008 | |
ThCh$ | ThCh$ | |
Supplies | 5,815,661 | 5,045,413 |
Forward agreement effects | - | 1,015,925 |
Short term bonds discount and placement expenses | 232,978 | 245,814 |
Wells Fargo Investment Fund (restricted) | 3,180,618 | - |
Other | 846,904 | 379,808 |
Total | 10,076,161 | 6,686,960 |
17
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 10 - Property, Plant and Equipment
Property, plant and equipment consist principally of land, buildings, improvements and machinery. Machinery and equipment included production lines and supporting equipment; sugar processing and liquefaction equipment; transportation machinery, and computer equipment. The Company has purchased insurance to cover its property, plant and equipment and inventories. These assets are geographically distributed as follows:
Chile : Santiago, Puente Alto, Maipú, Renca, Rancagua, San Antonio and Rengo
Argentina : Buenos Aires, Mendoza, Cordoba, and Rosario
Brazil : Rio de Janeiro, Niteroi, Campos, Cabo Frío, Nova Iguaçu, Espírito Santo and Vitoria.
a) Main components of property, plant and equipment | ||||||||||
Balances at December 31, 2009 | Balances at December 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 | 18,356,668 | - | 18,356,668 | 19,866,217 | - | 19,866,217 | ||||
Buildings and improvements | 113,806,749 | (45,445,279) | 68,361,470 | 120,742,853 | (47,333,846) | 73,409,007 | ||||
Machinery and equipment | 270,383,074 | (203,547,919) | 66,835,155 | 290,480,475 | (224,743,393) | 65,737,082 | ||||
Other property, plant and equipment | 261,202,767 | (211,883,222) | 49,319,545 | 275,611,681 | (217,726,099) | 57,885,582 | ||||
Technical reappraisal of property, plant & equipment | 2,349,325 | (724,908) | 1,624,417 | 2,349,325 | (715,720) | 1,633,605 | ||||
Total | 666,098,583 | (461,601,328) | 204,497,255 | 709,050,551 | (490,519,058) | 218,531,493 |
b) Other property, plant and equipment | ||
December 31, 2009 | December 31, 2008 | |
ThCh$ | ThCh$ | |
Containers | 158,774,796 | 161,426,617 |
Refrigerating equipment, promotional items and other minor assets | 61,432,739 | 67,379,373 |
Furniture and tools | 8,816,782 | 9,522,940 |
Other | 32,178,450 | 37,282,751 |
Total other property, plant and equipment | 261,202,767 | 275,611,681 |
18
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 10 - Property, Plant and Equipment (continued)
c) Technical reappraisal of property, plant and equipment | |||||||
Balances at December 31, 2009 | Balances at December 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 | - | 1,569,096 | 1,569,096 | - | 1,569,096 | |
Buildings and improvements | 219,673 | (161,291) | 58,382 | 219,673 | (160,182) | 59,491 | |
Machinery and equipment | 560,556 | (563,617) | (3,061) | 560,556 | (555,538) | 5,018 | |
Total | 2,349,325 | (724,908) | 1,624,417 | 2,349,325 | (715,720) | 1,633,605 |
d) Depreciation for the year
Depreciation charges for the year amounted to ThCh$30,852,043 (ThCh$36,909,135 in 2008) of which ThCh$20,757,724 (ThCh$27,143,861 in 2008) are included under operating costs and ThCh$10,094,319 (ThCh$9,765,274 in 2008) under administrative and selling expenses in the statements of income.
19
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 11 - Investment in Unconsolidated Affiliates
1. | Investments in unconsolidated affiliates and the corresponding direct shareholding in equity, as well as the recognition of unrealized income at year-end of the respective years are detailed as follows: |
Company | Country | Functional | N° of shares | Ownership interest | Equity of companies | Income (loss) for the period | Accrued income | Partic. in net income (loss) | Unrealized income (loss) | Accounting value of investment | |||||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | 2009 | 2008 | ||||
currency | % | % | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |||
Envases CMF S.A. | Chile | Ch$ | 28,000 | 50.00 | 50.00 | 37,230,175 | 39,007,169 | 2,223,006 | 4,360,747 | 286,453 | 1,156,368 | 18,615,088 | 19,503,585 | (956,099) | (1,039,239) | 17,658,989 | 18,464,346 |
Holdfab Participacoes Ltda. | Brazil | US$ | 1,283,158,339 | 12.33 | 14.73 | 55,665,891 | 46,934,975 | 8,209,637 | 3,683,379 | 1,012,084 | 542,634 | 6,862,491 | 6,914,414 | - | - | 6,862,491 | 6,914,414 |
Envases Central S.A. | Chile | Ch$ | 1,499,398 | 49.91 | 49.91 | 6,146,411 | 5,529,110 | 314,434 | 430,681 | 297,017 | 213,003 | 3,067,674 | 2,759,579 | (257,100) | (257,100) | 2,810,574 | 2,502,479 |
Kaik Participacoes Ltda | Brazil | US$ | 16,098,919 | 11.32 | 11.32 | 10,521,171 | 8,563,425 | 815,904 | (671,435) | 92,358 | (76,005) | 1,190,965 | 969,354 | - | - | 1,190,965 | 969,354 |
Vital Aguas S.A. | Chile | Ch$ | - | 56.50 | 56.50 | 4,676,503 | 3,086,511 | 177,655 | (39,491) | 165,356 | (24,817) | 2,642,224 | 1,743,879 | - | - | 2,642,224 | 1,743,879 |
32,378,442 | 31,890,811 | (1,213,199) | (1,296,339) | 31,165,243 | 30,594,472 |
20
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 11 - Investment in Unconsolidated Affiliates (continued)
The main changes occurred in the reported periods are described below:
During an Extraordinary Shareholders’ Meeting held during April 2009, Vital S.A. decided to carry out a capital increase in the amount of ThCh$1,274,284 through the issuance of 5,000 shares of which Embotelladora Andina S.A. subscribed and paid 2,825 shares equal to ThCh$720,690.
On March 23, 2009, RJR Investments Corp. was dissolved. Subsidiary Rio de Janeiro Refrescos Ltda. held 100% ownership interest in said corporation.
In June 2008, Embotelladora Andina S.A. acquired a 48% ownership interest in Embotelladoras del Sur S.A. for ThCh$753,581. Subsequent to the acquisition, Embotelladora Andina S.A. made a capital contribution in the amount of ThCh$386,400.
The amounts disbursed by Embotelladora Andina S.A. in the acquisition of and capital contribution to Embotelladoras del Sur S.A were initially recorded as an intangible since the final purpose was not that of acquiring the company but that of acquiring the rights of distribution of products of the water segment that were previously marketed by Embotelladoras del Sur S.A.
As of December 31, 2008, the Company recorded under other non-operating expenses all of the disbursements to Embotelladoras del Sur S.A. considering the difficulty in measuiring future cash flows that the distribution of the water brand Benedictino generates and also because this brand belongs to The Coca-Cola Company
On February 12, 2009 our subsidiary in Brazil Rio de Janeiro Refrescos Ltda. met the capital increase agreed upon by Holdfab Participacoes Ltda., in which it holds an ownership interest of 14.732%, by payment of the amount of ThCh$184,234.
Centralli Refrigerantes S.A. shows negative equity, which has been duly provided for.
The investment in Kaik Participações Ltda. (Brazil), where Embotelladora Andina S.A. holds an indirect ownership of 11.32%, has been accounted for under the equity method, since the Company has a significant influence through one of its directors, who participates in the process of setting policies, operating and financial decision-making in accordance with the ownership structure which is exclusivly owned by the Coca-Cola bottlers in Brazil
The investment in Envases Central S.A. is presented with a 48% reduction (the percentage share on the date of transaction) of the earnings generated during the sale to Envases Central during December 1996 for property located in Renca because this transaction represents unrealized income for Embotelladora Andina S.A. The amount of the reduction is reflected in the following chart. This transaction will be realized once the property is transferred to a third party different from the group.
The investment in Envases CMF S.A. is presented with a 50% reduction of the earnings generated during the sale of machinery and equipment of our subsidiary Envases Multipack S.A. which took place in September 2001, and that is recorded under Results during the remaining useful life period of the goods sold to Envases CMF S.A.
Unrealized income corresponds to transactions between subsidiaries and/or the Parent Company that have been deducted or added to the category of the originating asset with the following effect on income of the subsidiaries:
Envases CMF S.A. (purchase of property, plant and equipment): ThCh$(908,189) in 2009 (ThCh$(1,107,146) in 2008)
Vital Aguas S.A. (purchase of property, plant and equipment): ThCh$(12,299) in 2009 (ThCh$(2,505) in 2008)
Envases Central S.A. (purchase of finished products): ThCh$(11,078) in 2009 (ThCh$(1,951) 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$360 million.
21
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Company | December 31, 2009 | December 31, 2008 | ||
Amortization during the year | Goodwill balance | Amortization during the year | Goodwill balance | |
ThCh$ | ThCh$ | ThCh$ | ThCh$ | |
Rio de Janeiro Refrescos Ltda. | 3,437,386 | 29,447,916 | 4,179,341 | 40,098,729 |
Embotelladora del Atlántico S.A. | 2,656,734 | 16,645,939 | 3,257,717 | 23,669,153 |
Total | 6,094,120 | 46,093,855 | 7,437,058 | 63,767,882 |
December 31, 2009 | December 31, 2008 | |
ThCh$ | ThCh$ | |
Judicial deposits (Brazil) | 11,359,520 | 7,868,001 |
Transfer fiscal credits (Brazil) | 6,149,540 | 5,417,717 |
Prepaid expenses | 2,608,855 | 3,238,086 |
Bond issuance and placement discounts and expenses | 2,643,296 | 2,797,878 |
Spare parts | 1,924,042 | 2,547,874 |
Non-operating assets | 1,282,151 | 1,509,340 |
Other | 83,740 | 43,538 |
Total | 26,051,144 | 23,422,434 |
Note 14 - Short-Term and Long-Term Bank Liabilities
a) SHORT-TERM BANK LIABILITIES | ||||||
Currency or indexation adjustment | TOTAL | |||||
Bank or financial institution | Other foreign currencies | Non-indexed Ch$ | ||||
2009 | 2008 | 2009 | 2008 | 2009 | 2008 | |
ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |
Banco Galicia | 129,455 | 3,656,287 | - | 129,455 | 3,656,287 | |
Banco de Chile | - | - | - | 977 | - | 977 |
Banco BBVA Frances | - | 2,028,514 | - | - | - | 2,028,514 |
Banco Nvo Santa Fe | 243,723 | 243,723 | - | |||
Total | 373,178 | 5,684,801 | - | 977 | 373,178 | 5,685,778 |
Principal due | 368,194 | 5,402,300 | - | - | 368,194 | 5,402,300 |
Annual average interest rate | 10.44% | 17.93% | 8.58% | |||
Foreign currency liabilities | 100.00% |
22
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 14 - Short-Term and Long-Term Bank Liabilities (continued)
b) LONG-TERM BANK LIABILITIES (short-term portion)
Currency or indexation adjustment | ||||
Other foreign currencies | TOTAL | |||
2009 | 2008 | 2009 | 2008 | |
Bank or financial institution | ThCh$ | ThCh$ | ThCh$ | ThCh$ |
Banco Alfa | 122,704 | 112,020 | 122,704 | 112,020 |
Banco Votorantim | 119,555 | 109,185 | 119,555 | 109,185 |
Total | 242,259 | 221,205 | 242,259 | 221,205 |
Principal due | 241,242 | 220,564 | 241,242 | 220,564 |
Annual average interest rate | 10.79% | 10.51% | ||
Foreign currency liabilities | 100.00% |
Bank or financial institution | Currency or indexation adjustment | Years to maturity | Annual average interest rate | |||
More than 1 up to 2 | More than 2 up to 3 | Total long-term at December 31, 2009 | Total long-term at December 31, 2008 | |||
ThCh$ | ThCh$ | ThCh$ | % | ThCh$ | ||
Banco Votorantim | Other currencies | 119,556 | 29,889 | 149,445 | 9.40% | 244,941 |
Banco Alfa | Other currencies | 51,127 | - | 51,127 | 10.79% | 159,002 |
TOTAL | 170,683 | 29,889 | 200,572 | 403,943 | ||
Foreign currency liabilities | 100% |
1. Current risk rating of bonds is detailed as follows:
Bonds issued in the US market
A : Rating according to Fitch Ratings Ltd.
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 US market through its subsidiary Abisa Corp S.A. for a total amount of US$350 million, of which US$200 million remain outstanding, which are presented deducting the long-term liability from the bonds payable account.
3. Bonds issued by the subsidiary Rio de Janeiro Refrescos Ltda. (RJR)
The subsidiary RJR has liabilities corresponding to an issuance of bonds for US$75 million maturing in December 2012 and semiannual interest payments. At year-end, all such bonds are wholly owned by the subsidiary Abisa Corp. Consequently, the effects of such transactions have been eliminated from these consolidated financial statements, both in the balance sheet and in the consolidated statements of income.
23
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 16 – Long and Short-Term Bonds Payable (Promissory Notes and Bonds) (continued)
The following table contains more information on bonds payable:
Instrument subscription or ID N° | Series | Current nominal value | Currency | Interest rate | Maturity date | Term | Par value | Placement in Chile or abroad | ||
Interest paid | Amortization period | 2009 | 2008 | |||||||
Current portion of bonds payable | ThCh$ | ThCh$ | ||||||||
Register 254 SVS June 13, 2001 | B | 3,638,261 | UF | 6.5% | 1-Jun-26 | Semiannual | Jun-2010 | 3,117,629 | 1,707,460 | Chile |
Total short-term | 3,117,629 | 1,707,460 | ||||||||
Long term portion of bonds payable | ||||||||||
Register 254 SVS June 13, 2001 | B | 3,638,261 | UF | 6.5% | 1-Jun-26 | Semiannual | Jun-2010 | 73,484,258 | 76,254,892 | Chile |
Total long-term | 73,484,258 | 76,254,892 |
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) | 2,299,789 | 2,884,039 | 2,108,140 | 5,527,744 |
Staff severance indemnities | 984,689 | 771,723 | 9,006,580 | 8,196,202 |
Contingencies | 38,878 | 42,441 | 4,253,676 | 2,644,292 |
TOTAL | 3,323,356 | 3,698,203 | 15,368,396 | 16,368,238 |
24
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Dec-31-09 | Dec-31-08 | |
Staff severance indemnities | ThCh$ | ThCh$ |
Beginning balance | 9,179,042 | 6,963,570 |
Provision for the year | 2,992,343 | 2,979,684 |
Payments | (2,180,116) | (975,329) |
Ending balance | 9,991,269 | 8,967,925 |
As of December 31, 2008, the Company amended the discount rate of the current value of accrued employee benefits from 7% to 4% in order to adapt to current market conditions. The impact of this change was a charge to results amounting to ThCh$932,639 included under other non-operating expenses.
Note 19 – Other Long-Term Liabilities
Dec-31-09 | Dec-31-08 | |
ThCh$ | ThCh$ | |
Guarantee on containers | 8,932,492 | 9,869,901 |
Participation acquisition of assets | 1,546,904 | 2,003,659 |
Advertising agreements | 149,810 | 271,398 |
Others | 637,961 | 564,559 |
Total | 11,267,167 | 12,709,517 |
Note 20 - Minority Interest
Dec-31-09 | Dec-31-08 | |
LIABILITIES | ThCh$ | ThCh$ |
Embotelladora del Atlántico S. A. | 10,409 | 11,338 |
Andina Inversiones Societarias S.A. | 23 | 21 |
10,432 | 11,359 | |
Dec-31-09 | Dec-31-08 | |
STATEMENTS OF INCOME | ThCh$ | ThCh$ |
Embotelladora del Atlántico S. A. | (1,947) | (2,009) |
Andina Inversiones Societarias S.A. | (2) | (4) |
(1,949) | (2,013) |
25
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 21 - Changes in Shareholders’ Equity
The activity in shareholders’ equity, dividend distribution, and other reserves is detailed as follows:
Dec-31-09 | Dec-31-08 | ||||||||||
Paid-in capital | Other reserves | Accumulated income | Interim dividends | Net income | Paid-in capital | Other reserves | Accumulated income | Interim dividends | Net income | ||
ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |||
Beginning balance | 236,327,716 | 9,055,153 | 23,201,750 | (17,171,979) | 94,835,957 | 217,013,513 | (11,443,442) | 11,171,454 | (17,194,331) | 81,601,944 | |
Distribution of prior year income | - | - | 77,663,978 | 17,171,979 | (94,835,957) | - | - | 64,407,613 | 17,194,331 | (81,601,944) | |
Final dividend prior year | - | - | (11,279,813) | - | - | - | - | (7,288,372) | - | - | |
Extraordinary dividend | - | - | (34,326,396) | - | - | - | - | (47,887,296) | - | - | |
Translation adjustment reserve | - | (26,357,734) | - | - | - | - | 21,517,062 | - | - | - | |
Capital revalued | (5,435,538) | (208,269) | (2,183,092) | - | - | (19,314,203) | (1,018,466) | 2,808,385 | (4,070,925) | - | |
Income for the year | - | - | - | - | 86,918,333 | - | - | - | - | 94,835,957 | |
Interim dividends | - | - | - | (16,764,054) | - | - | - | - | (16,764,054) | - | |
Ending balance | 230,892,178 | (17,510,850) | 53,076,427 | (16,797,582) | 86,918,333 | 236,327,716 | 9,055,154 | 23,201,754 | 17,171,979 | 94,835,957 | |
Price-level restated balances | 230,892,178 | 8,846,885 | 22,668,115 | (16,777,023) | 92,654,729 |
26
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 21 - Changes in Shareholders’ Equity (continued) | |||
Number of shares | |||
Series | Subscribed | Paid-in | 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 | Paid-in |
ThCh$ | ThCh$ | |
A | 115,446,089 | 115,446,089 |
B | 115,446,089 | 115,446,089 |
Other Reserves | ||
The balance of other reserves is detailed as follows: | ||
2009 | 2008 | |
ThCh$ | ThCh$ | |
Reserve for cumulative translation adjustments(1) | (18,663,859) | 7,693,875 |
Reserve for technical reappraisal of property, plant and equipment | 68,854 | 69,414 |
Other | 1,084,155 | 1,083,596 |
Total | (17,510,850) | 8,846,885 |
(1)The reserve for cumulative translation adjustments was established in accordance with Technical Bulletin N°64 issued by the Chilean Association of Accountants and regulations specified under Circular N°5,294 from the SVS. |
The activity in the reserve for cumulative translation adjustments is detailed as follows:
Foreign exchange rate generated during the year | Reserve release / realized(*) | Balance | ||
Balance | ||||
Company | Jan-01-09 | investment | Dec-31-09 | |
ThCh$ | ThCh$ | ThCh$ | ThCh$ | |
Rio de Janeiro Refrescos Ltda. | 4,396,521 | (16,657,402) | 61,305 | (12,199,576) |
Embotelladora del Atlántico S.A. | 3,297,354 | (9,761,637) | - | (6,464,283) |
Total | 7,693,875 | (26,419,039) | 61,305 | (18,663,859) |
(*) Reserve realized resulted from dividends paid by our subsidiary Rio de Janeiro Refrescos Ltda.
27
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Other non-operating income during the year is detailed as follows: | 2009 | 2008 |
ThCh$ | ThCh$ | |
Restatement of judicial deposits (Brazil) | 2,221,960 | - |
Reverse provision property, plant & equipment devalued | - | 5,100,990 |
Re-estimation useful life prior years property, plant and equipment | 894,893 | - |
Gain on sale of property, plant and equipment | 296,775 | 268,438 |
Other income | 808,847 | 800,454 |
Sub-total | 4,222,475 | 6,169,882 |
Translation of financial statements(1) | 5,371,504 | - |
Total | 9,593,979 | 6,169,882 |
Other non-operating expenses during the year are detailed as follows: | ||
Conversion adjustment reserve realized(2) | (61,305) | (2,398,826) |
Bank taxes(3) | (2,074,742) | (2,613,658) |
Provision for labor and commercial lawsuits | (770,762) | (928,134) |
Write off and obsolesence provision of property, plant & equipment | (100,000) | (1,108,795) |
Write off intangibles | - | (1,113,761) |
Provision loss of investment in Centralli | (1,346) | (111,015) |
Rate change in calculation of staff severance indeminities | (276,008) | (932,639) |
Legal and tax fees | (283,323) | (907,880) |
Donations | (175,000) | (331,845) |
One time IPTU prior years | - | (396,295) |
Other | (1,589,470) | (1,206,922) |
Sub-total | (5,331,956) | (12,049,770) |
Translation of financial statements(1) | - | (4,001,234) |
Total | (5,331,956) | (16,051,004) |
(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 Association 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 2009 and 2008 period, respectively. |
(3) This refers to taxes charged in the normal course of business due to movements in banking accounts at our foreign subsidiaries and is not related to the obtention of financial resources. |
28
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 23 - Price-Level Restatement
Adjustment index | Dec-31-09 | Dec-31-08 | |
Assets - (charges)/credits | ThCh$ | ThCh$ | |
Inventories | CPI | (14,584) | 136,433 |
Property, plant and equipment | CPI | (2,366,729) | 8,554,565 |
Investments in related companies | CPI | (4,129,777) | 11,027,253 |
Short-term accounts receivable from related companies | CPI | (1,068,430) | 4,092,662 |
Cash, time deposits, marketable securities | UF | (1,400,977) | - |
Cash, time deposits, marketable securities | CPI | (123,924) | 3,348,939 |
Recoverable taxes | CPI | 1,591 | 26,650 |
Other current assets | UF | 598 | 1,969,048 |
Other current assets | CPI | (140,251) | 276,716 |
Other long term assets | CPI | (58,643) | 526,730 |
Cost and expense accounts | CPI | (721,653) | 11,095,378 |
Total (charges) credits | (10,022,779) | 41,054,374 | |
Liabilities - (charges)/credits | |||
Shareholders’ equity | CPI | 7,860,427 | (20,220,155) |
Short and long-term bonds payable | UF | 1,893,947 | (6,464,955) |
Other current liabilities | UF | - | (36,615) |
Other current liabilities | CPI | 60,774 | (1,990,882) |
Long-term accounts payable to related companies | CPI | - | (59,228) |
Other long term liabilities | CPI | 68,542 | (362,244) |
Income accounts | CPI | 685,583 | (13,956,041) |
Total (charges) credits | 10,569,273 | (43,090,120) | |
Price-level restatement (loss ) gain | 546,494 | (2,035,746) |
29
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Currency | Dec-31-09 | Dec-31-08 | |
Assets - (charges)/credits | ThCh$ | ThCh$ | |
Cash | US$ | 57,026 | 102,895 |
Time deposits | US$ | (628,887) | 6,760,088 |
Marketable securities (net) | US$ | (348,831) | 2,608,744 |
Trade accounts receivable | US$ | (4,427) | 683 |
Other debtors (net) | US$ | (46,952) | 27,288 |
Notes and accounts receivable from related companies | US$ | (9,106,568) | 7,226,786 |
Recoverable taxes | US$ | - | 81 |
Prepaid expenses | US$ | - | 205 |
Other current assets | US$ | 644,515 | - |
Other assets | US$ | - | (62,139) |
Total (charges) credits | (9,434,124) | 16,664,631 | |
Liabilities - (Charges) / credits | |||
Dividends payable | US$ | - | 215,428 |
Accounts payable | US$ | 437,164 | (2,104,120) |
Notes and accounts payable to related companies | US$ | 223,650 | (71,834) |
Provisions | US$ | 39,262 | (531,419) |
Prepaid income | US$ | - | 2,361 |
Other current liabilities | US$ | (130,120) | - |
Other creditors | US$ | - | 33,002 |
Long-term notes and accounts payable to related companies | US$ | - | 483,193 |
Long-term bonds payable | US$ | - | - |
Total (charges) credits | 569,956 | (1,973,389) | |
Foreign exchange gain (loss) on income | (8,864,168) | 14,691,242 |
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 interest expenses.
Bonds issued in the US market:
Debt issue costs and discounts have all been amortized, resulting from 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 year amounted to ThCh$2,876,274 and ThCh$3,043,692 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 year ended December 31, 2009 amounted to ThCh$167,418 and ThCh$517,516 in 2008.
30
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 26 - Consolidated Statement of Cash Flows
For the projection of future cash flows, there are no transactions and events to consider which have not been revealed in these financial statements and accompanying notes.
The following table presents an itemization of the movement of assets and liabilities not affecting the cash flows in the year but compromising future cash flows.
Dec-31-09 | Dec-31-08 | |||
ThCh$ | Maturity date | ThCh$ | Maturity date | |
Expected cash outflow | ||||
Expenses | ||||
Dividend payment | (5,588,018) | Jan-28-10 | (5,459,494) | Jan-28-09 |
Addition to property, plant and equipment | (1,483,468) | Feb-15-10 | (778,445) | Jan-31-09 |
Addition to property, plant and equipment | (245,605) | Jan-31-10 | (306,930) | Feb-15-09 |
Total expenses | (7,317,091) | (6,544,869) | ||
Expected cash inflow | ||||
Income | ||||
Sale of property, plant and equipment | 21,802 | Feb-28-10 | 20,170 | Jan-31-09 |
Total income | 21,802 | 20,170 | ||
Total net | (7,295,289) | (6,524,699) |
31
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 27 - Derivative Contracts
Derivative contracts as of December 31, 2009 are detailed 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 | Unrealized |
ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | |||||||
FR | CCPE | 1,011,250 | 1st quarter 2010 | Exchange rate UF/Ch$ | P | UF Time Deposits | 1,003,067 | 1,003,445 | Other current assets and liabilities | 4,592 | 4,592 |
FR | CCPE | 735,613 | 1st quarter 2010 | Exchange rate UF/Ch$ | P | UF Time Deposits | 728,386 | 729,305 | Other current assets and liabilities | 4,615 | 4,615 |
FR | CCPE | 1,261,051 | 1st quarter 2010 | Exchange rate UF/Ch$ | P | UF Time Deposits | 1,248,102 | 1,249,435 | Other current assets and liabilities | 8,471 | 8,471 |
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 arising from these lawsuits, amounts to ThCh$1,029,938 (ThCh$1,555,481 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 amount to ThCh$3,255,782 (ThCh$1,084,276 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 arising from these lawsuits amount to ThCh$6,834 (ThCh$7,862 in 2008). In accordance with its legal counsel’s opinion, the Company deems improbable that contingencies without provisions may affect the results or equity of the Company.
b. Restrictions
The bond issue and placement on the US market for US$ 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 ñiabilities that 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 ,inority 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
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 28 - Contingencies and Restrictions (continued)
c. Direct guarantees
Guarantees at December 31, 2009 are detailed as follows:
Balances pending at December 31, | Guarantee release December 31, | ||||||||
Guarantee creditor | Type of guarantee | Assets involved | |||||||
Debtor | Relationship | Type | Accounting value | 2009 | 2008 | 2010 | 2011 | ||
- | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ThCh$ | ||||
Agas S.A | Embotelladora Andina S.A | Parent Company | Guarantee receipt | Agreement | - | 152,130 | - | - | 152,130 |
Escuela Militar | Embotelladora Andina S.A. | Parent Company | Guarantee receipt | Guarantee receipt | - | 1,525 | - | 1,525 | - |
Serviu Region Metropolitana | Embotelladora Andina S.A. | Parent Company | Guarantee receipt | Guarantee receipt | - | 2,727 | - | - | 2,727 |
State of Rio de Janeiro | Rio de Janeiro Refrescos Ltda. | Subsidiary | Mortgage | Real estate | 11,420,510 | 11,826,943 | 10,805,073 | - | - |
Poder Judiciario | Rio de Janeiro Refrescos Ltda. | Subsidiary | Judicial deposit | Long-term asset | 14,791,035 | - | - | - | - |
Ezeiza Customs | Embotelladora del Atlantico S.A. | Subsidiary | Guarantee insurance | Mold exports | 17,882 | - | - | - | - |
Ezeiza Customs | Embotelladora del Atlantico S.A. | Subsidiary | Guarantee insurance | Raw material imports | 36,031 | - | - | - | - |
33
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 29 - Guarantees from Third Parties
Guarantees from third parties at December 31, 2009 are detailed as follows:
Relationship | Type of guarantee | Amount | Currency | Transaction | |
AGA S.A. | Parent Company | Receipt | 600,000 | US$ | Supply agreeement |
Several Clients | Subsidiary | Deposits | 3,768,943 | US$ | Guarantee over containers (bottles) |
Confab | Subsidiary | Mortgage | 30,000,000 | US$ | Purchase of Rio de Janeiro Refrescos Ltda. |
Russel W. Coffin | Subsidiary | Letter of credit | 53,014,484 | US$ | Purchase of Nitvitgov Refrigerantes S.A. |
Mac Coke Distribuidora de Bebidas | Subsidiary | Mortgage | 369,860 | US$ | Distributor credit |
Zulemar Comercio de Bebidas | Subsidiary | Mortgage | 304,952 | US$ | Distributor credit |
Dist Real Cola | Subsidiary | Mortgage | 184,362 | US$ | Distributor credit |
Soc. Com. Champfer | Subsidiary | Mortgage | 832,759 | US$ | Distributor credit |
Motta Distribuidora de Bebidas | Subsidiary | Mortgage | 1,263,496 | US$ | Distributor credit |
Franciscana Dist. | Subsidiary | Mortgage | 220,331 | US$ | Distributor credit |
Soberana de Carmo Dist Beb | Subsidiary | Mortgage | 149,495 | US$ | Distributor credit |
Aguiar Dist. de Bebidas | Subsidiary | Mortgage | 351,607 | US$ | Distributor credit |
Asxt Fluminense Dist. Bebidas | Subsidiary | Mortgage | 321,617 | US$ | Distributor credit |
Trasporte Rigar S.R.L. | Subsidiary | Guarantee insurance | 131,579 | US$ | Supplier |
Siemens S.A. | Subsidiary | Guarantee insurance | 64,763 | US$ | Supplier |
Catering Argentina S.A. | Subsidiary | Guarantee insurance | 235,000 | US$ | Supplier |
La Isla Sur S.R.L. | Subsidiary | Guarantee insurance | 190,841 | US$ | Supplier |
Atanor | Subsidiary | Guarantee insurance | 17,105,263 | US$ | Supplier |
KHS Corpoplast | Subsidiary | Guarantee insurance | 896,875 | US$ | Supplier |
Thermedics Detections de Argentina S.A. | Subsidiary | Guarantee insurance | 112,147 | US$ | Supplier |
34
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 30 - Local and Foreign Currency
Assets at each year- end were composed of local and foreign currencies, detailed as follows:
Dec-31-09 | Dec-31-08 | ||
Current assets | Currency | ThCh$ | ThCh$ |
Cash | Non-indexed Ch$ | 7,155,864 | 9,791,230 |
US$ | 84,113 | 1,493,263 | |
AR$ | 585,906 | 2,306,098 | |
R$ | 12,391,361 | 7,135,374 | |
Time deposits | Non-indexed Ch$ | 20,175,024 | 17,176,312 |
US$ | - | 13,430,593 | |
AR$ | 16,158 | - | |
R$ | 10,337,153 | 30,614 | |
Indexed Ch$ | 65,849,660 | 49,204,369 | |
Marketable securities (net) | US$ | 6,238,053 | 10,036,126 |
Non-indexed Ch$ | 12,303,039 | 15,581,677 | |
R$ | - | 58,839 | |
Trade accounts receivable (net) | Non-indexed Ch$ | 23,076,797 | 20,136,625 |
US$ | 664,263 | 827,159 | |
AR$ | 3,190,511 | 4,058,244 | |
R$ | 26,767,079 | 20,549,669 | |
Notes receivable | Non-indexed Ch$ | 9,642,288 | 10,296,839 |
AR$ | 711,548 | 791,174 | |
R$ | 3,621,652 | 2,703,961 | |
Other debtors (net) | Non-indexed Ch$ | 6,401,596 | 4,474,356 |
US$ | 412,606 | 116,077 | |
AR$ | 617,179 | 3,774,968 | |
R$ | 3,763,173 | 4,546,076 | |
Notes receivable from related companies | Non-indexed Ch$ | 1,051,015 | 1,686,892 |
Inventories (net) | Indexed Ch$ | 5,470,122 | 4,871,005 |
Non-indexed Ch$ | 2,198,338 | 2,864,698 | |
US$ | 1,243,135 | 1,243,626 | |
AR$ | 15,801,896 | 8,836,276 | |
R$ | 11,508,529 | 12,337,508 | |
Recoverable taxes | Non-indexed Ch$ | 154,196 | 4,133,357 |
AR$ | 337,166 | 705,693 | |
R$ | 232,733 | 219,606 | |
Indexed Ch$ | 3,530,160 | 743,570 | |
Prepaid expenses | Non-indexed Ch$ | 1,672,606 | 1,262,575 |
AR$ | 158,092 | 251,306 | |
R$ | 962,459 | 865,949 | |
Deferred taxes | Non-indexed Ch$ | 704,921 | 485,997 |
AR$ | 400,716 | 589,379 | |
R$ | 1,468,181 | 2,471,416 | |
Other current assets | Indexed Ch$ | 174,705 | 780,079 |
Non-indexed Ch$ | 5,239,036 | 1,417,347 | |
US$ | 770,218 | 1,255,058 | |
AR$ | 1,068,326 | 994,908 | |
R$ | 2,823,876 | 2,239,568 | |
Property, plant and equipment | |||
Property, plant and equipment | Indexed Ch$ | 96,716,630 | 94,667,038 |
US$ | 107,780,625 | 123,864,455 | |
Other assets | |||
Investment in related companies | Indexed Ch$ | 23,111,787 | 22,710,705 |
R$ | 8,053,456 | 7,883,767 | |
Investment in other companies | Indexed Ch$ | 56,016 | 56,016 |
US$ | 78,634 | 71,840 | |
Goodwill | US$ | 45,254,051 | 62,770,615 |
Indexed Ch$ | 839,804 | 997,267 | |
Long-term debtors | Indexed Ch$ | 5,625,155 | 8,346 |
AR$ | 2,619 | 11,059 | |
R$ | 192,022 | - | |
Notes receivable from related companies | Non-indexed Ch$ | 37,869 | 33,920 |
Intangibles | US$ | 289,997 | 355,598 |
Non-indexed Ch$ | 361,233 | - | |
Amortization | US$ | (173,999) | (195,580) |
Other | Indexed Ch$ | 2,643,296 | 2,707,840 |
Non-indexed Ch$ | 1,206,160 | 1,548,464 | |
US$ | - | 10,630 | |
AR$ | 2,576,024 | 3,386,008 | |
R$ | 19,625,664 | 15,769,492 | |
Total assets | Non-indexed Ch$ | 91,379,982 | 90,890,289 |
US$ | 162,641,696 | 215,279,460 | |
AR$ | 25,466,141 | 25,705,113 | |
R$ | 101,747,338 | 76,811,839 | |
Indexed Ch$ | 204,017,335 | 176,746,235 |
35
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 30 - Local and Foreign Currency (continued)
Current liabilities for the years ended December 31, 2009 and 2008, denominated in local and foreign currencies, are detailed as follows:
Up to 90 days | 90 days to 1 year | ||||||||
Dec-31-09 | Dec-31-08 | Dec-31-09 | Dec-31-08 | ||||||
Currency | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | Amount | Annual average interest rate | |
Short-term bank liabilities | Non-indexed Ch$ | - | 977 | 8.58% | - | - | |||
AR$ | 373,178 | 10.44% | 3,656,287 | 17.90% | - | 2,028,514 | 18.00% | ||
Long-term bank liabilities | R$ | - | - | 242,259 | 10.79% | 221,205 | 10.51% | ||
Bonds payable | Indexed Ch$ | - | - | 3,117,629 | 6.50% | 1,707,460 | 6.50% | ||
Dividends payable | Non-indexed Ch$ | 5,795,201 | 5,618,100 | - | - | ||||
AR$ | 5,243 | 6,130 | - | - | |||||
Accounts payable | Non-indexed Ch$ | 31,797,055 | 28,706,228 | - | - | ||||
US$ | 1,058,752 | 3,534,322 | - | - | |||||
AR$ | 10,996,304 | 13,974,267 | - | - | |||||
R$ | 19,311,532 | 15,179,151 | - | - | |||||
EURO$ | 47,774 | 10,247 | - | - | |||||
Other creditors | US$ | 90,862 | 111,416 | - | - | ||||
AR$ | 42,557 | 144,489 | - | 90,646 | |||||
R$ | 5,301,635 | 4,278,638 | 60,367 | - | |||||
Non-indexed Ch$ | - | 2,397 | - | - | |||||
Notes and accounts payable to related companies | Non-indexed Ch$ | 8,127,253 | 10,152,121 | - | - | ||||
AR$ | 1,716,164 | 1,920,906 | - | - | |||||
R$ | 3,914,755 | 4,075,374 | - | - | |||||
Provisions | Non-indexed Ch$ | 991,523 | 779,584 | - | - | ||||
R$ | - | - | 2,331,833 | 2,918,619 | |||||
Withholdings | Non-indexed Ch$ | 12,415,240 | 10,909,424 | - | - | ||||
AR$ | 7,831,363 | 9,420,519 | - | - | |||||
R$ | - | - | 6,289,403 | 2,565,132 | |||||
Income taxes | Non-indexed Ch$ | - | - | 420,701 | - | ||||
Indexed Ch$ | - | 900,999 | - | - | |||||
AR$ | - | 1,600,536 | 3,006,507 | - | |||||
R$ | - | - | 1,994,141 | 1,344,978 | |||||
Unearned income | Non-indexed Ch$ | 4,316 | 28,778 | - | - | ||||
Other current liabilities | Non-indexed Ch$ | - | 1,215,138 | - | - | ||||
Total current liabilities | Non-indexed Ch$ | 59,130,588 | 57,412,747 | 420,701 | - | ||||
AR$ | 20,964,809 | 30,723,134 | 3,006,507 | 2,119,160 | |||||
R$ | 28,527,922 | 23,533,163 | 10,918,003 | 7,049,934 | |||||
Indexed Ch$ | - | 900,999 | 3,117,629 | 1,707,460 | |||||
US$ | 1,149,614 | 3,645,738 | - | - | |||||
EURO$ | 47,774 | 10,247 | - | - | |||||
US$ | - | 1,986,734 | - | - |
36
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Long-term liabilities at December 31, 2009 were composed of local and foreign currencies, detailed as follows:
1 to 3 years | 3 to 5 years | 5 to 10 years | Over 10 years | ||||||
Currency | 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$ | 200,572 | 9.75% | - | - | - | |||
Long-term bonds payabale | Indexed Ch$ | 5,962,999 | 6.50% | 6,763,359 | 6.50% | 21,151,042 | 6.50% | 39,606,858 | 6.50% |
Other creditors | AR$ | 6,720 | - | - | - | ||||
Notes and accounts payable to related companies | Non-indexed Ch$ | 2,565,767 | - | - | - | ||||
Provisions | Indexed Ch$ | - | - | - | 7,873,769 | ||||
Non-indexed Ch$ | 1,132,811 | - | - | - | |||||
AR$ | 1,029,938 | - | - | - | |||||
R$ | 5,331,878 | - | - | - | |||||
Deferred taxes | Non-indexed Ch$ | 1,656,083 | - | - | - | ||||
R$ | 16,831,044 | - | - | - | |||||
AR$ | - | - | - | - | |||||
Other liabilities | Non-indexed Ch$ | - | - | 4,141,680 | - | ||||
AR$ | 302,939 | 908,817 | 1,817,635 | - | |||||
R$ | 4,096,096 | - | - | - | |||||
Total long-term liabilities | R$ | 26,459,590 | - | - | - | ||||
Indexed Ch$ | 5,962,999 | 6,763,359 | 21,151,042 | 47,480,627 | |||||
AR$ | 1,339,597 | 908,817 | 1,817,635 | - | |||||
Non-indexed Ch$ | 5,354,661 | - | 4,141,680 | - | |||||
37
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Long-term liabilities at December 31, 2008 were composed of local and foreign currencies, detailed 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$ | 403,943 | 10.39% | - | - | - | |||
Long-term bonds payable | Indexed Ch$ | 5,603,393 | 6.50% | 6,355,510 | 6.50% | 19,875,573 | 6.50% | 44,420,416 | 6.50% |
Other creditors | AR$ | 53,753 | - | - | - | ||||
Notes and accounts payable to related companies | Non-indexed Ch$ | 3,065,189 | - | - | - | ||||
Provisions | Indexed Ch$ | - | - | - | 7,338,299 | ||||
Non-indexed Ch$ | 857,904 | - | - | - | |||||
AR$ | 1,555,481 | - | - | - | |||||
R$ | 6,616,554 | - | - | - | |||||
Deferred taxes | Non-indexed Ch$ | 812,670 | - | - | 699,601 | ||||
R$ | 7,771,233 | - | - | - | |||||
AR$ | - | 1,895,075 | - | - | |||||
Other liabilities | Non-indexed Ch$ | - | - | 4,822,290 | - | ||||
AR$ | - | 352,204 | 3,169,829 | - | |||||
R$ | 4,365,194 | - | - | - | |||||
Total long-term liabilities | R$ | 19,156,924 | - | - | - | ||||
Indexed Ch$ | 5,603,393 | 6,355,510 | 19,875,573 | 51,758,715 | |||||
AR$ | 1,609,234 | 2,247,279 | 3,169,829 | - | |||||
Non-indexed Ch$ | 4,735,763 | - | 4,822,290 | 699,601 |
38
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 31 – Penalties
The Company has not been subject to penalties by the SVS or any other administrative authority.
Note 32 - Subsequent Events
No financial or other matters have occurred between the end of the year and the date of preparation of these financial statements that may significantly affect the assets, liabilities, and/or results of the Company.
Note 33 – Companies Subject to Special Regulations
The Company and its subsidiaries are not subject to special regulations.
39
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish – see Note 2)
Note 34 – Environment
The Company has disbursed ThCh$3,790,385 to improve its industrial process, industrial waste metering equipment, laboratory analyses, environmental impact counseling, and other studies. Future commitments, which are all short-term and for the same concepts, amount to ThCh$739,147
Disbursements and commitments for this period related to environmental issues were are detailed as follows:
Concept for which disbursement was realized or will be realized | Accounting record: Cost of asset/ expense | Description of asset or expense item | Amount disbursed | Certain or expected date of disbursement | |
ThCh$ | |||||
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 | 1st quarter 2009 |
Effluents plant | Investments in refurbishment of effluents plant (in the process of execution) | Property, plant & equipment | Works in progress | 520,134 | 2nd quarter 2009 |
Effluents plant | Investments in refurbishment of effluents plant (in the process of execution) | Property, plant & equipment | Works in progress | 50,944 | 3rd quarter 2009 |
Effluents plant | Investments in refurbishment of effluents plant (in the process of execution) | Property, plant & equipment | Works in progress | 451,801 | 4th quarter 2009 |
Quality improvements/fullfillment of regulations | Central microbiological laboratory 120 m2 | Property, plant & equipment | Works in progress | 85,073 | Year 2010 |
Costs reductions | Co2 meausring device line 4 and line 5 | Property, plant & equipment | 34,029 | Year 2010 | |
Investment due to obsolescence | Equipment for quality laboratory/effluents plant/security | Property, plant & equipment | 56,715 | Year 2010 | |
Quality improvements/fullfillment of regulations | Risk Superintendence Resolution N°463 | Property, plant & equipment | 85,073 | Year 2010 | |
Quality improvements/fullfillment of regulations | Modify EVO facilities | Property, plant & equipment | 56,715 | Year 2010 | |
Quality improvements/fullfillment of regulations | OHSAS | Property, plant & equipment | 28,358 | Year 2010 | |
Quality improvements/fullfillment of regulations | Others quality/security/MA | Property, plant & equipment | 51,044 | Year 2010 | |
Total Argentina | 1,638,932 | ||||
Brazil | |||||
Modify ETE at Jacarepagua | Improvements in water quality | Cost of asset | Improvement of of ETE sieve system | 1,694 | Oct-28-09 |
Design of water treatment capacity | Improvements in water quality | Cost of asset | Expansion project to capture water from rainfall | 360,332 | Aug-28-09 |
Design of water treatment capacity | Improvements in water quality | Cost of asset | Expansion project to capture water from rainfall | 79,044 | Aug-28-09 |
Design of water treatment capacity | Improvements in water quality | Cost of asset | Expansion project to capture water from rainfall | 84,678 | Aug-28-09 |
Total Brazil | 525,748 | ||||
Chile | |||||
Hand held equipment sales force (110) | Avoid printing paper | Cost of asset | Hand held equipment | 90,422 | Jun-12-09 |
Air conditioning equipment (SA) | Avoid air pollution | Cost of asset | Air conditioning equipment | 1,980 | Mar-31-10 |
Replacement of air compressors | Save energy | Cost of asset | Latest technology compressors | 8,593 | Jan-14-10 |
Total Chile | 100,995 | ||||
Total assets | 2,265,675 | ||||
Disbursements charged to expenses: | |||||
Argentina | |||||
Ecological island | Service of selective residue collection | Expense | Services | 63,681 | 1st quarter 2009 |
Ecological island | Collection of residues | Expense | Services | 9,638 | 1st quarter 2009 |
Ecological island | Crushing boxes | Expense | Services | 3,920 | 1st quarter 2009 |
Ecological island | AE rental | Expense | Rentals | 1,760 | 1st quarter 2009 |
Effluents plant | External analysis of effluents in Cordoba | Expense | Services | 716 | 1st quarter 2009 |
Waste management | Anti-spill containers and kits and signs | Expense | Materials | 267 | 1st quarter 2009 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 470 | 1st quarter 2009 |
Legal obligations | Rates / taxes | Expense | Taxes | 61 | 1st quarter 2009 |
Legal obligations | External analysis of effluents in Cordoba | Expense | Services | 464 | 1st quarter 2009 |
Legal obligations | Emission and noise control AE and trucks distribution centers | Expense | Services | 657 | 1st quarter 2009 |
Travel expenses | Travel expenses to distribution centers | Expense | Travel expenses | 127 | 1st quarter 2009 |
Waste management | CD drains | Expense | Services | 1,411 | 1st quarter 2009 |
Ecological island | Service of selective residue collection | Expense | Services | 55,564 | 2nd quarter 2009 |
Ecological island | Collection of residues | Expense | Services | 7,015 | 2nd quarter 2009 |
40
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
Ecological island | Crushing boxes | Expense | Services | 2,625 | 2nd quarter 2009 |
Ecological island | AE rental | Expense | Rentals | 1,572 | 2nd quarter 2009 |
Effluents plant | External analysis of effluents in Cordoba | Expense | Services | 3,959 | 2nd quarter 2009 |
Waste management | Anti-spill containers and kits and signs | Expense | Materials | 253 | 2nd quarter 2009 |
Waste management | Collection of dangerous residues at distribution centers | Expense | Services | 143 | 2nd quarter 2009 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 420 | 2nd quarter 2009 |
Legal obligations | Rates / taxes | Expense | Taxes | 55 | 2nd quarter 2009 |
Legal obligations | External analysis of effluents in Cordoba | Expense | Services | 662 | 2nd quarter 2009 |
Travel expenses | Travel expenses to distribution centers | Expense | Travel expenses | 100 | 2nd quarter 2009 |
Waste management | CD drains | Expense | Services | 1,260 | 2nd quarter 2009 |
Hydric resource | SGA - water fountain protection campaign (CSR) | Expense | Services | 771 | 2nd quarter 2009 |
Environment management systems | SGA - maintenance audits ISO 14001 | Expense | Services | 1,941 | 2nd quarter 2009 |
Ecological island | Service of selective residue collection | Expense | Services | 57,423 | 3rd quarter 2009 |
Ecological island | Collection of residues | Expense | Services | 5,843 | 3rd quarter 2009 |
Ecological island | Crushing boxes | Expense | Services | 3,145 | 3rd quarter 2009 |
Ecological island | AE rental | Expense | Rentals | 1,769 | 3rd quarter 2009 |
Effluents plant | External analysis of effluents in Cordoba | Expense | Services | 215 | 3rd quarter 2009 |
Waste management | Anti-spill containers and kits and signs | Expense | Materials | 158 | 3rd quarter 2009 |
Waste management | Collection of dangerous residues at distribution centers | Expense | Services | 44 | 3rd quarter 2009 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 286 | 3rd quarter 2009 |
Legal obligations | Rates / taxes | Expense | Taxes | 56 | 3rd quarter 2009 |
Legal obligations | External analysis plant | Expense | Services | 97 | 3rd quarter 2009 |
Waste management | DC drains | Expense | Services | 1,289 | 3rd quarter 2009 |
Hydric resource | SGA-Water fountain protection campaign (CSR) | Expense | Services | 3,729 | 3rd quarter 2009 |
Environment management systems | Environment campaigns | Expense | Services | 299 | 3rd quarter 2009 |
Ecological island | Selective residue collection services | Expense | Services | 59,998 | 4th quarter 2009 |
Ecological island | Collection of residues | Expense | Services | 8,950 | 4th quarter 2009 |
Ecological island | Crushing boxes | Expense | Services | 4,723 | 4th quarter 2009 |
Ecological island | AE rental | Expense | Rentals | 1,648 | 4th quarter 2009 |
Waste management | Anti-spill containers and kits and signs | Expense | Materials | 272 | 4th quarter 2009 |
Effluents plant | External analysis of effluents in Cordoba | Expense | Services | 602 | 4th quarter 2009 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 400 | 4th quarter 2009 |
Legal obligations | External analysis of effluents at distribution centers | Expense | Services | 109 | 4th quarter 2009 |
Legal obligations | Rates / Taxes | Expense | Taxes | 52 | 4th quarter 2009 |
Legal obligations | Emission and noise control AE and trucks distribution centers | Expense | Services | 160 | 4th quarter 2009 |
Legal obligations | External analysis plant | Expense | Services | 23 | 4th quarter 2009 |
Travel expenses | Travel expenses to distribution centers | Expense | Travel expenses | 33 | 4th quarter 2009 |
Hydric resource | SGA-Water fountain protection campaign (CSR) | Expense | Services | 2,082 | 4th quarter 2009 |
Waste management | Distribution centers drains/unforseen | Expense | Services | 1,201 | 4th quarter 2009 |
Ecological island | Selective residue collection services | Expense | Services | 67,625 | 1st quarter 2010 |
Ecological island | Collection of residues | Expense | Services | 7,206 | 1st quarter 2010 |
Ecological island | AE rental | Expense | Rentals | 1,648 | 1st quarter 2010 |
Effluents plant | External analysis of effluents in Cordoba | Expense | Services | 901 | 1st quarter 2010 |
Effluents plant | Maintenance of fish habitat | Expense | Services | 80 | 1st quarter 2010 |
Waste management | Anti-spill containers and kits and signs | Expense | Materials | 467 | 1st quarter 2010 |
Waste management | Collection of dangerous residues at distribution centers | Expense | Services | 200 | 1st quarter 2010 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 721 | 1st quarter 2010 |
Legal counseling | Counseling on environment legislation at distribution centers | Expense | Fees | 801 | 1st quarter 2010 |
Legal obligations | Rates / taxes | Expense | Taxes | 67 | 1st quarter 2010 |
Legal obligations | External analysis of effluents at distribution centers | Expense | Services | 227 | 1st quarter 2010 |
Legal obligations | Emission and noise control AE and trucks distribution centers | Expense | Services | 267 | 1st quarter 2010 |
Travel expenses | Travel expenses to distribution centers | Expense | Travel expenses | 560 | 1st quarter 2010 |
Waste management | Distribution centers drains | Expense | Services | 1,401 | 1st quarter 2010 |
Ecological island | Selective residue collection services | Expense | Services | 67,625 | 2nd quarter 2010 |
Ecological island | Collection of residues | Expense | Services | 7,206 | 2nd quarter 2010 |
Ecological island | AE rental | Expense | Rentals | 1,648 | 2nd quarter 2010 |
Effluents plant | External analysis of effluents in Cordoba | Expense | Services | 901 | 2nd quarter 2010 |
41
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
Effluents plant | Maintenance of fish habitat | Expense | Services | 80 | 2nd quarter 2010 |
Waste management | Anti-spill containers and kits and signs | Expense | Materials | 467 | 2nd quarter 2010 |
Waste management | Collection of dangerous residues at distribution centers | Expense | Services | 133 | 2nd quarter 2010 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 721 | 2nd quarter 2010 |
Legal counseling | Counseling on environment legislation at distribution centers | Expense | Fees | 801 | 2nd quarter 2010 |
Legal obligations | Rates / taxes | Expense | Taxes | 133 | 2nd quarter 2010 |
Legal obligations | External analysis of effluents at distribution centers | Expense | Services | 160 | 2nd quarter 2010 |
Legal obligations | Emission and noise control AE and trucks distribution centers | Expense | Services | 267 | 2nd quarter 2010 |
Travel expenses | Travel expenses to distribution centers | Expense | Travel expenses | 375 | 2nd quarter 2010 |
Waste management | Distribution centers drains | Expense | Services | 1,401 | 2nd quarter 2010 |
Environment management systems | SGA - maintenance audits ISO 14001 | Expense | Services | 1,334 | 2nd quarter 2010 |
Ecological island | Selective residue collection services | Expense | Services | 67,625 | 3rd quarter 2010 |
Ecological island | Collection of residues | Expense | Services | 7,206 | 3rd quarter 2010 |
Ecological island | AE rental | Expense | Rentals | 1,648 | 3rd quarter 2010 |
Effluents plant | External analysis of effluents Córdoba | Expense | Services | 901 | 3rd quarter 2010 |
Effluents plant | Maintenance of fish habitat | Expense | Services | 80 | 3rd quarter 2010 |
Waste management | Anti-spill containers and kits and signs | Expense | Materials | 467 | 3rd quarter 2010 |
Waste management | Collection of dangerous residues at distribution centers | Expense | Services | 133 | 3rd quarter 2010 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 721 | 3rd quarter 2010 |
Legal counseling | Counseling on environment legislation at distribution centers | Expense | Fees | 801 | 3rd quarter 2010 |
Legal obligations | External analysis of effluents at distribution centers | Expense | Services | 227 | 3rd quarter 2010 |
Travel expenses | Travel expenses to distribution centers | Expense | Travel expenses | 222 | 3rd quarter 2010 |
Waste management | Distribution centers drains | Expense | Services | 1,401 | 3rd quarter 2010 |
Environment management systems | SGA - maintenance audits ISO 14001 | Expense | Services | 2,002 | 3rd quarter 2010 |
Ecological island | Selective residue collection services | Expense | Services | 67,625 | 4th quarter 2010 |
Ecological island | Collection of residues | Expense | Services | 7,206 | 4th quarter 2010 |
Ecological island | AE rental | Expense | Services | 1,648 | 4th quarter 2010 |
Effluents plant | External analysis of effluents Córdoba | Expense | Services | 901 | 4th quarter 2010 |
Effluents plant | Maintenance of fish habitat | Expense | Services | 80 | 4th quarter 2010 |
Waste management | Anti-spill containers and kits and signs | Expense | Materials | 467 | 4th quarter 2010 |
Legal counseling | Counseling on environment legislation | Expense | Fees | 721 | 4th quarter 2010 |
Legal counseling | Counseling on environment legislation at distribution centers | Expense | Fees | 801 | 4th quarter 2010 |
Waste management | Collection of dangerous residues at distribution centers | Expense | Services | 200 | 4th quarter 2010 |
Legal obligations | External analysis of effluentes at distribution centers | Expense | Services | 160 | 4th quarter 2010 |
Travel expenses | Travel expenses to distribution centers | Expense | Travel expenses | 163 | 4th quarter 2010 |
Waste management | Distribution centers drains/unforseen | Expense | Services | 1,401 | 4th quarter 2010 |
Environment management systems | SGA - maintenance audits ISO 14001 | Expense | Services | 1,334 | 4th quarter 2010 |
Total Argentina | 645,684 | ||||
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 | 1,048,840 | NA |
Lixo disposal | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Lixo disposal | 175,002 | NA |
Mud disposal | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Mud disposal | 16,993 | NA |
ETE maintenance/operation costs | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | ETE operation/maintenance costs | 139,100 | NA |
IBAMA quarterly rate | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | IBAMA quarterly rate | 1,884 | NA |
Tratamento biológico esgoto sanitário Prédio Administrativo e Industrial | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Biological treatment of sanitary sewer administrative and industrial land | 6,095 | NA |
Environment week | Other | Expense | Environment week | 1,022 | NA |
Environment activities (cleaning day, Christmas Eco) | Other | Expense | Environment activities (cleaning day, Christmas Eco) | 70 | NA |
Disposal of class I residues | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Disposal of class I residues | 468 | NA |
Collection/disposal of ambulatory residues | Verification and control of fulfillment of regulations and rules related to industrial procedures | Expense | Collection/disposal of ambulatory residues | 1,104 | NA |
42
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
Purchase containers | Improvements and/or investments in production processes | Expense | Purchase containers | 3,152 | NA |
Acquisition of anaerobic mud for ETE | Improvements and/or investments in production processes | Expense | Acquisition of anaerobic mud for ETE | 11,786 | NA |
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 | 18,727 | NA |
Total Brazil | 1,424,243 | ||||
Chile | |||||
AGA gasification project | Save energy | Expense | Improvement of productive process capacity | 83,425 | May-07 |
Improvements in recovering condensation | Save energy | Expense | Improve energy efficiency | 14,402 | Jul-02 |
Blowing equipment | Save energy | Expense | Improve energy efficiency | 17,482 | May-04 |
Increase generating capacity - 2nd stage | Save energy | Expense | Improve energy efficiency | 11,666 | Sep-30 |
Equipment for the increase of cold capacity | Save energy | Expense | Reduces energy consumption in the cooling process | 21,726 | Jul-29 |
Increase capacity of cooling equipments | Save energy | Expense | Reduces energy consumption in the cooling process | 45,229 | Jul-29 |
Total Chile | 193,930 | ||||
Total expenses | 2,263,857 |
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NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009 and 2008
(Translation of a report originally issued in Spanish - see Note 2)
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 IFRS, based on a progressive calendar as from year 2009. In accordance with the regulations established by the Chilean Association of Accountants on this matter and what has been specifically established by Circulars N°427 and N°485 of the SVS, the Company has chosen to present its financial statements for the year ended December 31, 2009 under the current standards, 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 face the impacts of this change integrally.
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I. Analysis of Results for the Forth Quarter and Full Year ended December 31, 2009
Embotelladora Andina announces Consolidated Results for the Fourth Quarter and Full Year ended December 31, 2009
All figures are expressed under Chilean GAAP and in constant Chilean pesos as of December 31, 2009; therefore all variations are in real terms over a 12 month period inflation rate of -2.3%. For a better understanding of the analysis by country, we include a chart based on nominal local currency for the fourth quarter and year ended December 31, 2009.
· | Consolidated Sales Volume for the Fourth Quarter amounted to 135.3 million unit cases, an increase of 4.3% during the quarter. |
· | Operating Income reached Ch$52,666 million during the Fourth Quarter of 2009, a 29.1% increase. Operating Margin was 22.2%. |
· | Fourth Quarter EBITDA totaled Ch$60,038 million, a 21.1% increase. EBITDA Margin was 25.3%. |
· | Net Income for the Fourth Quarter of 2009 reached Ch$32,709 million, a decrease of 14.9%. |
· | Consolidated Sales Volume for the period ended December 31, 2009 totaled 458.6 million unit cases, an increase of 2.6%. |
· | Consolidated Operating Income reached Ch$130,061 million for the full year ended December 31, 2009, a 4.0% decrease. Operating Margin was 17.5%. |
· | Consolidated EBITDA for the full year ended December 31, 2009 amounted to Ch$160,913 million, a 6.6% decrease. EBITDA Margin was 21.7%. |
· | Net Income for the full year ended December 31, 2009 reached Ch$86,918 million, a decrease of 6.2%. |
Comments from the Chief Executive Officer, Mr. Jaime Garcia R.
“2009 was a difficult year, the economy contracted significantly and the cost of sugar was far above the historical average. Consolidated volumes of our products grew 2.6% and we managed to sustainably increase our volume and value market share, with prices increasing above local inflations. However, our financial results were again impacted mainly by the devaluations of local currencies producing accounting effects (due to the translation of figures from Brazil and Argentina) as well as economic effects (due to our dollar-denominated costs). We remain calm because we know we have done things in the right way, efficiently planning our long-term view. Challenges lay ahead and we count with all the strength to continue reinforcing our leadership.”
CONSOLIDATED SUMMARY
Fourth Quarter 2009: the Chilean peso and the Brazilian real appreciated on average 19% and 24% respectively. The Argentine peso devalued on average 14%. Hence, the average Argentine peso devalued 30% with respect to the end of period closing exchange rate of the Chilean peso, resulting in a negative accounting effect over income and a positive effect over costs and expenses upon translation of figures from Argentina. The Brazilian real appreciated 4% with respect to the end of period closing exchange rate of the Chilean peso, resulting in a positive accounting effect over income upon translation of figures from Brazil.
Full year ended December 31, 2009: Currencies on average devalued in the three countries where we operate. The Chilean peso by 7%, the Brazilian real by 9% and the Argentine peso by 18%, affecting our US dollar denominated costs. The Brazilian real and the Argentine peso devalued on average with respect to the end of period closing exchange rate of the Chilean peso by 27% and 32% respectively, resulting in a negative accounting effect upon translation of figures from Brazil and Argentina during the period.
Fourth Quarter 2009 vs. Fourth Quarter 2008
Consolidated Sales Volume for the Quarter reached 135.3 million unit cases, a 4.3% increase with respect to the same period of 2008, mainly driven by our Brazilian operation and impacted by lower volumes in our Argentine operation. Soft drinks grew 2.8% while juices, waters, and beer (“other categories”) significantly increased 22.4%.
Net Sales amounted to Ch$236,874 million, a 7.8% increase, due to increased volumes and the adjustment of prices above local inflations in addition to the positive effect upon translation of figures from Brazil, partially offset by the negative effect upon translation of figures from Argentina.
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Cost of Sales per unit case increased 0.8% mainly due to (i) significant cost increases of sugar for Chile and Brazil; (ii) devaluation of the Argentine peso; (iii) increased concentrate costs due to higher prices in the three countries and additionally in Chile due to an increase in the incidence, and (iv) increased labor costs in Argentina. All of these factors were almost completely offset by the effect upon translation of figures from Argentina, lower PET resin prices in the three countries, and the appreciation of the Chilean peso and Brazilian real.
SG&A expenses were lower by 2.3%, due to freight fee adjustments in Chile and the effect upon translation of figures from Argentina. These factors were partially offset by increases in (i) freight fees in Brazil and Argentina, (ii) labor costs in Argentina, and (iii) advertising investments in the three countries resulting from product launches during the quarter.
Increased consolidated volumes and local prices, impacts over costs and expenses, along with the effect upon translation of figures already explained, resulted in a Consolidated Operating Income of Ch$52,666 million, a 29.1% increase. Operating Margin was 22.2%, an increase of 360 basis points.
Finally, Consolidated EBITDA amounted to Ch$60,038 million, a 21.1% increase. EBITDA Margin was 25.3%, an increase of 270 basis points.
Full Year ended December 31, 2009 vs. Full Year ended December 31, 2008
Consolidated Sales Volume amounted to 458.6 million unit cases, an increase of 2.6%. Soft Drinks grew 2.0%, while the other categories of, Juices, Waters, and Beer together increased by 9.5%. Particularly, the Juices segment recorded a significant 12.6% increase. Net Sales amounted to Ch$743,116 million, a 9.7% decrease mainly explained by the effect upon translation of figures from Brazil and Argentina, more than offsetting the consolidated increase in volumes and increased prices in the three countries. Cost of Sales per unit case and SG&A expenses per unit case decreased 11.5% and 14.6%, respectively, mainly due to the effect upon translation of figures from Brazil and Argentina in addition to the reasons already explained for the quarter. Consolidated Operating Income amounted to Ch$130,061 million, a 4.0% decrease. Operating Margin was 17.5%, an increase of 100 basis points. Consolidated EBITDA amounted to Ch$160,913 million, a decrease of 6.6%. EBITDA Margin was 21.7%, an increase of 70 basis points.
SUMMARY BY COUNTRY
CHILE
Fourth Quarter 2009 vs. Fourth Quarter 2008
During the quarter, Sales Volume amounted to 44.9 million unit cases, a 1% growth driven by the categories of Waters (+13%) and Juices (+7%). During the quarter, we launched Fruitopia (concentrated low calorie fruit juice beverage) in 5 different flavors. Our volume market share for soft drinks was 68.9% during the quarter.
Net Sales amounted to Ch$81,590 million, reflecting a growth of 4.8%, explained by increased volumes and by a 4.0% increase of average income during the quarter.
Cost of Sales per unit case increased 4.1%, mainly explained by a significant increase in the price of sugar partially offset by lower PET resin prices and the revaluation of the Chilean peso.
SG&A expenses decreased 1% mainly explained by adjustments in freight fees and partially offset by increased advertising investments that supported the launch of the new product.
Increased prices and the previously explained effects upon Costs and Expenses resulted in an Operating Income of Ch$20,800 million, an increase of 9.4%. Operating Margin was 25.5%, an increase of 110 basis points.
EBITDA amounted to Ch$24,395 million, an increase of 7.3%. EBITDA Margin was 29.9%, an increase of 70 basis points.
Full Year ended December 31, 2009 vs. Full Year ended December 31, 2008
During the Full Year ended December 31, 2009, Sales Volume amounted to 152.4 million unit cases a 1.1% growth. This growth was a result of increased soft drink volumes (+0.4%) as well as an increase in the Juices and Waters segment (+4.9%). Net Sales amounted to Ch$272,344 million, a 3.2% improvement, driven by higher volumes and prices. Cost of
46
Sales per unit case increased 4.3% due to the significant increase in the price of sugar and the average devaluation of the Chilean peso during the period. All of which was partially offset by lower PET resin prices. SG&A expenses increased 2.4% due to adjustments to freight fees and increased advertising investments given new product launches during the year. Operating Income decreased 1.8% amounting to Ch$55,570 million. Operating Margin was 20.4%. EBITDA amounted to Ch$70,049 million, a 2.1% decrease. EBITDA Margin was 25.7%.
BRAZIL
Fourth Quarter 2009: The Brazilian real appreciated 24% on average. With respect to the end of period closing exchange rate of the Chilean peso, it appreciated 4%, resulting in a slightly positive accounting impact over income and a negative impact over costs and expenses upon translation of figures for consolidation in the end having a positive impact over results.
Full year ended December 31, 2009: The Brazilian real devalued 9% on average. With respect to the end of period closing exchange rate of the Chilean peso it devalued 27%, resulting in a negative accounting impact over income and a positive impact over costs and expenses upon translation of figures for consolidation, in the end, having a negative impact over results.
For a better understanding of the operation in Brazil, we include a chart based on nominal local currency for the quarter and full year ended December 31, 2009.
Fourth Quarter 2009 vs. Fourth Quarter 2008
Sales Volume for the quarter amounted to 55.5 million unit cases, representing an 11.6% increase. Soft drinks increased 10.2% and the Other Categories (juices, waters, and beer) increased 37.2%. This significant increase was driven by a recovery in the economy and consumption levels along with favorable weather conditions (especially during November and December). Our volume market share for soft drinks was 57.7% during the quarter and we launched the energy drink Gladiator in two flavors.
Net Sales reached Ch$108,432 million, representing an increase of 30.4% explained by the effect upon translation of figures in addition to higher volumes and price adjustments above local inflation.
Cost of Sales per unit case increased 14.1% mainly explained by: (i) the significant increase in the price of sugar, (ii) increased concentrate prices (given price adjustments), and (iii) the effect upon translation of figures. All of which was partially offset by lower PET resin prices and the average revaluation of the Brazilian real during the quarter.
SG&A expenses increased 14.3% due to effect upon translation of figures, increased freight fees, and advertising investments to support the launch of the new product.
Increased volumes and prices along with the impact upon costs and expenses resulted in an Operating Income of Ch$25,221 million (+64.6%). Operating Margin was 23.3% (+490 basis points).
EBITDA amounted to Ch$27,122 million, an increase of 44.6%. EBITDA Margin was 25.0% (+240 basis points).
Full Year ended December 31, 2009 vs. Full Year ended December 31, 2008
Sales Volume amounted to 185.3 million unit cases, a 6.4% increase driven by Soft drinks (+6.2%) and the Juices, Waters and Beer segment (+10.8%). Net Sales reached Ch$311,901 million (-13.9%). Cost of Sales per unit case and SG&As decreased 17.1% and 22.5%, in both cases due to the effect upon translation of figures in addition to the same reasons set forth for the quarter. Operating Income decreased 5.1%, amounting to Ch$56,988 million also mainly due to the effect upon translation of figures. Operating Margin was 18.3% (+170 basis points). EBITDA amounted to Ch$66,283 million, a decrease of 10.4%. EBITDA Margin was 21.3% (+90 basis points).
ARGENTINA
Fourth Quarter 2009: The Argentine peso devalued 14% on average. With respect to the end of period closing exchange rate of the Chilean peso it devalued 30%, resulting in a negative accounting impact over income and a positive impact over costs and expenses upon translation of figures for consolidation, in the end, having a negative impact over results.
Full year ended December 31, 2009: Te Argentine peso devalued 18% on average. With respect to the end of period closing exchange rate of the Chilean peso it devalued 32%, resulting in a negative accounting impact over income and a positive
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impact over costs and expenses upon translation of figures for consolidation, in the end, having a negative impact over results.
For a better understanding of the operation in Argentina, we include a chart based on nominal local currency for the fourth quarter and full year ended December 31, 2009.
Fourth Quarter 2009 vs. Fourth Quarter 2008
Sales Volume for the quarter decreased 1.7% reaching 34.8 million unit cases. Soft drinks volumes decreased 3.4% and the Juices and Waters categories increased 116%. Our volume market share for soft drinks increased to 54.2% during the quarter, the highest level during the last six years. Lower volumes are mainly explained by the moderate private consumption recorded in all economic sectors of Argentina. During this quarter, our newly built juice plant in Córdoba began operations. Additionally we launched Aquarius (non-carbonated beverage with 10% fruit juice) grape and orange flavored.
Net Sales reached Ch$46,851 million; a decrease of 21.5% explained by the effect upon translation of figures which more than offset price adjustments above inflation affecting our costs.
Cost of Sales per unit case decreased 25.1%, mainly explained by the effect upon translation of figures and lower sugar and PET resin prices; all of which was partially offset by: (i) increased concentrate costs (due to higher prices), (ii) increased labor costs, and (iii) the effect of U.S. dollar denominated raw materials due to the devaluation of the Argentine peso during the period.
SG&A expenses decreased 25.2% mainly due to the effect upon translation of figures and offset by increased salaries, freight costs and advertising investments carried out during the period as a result of the new product launching and a stronger advertising effort focused on the Juices and Isotonic segment.
The Increase in local prices, translation of figures along with the effects upon costs and expenses resulted in a 10.2% improvement of Operating Income, which amounted to Ch$8,094 million. Operating Margin was 17.3% (+500 basis points).
EBITDA reached Ch$9,969 million, an increase of 10.9%. EBITDA Margin was 21.3% (+620 basis points).
Full Year ended December 31, 2009 vs. Full Year ended December 31, 2008
Sales Volume for the Full Year ended December 31, 2009 reached 120.9 million unit cases, a decrease of 0.9%. Net Sales reached Ch$160,108 million (-20.0%). Cost of Sales per unit case decreased 24.0% and SG&A expenses decreased 17.4%, for the same reasons set forth during the quarter. Operating Income amounted to Ch$21,437 million, a decrease of 1.0%. Operating Margin was 13.4% (+260 basis points). EBITDA reached Ch$28,516 million, a decrease of 3.7%. EBITDA Margin was 17.8% (+300 basis points).
NON-OPERATING RESULTS
Full Year ended December 31, 2009 vs. Full Year ended December 31, 2008
Non-Operating Results totaled a loss of (Ch$10,755) million, which compares positively to a higher accumulated loss of (Ch$18,189) million recorded during 2008. This decreased loss in the non-operating result line is best explained by:
· | Financial Expense/Income (Net): Impacted by a positive variation resulting from losses in financial hedging agreements that took place during 2008. This was offset by the exchange rate difference. |
· | Other Non-Operating Income/Expenses: Resulted in a lower loss compared to the previous period explained by reversals against earnings from the conversion adjustment reserve realized during 2008, because of dividends received from foreign subsidiaries and other one-off effects. |
· | An increase tax payment because earnings come mainly from Argentina and Brazil with income tax rates of 35% and 34% respectively, and due to the extinction of tax loss carry forwards from Brazil. |
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Finally, Net Income amounted to Ch$86,918 million, representing a 6.2% decrease and Net Margin was 11.7% an increase of 40 basis points.
ANALYSIS OF THE BALANCE SHEET
As of December 31, 2009, the Company’s Net Cash Position amounted to US$120.2 million. Accumulated excess cash is invested in short-term time deposits with top of the line banks and money markets.
The Company holds 44.1% of its financial assets in UFs*, 35.0% in Chilean pesos, 16.4% in Brazilian reais, 4.1% in U.S. dollars, and 0.4% in Argentine pesos. Total financial assets amounted to US$272.8 million.
Financial debt level as of December 31, 2009 amounted to US$152.7 million, 98.9% of which is UF-denominated, 0.5% in Argentine pesos, and 0.6% is in Brazilian reais.
_______________________
*Unidad de Fomento. Chilean peso-denominated monetary unit daily indexed to the Chilean inflation rate of the previous month.
II. Main Indicators
The main indicators contained in the table reflect for both periods the solid financial position and profitability of Embotelladora Andina S.A.
INDICATORS | Unit | Dec-09 | Dec-08 | Variance | |
LIQUIDITY | |||||
Current Ratio | Times | 2.13 | 1.96 | 0.17 | |
Acid Tests | Times | 1.84 | 1.72 | 0.12 | |
Working Capital | MCh$ | 36,516 | 16,618 | 20,385 | |
ACTIVITY | |||||
Investments | MCh$ | 49,763 | 65,068 | (15,306) | |
Inventory turnover | Times | 12.46 | 15.44 | -2.99 | |
Days of inventory on hand | Days | 28.90 | 23.31 | 5.59 | |
INDEBTEDNESS | |||||
Debt to equity ratio | % | 73.88% | 73.06% | 0.82% | |
Short-term liabilities to total liabilities | % | 51.18% | 51.43% | -0.24% | |
Long-term liabilities to total liabilities | % | 48.82% | 48.57% | 0.24% | |
Interest charges coverage ratio | Times | 38.52 | 37.01 | 1.51 | |
PROFITABILITY | |||||
Return over equity | % | 25.76% | 29.07% | -3.31% | |
Return over total assets | % | 14.85% | 16.01% | -1.16% | |
Return over operating assets | % | 29.66% | 32.89% | -3.23% | |
Operating income | MCh$ | 130,061 | 135,458 | (5,397) | |
Operating margin | % | 17.50% | 16.47% | 1.03% | |
EBITDA (1) | MCh$ | 159,412 | 164,871 | (5,459) | |
EBITDA margin | % | 21.45% | 20.04% | 1.41% | |
Dividends payout ratio - Serie A shares | % | 5.43% | 7.67% | -2.24% | |
Dividends payout ratio - Serie B shares | % | 4.95% | 6.96% | -2.01% |
1Earnings before income taxes, interests, depreciation, amortization, and extraordinary items.
Liquidity indicators reflect the Company’s solid financial position and profitability for both periods.
Liquidity indicators improve given a decreased short-term debt. Indicators of indebtedness remain stable with a debt/capital structure as of December 2009 remaining similar to that of the previous period. During the period net financial expenses amounted to Ch$3,179 million and earnings before interests and taxes amounted to Ch$122,466 million, achieving an interest coverage of 38.5 times.
At the closing of the period, ended December 31, 2009, operating profitability indicators were affected by the reasons explained in paragraph I.
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III. Analysis of Book Values and Present Value of Assets
With respect to the Company’s main assets the following should be noted:
Given the high rotation of the items that compose working capital, book values of current assets are considered to represent market values.
Fixed asset values in the Chilean companies are presented at restated acquisition cost. In the foreign companies, fixed assets are valued in accordance with Technical Bulletin N° 64 issued by the Chilean Institute of Accountants (controlled in historical dollars).
Depreciation is estimated over the restated value of assets along with the remaining useful economic life of each asset.
All fixed assets that are considered available for sale are held at their respective market values.
Investments in shares, in situations where the Company has a significant influence on the issuing company, are presented following the equity method. The Company’s participation in the results of the issuing company for each year has been recognized on an accrual basis, and unrealized results on transactions between related companies have been eliminated.
Summarizing, assets are valued in accordance with generally accepted accounting standards in Chile and the instructions provided by the Chilean Securities Commission, as shown in Note 2 of the Financial Statements.
IV. | Analysis of the Main Components of Cash Flow |
Dec-2009 | Dec-2008 | Variation MCh$ | Variation % | |
MCh$ | MCh$ | |||
Operating | 122,052 | 155,179 | (33,127) | -21% |
Financing | (67,532) | (77,471) | 9,939 | 13% |
Investment | (72,136) | (73,266) | 1,130 | 2% |
Net cash flow for the Period | (17,616) | 4,442 | -22,058 | 497% |
The Company generated a negative net cash flow of MCh$17,616 during this period, analyzed as follows:
Operating activities generated a positive cash flow of MCh$122,052 representing a negative variation of MCh$33,127 mainly explained by higher financial income resulting from the liquidation of cross currency swap agreements during 2008 which did not occur during 2009, partially offset by lower collections from clients and lower payments to suppliers and employees.
Financing activities generated a negative cash flow of MCh$67,532; with a positive variation of MCh$9,939 regarding the previous year, mainly due to lower additional dividend payments during 2009 with respect to the previous year.
Investment activities generated a negative cash flow of MCh$72,136 with a positive variation of MCh$21,130 regarding the previous year, mainly due to lower additions to property, plant and equipment during 2009 with respect to the previous year that are partially offset by increased investments in financial instruments during 2009.
V. Analysis Of Market Risk
Interest Rate Risk
As of December 31, 2009 and 2008, the Company held 100% of its debt obligations at fixed-rates. Consequently, the risk of market interest rate fluctuations regarding the Company’s cash flow remains low.
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Foreign Currency Risk
Income generated by the Company is linked to the currencies of the markets in which it operates, and for this period, it was composed as follows:
Chilean peso: 37%
Brazilian real: 42%
Argentine peso: 21%
Since the Company’s sales are not linked to the United States dollar, the policy adopted for managing foreign exchange risk, this is the mismatch between assets and liabilities denominated in a given currency, has been to maintain financial investments in dollar-denominated instruments, for an amount at least equivalent to the dollar-denominated liabilities.
Additionally, it is Company policy to maintain foreign currency hedge agreements to lessen the effects of exchange risk in cash expenditures expressed in US dollars, which mainly correspond to payment to suppliers of raw materials.
Accounting exposure of foreign subsidiaries (Brazil and Argentina) for the difference between monetary assets and liabilities, hence, denominated in local currency, and therefore, exposed to risks upon translation to the US dollar, are only covered when it is foreseen that it will result in significant negative differences and when the associated cost of said coverage is deemed reasonable by management.
Commodity Risks
The Company faces the risk of price changes in the international markets for sugar, aluminum, and PET resin, all of which are necessary raw materials for preparing beverages, and that altogether represent between 35% and 40% 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-hedging instruments have also been utilized.
********
This document may contain forward-looking statements reflecting Embotelladora Andina’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.
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Material Events
During the period between January 1, 2009 and December 31, 2009, the following material events were filed:
1. 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.
2. 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.
3. | Regular Shareholders’ Meeting |
During the Regular Shareholders’ Meeting held April 14, 2009, the following was resolved:
I. | Renewal of Board of Directors as follows: |
Director | Alternate Director |
Juan Claro González (Chairman) | Ernesto Bertelsen Repetto |
Gonzalo Said Handal (Vice Chairman) | Jose Maria Eyzaguirre Baeza |
José Antonio Garcés Silva (junior) | Patricio Parodi Gil |
Arturo Majlis Albala | Cristian Alliende Arriagada |
Salvador Said Somavia | José Domingo Eluchans Urenda |
Bryan J. Smith | Jorge Hurtado Garretón |
Heriberto Urzúa Sánchez | Gonzalo Parot Palma |
II. | Distribution of Final Dividend Nº 165 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 |
Payment began on April 30, 2009 |
III. | Distribution of 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. |
Payment began May 28, 2009. |
4. | Interim Dividend |
Distribution of Interim Dividend Nº 167 on account of the fiscal year ending December 31, 2009:
a) | Ch$7.00 (seven pesos) per each Series A share and; |
b) | Ch$7.70 (seven pesos and 70/100) per each Series B share. |
Payment began July 30, 2009.
5. | Interim Dividend |
Distribution of Interim Dividend Nº 168 on account of the fiscal year ending December 31, 2009:
a) | Ch$7.00 (seven pesos) per each Series A share and; |
b) | Ch$7.70 (seven pesos and 70/100) per each Series B share. |
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Payment began October 28, 2009.
6. | Interim Dividend |
Distribution of Interim Dividend Nº 169 on account of the fiscal year ending December 31, 2009:
a) | Ch$7.00 (seven pesos) per each Series A share and; |
b) | Ch$7.70 (seven pesos and 70/100) per each Series B share. |
Payment began January 28, 2010.
7. | Related Party Policies |
At an extraordinary session held December 24, 2009, the Board of Directors approved a general policy regarding normal business with related companies, which fall within their corporate purpose and are aimed towards contributing to the company’s interest, adjusting to the price, terms, and conditions prevailing in the market.
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Embotelladora Andina S.A. | |||||||||
Fourth Quarter Results for the period ended December 31, Chilean GAAP | |||||||||
(In million constant 12/31/09 Chilean Pesos, except per share) | |||||||||
Fourth Quarter 2009 | Fourth Quarter 2008 | ||||||||
Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. | |
VOLUME TOTAL BEVERAGES (Million UC) | 44.9 | 55.5 | 34.8 | 135.3 | 44.6 | 49.8 | 35.4 | 129.7 | 4.3% |
Soft Drinks | 37.7 | 51.9 | 33.7 | 123.3 | 38.0 | 47.1 | 34.9 | 120.0 | 2.8% |
Mineral Water | 2.7 | 0.9 | 0.8 | 4.4 | 2.4 | 0.6 | 0.2 | 3.2 | 38.3% |
Juices | 4.5 | 1.6 | 0.3 | 6.4 | 4.2 | 1.0 | 0.3 | 5.5 | 16.1% |
Beer | NA | 1.2 | NA | 1.2 | NA | 1.1 | NA | 1.1 | 7.5% |
NET SALES | 81,590 | 108,432 | 46,851 | 236,874 | 77,843 | 83,139 | 59,703 | 219,722 | 7.8% |
COST OF SALES | (44,507) | (55,795) | (25,035) | (125,337) | (42,402) | (43,835) | (34,010) | (119,285) | 5.1% |
GROSS PROFIT | 37,084 | 52,638 | 21,816 | 111,537 | 35,441 | 39,304 | 25,693 | 100,438 | 11.1% |
Gross Margin | 45.5% | 48.5% | 46.6% | 47.1% | 45.5% | 47.3% | 43.0% | 45.7% | |
SELLING AND ADMINISTRATIVE EXPENSES | (16,283) | (27,417) | (13,722) | (57,422) | (16,428) | (23,981) | (18,347) | (58,756) | -2.3% |
CORPORATE EXPENSES (4) | 0 | 0 | 0 | (1,448) | 0 | 0 | 0 | (888) | 63.2% |
OPERATING INCOME | 20,800 | 25,221 | 8,094 | 52,666 | 19,013 | 15,323 | 7,346 | 40,794 | 29.1% |
Operating Margin | 25.5% | 23.3% | 17.3% | 22.2% | 24.4% | 18.4% | 12.3% | 18.6% | |
EBITDA (1) | 24,395 | 27,122 | 9,969 | 60,038 | 22,740 | 18,750 | 8,993 | 49,596 | 21.1% |
Ebitda Margin | 29.9% | 25.0% | 21.3% | 25.3% | 29.2% | 22.6% | 15.1% | 22.6% | |
NON OPERATIONAL RESULTS | |||||||||
FINANCIAL EXPENSE/INCOME (Net) | (1,307) | (3,948) | -66.9% | ||||||
RESULTS FROM AFFILIATED | 540 | 1,224 | -55.9% | ||||||
AMORTIZATION OF GOODWILL | (1,524) | (1,859) | -18.1% | ||||||
OTHER INCOME/(EXPENSE) | 258 | (2,454) | 110.5% | ||||||
PRICE LEVEL RESTATEMENT (3) | (5,201) | 11,941 | -143.6% | ||||||
NON-OPERATING RESULTS | (7,233) | 4,904 | -247.5% | ||||||
INCOME BEFORE INCOME TAXES; AMORTIZATION OF | |||||||||
NEGATIVE GOODWILL AND MINORITY INTEREST | 45,433 | 45,699 | -0.6% | ||||||
INCOME TAXES | (12,723) | (7,256) | 75.4% | ||||||
MINORITY INTEREST | (1) | (1) | NA | ||||||
AMORTIZATION OF NEGATIVE GOODWILL | 0 | 0 | NA | ||||||
NET INCOME | 32,709 | 38,442 | -14.9% | ||||||
Net Margin | 13.8% | 17.5% | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | 760.3 | 760.3 | |||||||
EARNINGS PER SHARE | 43.0 | 50.6 | |||||||
EARNINGS PER ADS | 258.1 | 303.4 | -14.9% | ||||||
(1) EBITDA: Operating Income + Depreciation | |||||||||
(2) Total may be different from the addition of the three countries because of intercountry eliminations | |||||||||
(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts + Exchange rate gains & losses. | |||||||||
(4) Corporate expenses partially reclassified to the operations. |
54
Embotelladora Andina S.A. | |||||||||
Fourth Quarter Results for the period ended December 31, Chilean GAAP | |||||||||
(In million nominal US$, except per share) | |||||||||
Exch. Rate : | $ 507.10 | Exch. Rate : | $ 636.45 | ||||||
Fourth Quarter 2009 | Fourth Quarter 2008 | ||||||||
Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. | |
VOLUME TOTAL BEVERAGES (Million UC) | 44.9 | 55.5 | 34.8 | 135.3 | 44.6 | 49.8 | 35.4 | 129.7 | 4.3% |
Soft Drinks | 37.7 | 51.9 | 33.7 | 123.3 | 38.0 | 47.1 | 34.9 | 120.0 | 2.8% |
Mineral Water | 2.7 | 0.9 | 0.8 | 4.4 | 2.4 | 0.6 | 0.2 | 3.2 | 38.3% |
Juices | 4.5 | 1.6 | 0.3 | 6.4 | 4.2 | 1.0 | 0.3 | 5.5 | 16.1% |
Beer | NA | 1.2 | NA | 1.2 | NA | 1.1 | NA | 1.1 | 7.5% |
NET SALES | 160.9 | 213.8 | 92.4 | 467.1 | 125.2 | 133.7 | 96.0 | 353.4 | 32.2% |
COST OF SALES | (87.8) | (110.0) | (49.4) | (247.2) | (68.2) | (70.5) | (54.7) | (191.8) | 28.8% |
GROSS PROFIT | 73.1 | 103.8 | 43.0 | 220.0 | 57.0 | 63.2 | 41.3 | 161.5 | 36.2% |
Gross Margin | 45.5% | 48.5% | 46.6% | 47.1% | 45.5% | 47.3% | 43.0% | 45.7% | |
SELLING AND ADMINISTRATIVE EXPENSES | (32.1) | (54.1) | (27.1) | (113.2) | (26.4) | (38.6) | (29.5) | (94.5) | 19.8% |
CORPORATE EXPENSES (4) | 0.0 | 0.0 | 0.0 | (2.9) | 0.0 | 0.0 | 0.0 | (1.4) | 100.1% |
OPERATING INCOME | 41.0 | 49.7 | 16.0 | 103.9 | 30.6 | 24.6 | 11.8 | 65.6 | 58.3% |
Operating Margin | 25.5% | 23.3% | 17.3% | 22.2% | 24.4% | 18.4% | 12.3% | 18.6% | |
EBITDA (1) | 48.1 | 53.5 | 19.7 | 118.4 | 36.6 | 30.2 | 14.5 | 79.8 | 48.4% |
Ebitda Margin | 29.9% | 25.0% | 21.3% | 25.3% | 29.2% | 22.6% | 15.1% | 22.6% | |
NON OPERATIONAL RESULTS | |||||||||
FINANCIAL EXPENSE/INCOME (Net) | (2.6) | (6.3) | -59.4% | ||||||
RESULTS FROM AFFILIATED | 1.1 | 2.0 | -45.9% | ||||||
AMORTIZATION OF GOODWILL | (3.0) | (3.0) | 0.5% | ||||||
OTHER INCOME/(EXPENSE) | 0.5 | (3.9) | 112.9% | ||||||
PRICE LEVEL RESTATEMENT (3) | (10.3) | 19.2 | -153.4% | ||||||
NON-OPERATING RESULTS | (14.3) | 7.9 | -280.9% | ||||||
INCOME BEFORE INCOME TAXES; AMORTIZATION OF | |||||||||
NEGATIVE GOODWILL AND MINORITY INTEREST | 89.6 | 73.5 | 21.9% | ||||||
INCOME TAXES | (25.1) | (11.7) | 115.0% | ||||||
MINORITY INTEREST | (0.0) | (0.0) | NA | ||||||
AMORTIZATION OF NEGATIVE GOODWILL | 0.0 | 0.0 | NA | ||||||
NET INCOME | 64.5 | 61.8 | 4.3% | ||||||
Net Margin | 13.8% | 17.5% | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | 760.3 | 760.3 | |||||||
EARNINGS PER SHARE | 0.08 | 0.08 | |||||||
EARNINGS PER ADS | 0.51 | 0.49 | 4.3% | ||||||
(1) EBITDA: Operating Income + Depreciation | |||||||||
(2) Total may be different from the addition of the three countries because of intercountry eliminations | |||||||||
(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts + Exchange rate gains & losses. | |||||||||
(4) Corporate expenses partially reclassified to the operations. |
55
Embotelladora Andina S.A. | |||||||||
Twelve Months Results for the period ended December 31, Chilean GAAP | |||||||||
(In million constant 12/31/09 Chilean Pesos, except per share) | |||||||||
January-December 2009 | January-December 2008 | ||||||||
Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. | |
VOLUME TOTAL BEVERAGES (Million UC) | 152.4 | 185.3 | 120.9 | 458.6 | 150.8 | 174.0 | 122.0 | 446.9 | 2.6% |
Soft Drinks | 128.0 | 173.6 | 117.9 | 419.6 | 127.6 | 163.5 | 120.2 | 411.2 | 2.0% |
Mineral Water | 8.1 | 2.6 | 1.7 | 12.3 | 7.7 | 2.6 | 1.1 | 11.4 | 8.4% |
Juices | 16.3 | 5.0 | 1.3 | 22.6 | 15.5 | 3.7 | 0.8 | 20.1 | 12.6% |
Beer | NA | 4.1 | 0.0 | 4.1 | NA | 4.2 | 0.0 | 4.2 | -2.5% |
NET SALES | 272,344 | 311,901 | 160,108 | 743,116 | 263,910 | 362,205 | 200,042 | 822,571 | -9.7% |
COST OF SALES | (155,270) | (170,242) | (89,082) | (413,356) | (147,299) | (192,891) | (118,362) | (454,967) | -9.1% |
GROSS PROFIT | 117,074 | 141,660 | 71,026 | 329,760 | 116,611 | 169,313 | 81,680 | 367,604 | -10.3% |
Gross Margin | 43.0% | 45.4% | 44.4% | 44.4% | 44.2% | 46.7% | 40.8% | 44.7% | |
SELLING AND ADMINISTRATIVE EXPENSES | (61,503) | (84,672) | (49,589) | (195,764) | (60,035) | (109,283) | (60,036) | (229,356) | -14.6% |
CORPORATE EXPENSES (4) | 0 | 0 | 0 | (3,934) | 0 | 0 | 0 | (2,792) | 40.9% |
OPERATING INCOME | 55,570 | 56,988 | 21,437 | 130,061 | 56,576 | 60,030 | 21,644 | 135,458 | -4.0% |
Operating Margin | 20.4% | 18.3% | 13.4% | 17.5% | 21.4% | 16.6% | 10.8% | 16.5% | |
EBITDA (1) | 70,049 | 66,283 | 28,516 | 160,913 | 71,575 | 73,958 | 29,626 | 172,367 | -6.6% |
Ebitda Margin | 25.7% | 21.3% | 17.8% | 21.7% | 27.1% | 20.4% | 14.8% | 21.0% | |
NON OPERATIONAL RESULTS | |||||||||
FINANCIAL EXPENSE/INCOME (Net) | (2,479) | (15,338) | -83.8% | ||||||
RESULTS FROM AFFILIATED | 1,853 | 1,811 | 2.3% | ||||||
AMORTIZATION OF GOODWILL | (6,094) | (7,437) | -18.1% | ||||||
OTHER INCOME/(EXPENSE) | (1,109) | (5,880) | -81.1% | ||||||
PRICE LEVEL RESTATEMENT (3) | (2,946) | 8,654 | -134.0% | ||||||
NON-OPERATING RESULTS | (10,775) | (18,189) | -40.8% | ||||||
INCOME BEFORE INCOME TAXES; AMORTIZATION OF | |||||||||
NEGATIVE GOODWILL AND MINORITY INTEREST | 119,286 | 117,269 | 1.7% | ||||||
INCOME TAXES | (32,366) | (24,612) | 31.5% | ||||||
MINORITY INTEREST | (2) | (2) | NA | ||||||
AMORTIZATION OF NEGATIVE GOODWILL | 0 | 0 | NA | ||||||
NET INCOME | 86,918 | 92,655 | -6.2% | ||||||
Net Margin | 11.7% | 11.3% | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | 760.3 | 760.3 | |||||||
EARNINGS PER SHARE | 114.3 | 121.9 | |||||||
EARNINGS PER ADS | 685.9 | 731.2 | -6.2% | ||||||
(1) EBITDA: Operating Income + Depreciation | |||||||||
(2) Total may be different from the addition of the three countries because of intercountry eliminations | |||||||||
(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts + Exchange rate gains & losses. | |||||||||
(4) Corporate expenses partially reclassified to the operations. |
56
Embotelladora Andina S.A. | |||||||||
Twelve Months Results for the period ended December 31, Chilean GAAP | |||||||||
(In million constant 12/31/09 Chilean Pesos, except per share) | |||||||||
Exch. Rate : | $ 507.10 | Exch. Rate : | $ 636.45 | ||||||
January-December 2009 | January-December 2008 | ||||||||
Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | Chilean Operations | Brazilian Operations | Argentine Operations | Total (2) | % Ch. | |
VOLUME TOTAL BEVERAGES (Million UC) | 152.4 | 185.3 | 120.9 | 458.6 | 150.8 | 174.0 | 122.0 | 446.9 | 2.6% |
Soft Drinks | 128.0 | 173.6 | 117.9 | 419.6 | 127.6 | 163.5 | 120.2 | 411.2 | 2.0% |
Mineral Water | 8.1 | 2.6 | 1.7 | 12.3 | 7.7 | 2.6 | 1.1 | 11.4 | 8.4% |
Juices | 16.3 | 5.0 | 1.3 | 22.6 | 15.5 | 3.7 | 0.8 | 20.1 | 12.6% |
Beer | NA | 4.1 | 0.0 | 4.1 | NA | 4.2 | 0.0 | 4.2 | -2.5% |
NET SALES | 537.1 | 615.1 | 315.7 | 1,465.4 | 424.4 | 582.5 | 321.7 | 1,322.9 | 10.8% |
COST OF SALES | (306.2) | (335.7) | (175.7) | (815.1) | (236.9) | (310.2) | (190.4) | (731.7) | 11.4% |
GROSS PROFIT | 230.9 | 279.4 | 140.1 | 650.3 | 187.5 | 272.3 | 131.4 | 591.2 | 10.0% |
Gross Margin | 43.0% | 45.4% | 44.4% | 44.4% | 44.2% | 46.7% | 40.8% | 44.7% | |
SELLING AND ADMINISTRATIVE EXPENSES | (121.3) | (167.0) | (97.8) | (386.0) | (96.5) | (175.8) | (96.6) | (368.9) | 4.7% |
CORPORATE EXPENSES (4) | 0.0 | 0.0 | 0.0 | (7.8) | 0.0 | 0.0 | 0.0 | (4.5) | 72.8% |
OPERATING INCOME | 109.6 | 112.4 | 42.3 | 256.5 | 91.0 | 96.5 | 34.8 | 217.8 | 17.7% |
Operating Margin | 20.4% | 18.3% | 13.4% | 17.5% | 21.4% | 16.6% | 10.8% | 16.5% | |
EBITDA (1) | 138.1 | 130.7 | 56.2 | 317.3 | 115.1 | 118.9 | 47.6 | 277.2 | 14.5% |
Ebitda Margin | 25.7% | 21.3% | 17.8% | 21.7% | 27.1% | 20.4% | 14.8% | 21.0% | |
NON OPERATIONAL RESULTS | |||||||||
FINANCIAL EXPENSE/INCOME (Net) | (4.9) | (24.7) | -80.2% | ||||||
RESULTS FROM AFFILIATED | 3.7 | 2.9 | 25.5% | ||||||
AMORTIZATION OF GOODWILL | (12.0) | (12.0) | 0.5% | ||||||
OTHER INCOME/(EXPENSE) | (2.2) | (9.5) | -76.9% | ||||||
PRICE LEVEL RESTATEMENT (3) | (5.8) | 13.9 | -141.7% | ||||||
NON-OPERATING RESULTS | (21.2) | (29.3) | -27.4% | ||||||
INCOME BEFORE INCOME TAXES; AMORTIZATION OF | |||||||||
NEGATIVE GOODWILL AND MINORITY INTEREST | 235.2 | 188.6 | 24.7% | ||||||
INCOME TAXES | (63.8) | (39.6) | 61.3% | ||||||
MINORITY INTEREST | (0.0) | (0.0) | NA | ||||||
AMORTIZATION OF NEGATIVE GOODWILL | 0.0 | 0.0 | NA | ||||||
NET INCOME | 171.4 | 149.0 | 15.0% | ||||||
Net Margin | 11.7% | 11.3% | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | 760.3 | 760.3 | |||||||
EARNINGS PER SHARE | 0.23 | 0.20 | |||||||
EARNINGS PER ADS | 1.35 | 1.18 | 15.0% | ||||||
(1) : Operating Income + Depreciation | |||||||||
(2) Total may be different from the addition of the three countries because of intercountry eliminations | |||||||||
(3) Includes: Monetary Correction + Conversion Effect to Balance Sheet + Income Statement Accounts + Exchange rate gains & losses. | |||||||||
(4) Corporate expenses partially reclassified to the operations. | |||||||||
57
Consolidated Balance Sheet | ||||||||
(In million of constant 12/31/09 Chilean Pesos) | ||||||||
ASSETS | 12/31/2009 | 12/31/2008 | %Ch | LIABILITIES & SHAREHOLDERS' EQUITY | 12/31/2009 | 12/31/2008 | %Ch | |
Cash + Time deposits + market. Securit. | 135,136 | 126,244 | 7.0% | Short term bank liabilities | 373 | 5,686 | -93.4% | |
Account receivables (net) | 79,920 | 73,962 | 8.1% | Current portion of long term bank liabilities | 242 | 221 | 0.0% | |
Inventories | 36,222 | 30,153 | 20.1% | Current portion of bonds payable | 3,118 | 1,708 | 82.5% | |
Other current assets | 19,698 | 18,417 | 7.0% | Trade accounts payable and notes payable | 88,265 | 87,804 | 0.5% | |
Total Current Assets | 270,975 | 248,776 | 8.9% | Other liabilities | 35,284 | 31,684 | 11.4% | |
Total Current Liabilities | 127,283 | 127,103 | 0.1% | |||||
Property, plant and equipment | 666,098 | 709,050 | -6.1% | |||||
Depreciation | (461,601) | (490,519) | -5.9% | Long term bank liabilities | 201 | 404 | -50.3% | |
Total Property, Plant, and Equipment | 204,497 | 218,531 | -6.4% | Bonds payable | 73,484 | 76,255 | -3.6% | |
Other long term liabilities | 47,695 | 43,375 | 10.0% | |||||
Investment in related companies | 31,165 | 30,594 | 1.9% | Total Long Term Liabilities | 121,380 | 120,034 | 1.1% | |
Investment in other companies | 135 | 128 | 5.3% | |||||
Goodwill | 46,094 | 63,768 | -27.7% | Minority interest | 10 | 11 | -8.2% | |
Other long term assets | 32,386 | 23,636 | 37.0% | |||||
Total Other Assets | 109,780 | 118,126 | -7.1% | Stockholders' Equity | 336,579 | 338,285 | -0.5% | |
TOTAL ASSETS | 585,252 | 585,433 | 0.0% | TOTAL LIABILITIES & SHAREHOLDERS' EQUITY | 585,252 | 585,433 | 0.0% | |
Financial Highlights | ||||||||
(In million of constant 12/31/09 Chilean Pesos) | ||||||||
Year to Date | ||||||||
ADDITIONS TO FIXED ASSETS | 12/31/2009 | 12/31/2008 | DEBT RATIOS | 12/31/2009 | 12/31/2008 | |||
Chile | 22,876 | 24,784 | Financial Debt / Total Capitalization | 0.19 | 0.20 | |||
Brazil | 19,231 | 33,066 | Financial Debt / EBITDA L12M | 0.48 | 0.49 | |||
Argentina | 7,656 | 7,218 | EBITDA L12M / Interest Expense (net) L12M | 22.03 | 18.61 | |||
49,763 | 65,068 | L12M: Last twelve months | ||||||
* As of December 31, 2009, the Company registered a positive net cash position of US$ 120,2 million. Total debt amounted to US$ 152,6 million. | ||||||||
Total Cash amounted to US$ 272,8 million. | ||||||||
58
Embotelladora Andina S.A. | ||||||
Twelve Months Results for the period ended December 31, 2009 Local GAAP | ||||||
(In nominal local currency of each period) | ||||||
January - December 2009 | January - December 2008 | |||||
Chile Million Ch$ | Brazil Million R$ | Argentina Million AR$ | Chile Million Ch$ | Brazil Million R$ | Argentina Million AR$ | |
TOTAL BEVERAGES VOLUME (Million UC) | 152.4 | 185.3 | 120.9 | 150.8 | 174.0 | 122.0 |
Soft Drinks | 128.0 | 173.6 | 117.9 | 127.6 | 163.5 | 120.2 |
Mineral Water | 8.1 | 2.6 | 1.7 | 7.7 | 2.6 | 1.1 |
Juices | 16.3 | 5.0 | 1.3 | 15.5 | 3.7 | 0.8 |
Beer | NA | 4.1 | 0.0 | NA | 4.2 | 0.0 |
NET SALES SOFT DRINKS | 225,313 | 1,081.8 | 1,079.9 | 216,145 | 958.7 | 936.9 |
NET SALES OTHER | 47,561 | 122.0 | 34.1 | 43,208 | 104.2 | 18.6 |
NET SALES PACKAGING | 61.6 | 66.2 | ||||
NET SALES | 272,875 | 1,203.9 | 1,175.6 | 259,353 | 1,062.9 | 1,021.7 |
COST OF SALES | (155,712) | (666.7) | (641.4) | (144,660) | (572.8) | (594.1) |
GROSS PROFIT | 117,162 | 537.1 | 534.2 | 114,693 | 490.1 | 427.6 |
Gross Margin | 42.9% | 44.6% | 45.4% | 44.2% | 46.1% | 41.9% |
SELLING AND ADMINISTRATIVE EXPENSES | (61,464) | (333.5) | (361.4) | (58,641) | (318.5) | (305.3) |
OPERATING INCOME | 55,699 | 203.6 | 172.8 | 56,052 | 171.6 | 122.3 |
Operating Margin | 20.4% | 16.9% | 14.7% | 21.6% | 16.1% | 12.0% |
EBITDA1 | 70,178 | 255.5 | 210.9 | 71,404 | 219.2 | 152.5 |
Ebitda Margin | 25.7% | 21.2% | 17.9% | 27.5% | 20.6% | 14.9% |
Embotelladora Andina S.A. | ||||||
Fourth Quarter Results for the period ended December 31, 2009 Local GAAP | ||||||
(In nominal local currency of each period) | ||||||
Forth Quarter 2009 | Fourth Quarter 2008 | |||||
Chile Million Ch$ | Brazil Million R$ | Argentina Million AR$ | Chile Million Ch$ | Brazil Million R$ | Argentina Million AR$ | |
TOTAL BEVERAGES VOLUME (Million UC) | 44.9 | 55.5 | 34.8 | 44.6 | 49.8 | 35.4 |
Soft Drinks | 37.7 | 51.9 | 33.7 | 38.0 | 47.1 | 34.9 |
Mineral Water | 2.7 | 0.9 | 0.8 | 2.4 | 0.6 | 0.2 |
Juices | 4.5 | 1.6 | 0.3 | 4.2 | 1.0 | 0.3 |
Beer | NA | 1.2 | NA | NA | 1.1 | NA |
NET SALES SOFT DRINKS | 67,520 | 334.9 | 324.8 | 66,413 | 277.0 | 295.6 |
NET SALES OTHER | 14,230 | 37.1 | 12.5 | 13,125 | 28.5 | 6.0 |
NET SALES PACKAGING | 15.1 | 18.9 | ||||
NET SALES | 81,751 | 372.0 | 352.4 | 79,538 | 305.5 | 320.5 |
COST OF SALES | (44,638) | (193.6) | (184.8) | (43,221) | (170.7) | (182.1) |
GROSS PROFIT | 37,113 | 178.4 | 167.6 | 36,317 | 134.8 | 138.4 |
Gross Margin | 45.4% | 47.9% | 47.6% | 45.7% | 44.1% | 43.2% |
SELLING AND ADMINISTRATIVE EXPENSES | (16,315) | (96.9) | (102.3) | (17,248) | (74.8) | (98.2) |
OPERATING INCOME | 20,797 | 81.4 | 65.3 | 19,068 | 59.9 | 40.2 |
Operating Margin | 25.4% | 21.9% | 18.5% | 24.0% | 19.6% | 12.5% |
EBITDA1 | 24,447 | 95.7 | 75.1 | 23,088 | 71.4 | 49.3 |
Ebitda Margin | 29.9% | 25.7% | 21.3% | 29.0% | 23.4% | 15.4% |
1EBITDA: Operating Income + Depreciation | ||||||
Chile results do not consider corporate expenses |
59
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Santiago, Chile.
EMBOTELLADORA ANDINA S.A.
By: /s/ Osvaldo Garay
�� Name: Osvaldo Garay
Title: Chief Financial Officer
Santiago, March 9, 2010 |
60