Exhibit 1
--------------------------------------------------------------------------
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
------------------
CONSOLIDATED FINANCIAL STATEMENTS
as of December 31, 2000 and 2001 and for each of the
three years in the period ended December 31, 2001
together with the Reports of Independent Accountants
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
------------
Index to Consolidated Financial Statements
Report of Independent Accountants F2
Consolidated Balance Sheets as of December 31, 2000 and 2001 F3-4
Consolidated Statements of Income for each
of the three years in the period ended December 31, 2001 F5
Consolidated Statements of Changes in Shareholders' Equity
for each of the three years in the period ended December 31, 2001 F6
Consolidated Statements of Cash Flows for each of the three years
in the period endedDecember 31, 2001 F7-F8
Notes to the Consolidated Financial Statements F9
------------
Ch$ - Chilean pesos
ThCh$ - Thousands of Chilean pesos
US$ - United States Dollars
ThUS$ - Thousands of United States Dollars
UF - Unidad de Fomento "UF" is a daily, indexed,
peso-denominated accounting unit. The UF rate is set daily
in advance based on the change in the Chilean Consumer Price
Index of the previous month.
------------
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Cristalerias de Chile S.A.:
We have audited the accompanying consolidated balance sheets of Cristalerias
de Chile S.A. (the "Company") and subsidiaries as of December 31, 2000 and
2001 and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 2001, all expressed in thousands of constant Chilean pesos.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Accounting practices used by the Company in preparing the accompanying
consolidated financial statements conform with accounting principles generally
accepted in Chile, but do not conform with accounting principles generally
accepted in the United States of America. A description of these differences
and a reconciliation of consolidated net income and shareholders' equity under
accounting principles generally accepted in Chile to the corresponding amounts
that would be reported in accordance with accounting principles generally
accepted in the United States, except for the omissions, as allowed pursuant
to Item 18 of SEC Form 20-F, of adjustments necessary to eliminate the effect
of price-level changes and the translation of non-Chilean operations described
in Notes 2(b) and 2(t), is set forth in Note 39 to these consolidated
financial statements.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Cristalerias de Chile S.A. and subsidiaries as of December 31, 2000 and 2001,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in Chile.
As explained in Note 3 to these consolidated financial statements, on January
1, 2000 the Company prospectively recorded the tax effects of temporary
differences adopted using the liability method in accordance with Technical
Bulletins N(degree)60 and 68 issued by the Chilean Association of Accountants
and Circular N(degree) 1,466 issued by the Chilean Superintendency of
Securities and Insurance.
LANGTON CLARKE
Santiago, Chile February 28, 2002,
(except for Notes 2(a), 2(b), 35 and 39 for which the date is May 29, 2002)
F-2
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Translation of financial statements originally
issued in Spanish - See Note 2) (Restated for
general price-level changes and expressed in
thousands of constant
Chilean pesos as of December 31, 2001 and thousands of U.S. dollars)
As of December 31,
-----------------------------------------------------
ASSETS 2000 2001 2001
ThCh$ ThCh$ ThUS$
(Note 2(o))
CURRENT ASSETS:
Cash 2,105,158 2,815,861 4,300
Time deposits (Note 4) 18,403,839 22,731,793 34,716
Marketable securities (Note 4) 8,398,679 13,045,240 19,923
Current receivables, net of allowance for doubtful accounts of
ThCh$539,982 and ThCh$528,989 respectively (Note 5) 39,118,185 36,634,722 55,949
Accounts receivable from related companies (Note 6) 460,507 436,351 666
Inventories (Note 7) 33,488,731 28,802,119 43,987
Recoverable taxes (Note 8) 785,983 1,479,368 2,259
Prepaid expenses 806,203 1,154,810 1,764
Deferred income taxes (Note 8) 810,012 1,265,050 1,932
Other current assets (Note 9) 9,751,211 11,531,338 17,611
------------- -------------- ----------
Total current assets 114,128,508 119,896,652 183,107
------------- -------------- ----------
PROPERTY, PLANT AND EQUIPMENT (Note 11):
Land 12,245,128 12,931,166 19,749
Buildings and construction 48,968,029 52,067,805 79,518
Machinery and equipment 116,223,481 125,755,365 192,054
Other property, plant and equipment 14,978,649 9,950,609 15,197
Technical revaluation of property, plant and equipment 10,270,196 8,286,374 12,655
Less: Accumulated depreciation (81,668,863) (80,446,312) (122,858)
------------- -------------- ----------
Net property, plant and equipment 121,016,620 128,545,007 196,315
------------- -------------- ----------
OTHER ASSETS:
Investments in related companies (Note 12) 103,528,024 111,555,928 170,369
Investments in others companies (Note 13) 1,566,535 1,430,266 2,184
Long-term receivables 128,230 217,251 332
Accounts receivables from related companies (Note 6) 1,381,048 11,452 17
Intangibles, net (Note 15) 10,470,642 10,459,663 15,974
Goodwill, net (Note 14) 10,244,410 8,875,457 13,555
Other Assets (Note 16) 1,409,534 12,136,960 18,536
------------- -------------- ----------
Total other assets 128,728,423 144,686,977 220,967
------------- -------------- ----------
Total assets 363,873,551 393,128,636 600,389
============= ============== ==========
The accompanying notes are an integral part of these
consolidated financial statements.
F-3
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Translation of financial statements originally
issued in Spanish - See Note 2) (Restated for
general price-level changes and expressed in
thousands of constant
Chilean pesos as of December 31, 2001 and thousands of U.S. dollars)
As of December 31,
-------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY 2000 2001 2001
ThCh$ ThCh$ ThUS$
(Note 2(o))
CURRENT LIABILITIES:
Short-term bank liabilities (Note 17) 5,014,709 2,025,552 3,093
Current portion of long-term bank liabilities (Note 17) 11,083,700 16,288,092 24,875
Current portion of bonds payable (Note 19) 413,353 259,200 396
Dividends payable 744,055 981,388 1,499
Trade accounts payable 14,460,320 12,015,922 18,351
Miscellaneous creditors 780,999 804,507 1,229
Accounts payable to related companies (Note 6) 1,800,021 1,939,497 2,962
Accrued expenses (Note 20) 7,472,164 9,565,558 14,609
Withholdings 2,285,471 2,726,038 4,163
Unearned income 2,214,652 1,471,360 2,247
Other current liabilities (Note 18) - 2,283,074 3,487
Total current liabilities 46,269,444 50,360,188 76,911
------------- ------------- ----------
LONG-TERM LIABILITIES
Long-term bank liabilities (Note 17) 70,268,866 63,442,315 96,890
Bonds payable (Note 19) 609,705 19,921,759 30,425
Accounts payable 365,721 259,416 396
Miscellaneous creditors 614,810 2,287,689 3,494
Accrued expenses (Note 20) 9,794,414 6,732,575 10,282
Deferred income taxes (Note 8) 200,547 1,965,818 3,002
Other Long-Term Liabilities (Note 22) - 447,908 684
Total long-term liabilities 81,854,063 95,057,480 145,173
------------- ------------- ----------
COMMITMENTS AND CONTINGENCIES (Note 31):
MINORITY INTEREST (Note 23): 32,442,969 34,322,268 52,417
SHAREHOLDERS' EQUITY (Note 24):
Authorized, subscribed and paid-in capital represented by
64,000,000 shares with no par value 62,863,356 62,863,356 96,005
Share premium 26,794,558 26,794,558 40,921
Other reserves 6,246,374 7,819,790 11,942
Retained earnings 89,832,239 98,140,385 149,881
Net income for the period 17,570,548 17,770,611 27,139
------------- ------------- ----------
Total shareholders' equity 203,307,075 213,388,700 325,888
------------- ------------- ----------
Total liabilities and shareholders' equity 363,873,551 393,128,636 600,389
============= ============= ==========
The accompanying notes are an integral part of these
consolidated financial statements.
F-4
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Translation of financial statements originally issued
in Spanish - See Note 2) (Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 and thousands of U.S. dollars)
Years ended December 31,
----------------------------------------------------------------------
OPERATING RESULTS: 1999 2000 2001 2001
ThCh$ ThCh$ ThCh$ ThUS$
(Note 2(o))
Net sales 128,569,675 144,962,066 141,928,816 216,755
Cost of sales (84,192,275) (90,806,891) (87,462,100) (133,573)
------------- ------------- ------------- ----------
Gross margin 44,377,400 54,155,175 54,466,716 83,182
Selling and administrative expenses (20,963,863) (23,303,618) (21,882,188) (33,419)
------------- ------------- ------------- ----------
Operating income 23,413,537 30,851,557 32,584,528 49,763
------------- ------------- ------------- ----------
NON-OPERATING RESULTS:
Net Interest income (expense) (Note 25) 380,913 (2,121,621) (4,091,835) (6,249)
Equity participation in net income (loss) of
related companies (Note 12) 1,007,418 (2,798,850) (7,394,602) (11,293)
Other non-operating income (Note 25) 2,039,828 1,774,426 6,709,775 10,247
Other non-operating expense (Note 25) (2,851,288) (2,707,625) (2,746,373) (4,194)
Price-level restatement, net (Note 26) (1,086,065) (2,126,035) (2,269,680) (3,466)
Foreign exchange gain, net (Note 27) 2,629,495 1,025,975 1,347,027 2,057
------------- ------------- ------------- ----------
Non-operating income (loss) 2,120,301 (6,953,730) (8,445,688) (12,898)
------------- ------------- ------------- ----------
Income before income taxes and minority
Interest 25,533,838 23,897,827 24,138,840 36,865
Income taxes (Note 8) (3,739,766) (3,763,459) (4,982,312) (7,609)
Extraordinary income (Note 28) - - 1,785,074 2,726
------------- ------------- ------------- ----------
Income before minority interest 21,794,072 20,134,368 20,941,602 31,982
Minority interest (Note 23) (455,638) (2,563,820) (3,170,991) (4,843)
Net income 21,338,434 17,570,548 17,770,611 27,139
============= ============= ============= ==========
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Translation of financial statements originally issued in Spanish - See Note 2)
(Expressed in thousands of historical Chilean pesos, except as stated)
Previous
Share Share Other Retained Year's Net Net Income
Capital Premium Reserves Earnings Income For the Year Total
------------ ----------- ------------ ----------- ------------ ------------- ------------
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Balance as of January 1, 1999 56,760,323 24,193,231 5,182,118 60,007,464 16,662,673 - 162,805,809
Profit distribution 1999 - - - 16,662,673 (16,662,673) - -
Dividends - - - (7,168,000) - - (7,168,000)
Price-level restatement of
equity accounts 1,475,768 629,024 134,737 1,908,815 - - 4,148,344
Currency translation adjustment - - (92,440) - - - (92,440)
Subsidiary start-up stage - - (271,408) - - - (271,408)
deficit
Net income for the year - - - - - 19,767,748 19,767,748
---------- ---------- --------- ---------- ---------- ---------- ----------
Balance as of December 31, 1999 58,236,091 24,822,255 4,953,007 71,410,952 - 19,767,748 179,190,053
========== ========== ========= ========== ========== ========== ===========
Balance as of December 31, 1999
restated to constant Chilean
Pesos
as of December 31, 2001 62,863,356 26,794,557 5,346,559 77,085,052 - 21,338,434 193,427,957
========== ========== ========= ========== ========== ========== ===========
Balance as of January 1, 2000 58,236,091 24,822,255 4,953,007 71,410,952 19,767,748 - 179,190,053
Profit distribution 2000 - - 271,408 19,496,340 (19,767,748) - -
Dividends - - - (7,878,400) - - (7,878,400)
Price-level restatement of
equity accounts 2,737,096 1,166,646 245,548 4,102,281 - - 8,251,571
Currency translation adjustment - - 696,131 - - - 696,131
Subsidiary start-up stage - - (107,536) - - - (107,536)
deficit
Net income for the year - - - - - 17,042,239 17,042,239
Balance as of December 31, 2000 60,973,187 25,988,901 6,058,558 87,131,173 - 17,042,239 197,194,058
========== ========== ========= ========== ========== ========== ===========
Balance as of December 31, 2000
restated to constant Chilean
Pesos
as of December 31, 2001 62,863,356 26,794,558 6,246,374 89,832,239 - 17,570,548 203,307,075
========== ========== ========= ========== ========== ========== ===========
Balance as of January 1, 2001 60,973,187 25,988,901 6,058,558 87,131,174 - 17,042,239 197,194,059
Profit distribution 2001 - - 107,536 16,934,703 - (17,042,239) -
Dividends - - - (8,996,480) - (8,996,480)
Price-level restatement of
equity accounts 1,890,169 805,657 172,569 3,070,988 - - 5,939,383
Currency translation adjustment - - 1,604,256 - - - 1,604,256
Subsidiary start-up stage - - (123,129) - - - (123,129)
deficit
Net income for the year - - - - - 17,770,611 17,770,611
------------- ------------- ------------ ------------- ---------- ---------- ----------
Balance as of December 31, 2001 62,863,356 26,794,558 7,819,790 98,140,385 - 17,770,611 213,388,700
========== ========== ========= ========== ========== ========== ===========
As of December 31, 1999, 2000 and 2001 there were 64,000,000 shares
authorized, issued and outstanding.
The accompanying notes are an integral part of these
consolidated financial statements.
F-6
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Translation of financial statements originally
issued in Spanish - See Note 2) (Restated for
general price-level changes and expressed in
thousands of constant
Chilean pesos as of December 31, 2001 and thousands of U.S. dollars)
Years ended December 31,
---------------------------------------------------------------
1999 2000 2001 2001
ThCh$ ThCh$ ThCh$ ThUS$
(Note 2(o))
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME FOR THE PERIOD 21,338,434 17,570,548 17,770,611 27,139
(Gain) loss on sale of property and equipment 65,267 (105,846) (43,202) (66)
(Gain) loss on sale of other assets (712,444) (252,999) (1,989,949) (3,039)
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
Depreciation 10,992,489 11,450,725 11,781,551 17,993
Amortization of intangibles 296,263 273,003 1,210,597 1,849
Write-offs and provisions 4,492,423 3,624,246 3,881,791 5,928
Equity in net (income) loss of related companies (1,007,418) 2,798,850 7,394,602 11,293
Amortization of goodwill 578,465 809,444 822,466 1,256
Net price-level restatement 1,086,065 2,126,035 2,269,680 3,466
Foreign exchange gain, net (2,629,495) (1,025,975) (1,347,027) (2,057)
Other, net 771,532 (67,935) (812,679) (1,241)
CHANGES IN OPERATING ASSETS:
Increase in current receivable (7,527,948) (4,444,953) (5,871,651) (8,967)
Increase decrease in inventories (2,074,351) 2,336,188 831,519 1,270
Increase in other assets (2,824,096) (3,800,973) (3,633,775) (5,550)
CHANGES IN OPERATING LIABILITIES:
Increase (decrease) in trade accounts payable 412,355 (148,924) 1,610,502 2,460
Increase (decrease) in bank liabilities 165,109 (149,263) (1,063,233) (1,624)
Increase in income tax 123,582 641,877 1,518,279 2,319
Increase (decrease) in accounts payable to related
companies 140,866 (108,898) 2,036,577 3,110
(Decrease) increase in withholdings (188,987) 387,848 (247,904) (379)
Loss in minority interest 455,638 2,563,820 3,170,991 4,843
------------- ------------- ------------- ---------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 23,953,749 34,476,818 39,289,746 60,003
------------- ------------- ------------- ---------
The accompanying notes are an integral part of these
consolidated financial statements.
F-7
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Translation of financial statements originally
issued in Spanish - See Note 2) (Restated for
general price-level changes and expressed in
thousands of constant
Chilean pesos as of December 31, 2001 and thousands of U.S. dollars)
Years ended December 31,
-------------------------------------------------------------------------
1999 2000 2001 2001
ThCh$ ThCh$ ThCh$ ThUS$
(Note 2(o))
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of subsidiary shares 208,711 1,489,705 - -
Borrowings from banks and others 21,491,459 68,313,763 8,461,852 12,923
Bonds payable - - 18,307,312 27,959
Borrowings from related companies 709,901 1,431,323 1,909,679 2,916
Dividends paid (8,226,724) (8,712,706) (9,453,345) (14,437)
Payment of loans (17,365,745) (10,969,466) (11,708,795) (17,882)
Repayment of bonds (4,655,030) (894,569) (1,057,645) (1,615)
Payment of loans from related companies (95,391) (3,361,134) (2,230,953) (3,407)
Other sources of financing - (89,978) 944,737 1,443
Other finance payments (66,577) (1,335,960) (157,144) (240)
-------------- -------------- -------------- ----------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES 7,999,396) 45,870,978 5,015,698 7,660
-------------- ------------- ------------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sales of property, plant and 114,017 786,669 1,466,838 2,240
Proceeds from sales of permanent investment 1,942,599 1,833,233 920,823 1,406
Proceeds from sales of other investments 87,609,950 47,798,838 53,813,084 82,184
Proceeds from loans from related companies 1,267,612 1,868,797 1,331,054 2,033
Proceeds from forwards contracts - 991,322 10,205,758 15,586
Additions to property, plant and equipment (9,156,432) (19,806,770) (32,730,097) (49,986)
Permanent investments (13,116,722) (83,452,104) (3,932,860) (6,006)
Investment in financial instruments (70,571,176) (23,722,757) (64,978,814) (99,236)
Related company loans (1,947,435) (1,907,331) (151,666) (232)
Other investing activities (78,325) (692,146) 107,996 165
-------------- -------------- ------------- ---------
NET CASH USED IN INVESTING ACTIVITIES (3,935,912) (76,302,249) (33,947,884) (51,846)
------------- ------------- ------------- ---------
TOTAL NET CASH FLOW OF THE PERIOD 12,018,441 4,045,547 10,357,560 15,817
EFFECT OF INFLATION ON CASH AND CASH
EQUIVALENTS (397,546) (1,809,889) (1,252,114) (1,911)
------------- ------------- ------------- ---------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 11,620,895 2,235,658 9,105,446 13,906
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE PERIOD 14,813,512 26,434,407 28,670,065 43,785
------------- ------------- ------------- ---------
CASH AND CASH EQUIVALENTS AT THE END
OF THE PERIOD 26,434,407 28,670,065 37,775,511 57,691
============= ============= ============= =========
The accompanying notes are an integral part of these
consolidated financial statements.
F-8
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and expressed
in thousands of constant
Chilean pesos as of December 31, 2001, except as indicated)
1. Nature of Operations
The primary activity of Cristalerias de Chile S.A. ("Cristalerias")
and its subsidiaries (collectively, the "Company") is the production
of glass bottles and plastic containers for the beverage industry.
The Company also has majority holdings in companies within the
communications, wine production, and construction industries.
Virtually all the sales made by Cristalerias de Chile S.A. are within
the domestic market, with the exception of wine bottle sales which
have a significant export volume.
2. Summary of Significant Accounting Policies
(a) Basis for preparation of financial statements:
The consolidated financial statements of the Company have been
prepared on the basis of accounting principles generally accepted in
Chile and specific guidelines issued by the Chilean Superintendency
of Securities and Insurance (the "SVS"), which are collectively
referred to as "Chilean GAAP". Certain accounting practices applied
by the Company that conform with generally accepted accounting
principles in Chile do not conform with generally accepted accounting
principles in the United States (U.S. GAAP). Certain prior year
amounts have been reclassified to conform to the current year method
of presentation.
The preparation of financial statements in conformity with Chilean
GAAP, along with the reconciliation to U.S. GAAP, requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ materially from those estimates.
In certain cases generally accepted accounting principles require
that assets or liabilities be recorded or disclosed at their fair
values. The fair value is the amount at which an asset could be
bought or sold or the amount at which a liability could be incurred
or settled in a current transaction between willing parties, other
than in a forced or liquidation sale. Where available, quoted market
prices in active markets have been used as the basis for the
measurement; however, where quoted market prices in active markets
are not available, the Company has estimated such values based on the
best information available, including using modeling and other
valuation techniques.
The accompanying financial statements reflect the consolidated
results of operations of Cristalerias and its subsidiaries. All
significant inter-company accounts have been eliminated in
consolidation. The company consolidates the financial statements of
the companies in which it controls a majority of voting shares.
Investments in companies in the development stage are accounted for
using the equity method, except that any participation in income or
losses is included directly in shareholders' equity instead of being
reflected in the Company's consolidated statement of income.
F-9
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and expressed
in thousands of constant
Chilean pesos as of December 31, 2001, except as indicated)
-----------------------
2. Summary of Significant Accounting Policies, continued:
(a) Basis for preparation of financial statements, continued:
As of December 31, 2000 and 2001, Cristalerias consolidated the
following companies:
Name % Participation
---- ---------------
2000 2001
---- ----
Cristalchile Comunicaciones S.A. 99.998 99.998
Constructora Apoger S.A. "Apoger" (1) 80.000 80.000
CIECSA S.A. and subsidiaries "CIECSA" (2) 98.110 98.210
Sociedad Anonima Viria Santa Rita "Santa Rita" (3) 54.100 54.097
Crowpla Reicolite S.A.(4) 99.990 -
Cristalchile Inversiones S.A. - 99.990
(1) Apoger includes the balance of its subsidiary, Monte Azul Ltda.
of which it owns 99.0%.
(2) Consolidated CIESCA S.A. includes the balances of its
subsidiary, Megavision S.A. of which it owns 78.01%. As of the third
quarter of 2001, CIESCA's subsidiary, Ediciones Chiloe S.A. has not
been consolidated, because ownership has decreased from 75% to 50%,
and the Company no longer has control.
(3) Santa Rita and subsidiaries includes the balances of its
subsidiaries, Vina Dona Paula S.A. and Vina Carmen S.A., of which it
owns 99.0% and 100%, respectively. In 2000, Dona Paula was not
included in the consolidation as it was in the development stage.
Sur Andino S.A., which is 100% owned and consolidated, was created
on March 1, 2001
(4) On June 29, 2001, Cristalerias contributed its investment in
Crowpla Reicolite S.A. to a joint-venture with Andina Inversiones
Societarias S.A. reducing its ownership from 99.99% to 50%. The
joint venture is not consolidated as neither party has control.
(b) Price-Level Restatement:
The financial statements have been price-level restated in order to
reflect the effect of the changes in the purchasing power of the
Chilean currency during each year. All non-monetary assets and
liabilities and income statement accounts have been restated to
reflect the changes in the Chilean consumer price index from the date
they were acquired or incurred to year-end.
The purchasing power gain or loss included in net income within the
account "price-level restatement" reflects the effect of Chilean
inflation on the monetary assets and liabilities held by the Company.
The restatements were calculated using the official consumer price
index ("CPI") of the National Institute of Statistics and based on
the "prior month rule", in which the inflation adjustments are based
on the consumer price index at the close of the month preceding the
close of the respective year or transaction. This index is considered
by the business community, the accounting profession and the Chilean
government to be the index which most closely complies with the
technical requirement to reflect the variation in the general level
of prices in the country and, consequently, is widely used for
financial reporting purposes in Chile.
F-10
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
2. Summary of Significant Accounting Policies, continued:
(b) Price-Level Restatement, continued:
The values of the Chilean consumer price index used for financial
accounting price-level restatement purposes are as follows:
Change over
previous
Index November 30
----- -----------
November 30, 1999 102.04 2.6%
November 30, 2000 106.82 4.7%
November 30, 2001 110.10 3.1%
By way of comparison, the year-end values of the Chilean consumer
price index are as follows:
Change over
previous
Index December 31
----- -----------
December 31, 1999 102.31 2.3%
December 31, 2000 106.94 4.5%
December 31, 2001 109.76 2.6%
The above-mentioned price-level restatements do not purport to
represent appraisal or replacement values and are only intended to
restate all non-monetary financial statement components in terms of
local currency of a single purchasing power and to include in the net
result for each year the gain or loss in purchasing power arising
from the holding of monetary assets and liabilities exposed to the
effects of inflation.
Assets and liabilities that are denominated in index-linked units of
account are stated at the year-end values of the respective units of
account. The principal index-linked unit used in Chile is the Unidad
de Fomento (UF), which changes daily to reflect the changes in
Chile's consumer price index. Many of the Company's investments and
liabilities are denominated in UF. As the Company's indexed
liabilities exceed its indexed assets, an increase in the index
results in a net loss on indexation.
Values for the UF are as follows (historical pesos per UF):
Ch$
----------
December 31, 1999 15,066.96
December 31, 2000 15,769.92
December 31, 2001 16,262.66
F-11
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
2. Summary of Significant Accounting Policies, continued:
(b) Price-Level Restatement, continued:
Comparative financial statements:
All amounts in the financial statements and notes are expressed in
constant Chilean pesos of December 31, 2001 purchasing power, unless
otherwise stated. For comparative purposes, the December 31, 1999 and
2000 financial statements, and the amounts disclosed in the related
footnotes have been restated by 7.9%(1) and 3.1%, respectively, in
order to present such information in terms of Chilean pesos as of
December 31, 2001. This updating does not change the prior year's
statements or information in any way except to update the amounts to
constant Chilean pesos of similar purchasing power.
(1) Originally reported 1999 figures multiplied by 4.7% then
multiplied by 3.1%
(c) Assets and liabilities denominated in foreign currency:
Balances in foreign currencies have been translated into Chilean
Pesos at the Observed Exchange Rate as reported by the Central Bank
of Chile as follows:
As of December 31,
--------------------------------------------------
Symbol 1999 2000 2001
------------------ -------------- -------------
Ch$ Ch$ Ch$
U.S. Dollar US$ 530.07 573.65 654.79
Canadian Dollar CAD 364.99 382.51 410.73
Pound Sterling GBP 855.92 856.58 948.01
German Mark (1) DEM 272.47 275.50 296.36
Italian Lira (1) ITL 0.28 0.28 0.30
Swiss Franc CHF 331.79 354.87 390.62
French Franc (1) FRF 81.24 82.15 88.36
Danish Corona (1) DKK 71.60 72.25 77.82
Swedish Corona SEK 62.23 60.76 62.14
Euro EUR 532.89 538.84 578.18
Argentine peso (2) ARG 530.07 573.65 385.17
-----------------
(1) Beginning on January 1 2002, these currencies will be
expressed in the Euro.
(2) In recent years prior to December 31, 2001, the Argentine
peso has been pegged to the U.S. dollar at a rate of 1
Argentine peso to 1 U.S. dollar. In early December 2001,
restrictions were put in place that prohibited cash withdrawals
above a certain amount and foreign money transfers, with
certain limited exceptions. While the legal exchange rate
remained at 1 peso to 1 U.S. dollar, financial institutions
were allowed to conduct only limited activity due to these
controls, and currency exchange activity was effectively halted
except for personal transactions in small amounts. In January
2002, the Argentine government announced its intent to create a
dual currency system with an "official" fixed exchange rate of
1.4 pesos to 1 U.S. dollar for import and export transactions
and a "free" floating exchange rate for other transactions. On
January 11, 2002, the exchange rate market holiday ended and
closing new "free" floating exchange rates ranged from 1.6 to
1.7 pesos to 1 U.S. dollar notwithstanding the official foreign
exchange rate as of December 31, 2001, in accordance with SVS
Circular No. 81. The conversion of Argentine subsidiary
financial statements reflect the conversion rate of 1.7 pesos
to 1 U.S. dollar.
F-12
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
2. Summary of Significant Accounting Policies, continued:
(c) Assets and liabilities denominated in foreign currency,
continued:
Transactions in foreign currencies are recorded at the exchange rate
prevailing when the transactions occur. Foreign currency balances are
translated at the exchange rate prevailing at the month end. The
resulting translation gains and losses related to these balances are
included in foreign exchange gains and losses in the income statement
for the period to which they relate.
(d) Time deposits, marketable securities and investments under
agreements to resell:
Time deposits and marketable securities are shown at cost plus
price-level restatement (indexation) and accrued interest, which
approximates the market value of these items.
Investments in mutual funds are presented at their redemption value
at the end of each accounting period. Investment in other companies
are recorded at the lower of adjusted cost or market value.
Financial instruments acquired subject to reverse repurchase
agreements are classified as other current assets (see Note 9). These
financial instruments are notes issued by the Chilean Central Bank,
primarily denominated in UF and are stated at cost plus interest and
indexation accrued at year-end.
Investments held by the Parent Company in bonds of Celulosa Arauco
are included in Other Assets and recorded at par value, without
adjusting them to the market value because the Company intends to
hold these bonds until their maturity (see Note 16).
(e) Inventories:
Inventories are valued at price-level restated cost, or at
replacement cost, if lower. Finished goods are shown at restated
direct costs, which include raw materials, energy and direct labor
costs. Raw materials are valued at historical cost, which does not
exceed net realizable value. Inventory costs are transferred to cost
of sales on the basis of weighted-average cost.
Rights to show television programs and programs produced by
Megavision are valued at cost less amortization. The inventory of
programs is amortized on an accelerated basis over the number of
contracted showings in order to match the higher income earned from
the initial showings.
The stated values of inventories do not exceed their estimated net
replacement cost.
F-13
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
2. Summary of Significant Accounting Policies, continued:
(f) Property, plant and equipment:
Property, plant and equipment are presented at price-level restated
cost; as further restated for permitted technical revaluations
carried out during 1979 and 1986. Depreciation has been calculated on
a straight-line basis, taking into account the estimated useful lives
of the assets, which are as follows:
Years
-------
Buildings and construction 15 - 50
Machinery and equipment 5 - 20
Other 3 - 10
The Company accounts for repairs and maintenance expenditures that do
not improve the operating capacity of its fixed assets as expenses.
Expenditures such as betterments or significant improvements that
enhance the operating capacity of its fixed assets are capitalized.
When disposed of, the difference between the sales proceeds and the
net book value of the fixed assets is treated as a gain or a loss.
(g) Investments in related companies:
Investments in companies in which the Company's participation exceeds
10% but is 50% or less are accounted for using the equity method
unless the Company does not have significant control. In addition, if
a company (such as Cristalerias) is part of a group under common
control which owns more than 10% of the outstanding voting shares of
a related company, each company in the controlled group which has an
ownership interest in the related company may account for its
investment using the equity method. The Company's proportional share
in net income and losses of related companies is recognized in
non-operating income and expense in the Consolidated Statements of
Income, after eliminating any unrealized profits from transactions
between related companies.
As of December 31, 2001, Envases CMF S.A. (formerly Crowpla Reicolite
S.A.) has not been consolidated as it is included in investments in
related companies. On June 29, 2001, the Company contributed this
investment to a joint venture in Crowpla Reicolite with Andina
Inversiones Societarias S.A., reducing its ownership share from
99.99% to 50.00%.
(h) Staff severance indemnities:
Cristalchile S.A. has recorded a liability for long-term service
indemnities in accordance with the collective bargaining agreements
entered into with its employees. This liability is shown at its
current value, based on the amount that would be owed if the
employees terminated their employment. Each employee is entitled to
receive one month's salary for every year of service with the
Company.
F-14
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
2. Summary of Significant Accounting Policies, continued:
(i) Deferred income taxes and tax income:
Deferred income taxes are recorded based on timing differences
between accounting and taxable income. As a transitional provision, a
contra asset or liability has been recorded offsetting the effects of
the deferred tax assets and liabilities not recorded prior to January
1, 2000. Such contra asset or liability amounts must be amortized to
income over the estimated average reversal periods corresponding to
the underlying temporary differences to which the deferred tax asset
or liability relates calculated using the tax rates to be in effect
at the time of reversal.
(j) Allowance for doubtful accounts:
The parent company and its subsidiaries have made an allowance for
doubtful accounts, which is deducted from accounts receivables and
notes receivables. The criteria used in determining the allowance is
based on the age of the balances due.
(k) Intangibles:
Intangible assets comprise the value paid by Megavision in 1990 for
the right to use the Channel 9 television frequency and its regional
channels network and trademarks held by Santa Rita. The television
broadcast rights have a long productive life, and according to
commercial transactions it has maintained its economic value. Despite
the fact that the Company's management believes that there has been
no decrease in the asset's value, the television broadcast rights are
being amortized over a 40 year period on a decelerated basis, that
is, the depreciation charge will increase as a proportion of the
remaining balance. The decelerated basis has been chosen in order to
match the amortization expense with the expected increases in
advertising revenue. Trademarks are carried at historical cost plus
price-level restatement. Beginning January 1, 1998, Santa Rita began
to amortize these trademarks on a straight-line basis over a 40-year
period.
(l) Goodwill and negative goodwill:
Goodwill has resulted from comparing the price paid for the
investment made with the proportional carrying values of the
investment's net assets acquired. The amortization of these values is
over a period of 20 years. As of December 31, 2000 and 2001, there
are no negative goodwill amounts recorded.
F-15
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
2. Summary of Significant Accounting Policies, continued:
(m) Foreign currency forward exchange contracts:
The Company has entered into foreign currency forward exchange
contracts to manage exposure related to certain foreign currency
commitments, certain foreign currency denominated balance sheet
positions, and certain anticipated foreign currency denominated
expenditures. Some of these foreign currency forward exchange
contracts have been designated, and are effective as hedges. The
amounts payable and the amounts receivable related to foreign
exchange hedging contracts are recognized on a net basis under
Current Assets or Other Current liabilities and Other Long-term
Liabilities for the years ending December 31, 2000 and 2001,
respectively. Amounts payable or receivable under these contracts
offset gains and losses on the assets, liabilities and transactions
being hedged and are presented on a net basis at the end of the
period and are classified according to the contract's expiration
date.
(n) Revenue Recognition:
Revenue is recognized (a) upon shipment of goods, at which time title
transfer to the customer, or (b) upon broadcasting for advertising
services.
(o) Translation to U.S. Dollars:
The Company maintains its accounting records and prepares its
financial statements in Chilean pesos. The United States dollar
amounts disclosed in the accompanying financial statements are
presented solely for the convenience of the reader at the December
31, 2001 closing exchange rate of Ch$654.79 per US$1. This
translation should not be construed as representing that the Chilean
peso amounts actually represent or have been, or could be, converted
into United States dollars at that exchange rate or at any other rate
of exchange.
(p) Statement of cash flows:
The Company considers all time deposits and instruments under
repurchase agreements with a remaining maturity of less than 90 days
to be cash equivalents.
Cash flows related to the Company's activities such as interest paid,
interest income, dividends received and all other cash flows not
classified as investment or financing are recognized under "Cash Flow
from Operating Activities".
(q) Repurchase and Resale agreement operations:
The financial instruments acquired with resale agreement are
presented at their acquisition value plus the interests and
adjustments accrued at the closing of the fiscal year and they are
classified as Other Current Assets.
F-16
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
2. Summary of Significant Accounting Policies, continued:
(r) Bonds:
Bonds payable are recorded at the face value of the bonds. The
difference between the face value and the proceeds received, equal to
the premium or discount, is deferred and amortized over the term of
the bonds.
(s) Computer Software:
The parent company and Vina Santa Rita developed computer software
with their own resources and also acquired computer packages from
third parties. Disbursements due to in-house software development not
related to the application development are charged to results as they
arise. The computer packages are recorded as Fixed Assets and
amortized over 36 months in the parent company and 48 months in the
subsidiary S.A. Vina Santa Rita.:
(t) Foreign investments:
In accordance with Technical Bulletin No. 64 ("BT 64") of the Chilean
Association of Accountants, and Official Circular N(degree) 5294 of
the S.V.S., permanent foreign investments established in countries
defined by BT 64 as being unstable, whose activities do not
constitute an extension of the parent company's operations are
controlled and measured in U.S. dollars. Differences between the
Chilean peso and the U.S. dollar exchange rate variation and
fluctuations in the IPC are accounted for as a charge or credit to
the equity account called "Cumulative Translation Adjustment ". Under
BT 64, foreign exchange differences on US dollar-denominated
liabilities that have been designated as a hedge of such investments
are also included in the same equity account to the extent the hedge
is effective. This rule corresponds to the Company's equity method
investment in Rayen Cura.
F-17
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
3. Changes in Accounting Policies
In accordance with Technical Bulletins N(degree)60 and 68 issued by
the Chilean Association of Accountants and Circular N(degree) 1,466
issued by the SVS, the Company has recorded the tax effects of
temporary differences on a prospective basis beginning January 1,
2000.
Had the Company recorded deferred tax assets and liabilities as of
December 31, 1999, those balances would have amounted to
ThCh$5,850,482 and ThCh$5,746,490, respectively. In addition, the
charge to earnings (losses) for new temporary differences generated
during the period amounted to ThCh$20,682, ThCh$137,262 and
ThCh$443,986 for the years ended December 31, 1999, 2000 and 2001,
respectively, which has been recorded in the Statement of Income
under the item "Income taxes" (See Note 8).
4. Time Deposits and Marketable Securities
The composition of time deposits is as follows:
Institution Currency 2000 2001
ThCh$ ThCh$
Banco Santiago US$ 1,485,087 4,264,634
Banco Credito e Inversiones US$ - 4,445,253
Banco A. Edwards US$ - 4,302,363
Banco Santander New York US$ 14,071,990 -
Banco Santiago UF 912,767 2,227,619
Banco A. Edwards UF - 881,714
Banco Santander UF - 4,221,202
ScotiaBank (formerly Sudamericano) UF - 1,318,036
Citibank UF - 1,070,972
Banco de Chile UF 1,933,995 -
------------ ------------
Total 18,403,839 22,731,793
============ ============
F-18
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
4. Time Deposits and Marketable Securities, continued
Marketable securities consist of the following:
Institution 2000 2001
ThCh$ ThCh$
------------ ------------
Chilean Government securities 2,581,949 -
Mutual Funds 39,631 9,704,120
Equity Securities 5,777,099 3,269,521
------------ ------------
Other - 71,599
Total 8,398,679 13,045,240
============ ============
5. Current receivables
Current receivables are summarized as follows:
2000 2001
------------ ------------
ThCh$ ThCh$
Trade accounts receivable 34,502,265 32,184,566
Miscellaneous accounts receivable 907,447 649,782
Notes receivable 4,248,455 4,329,363
------------ ------------
Sub-total 39,658,167 37,163,711
Less: allowance for doubtful accounts (539,982) (528,989)
------------- -------------
Total 39,118,185 36,634,722
============ ============
F-19
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
6. Related Party transactions:
The following table details amounts receivable from and payable to
related parties as of December 31, 2000 and 2001:
Balance Receivable Balance Payable
------------------------------------------------------
2000 2001 2000 2001
-------------- ------------- ------------- -----------
ThCh$ ThCh$ ThCh$ ThCh$
Short-term
Metropolis - Intercom (indirect affiliate company) 27,492 33,599 - 36,216
Costanera S.A. (affiliate) 5,401 - - -
Inversiones Bayona S.A. (shareholder) - - 134,108 177,376
Servicios y Consultorias Hendaya S.A. (shareholder) 1,461 4,320 128,819 170,381
Elecmetal S.A. (majority shareholder) 2,695 1,028 494,014 653,400
Editorial Zig-Zag S.A.(affiliate) 149,061 275,695 - -
Navarino S.A. (common control) 198 - - -
Bazuca S.A. (affiliate) 12,617 - - -
Cordillera Comunicaciones Ltda. (affiliate) - - 181,380 200,810
Claro y Co. (common board members) 401 285 4,344 19,702
Distribuicion via Directa (common control) - - 28,340 -
Envases CMF S.A. (affiliate) - 55 - 17,997
Andres Navarro (majority shareholder of affiliate) - - 23 -
Cia. Sudamericana de Vapores (common control) 26,485 1,586 1,675 13,462
Marinsa (indirect affiliate company) 1,861 - - -
Vina Los Vascos S.A. (indirect affiliate) 227,711 116,548 3,916 8,090
Rayen Cura S.A.I.C. (affiliate) 5,124 - - -
Ediciones Financieras S.A. (affiliate) - 3,235 - 3,642
Televisa International S.A. De C.V. - - 823,402 638,421
----------- --------- ----------- -----------
Total Short-term 460,507 436,351 1,800,021 1,939,497
=========== ========= =========== ===========
Long-term
Inmobiliaria Don Alberto S.A. (Affiliate) 42,522 - - -
Vina Dona Paula (Affiliate) 1,338,526 - - -
Ediciones Chiloe S.A. (affiliate) - 11,452 - -
----------- --------- ----------- -----------
Total Long-term 1,381,048 11,452 - -
=========== ========= =========== ===========
All related party transactions are translated at arms-length basis, using
approximate market prices and interest rates, when applicable.
F-20
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
6. Related Party transactions, continued:
Transactions with related parties that affect net income are as follows:
Amount of transaction (Charge) Credit to income
--------------------------------- ---------------------------------
1999 2000 2001 1999 2000 2001
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
----------------------------------------------------------------------
CRISTALCHILE S.A.
Servicios y Consultorfas Hendaya S.A. (shareholder)
Services received 676,978 1,227,737 1,235,875 (676,978) (1,227,737) (1,235,875)
Dividends 680,499 720,802 752,913 - - -
Services Provided 18,844 18,360 19,430 18,844 18,360 19,430
Sales - 8,657 7,538 - 6,844 38
Sale of Fixed Assets - 12,938 - - - -
Cfa. Electro Metaliurgica S.A. (shareholder)
Dividends 2,609,673 2,764,233 2,887,375 - - -
Payments on company's behalf 1,871 3,602 20 - - -
Purchase of industrial materials 2,284 166 6,044 (2,284) (166) -
Advertising sold - 5,059 2,268 - 2,856 515
Services provided - 165 - - (165) -
Claro y Cfa.(related by President Mr. Claro)
Legal Counsel 26,491 142,768 163,763 (26,491) (142,768) (163,763)
Sales 346 1,240 109 346
Navarino S.A. (indirectly related company)
Services Provided 9,616 9,514 9,580 9,616 9,514 9,580
Loans Granted 509,612 - - - - -
Repayment of Loans 509,612 - - - - -
Interest on Loans Granted 1,138 - - 1,138 - -
Advertising sold - 2,380 - - 2,380 -
Quemchi S.A. (indirectly related company)
Services Provided 9,616 9,514 9,580 7,189 9,514 9,580
Loans Granted 378,889 36,085 50,000 - - -
Repayment of Loans 378,889 36,085 50,000 - - -
Interest on Loans Granted 22,255 59 152 22,255 59 152
Advertising sold 3,582 1,876 - 3,582 1,876 -
Cia Sudamenricana de Vapores (indirectly related
company)
Shipping Services 342,259 327,237 403,832 - - -
Advertising sold - 35,141 - - 35,141 -
Advertising contracts - 85,058 53,333 - 85,058 53,333
Services received - 26,848 44,414 - (26,848) (44,414)
Sales - 56,746 49,261 - 15,683 10,904
Rayen Curd S.A. (related company)
Direct Sales - 52,914 38,397 - 15,993 10,230
Paid in Capital - 5,266,809 3,239,783 - - -
Repayment of Loans - - 403 - - -
F-21
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
6. Related Party transactions, continued:
Amount of transaction (Charge) Credit to income
----------------------------------- -----------------------------------
1999 2000 2001 1999 2000 2001
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
------------------------------------------------------------------------
CIECSA S.A.
Envases CMF S.A.
Purchase of Industrial Materials - - 17,371 - - -
Sales - 139 173 - 101 35
Paid in Capital - - 502,042 - - -
Repayment of Loans - 533,895 1,245,296 - - -
Interest on Loans Granted - 184,895 58,552 - 184,895 58,552
Reimbursement of Expenses - - 12,122 - - (12,122)
Editorial Zig-Zag (related company)
Advertising sold - 21,589 - - 21,589 -
Televise SA de CV (shareholder) -
Sales 80,485 120,117 34,918 80,485 120,117 34,918
Purchase of Materials 1,231,376 1,801,477 (1,231,376) (1,801,477)
Metrdpolis Intercom (related company)
Advertising sold 3,458 251,600 180,519 3,458 251,600 180,519
Subscription sold - 55,505 - - 55,505 -
Advertising purchased 4,097 8,806 62,996 (4,097) (8,806) (62,996)
Empresa Editorial Televise SA (related company)
Advertising sold 55,052 - - 55,052 - -
Advertising purchased 55,052 - - (55,052) - -
Sales - 20 - - (20) -
Forus SA (Directors in common)
Advertising sold 33,106 35,054 - 33,106 35,054 -
Indesa S.A. (related company)
Advertising sold 227 169 - 227 169 -
Subscription sold 88 88 - 88 88 -
Maritime de Inversiones S.A. (directors in common)
Advertising sold 726 1,791 - 726 1,791 -
Subscription sold 88 88 - 88 88 -
Sonda S.A. (directors in common)
Advertising sold 23,342 - - 23,342 - -
Subscription sold 78 226 - 78 226 -
Distribuidora Via Directa S.A.
Newspaper distribution 133,120 161,436 - (133,120) (161,436) -
News Stands 90,926 127,582 - 90,926 127,582 -
Other 88 84 - 88 84 -
Costanera S.A.C.I. (related company)
Advertising sold 4,578 - - 4,578 -
Program production 184,405 77,783 - (184,405) (77,783)
Inversiones Bayona S.A. (majority shareholder)
Dividends 708,439 750,397 783,825 -
Vine Los Vascos (indirectly related company)
Direct Sales 565,420 554,142 471,384 138,350 167,487 106,746
Purchase of Industrial Materials 38,014 45,165 43,082 - (54) -
Inmobiliaria Don Aberto (indirectly related company)
Interest on Loans Granted 11,734 5,952 942 11,734 5,952 942
Loans Repaid 181,856 405,060 42,187 - - -
Profits distributed - - 45,011 - - -
F-22
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
6. Related Party transactions, continued:
Amount of transaction (Charge) Credit to income
---------------------------------------------------------------------
1999 2000 2001 1999 2000 2001
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
---------------------------------------------------------------------
S.A. VINA SANTA RITA
Inversiones Pocuro Ltda
Subscription sold - 84 - - 84 -
CAP S.A.
Advertising sold 69,009 - 2,500 - - 2,500
Ediciones Financieras S.A.
Payments on company's behalf - - 9,970 - - -
Sales - 22,623 30,759 - (22,623) (30,759)
Advertising purchase - 168 1,692 - - 422
7. Inventories
Inventories have been valued in accordance with the policy described
in Note 2(e). The principal components are as follows:
2000 2001
--------- ----------
ThCh$ ThCh$
Finished products 9,862,901 7,879,025
Raw materials and fuel 16,828,499 15,475,402
Operating supplies and spare parts 2,807,382 2,887,025
Goods-in-transit 748,321 382,133
Foreign and local programming not yet
transmitted 2,121,877 2,178,534
Work-in-progress 1,119,751 -
----------- -----------
Total 33,488,731 28,802,119
=========== ==========
F-23
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
8. Income and Deferred Taxes
The Company and its subsidiaries have recorded a current tax
provision of 15% of taxable income for income tax and for withheld
employee taxes. The income tax liability is determined based on
current Chilean tax laws and is presented as a net asset or
liability.
Net recoverable taxes assets as of December 31, 2000 and 2001 are
calculated, as follows:
2000 2001
------------- ------------
ThCh$ ThCh$
Provision for current income taxes (3,871,590) (3,871,387)
Withheld employee taxes (13,403) (8,303)
-------------- -------------
Total current taxes (3,884,993) (3,879,690)
Credits:
Credit Art. 33 42,683 43,087
Monthly income tax installments 3,991,065 4,779,903
Training expenditures 106,283 105,593
Grants 79,852 72,154
------------- -------------
Total Credits 4,219,883 5,000,737
Income tax payable 334,891 1,121,047
Recoverable taxes 451,092 358,321
------------- -------------
Taxes recoverable, net 785,983 1,479,368
============= =============
F-24
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
8. Income and Deferred Taxes, continued:
The income tax rate will increase from 15% to 16% in 2002, 16.5% in
2003, and 17% in 2004. Deferred tax assets and liabilities as of
December 31, 2001, are recorded using the applicable tax rate
depending on the year of reversal. The total deferred tax asset
(liabilities) recognized by the Company at each year end amounted to
ThCh$609,465 and ThCh$(700,768) as of December 31, 2000 and 2001,
respectively, and is classified as short and long-term as follows:
2000 2001
--------------------------- --------------------------
Short Term Long Term Short Term Long Term
-------------- -------------- -------------- ----------
ThCh$ ThCh$ ThCh$ ThCh$
Deferred income tax assets 1,022,996 5,954,727 1,648,691 5,804,352
Complementy account, net of amortization (184,746) (4,910,686) (245,266) (4,637,376)
-------------- -------------- -------------- -----------
Total deferred income tax assets 838,250 1,044,041 1,403,425 1,166,976
-------------- -------------- -------------- -----------
Deferred income tax liabilities 206,944 6,181,590 295,236 6,972,625
Complementy account, net of amortization (178,706) (4,937,002) (156,861) (3,839,831)
-------------- ------------- -------------- -----------
Total deferred income tax liabilities 28,238 1,244,588 138,375 3,132,794
-------------- ------------- -------------- -----------
Net deferred tax assets (liabilities) 810,012 (200,547) 1,265,050 (1,965,818)
============== ============== ============== ===========
Income tax expense as of December 31, 1999, 2000 and 2001 is as follows:
1999 2000 2001
------------ ------------- -------------
ThCh$ ThCh$ ThCh$
Parent Company 1st category tax (3,760,448) (3,884,993) (3,879,690)
Deferred tax expense 20,682 (137,262) (443,986)
Tax benefit for tax losses - 6,222 6,156
Deferred tax amortization - 252,574 (615,778)
Deferred loss tax effect due to change in tax rate - - (49,014)
------------ ------------ ------------
Income tax expense (3,739,766) (3,763,459) (4,982,312)
============ ============ ============
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
9. Other current assets
Other current assets are valued as described in Note 2(d) and are
principally comprised of investments in government securities subject
to reverse repurchase agreements.
2000 2001
---------- -------------
ThCh$ ThCh$
Reverse repurchase agreements 9,033,192 11,463,484
(See Note 10)
Forward contracts 690,222 -
Other 27,797 67,854
---------- -------------
Total 9,751,211 11,531,338
========== =============
10. Reverse repurchase agreements:
Market Value as of
----------------------------------
Purchase Maturity Purchase December 31,
Issuer Date Date Date 2001
- ----------------------- ------------------ ------------- ------------- -------------
Banco A. Edwards 12-14-2001 01-09-2002 2,687,642 2,627,336
Banco A. Edwards 12-14-2001 01-11-2002 685,261 670,815
Banco A. Edwards 12-14-2001 01-21-2002 1,713,247 1,671,985
Banco A. Edwards 12-14-2001 01-07-2002 333,055 340,697
Banco A. Edwards 12-14-2001 01-28-2002 1,313,319 1,310,732
Banco A. Edwards 12-14-2001 01-14-2002 1,953,712 1,906,972
BCI Brokers 12-16-2001 01-03-2002 1,733,100 1,734,660
Santiago Brokers 12-18-2001 01-02-2002 900,000 900,135
Scotiabank 12-02-2001 01-10-2002 300,000 300,152
------------- -------------
Total 11,619,336 11,463,484
============= =============
F-26
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
11. Property, Plant and Equipment
Property, plant and equipment have been valued in accordance with
Note 2(f). The items comprising property, plant and equipment of the
Company at each year end, are primarily land, industrial buildings,
infrastructure, machinery and equipment distributed among the Padre
Hurtado Plant, the San Sebastian plant and Megavision's Vicuna
Mackenna facilities and Santa Rita's vineyards, building,
infrastructure and equipment distributed among Alto Jahuel,
Peralillo.
a) Technical revaluation and adjustment of book value:
Property, plant and equipment include increases arising from the
technical revaluation of certain assets carried out during 1979 and
1986, in accordance with instructions from the SVS.
The gross amount of technical revaluation included in the carrying
amount of assets is detailed below by class of asset:
2000 2001
--------- ---------
ThCh$ ThCh$
Land 300,420 300,603
Buildings and construction 6,451,869 6,436,532
Machinery and equipment 3,517,907 1,549,239
--------- ---------
Total increase in value due to
technical revaluation of property,
plant and equipment 10,270,196 8,286,374
========== =========
F-27
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
11. Property, Plant and Equipment, continued:
b) Depreciation
The depreciation charge to income each year and the balance of
accumulated depreciation at each year-end are summarized as follows:
1999 2000 2001
---- ---- ----
ThCh$ ThCh$ ThCh$
Depreciation of:
Property, plant and equipment 10,638,481 11,104,693 11,524,903
Technical revaluation 354,008 346,032 256,648
------------ ------------ ------------
Depreciation expense 10,992,489 11,450,725 11,781,551
============ ============ ============
c) Accumulated depreciation at each year-end is distributed as follows:
2000 2001
---- ----
ThCh$ ThCh$
Property, plant and equipment 73,615,655 74,046,869
Technical revaluation 8,053,208 6,399,443
------------- -------------
Accumulated depreciation 81,668,863 80,446,312
============= =============
12. Investments in Related Companies
The investments in related companies at each year-end are as follows:
2000 2001
----------------------------------------------
% ThCh$ % ThCh$
Vina Los Vascos S.A. 43.00 3,973,881 43.00 4,447,406
Inmobiliaria y Constructora Richelieu S.A. 7.00 1,376 0.00 -
Envases CMF S.A. 0.00 - 50.00 14,310,150
Ediciones Chiloe S.A. 0.00 - 50.00 559,486
Cordillera Comunicaciones Ltda. 0.25 428,446 0.25 393,277
Cordillera Comunicaciones Holding Ltda. 50.00 85,260,886 50.00 78,262,125
Editorial Zig-Zag 49.86 47,764 49.86 331,551
Inmobiliaria Don Alberto 38.17 162,106 38.17 1,077
Rayen Cura S.A.C.I. 40.00 10,638,233 40.00 13,131,177
Vina Doha Paula 100.00 2,878,000 0.00 -
Simetral S.A. 81.50 137,332 81.50 119,679
----------- -----------
Total 103,528,024 111,555,928
=========== ===========
F-28
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
12. Investments in Related Companies, continued:
Income resulting from these investments for each year is as follows:
Participation in net income (loss)
----------------------------------------------
1999 2000 2001
----------- ------------ -----------
ThCh$ ThCh$ ThCh$
Vina Los Vascos S.A. 417,637 501,504 473,525
Inmobiliaria y Constructora Richelieu S.A. (17) 81 (452)
Cordillera Comunicaciones Ltda. 1,350 (19,675) (35,170)
Cordillera Comunicaciones Holding Ltda. 66,113 (3,915,373) (6,998,761)
Editorial Zig-Zag (20,402) (4,862) 65,260
Inmobiliaria Don Alberto 142,676 10,565 (11,306)
Rayen Cura S.A.C.I. 221,059 628,910 (1,769,849)
Cristalerias Videcor Chile Ltda. 179,002 - -
Ediciones Chiloe S.A. - - (36,613)
Envases CMF S.A. - - 918,764
---------- ------------ -----------
Total 1,007,418 (2,798,850) (7,394,602)
========== ============ ===========
The Company has valued its investments in related companies as
described in Notes 2(g). The following is a description of the
Company's significant investments.
Cordillera Comunicaciones Ltda.
On October 19, 1995, The Board of Directors of Cristalerias approved
an agreement between the Cordillera Comunicaciones Holding Group
(TCI/BRESNAN - Cristalchile) and the Intercom Group (CTC - El
Mercurio) to jointly operate the Metropolis and Intercom cable
systems (the "Association"). The agreement established that
(Intercom) would operate the cable television network that provided
its services to the Association. In accordance with the agreement,
Cordillera sold part of its assets to (Intercom) for approximately
US$100 million (historical). Until 2001, the Cordillera Group had a
participation of 60% of the Association while the Intercom Group had
40%.
In May 2000, Cristalchile settled an arbitration proceeding with
Telefonica CTC Chile, initiated in May 1998 to resolve the dispute
between the parties over the development of internet services through
Metropolis-Intercom, under the terms of the agreement. During the
year, the Company's unconsolidated subsidiary, Cordilleras
Comunicaciones bought the remaining interest in Metropolis- Intercom
and the HFC network from Telefonica CTC Chile for US$ 270 million.
Cordillera Comunicaciones is 50% owned by both the Company and
Liberty Media.
The Company did not consolidate Cordillera Comunicaciones as it did
not have control.
F-29
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
12. Investments in Related Companies, continued:
Vina Dona Paula S.A.
On August 25, 1997, Vina Santa Rita formed Vina Dona Paula S.A.,
with a 99.99% ownership interest. The company's balance sheet has
been consolidated as of December 31, 2001. Dona Paula S.A. was not
included in the consolidation as of December 31, 2000 because the
company was in the development stage.
Vina Los Vascos S.A.
On September 15, 2000, Vina Santa Rita acquired an additional
2,188,680 shares of Vina Los Vascos S.A., in the amount of
ThCh$391,974 (historical pesos). This transaction generated goodwill
of ThCh$185,810. (historical pesos). With this acquisition Vina Santa
Rita's ownership percentage totals 43% as of December 31, 2001.
Editorial Zig-Zag S.A.
In October 1997, Multimedia was dissolved, and 100% of its shares in
Editorial Zig-Zag S.A. were transferred to Ciesca S.A. In the same
month, Zig-Zag's capital was increased by ThCh$526,000 (historical
pesos), 33% of which was subscribed by Ciesca (36,758,760 shares),
reaching a 39.9% percentage ownership in Zig-Zag.
During September 2000, Ciesca bought an additional 18,379,380 shares
in Zig-Zag for ThCh$113,074 to increase the ownership percentage in
Zig-Zag to 49.86%.
Editorial Zig-Zag increased its capital on February 26, 2001, Ciesca
S.A. bought 22,600,000 shares for ThCh$56,550. Ciesca S.A. purchased
60,000 additional shares of Editorial Zig-Zag S.A. for an amount of
ThCh$150 (historic), maintaining its current 49.89% share.
Simetral S.A.
In October 2000, Ciesca S.A. formed Simetral S.A., with a 81.5%
ownership interest. Simetral is not consolidated with Ciesca because
it is still in the development stage.
During the shareholders' meeting held on July 23, 2001, the
shareholders of Simetral S.A. agreed to increase the company's
capital of ThCh$284,044, divided in 1,000,000 shares to ThCh$414,044
divided into 1,457,676 shares, through the issuance of 457,676 shares
with a value of Ch$284.0437 each.
Ciesca S.A. purchased 373,006 shares of this issuance on August 28,
2001, for a value of ThCh$105,950(historic) maintaining its 81.5%
share of Simetral S.A.'s equity.
F-30
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
12. Investments in Related Companies, continued:
Rayen Cura S.A.I.C.
The Company transferred the investment it had in Rayen Cura S.A.I.C.,
a company established in the city of Mendoza, Argentina, to its
subsidiary CristalChile Inversiones S.A. for ThCh$18,340,577,
equivalent to US$25,582,473 on December 28, 2001, which includes the
loan from shareholders issued in July 2001 of US$4,800,000. This
transaction had no effect on results as it was a transaction between
entities under common control and all amounts were at book values.
According to Chilean GAAP, CristalChile Inversiones S.A. remeasured
the Rayen Cura S.A.C.I. financial statements using a rate of
exchange of 1.7 Argentine Pesos per U.S. dollar . The accounting
charge to results as a consequence of the devaluation of the
Argentine Peso was ThCh$2,226,055 at December 31, 2001.
On September 30, 2000, the Company purchased 4,160,000 shares in
Rayen Cura S.A.I.C, located in the city of Mendoza, Argentina, for
US$16,200,000, equivalent to ThCh$8,611,110, (historical pesos)
resulting in a 40% ownership stake. This acquisition generated
goodwill of US$9,182,833, which is being amortized over a period of
20 years pursuant to the instructions of the SVS.
On February 23, 2001, the Company and the other shareholder paid
proportional capital-contributions to Rayen Cura totaling
US$9,600,000. As the contributions were proportional, Cristalchile's
participation in Rayen Cura remains at 40%.
In accordance with Technical Bulletin No. 64, the Company presents
the following information with respect to this foreign investment
(See Note 2(t)):
2000 2001
-------------------------------
ThCh$ ThCh$
Participation of Cristalchile in Rayen Cura S.A.I.C. 10,638,233 13,131,177
Goodwill on investment, net of accumulated amortization 5,026,988 5,268,598
------------- -------------
Total investment value 15,665,221 18,399,775
============= =============
Participation in net income (loss) for the year 628,909 (2,110,132)
------------- --------------
Participation in net income available for dividends 440,236 -
============= =============
The investment in Rayen Cura S.A.I.C. is measured in U.S. dollars in
accordance with Technical Bulletin No 64.
Cristalerias Videcor Chile Ltda.
On September 20, 2000, the Company sold its investment in
Cristalerias Videcor Chile Ltda. for ThCh$2,656,407 (historical
pesos), resulting in a gain on the sale of ThCh$660,002 (historical
pesos), which is included in other non-operating income.
F-31
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
12. Investments in Related Companies, continued:
Ediciones Chiloe S.A.
CIESCA sold 443,731 shares of Ediciones Chiloe S.A. to Recoletos
Chile Ltda. on September 27, 2001, thereby reducing its share in the
company to 50%. The sale generated a gain of ThCh$567,500 as well as
the recognition of ThCh$47,500 from previously unrecognized earnings.
During the Shareholders' meeting held on September 27, 2001, the
shareholders agreed to increase the company's capital by ThCh$684,308
through the issuance of 1,500,795 shares, which were equally
purchased by Ciesca S.A. and Recoletos Chile Ltda., so each party
maintained the same ownership percentage. In the issuance, 1,297,013
shares, equivalent to ThCh$583,339, were paid by contributing 1,046
shares of Ediciones Financieras S.A. valued at ThCh$421,551 and
forgiveness of loans of ThCh$161,788. Payment of 221,382 shares,
equivalent to ThCh$100,969 is pending and will be paid over a period
of three years.
Ediciones Financieras S.A.
CIESCA sold 523 shares of Ediciones Financieras S.A. to Recoletos
Chile Ltda., a third party on September 27, 2001, recognizing a gain
of ThCh$161,000. Additionally, CIESCA contributed 523 shares to
Ediciones Chiloe in exchange for newly issued shares in that company
to maintain its ownership percentage. CIESCA no longer has a direct
ownership in Ediciones Financieras S.A..
Envases CMF S.A.
During the Shareholders' meeting of Crowpla Reicolite S.A. that was
held on June 29, 2001, shareholders agreed to increase the company's
capital to ThCh$26,220,315 divided into 56,000 shares, through the
issuance of 29,000 shares equivalent to ThCh$15,648,300. Andina
Inversiones Societarias S.A. purchased 28,000 shares worth
ThCh$15,149,749, and Cristalerias purchased 1,000 shares worth
ThCh$498,552. As a result of this transaction, Cristalerias decreased
its ownership in the company to 50% and the investment is no longer
consolidated as neither company has control of the joint-venture.
Cristalerias recognized a gain from the excess of its share in the
joint venture's equity and the book value of its investment of
ThCh$1,989,949, which is included in Gain on Sale of Investments in
Other Non-Operating Income (see Note 25). The company changed its
name to Envases CMF S.A. during November 2001.
13. Investments in Other Companies
The investment in other companies, which at December 31, 2001 totaled
ThCh$1,430,266 (ThCh$1,566,535 at December 31, 2000) are presented in
the tables:
Number of Share
shares percentage Accounting value
Corporation 2000 20001
------------------------------------------------------------------------------------------------------------------
% ThCh$ ThCh$
Internet Holding S.A. 65,765 7.42 983,424 853,912
Bazuca Com. INC 266,500 7.89 580,139 573,382
Metropolis Intercom S.A. 1 0.00 21 21
Proser S.A. 50 1.50 2,951 2,951
----------- -----------
Total 1,566,535 1,430,266
=========== ===========
F-32
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
14. Goodwill, net
Goodwill, net of accumulated amortization of ThCh$3,554,780 and
ThCh$3,741,263 as of December 31, 2000 and 2001, respectively, is as
follows:
2000 2001
-------------------------------
ThCh$ ThCh$
Editorial Zig-Zag 116,753 110,647
Ciecsa S.A. 1,631,541 1,515,002
Sociedad Anonima Vina Santa Rita 682,080 633,847
Red Televisiva Megavision S.A. 80,825 73,479
Ediciones Financieras S.A. 1,235,242 -
Vina Los Vascos S.A. 1,337,859 1,273,884
Crowpla Reicolite S.A. 133,122 -
Rayen Cura S.A.I.C. 5,026,988 5,268,598
------------ ------------
Total goodwill, net 10,244,410 8,875,457
============ ============
15. Intangibles, net
Intangibles at each year-end are as follows:
2000 2001
-------------------------------
ThCh$ ThCh$
Channel 9 and regional network frequency concessions 9,785,887 9,785,887
Trademarks 1,320,536 1,464,207
------------ ------------
11,106,423 11,250,094
Accumulated trademarks amortization (98,750) (134,061)
Accumulated frequency amortization (537,031) (656,370)
------------- ------------
Total intangibles, net 10,470,642 10,459,663
============ ============
F-33
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
16. Other Assets
Other assets at each period-end are as follows:
2000 2001
-----------------------------------
ThCh$ ThCh$
Inventories of domestic and foreign programming to be
broadcast in over one year 1,275,038 928,772
Celulosa Arauco Bonds (1) - 9,070,345
Bond Issuance Costs 34,579 1,307,622
Other 99,917 830,221
-----------------------------------
Total Other assets 1,409,534 12,136,960
===================================
(1) The Company purchased Celulosa Arauco bonds with face value of
ThCh$8,787,319 or approximately US$13,420,000 at an annual rate of 6.95% with
a maturity date of September 15, 2005. A premium of ThCh$283,026 will be
amortized over the term of the bonds. The bonds are intended to be
held-to-maturity, and therefore have not been marked to market at year-end.
17. Bank Liabilities
a) Short-term bank liabilities as of December 31, 2000 and 2001 are as
follows:
2000 2001
-------------------------------------
Bank Currency ThCh$ ThCh$
Banco Sudamericano UF 1,016,879 1,015,329
Banco Sudamericano Ch$ 94,631 -
Banco Santiago Ch$ - 1,004,447
Banco Santiago UF 1,106,073 -
Banco A. Edwards US$ 18,963 -
Banco BICE US$ 2,743,837 -
Fondo Provincial de Mendoza US$ - 5,775
Banco Chile Ch$ 2 1
Banco BICE US$ 34,324 -
-------------------------------------
Total 5,014,709 2,025,552
=====================================
The weighted-average annual interest rate on short-term borrowings
was 7.50% as of December 31, 2000 and 7.20% as of December 31, 2001.
F-34
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
17. Bank Liabilities, continued:
b) Long-term bank liabilities outstanding at each year-end are as
follows:
Balances as of December 31, 2000 Balances as of December 31, 2001
-------------------------------- --------------------------------
Average Current Long-term Current Long-term
Bank or Financial Type of Interest Portion Portion Total Portion Portion Total
Institution Currency Rate ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
---------------------------------------------------------------------------------------------------------
Banco Santiago US$ 3.60 33,934 - 33,934 19,514 19,514
Chase M. Bank (syndicate) US$ 3.00 24,440 59,143,315 59,167,755 9,430,535 56,124,857 65,555,392
Banco Santiago UF 7.41 2,448,264 - 2,448,264 2,203,757 2,203,757
Banco Sudamericano UF 7.96 814,768 798,212 1,612,980 1,214,208 399,200 1,613,408
Banco Edwards UF 8.16 1,800,578 - 1,800,578 181,869 1,450,503 1,632,372
Banco Argentaria US$ 4.89 223,540 782,389 1,005,928 243,977 609,942 853,919
Banco regional de Cuyo US$ 3.30 - - - - 158,301 158,301
Citibank US$ 4.52 3,892,730 8,240,196 12,132,927 1,816,511 3,703,265 5,519,776
Dresdner US$ 5.40 967,816 1,267,359 2,235,175 972,872 467,710 1,440,582
Banco de Credito e
Inversiones UF 8.16 877,630 37,395 915,025 204,849 528,537 733,386
---------- ------------ ------------ -------------- ------------ ------------
11,083,700 70,268,866 81,352,566 16,288,092 63,442,315 79,730,407
========== ============ ============ ============== ============ ============
Scheduled maturities of the long-term bank obligations as of December 31, 2001
are as follows:
Year Ending December 31, ThCh$
------------------------
-----------------------
2003 22,224,034
2004 22,068,488
2005 19,109,136
2006 40,657
Thereafter -
-----------------------
Total 63,442,315
=======================
The Company's syndicated loan with Chase Manhattan Bank has certain
restrictive covenants, the most significant of which are summarized below:
a) The Company will not merge into or consolidate with any other company,
or permit any other company to merge into or consolidate with it.
b) The Company cannot have a total debt to capitalization ratio of more
than 0.36 to 1.0, the unconsolidated net debt to EBITDA ratio cannot
exceed 3.0 to 1.0, interest coverage ratio cannot be less than 4.0, and
net worth cannot be less than UF10,000,000.
As of December 31, 2001, the Company is in compliance with these covenants.
F-35
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
18. Other Current Liabilities
As of December 31, 2001 there are balances in Other Current
Liabilities of ThCh$2,283,074 corresponding to forward contracts in
foreign currency entered into by the parent company and the
subsidiaries, Vina Santa Rita and Ciesca S.A.
As of December 31, 2000, the Company had a net receivables balance
related to its forward contracts.
19. Bonds Payable
The Company has made the following public bond issuances:
Series A bonds
Bearer bonds issued in June 1991, denominated in UF (UF 200,000), are
repayable in 20 semiannual installments beginning December 1, 1993.
The effective annual interest rate is 6.59%, payable semi-annually in
arrears on December 1 and June 1.
Series C and D bonds
On January 23, 2001, Santa Rita issued Series C bonds of UF 200,000
with an annual interest rate of 6.29% payable semiannually with
principal due in the fifth year, and Series D bonds of UF 1,000,000
with an annual interest rate of 6.29% payable semiannually with
principal due in 16 semiannual installments beginning in January
2007.
The bonds payable at each period-end consist of the following:
2000 2001
-------------------------------------
ThCh$ ThCh$
Principal 1,016,508 20,125,042
Accrued interest 6,550 55,917
-------------------------------------
1,023,058 20,180,959
Current portion (413,353) (259,200)
-------------------------------------
Long-term portion 609,705 19,921,759
=====================================
F-36
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
19. Bonds Payable, continued
Scheduled maturities of the long-term portion of the principal of
these bonds as of December 31, 2001 are as follows:
Maturing during the year
Ending December 31, ThCh$
--------------------------- -------------
2003 613,255
2004 -
2005 3,261,284
2006 -
Thereafter 16,306,420
----------
Total 20,180,959
==========
The above-mentioned bond issues contain certain restrictive
covenants; the most significant of which are summarized below:
a) The Company may not invest in financial instruments issued by
related companies nor give loans on preferential terms to
related companies.
b) The Company must maintain a debt/equity ratio of 1.5 to 1 and a
current ratio of 1 to 1.
As of December 31, 2001, the Company is in compliance with these
covenants.
20. Accrued Expenses
The composition of short and long-term accrued expenses at each
year-end are as follows:
2000 2001
-------------------------------------
SHORT-TERM ACCRUED EXPENSES: ThCh$ ThCh$
Board of Directors' share in profits (i) 826,854 855,221
Staff severance indemnities (Note 21) 167,752 155,853
Furnace repairs and reconstruction (ii) 591,433 1,113,143
Obligations for pallets 989,295 972,907
Accrued vacation 1,135,808 1,019,800
Royalty for authoring rights 228,614 270,348
Publicity agency commissions 163,224 2,252,122
Sales commissions 1,558,582 536,451
Suppliers 882,786 679,366
Insurance - 295,879
Machine repairs 343,315 807,849
Other 584,501 606,619
-------------------------------------
Total short-term accrued expenses 7,472,164 9,565,558
=====================================
LONG-TERM ACCRUED EXPENSES:
Staff severance indemnities (Note 21) 3,724,146 3,521,848
Furnace repairs and reconstruction (ii) 6,070,268 3,210,727
-------------------------------------
Total long-term accrued expenses 9,794,414 6,732,575
=====================================
F-37
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
20. Accrued Expenses, continued:
(i) As of December 31 of each year, a provision is made for the
Board of Directors' share of net income.
(ii) Furnace repairs and reconstruction:
This provision is made over the estimated useful life of each smelter
furnace refractor so that significant repairs or reconstruction will
not have a distorting effect on the results of the year in which the
repairs are performed. As of December 31, 2001, the short-term
portion of the provision represents the estimated cost of repairs to
be made to the furnaces in 2002. The Company has a provision for this
purpose of ThCh$6,661,701and ThCh$4,323,870 at December 31, 2000 and
2001, respectively.
21. Staff severance indemnities provisions
The provision for staff severance indemnity payments is shown at its
current value, as stated in Note 2(h). The movement in this account
was as follows:
2000 2001
-------------------------------------
ThCh$ ThCh$
Balance at beginning of year 3,604,558 3,891,898
Provisions established during the year 474,628 283,454
Deconsolidation of Crowpla Reicolite S.A. (Note 12) - (336,435)
Payments (187,288) (161,216)
-------------------------------------
Balance at year end 3,891,898 3,677,701
=====================================
22. Other Long Term Liabilities
At December 31, 2001 there is a balance of ThCh$447,908 corresponding
to forwards contracts entered into by the Company and its
subsidiaries, which will expire in 2003.
At December 31, 2000 there were no long-term liabilities recorded for
this concept.
23. Minority Interest
The consolidated subsidiaries generating minority interest at each
year-end are as follows:
Equity Participation in net (income) loss Participation
2000 2001 1999 2000 2001 1999 2000 2001
------------------------------------------------------------------------------------------
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ % % %
CIECSA S.A. Consolidated 2,401,450 2,038,734 1,754,420 282,309 143,508 3.40 1.89 1.79
Constructora Apoger S.A. 235,844 9,682 9,265 2,051 809 20.00 20.00 20.00
Cristalchile Comunicaciones S.A. 1,694 1,554 (6) 76 140 0.01 0.01 0.01
Envases CMF S.A. 1,608 - (72) (89) - 0.01 0.01 -
S.A. Vina Santa Rita 29,802,373 32,272,298 (2,219,245) (2,848,167) (3,315,448) 43.94 45.90 45.90
-----------------------------------------------------------------
Total 32,442,969 34,322,268 (455,638) (2,563,820) (3,170,991)
=================================================================
F-38
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
24. Changes in Shareholders' Equity
(a) Other reserves:
As of December 31, 2000 and 2001, other reserves consist of the
following:
2000 2001
-------------------------------------
ThCh$ ThCh$
Reserve for future capital increases 3,522,329 3,852,386
Reserve for technical revaluation of Property, plant and equipment 2,216,987 1,886,930
Currency translation adjustment 617,928 2,203,603
Subsidiary start-up stage deficit (110,870) (123,129)
-------------------------------------
Total other reserves 6,246,374 7,819,790
=====================================
25. Non-operating income and expense
Non-operating income during each year were as follows:
1999 2000 2001
-------------------------------------------------------
ThCh$ ThCh$ ThCh$
Interest income 3,311,566 3,008,436 2,839,412
Interest and other financial expense (2,930,653) (5,130,057) (6,931,247)
-------------------------------------------------------
Net interest income (expense) 380,913 (2,121,621) (4,091,835)
=======================================================
Other non-operating income:
Net sales of materials and other 19,243 38,420 20,189
Amortization of unrealized profit 43,031 64,428 59,957
Gain on sale of property, plant and equipment - 100,832 69,158
Gain on sale of investments 712,444 252,999 5,777,080
Office rental 289,999 248,361 282,180
Dividend received 808 - -
Reversal of provision for Ediciones Financieras 138,745 - -
Indemnities 34,948 77,938 94,180
Taxation Franchise 377,849 164,356 199,949
Forward Contracts 1,291 444,674 -
Other 421,470 382,418 207,082
-------------------------------------------------------
Total other non-operating income 2,039,828 1,774,426 6,709,775
=======================================================
F-39
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
25. Non-operating income and expense, continued:
Non-operating expense during each year were as follows:
1999 2000 2001
-------------------------------------------------------
ThCh$ ThCh$ ThCh$
Amortization of goodwill (578,465) (809,444) (822,466)
Amortization of intangibles (31,927) (138,845) (158,133)
Write-offs of accounts receivable (370,455) (49,435) (304,650)
Board of Directors' participation in profits (99,619) (126,179) (97,783)
Banking expenses (147,533) (44,231) -
Professional expenses (565,400) (633,545) (722,952)
Loss on sale of property, plant and equipment (65,266) (18,535) -
Indemnities - (158,001) (139,824)
Communication (11,957) (23,686) -
Insurance (11,967) (9,248) (11,731)
Other (968,699) (696,476) (488,834)
-------------------------------------------------------
Total non-operating expense (2,851,288) (2,707,625) (2,746,373)
=======================================================
26. Price-level restatement
The price-level restatement is determined under Chilean GAAP by
restating the following non-monetary assets and liabilities:
1999 2000 2001
-------------------------------------------------------
ThCh$ ThCh$ ThCh$
Shareholders' equity (4,477,959) (8,507,370) (5,939,383)
Liabilities (881,903) (1,760,295) (3,471,813)
Property, plant and equipment, net 2,948,240 5,351,988 3,681,586
Current assets 1,323,455 1,981,223 1,200,563
Other assets 1,140,846 3,139,038 2,933,930
Minority interest (721,572) (1,463,717) (61,583)
-------------------------------------------------------
Adjustment to balance sheet accounts (668,893) (1,259,133) (1,656,700)
Adjustment to income statement statement (417,172) (866,902) (612,980)
accounts
-------------------------------------------------------
Net price-level restatement effect (1,086,065) (2,126,035) (2,269,680)
=======================================================
F-40
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
27. Foreign Exchange Gain (Losses)
Because of the difference in the rates of foreign exchanges, a net
gain was recorded in the years ending December 31, 1999, 2000 and
2001 for ThCh$2,629,495, 1,025,075 and 1,347,027, respectively, as
detailed below:
1999 2000 2001
-------------------------------------------------------
ThCh$ ThCh$ ThCh$
Cash 198,758 (154,933) (649,881)
Accounts Receivable 198,740 9,909 211,298
Time Deposits 5,396,787 1,960,641 3,201,097
Inventory 208,260 300,115 362,245
Other Assets 546,595 152,659 36,590
-------------------------------------------------------
Sub-total foreign exchange gains 6,549,140 2,268,391 3,161,349
Short-term Bank Loans (4,920) (254,056) (877,208)
Accounts Payable (106,395) (236,536) (116,729)
Notes Payable (617,092) (563,272) (1,447,008)
Short-term Misc. Creditors (17,846) (17,438) (35,071)
Short-term Provisions (99,915) (56,400) (353,706)
Long-term Bank Loans (2,341,257) 622,626 1,576,276
Long-term Provisions (618,390) (448,188) (367,094)
Other Long-term Liabilities (89,945) (88,142) (172,465)
Other Liabilities (23,885) (201,010) (21,317)
-------------------------------------------------------
Sub-total foreign exchange (losses) (3,919,645) (1,242,416) (1,814,322)
-------------------------------------------------------
Net Gain on Foreign Exchange Differences 2,629,495 1,025,975 1,347,027
=======================================================
28. Extraordinary Items
For the year ended December 31, 2001, the total provision for furnace
repairs of ThCh$1,785,074 has been reversed net of taxes because the
furnace was totally rebuilt, instead of being repaired as an
extraordinary item.
29. Bond Issuance Costs
The subsidiary, Vina Santa Rita, issued bonds in January of 2001, and
incurred issuance costs of ThCh$272,275. These costs are classified
between ThCh$40,057 in Other Current Assets and ThCh$232,218 in Other
Assets, and are being amortized over the life of the bonds.
F-41
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
30. Financial Derivative Contracts:
The Company and its subsidiaries, Vina Santa Rita and Ciesca S.A.,
have entered into forward foreign currency contracts with notional
amounts of US$140,900,000 in 2001 (US$97,600,000 in 2000).
As of December 31, 2001, the net liability balance of ThCh$2,730,982
is presented in Other Current Liabilities of ThCh$2,283,074 and Other
Long-Term Liabilities of ThCh$447,908, respectively.
As of December 31, 2000 the net asset balance of ThCh$690,222 is
presented in Other Current Assets.
Additional information is presented in the following table where the
forward contracts are listed by period of maturity date:
As of December 31, 2001
-------------------------------------
Notional Amount Maturity Amount Hedged Amount at-risk Net Asset Gain (Loss)
(Liability)
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
-----------------------------------------------------------------------------------------------------------------
11,439,352 1st Quarter 2002 11,439,352 12,441,010 1,001,658 1,001,658
62,260 1st Quarter 2002 62,260 65,479 2,055 2,055
1,153,600 1st Quarter 2002 1,153,600 1,309,580 110,842 110,842
5,360,760 1st Quarter 2002 5,360,760 5,893,110 385,793 385,793
1,761,337 2nd Quarter 2002 (1) (1) 203,033 203,033
1,351,260 2nd Quarter 2002 (1) (1) (41,680) (41,680)
36,785,985 3rd Quarter 2002 (1) (1) (2,082,115) (2,082,115)
62,260 3rd Quarter 2002 62,260 65,479 2,055 2,055
26,186,194 4th Quarter 2002 (1) (1) (1,506,830) (1,506,830)
2,788,360 4th Quarter 2002 2,788,360 2,619,160 (179,851) (179,851)
62,260 4th Quarter 2002 62,260 65,479 2,021 2,021
2,788,360 4th Quarter 2002 2,788,360 2,619,160 (180,055) (180,055)
6,995,808 1st Quarter 2003 (1) (1) (447,908) (447,908)
--------------------------------------- -------------------------------------
96,797,796 (2,730,982) (2,730,982)
=================== =====================================
(1) Non-hedging instruments.
F-42
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
31. Commitments and Contingencies
Cristalerias de Chile S.A. and its subsidiaries have the following
commitments as of December 31, 2000 and 2001:
2000 2001
---------------------------------
ThCh$ ThCh$
(a) Guarantees
Guarantees given:
Contra-guarantee in favor of Societe de Participations Financieres et 3,406,655 3,771,590
Industrielles, France
Co-ownership AGF and Metropolis buildings 6,810 7,624
Mortgage on V. Mackenna building 2,448,264 2,203,757
Pledge guarantee of TV equipment with Banco Sudamericano 2,427,355 2,346,794
Other 13,197 -
(b) Other commitments:
Advertisement contracts for future broadcast 5,402,528 7,090,239
Legal Proceedings: Cristalerias is party to various lawsuits arising
in the ordinary course of its business. Management considers it
unlikely that any losses associated with pending lawsuits will
significantly affect the Company's results of operations, financial
position or cashflows, although no assurance can be given to such
effect. The Company has not established a provision for these
lawsuits other than a total of ThCh$704,500 committed for pending
civil and labor lawsuits related to the subsidiary, Red Televisiva
Megavision as of December 31, 2001.
Grape Contracts: The Company's subsidiary, Santa Rita, enters into
purchase contracts with local growers in order to ensure the company
has sufficient amounts of fine quality grapes to be used in the
conpany's wine production. Approximately 40% if the Company's grapes
are obtained from these contracts, while another 40% are obtained
from the Company's own vineyards and an additional 20% is purchased
at market. The Company only incurs obligations when the grapes are
delivered to the Company and as such are not recorded as liabilities.
F-43
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
32. Guarantees from Third Parties:
The Company has received the following guarantees from third parties
as of December 31, 2000 and 2001:
2000 2001
------------------------------------
ThCh$ ThCh$
Item
Rental of BankBoston Real Estate Property 5,982 5,983
Rental of property Telecomunicaciones Cono Sur Ltda 2,114 2,114
Rental of office 202 AGF Building 3,821 3,822
Promissory Notes from Suppliers 1,281 1,003
Container Installation (Tersanoix S.A.) - 155,112
Purchase of posts and grapevine plants (Intelmaq) 36,138 35,051
Underground materials storehouse Buin Salfa Montajes 37,843 31,834
Purchase of wine from Alberto Siegel and others 124,930 29,195
Works Packo America S.A. 74,783 -
------------------------------------
Total 286,892 264,114
====================================
F-44
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
33. Foreign Currencies
As of December 31, 2000 and 2001, foreign currency denominated assets
and liabilities in the disclosed currencies are as follows:
Foreign
Currency 2000 2001
------------------------------------------------------
Assets:
Cash US$ 1,138,016 712,853
Time deposits US$ 27,119,459 34,762,556
Accounts receivable US$ 12,556,763 9,454,282
Prepaid expenses US$ 66,784 459,152
Other current assets US$ 722,072 13,243,024
Inventories US$ 10,452,178 3,165,548
Other assets US$ 944,837 14,853,687
Current liabilities:
Short-term bank liabilities US$ 4,816,176 -
Current portion of long-term bank liabilities US$ 8,964,455 19,064,752
Current portion of long-term liabilities US$ 266,962 303,933
Trade accounts payable US$ 3,797,030 5,292,257
Notes payable US$ 9,986,334 5,813,853
EURO - 37,500
GBP 103 -
DEM 1,701,669 -
ITL 355,096,319 -
Miscellaneous creditors US$ 153,367 -
Accrued expenses US$ 2,995,202 4,500,984
Other current liabilities US$ 212,884 -
Long-term liabilities:
Long-term bank liabilities US$ 121,037,670 93,257,495
Miscellaneous creditors US$ 952,963 954,016
Notes payable US$ 479,414 2,784,229
Accrued expenses US$ 10,581,832 4,903,444
Other Long-term Liabilities US$ - 684,048
F-45
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
34. Sanctions:
During 1999, 2000 and 2001, no sanctions by the Chilean
Superintendency of Securities and Insurance have been applied to the
Company.
35. Subsequent Events:
On January 8, 2002, the Company paid a dividend of Ch$30 per share on
the 64,000,000 outstanding shares. The Board of Directors approved
this dividend in November of 2001.
The Chilean Superintendency of Securities and Insurance issued
Official Circular No 081 on January 22, 2002 related to the
devaluation of the Argentine currency established a rate of exchange
of Arg$1.7 per U.S. dollar for financial statements ending December
31, 2001. This resulted in a foreign currency loss in the
consolidated financial statements of ThCh$2,151,000 for the Company's
investments in Rayen Cura S.A.I.C. and Vina Dona Paula S.A.
At the date of the issuance of these financial statements and
considering the unstable political and economic situation in
Argentina, there is uncertainty regarding future changes that could
occur. The exchange rate as of May 29, 2002 was Arg$3.49 per U.S.
dollar.
36. Environment:
The Company is committed to the preservation of the environment.
During 2000, the parent company invested ThCh$1,173,681 in a new
electrostatic precipitator, which is used to filter gases discharged
from the glass smelting process, in order to comply with emission
standards for particulate matter issued the Chilean Government.
Additionally, the subsidiary, Vina Santa Rita, has invested
ThCh$86,597 during the year-ended December 31, 2001 in protecting the
environment.
F-46
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
37. Shareholder Information:
During October 2000, the Bank of New York replaced Citibank N.A. as
the depositary bank of the American Depository Receipt holders.
During the years ended December 31, 1999, 2000 and 2001, share
transactions made by the directors, majority shareholders, and
parties related to the directors, according to the Share Register,
were as follows:
1999 2000 2001
-------------------------------------------------------------------------
Purchases Sales Purchases Sales Purchases Sales
Directors - - - - - -
Majority shareholders-
Bank of New York - - 312,912 11,562,354 - -
Citibank N.A. 370,098 1,587,897 8,554,089 441,150 - -
Related to Directors-
Patricio Garcia Harmsen 15,000 - - - - -
Cia. Inm. La Hispano Chilena S.A. 24,245 - - - - -
------------------------------------------------------------------------
409,343 1,587,897 8,867,001 12,003,504 - -
========================================================================
During the years ended December 31, 1999, 2000 and 2001, shareholder
distributions were as follows:
% of Participation Number of Shareholders
Type of Shareholder 1999 2000 2001 1999 2000 2001
-------------------------------------------------------------------------------------------------------------------
10% or more 51.61 46.71 34.03 2 2 1
Less than 10% and equal to or greater 48.20 53.12 65.81 234 235 261
than UF200
Less than 10% and less than UF200 0.19 0.17 0.16 968 866 831
Totals 100.00 100.00 100.00 1,204 1,103 1,093
Controlling shareholders 52.14 52.14 52.14 3 3 3
F-47
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
38. Board of Directors' Remuneration:
Required disclosures of amounts paid to the Board of Directors of the
Company during each year are as follows:
1999 2000 2001
-------------------------------------------------------
ThCh$ ThCh$ ThCh$
Share of previous year's net income 840,575 831,603 821,240
Fees for attendance at meetings 7,339 7,902 8,825
Payment of special services 12,951 2,582 3,706
-------------------------------------------------------
Total 860,865 842,087 833,771
=======================================================
An estimate of ThCh$855,221 has been accrued for 2001 Directors' remuneration
as of December 31, 2001 that will be paid during 2002.
F-48
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles:
Generally accepted accounting principles in Chile (Chilean GAAP) vary
in certain important respects from the generally accepted accounting
principles in the United States (U.S. GAAP). Such differences involve
certain methods for measuring the amounts shown in the financial
statements, as well as additional disclosures required by U.S. GAAP.
I. Differences in Measurement Methods:
The principal methods applied in the preparation of the accompanying
financial statements which have resulted in amounts that differ from
those that would have otherwise been determined under U.S. GAAP are
as follows:
(a) Inflation accounting:
The cumulative inflation rate in Chile as measured by the
Consumer Price Index for the three-year period ended December
31, 2001 was 10.75%.
Chilean GAAP requires that the financial statements be restated
to reflect the full effects of the loss in the purchasing power
of the Chilean peso on the financial position and results of
operations of reporting entities. The method, described in Note
2(b), is based on a model which enables calculation of net
inflation gains or losses caused by monetary assets and
liabilities exposed to changes in the purchasing power of local
currency, by restating all non-monetary accounts in the
financial statements. The model prescribes that the historical
cost of such accounts be restated for general price-level
changes between the date of origin of each item and the
year-end, but requires that latest cost values be used for the
restatement of inventories.
The inclusion of price-level adjustments in the accompanying
financial statements is considered appropriate under the
prolonged inflationary conditions affecting the Chilean
economy. Accordingly, the effect of price-level changes is not
eliminated in the reconciliation to U.S. GAAP included under
paragraph I(r) below.
F-49
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(b) Revaluation of property, plant and equipment:
As mentioned in Note 2(f), certain property, plant and
equipment are reported in the financial statements at amounts
determined in accordance with a technical appraisal.
Revaluation of property, plant and equipment is an accounting
principle not generally accepted in the United States. The
effects of the reversal of this revaluation, as well as of the
related accumulated depreciation and depreciation expense for
the year is shown below, under paragraph I(r).
(c) Allocation of certain overhead costs to inventories:
As indicated in Note 2(e), finished and in-process products are
reported in the financial statements at restated direct costs,
which include the related raw material, energy and direct labor
costs. Accordingly, certain indirect manufacturing expenses are
excluded from inventory, which is contrary to U.S. GAAP. The
effects of including certain indirect manufacturing expenses
are included under paragraph I(r) below.
F-50
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(d) Income taxes:
Under Chilean GAAP, until December 31, 1999, deferred income
taxes were recorded based on non-recurring timing differences
between the recognition of income and expense items for
financial statement and tax purposes. Accordingly, there was an
orientation toward the income statement focusing on differences
in the timing of recognition of revenues and expenses in
pre-tax accounting income and taxable income. Chilean GAAP also
permitted not providing for deferred income taxes where a
deferred tax asset or liability is not expected to be realized.
Starting January 1, 2000, the Company recorded income taxes in
accordance with Technical Bulletin N(degree)60 of the Chilean
Association of Accountants, recognizing, using the liability
method, the deferred tax effects of temporary differences
between the financial and tax values of assets and liabilities.
As a transitional provision, a contra asset or liability has
been recorded offsetting the effects of the deferred tax assets
and liabilities not recorded prior to January 1, 2000. Such
contra asset or liability must be amortized to income over the
estimated average reversal periods corresponding to the
underlying temporary differences to which the deferred tax
asset or liability relates.
Under U.S. GAAP, companies must account for deferred taxes in
accordance with SFAS N(degree)109, which requires an asset and
liability approach for financial accounting and reporting of
income taxes, under the following basic principles:
(i) A deferred tax liability or asset is recognized for the
estimated future tax effects attributable to temporary
differences and tax loss carryforwards.
(ii) The measurement of deferred liabilities and assets is
based on the provisions of the enacted tax law. The
effects of future changes in tax laws or rates are not
anticipated.
(iii) The measurement of deferred tax assets are reduced by a
valuation allowance, if based on the weight of available
evidence, it is more likely than not that some of the
deferred tax assets will not be realized.
Temporary differences are defined as any difference between the
financial reporting basis and the tax basis of an asset and liability
that at some future date will reverse, thereby resulting in taxable
income or expense. Temporary differences ordinarily become taxable or
deductible when the related assets are recovered or the related
liability is settled. A deferred tax liability or asset represents
the amount of taxes payable or refundable in future years as a result
of temporary differences at the end of the current year.
F-51
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(d) Income taxes, continued:
In 1999, the principal effect on the Company due to the
difference in the accounting for deferred income taxes between
Chilean and U.S.GAAP relates to the treatment of temporary
differences arising from accrued expenses, net operating
loss-carryforwards and accelerated depreciation methods. In
2000, the principal difference relates to the contra asset and
liability recorded as a transitional provision for unrecorded
deferred taxes as of January 1, 2000. The effect of these
differences on the net income and shareholders' equity of the
Company is included in paragraph I(r) below.
(e) Accounting for investments in related companies:
The adjustment to related companies includes the effect on the
income and equity of the consolidated accounts of Cristalerias
of the adjustments for U.S. GAAP within the Company's equity
investees. These adjustments principally relate to deferred
taxes, production costs, and goodwill amortization rates. The
effects of this adjustment are included under paragraph I(r)
below.
(f) Minimum dividend required by Chilean law:
As required by the Chilean Companies Act, unless otherwise
decided by the unanimous vote of holders of the issued and
subscribed shares, the Company must distribute a cash dividend
in an amount equal to at least 30% of the Company's net income
for each year as determined in accordance with Chilean GAAP,
unless and except to the extent the Company has unabsorbed
prior year losses. Since the payment of the 30% dividend out of
each year's income is a legal requirement in Chile, a provision
has been made in the accompanying U.S. GAAP reconciliation in
I(r) below to recognize the corresponding decrease in net
equity at the end of each year in which the net income is
earned.
(g) Furnace repair provision:
Under Chilean GAAP, provisions may be accrued for estimated
future repairs that will be required to be made to significant
property, plant and equipment. Accordingly, Cristalerias has
accrued provisions for estimated future repairs to the
Company's furnaces. U.S. GAAP requires that such repairs be
expensed in the year incurred or capitalized if considered to
be a betterment that would significantly improve the useful
life of the asset. The effects of this adjustment are included
under paragraph I(r) below.
F-52
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(h) Classification of molds as property, plant, and equipment:
Under U.S. GAAP, molds used in the production process are
treated as property, plant and equipment and are depreciated
over their expected useful lives. The Company, in accordance
with Chilean GAAP, has historically expensed some of these
items as incurred. As of January 1, 1997, the Company began to
capitalize purchased molds and depreciate them over a period of
24 months. For U.S. GAAP purposes, the molds are depreciated
using the unit-of-production method with the estimated useful
life per mold ranging from 12,000,000 units produced to
20,000,000 units produced, depending upon the type and
specifications of the individual molds. The effects of this
adjustment are included under paragraph I(r) below.
(i) Investments in marketable securities:
Under Chilean GAAP, investments in debt and equity securities
are accounted for at the lower of cost or market value.
Under U.S. GAAP, investments in debt and equity securities are
accounted for according to the purpose for which these
investments are held. U.S. GAAP defines three distinct purposes
for holding investments:
o Investments held for trading purposes
o Investments available-for-sale
o Investments held to maturity
The Company considers that all of its investments are
available-for-sale except for the Celulosa Arauco bonds
purchased during 2001, which are considered held-to-maturity.
There are no differences between Chilean GAAP and U.S. GAAP for
held-to-maturity investments. For available-for-sale
investments, the accounting treatment in accordance with U.S.
GAAP is to value these instruments at fair value and record the
change in fair value as a separate component of shareholders'
equity, net of deferred taxes. The effects on shareholders'
equity of adopting this treatment are included under paragraph
I(r) below.
(j) Intangible assets:
Under Chilean GAAP, the cost of the frequency purchased by the
subsidiary Megavision S.A. is being amortized on a decelerated
basis as described in Note 2(k). Under U.S. GAAP, such
intangible assets are amortized on a straight-line basis.
During 1998, the Company began amortizing trademarks under
Chilean GAAP on a straight-line basis over a period of 40
years, in accordance with Technical Bulletin No. 55 of the
Chilean Association of Accountants. Previously under Chilean
GAAP, companies were not required to amortize those costs
relating to trademarks. In accordance with U.S. GAAP, companies
are required to amortize trademarks on a systematic and
rational basis over the expected period for which an economic
benefit will be derived from the trademark. For U.S. GAAP
purposes, the Company has historically, and continues to,
amortize deferred costs related to trademarks on a
straight-line basis over a period of 25 years. The effects of
the adjustments are included under paragraph I(r) below.
F-53
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(k) Recoverability of long-lived assets:
In accordance with Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of" the Company
evaluates the carrying amount of property, plant and equipment
and certain intangibles, including goodwill, in relation to the
operating performance and future undiscounted cash flows of the
underlying business. This standard requires that an impairment
loss be recognized in the event that facts and circumstances
indicate that the carrying amount of an asset may not be fully
recoverable, when compared to the estimated future undiscounted
cash flows. Impairment is recorded based on an estimate of
future discounted cash flows, as compared to current carrying
amounts.
(l) Unrealized profit and negative goodwill:
In 1995 the Company recorded the contribution of Cable TV
companies to Cordillera Comunicaciones S.A., a related Company,
at an amount that exceeded the book value of these investments.
Under Chilean GAAP the excess amount was recorded as income in
1995. Under U.S. GAAP, the profit from this transaction is
unrealized because of the Company's influence in the related
Company. Additionally, under U.S. GAAP, the excess of the fair
value of the assets received over the purchase price or
negative goodwill is allocated to reduce the values assigned to
the non-current assets. This reduces the U.S. GAAP depreciation
base in property, plant and equipment by the excess purchase
price. As a consequence, the U.S. GAAP adjustment includes
income from the decreased depreciation of the fixed assets
using straight-line depreciation over an original useful life
of 13 years. The effects of recording the unrealized profit and
reduced depreciation expense is included under Paragraph I(r)
below.
(m) Goodwill:
Related party transactions related to Ediciones Financieras
S.A:
Under Chilean GAAP, the goodwill generated during 1995 as a
result of the purchase of Ciesca S.A. by the Company from
Navarino S.A., a related company, and the goodwill which
originated from the related party transaction between Ediciones
Chiloe S.A and Ciesca S.A., described in Note 12, are being
amortized over a twenty-year period (over a ten year period
prior to 1998). Under U.S. GAAP, such related party
transactions were recorded at book value and therefore no
goodwill would have been generated. During 2001, Ciesca sold a
portion of its ownership in Ediciones Financieras, which
resulted in different gain on sale under U.S. GAAP than Chile
GAAP, because the bases of the net assets are different as a
result of the treatment of goodwill recognition previously
discussed. The effect of adjustment to U.S. GAAP, to reverse
the related amortization expense on goodwill and the different
goodwill amounts not accepted for US GAAP purposes, is included
under paragraph I(r) below.
Amortization period:
In accordance with rules established by the SVS, which has been
adopted for the purposes of Chilean GAAP, the goodwill arising
from the acquisitions of S.A. Vina Santa Rita., Editorial
Zig-Zag and Megavision is being amortized over the maximum
allowable period of twenty years on a straight-line basis.
Under U.S. GAAP, the Company amortizes goodwill over periods of
up to forty years. The effects of adjustment to U.S. GAAP are
shown under paragraph I(r) below.
F-54
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(m) Goodwill, continued:
Differences in purchase accounting methods:
The Company acquired Vina Los Vascos S.A. during 1996. Under
Chilean GAAP, goodwill generated from this purchase was
calculated as the excess of the purchase price over the book
value of the assets acquired. Under U.S. GAAP, goodwill is
calculated as the excess of the purchase price over the fair
values of the net assets acquired. Additionally, under Chilean
GAAP, the Company is amortizing the goodwill related to this
acquisition over a period of 20 years. Under U.S. GAAP, the
Company amortizes this goodwill over a period of 40 years.
Goodwill acquired after June 30, 2001 is not amortized (see
Note 39(p). The effect of adjustment to U.S. GAAP is shown
under paragraph I(r) below.
Amortization of goodwill of ThCh$501,453, ThCh$137,007 and
ThCh$375,121 for the years ended December 31, 1999, 2000 and
2001, respectively, would be included in operating income for
U.S. GAAP purposes.
(n) Results of subsidiaries in the development stage:
Under Chilean GAAP, costs incurred during the development stage
of a subsidiary company are not charged to the income statement
during the year in which they were incurred, being charged
instead directly to an equity account (Subsidiary start-up
deficit). U.S. GAAP requires that all such costs be charged to
the income statement in the year incurred. The effects are
included under paragraph I(r) below.
(o) Translation of financial statements of investments outside of
Chile:
In accordance with the Chilean foreign currency translation
standard, "BT 64", the financial statements of foreign
subsidiaries that operate in countries exposed to significant
risks, and are not considered to be an extension of the parent
company's operations, must now be remeasured into U.S. dollars.
The Company has remeasured its foreign subsidiaries into U.S.
dollars under this requirement as follows:
- Monetary assets and liabilities are translated at year-end
rates of exchange between the U.S. dollar and the local
currency.
- All non-monetary assets and liabilities and shareholder's
equity are translated at historical rates of exchange
between the U.S. dollar and the local currency.
- Income and expense accounts are translated at average
rates of exchange between the U.S. dollar and local
currency.
- The effects of any exchange rate fluctuations are included
in the results of operations for the period.
Under BT 64, the investment in the foreign subsidiary is
price-level restated, the effects of which are reflected in
income, while the effects of the foreign exchange gain or loss
between the Chilean Peso and the U.S. dollar are reflected in
equity in the account "Cumulative Translation Adjustment"; as
the foreign investment itself is measured in U.S. dollars.
F-55
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(o) Translation of financial statements of investments outside of
Chile, continued:
In the opinion of the Company, the Chilean GAAP procedures
described above are part of the comprehensive basis of
preparation of price-level adjusted financial statements
required by Chilean GAAP. Inclusion of inflation and
translation effects in the financial statements is considered
appropriate under the inflationary conditions that have
historically affected the Chilean economy and, accordingly, are
not eliminated in the reconciliation to U.S. GAAP.
(p) Forward contracts:
As of and for the year ended December 31, 2000, the Company had
entered into foreign currency forward exchange contracts to
transfer its exposure in U.S. dollars to an exposure in UF. As
described in the Company's accounting policy in Note 2(m), some
of these foreign currency forward exchange contracts have been
designated, and are effective as hedges. Under Chilean GAAP,
the Company had deferred ThCh$122,121 of forward contract gains
and has included these amounts in Other Current Liabilities.
For U.S. GAAP purposes, the Company has recognized these
forward contract gains in results of operations, in accordance
with SFAS 52. The effects of the adjustments have been included
under paragraph I(r) below.
For the year ended December 31, 2001, the Company continued to
have foreign currency forward exchange contracts for the
purpose of transferring risk from exposure in U.S. dollars to
an exposure in UF. Under Chilean GAAP, the Company did not
defer any forward contract gains or losses, and recorded a net
liability of ThCh$2,730,982. Fair values under Chilean GAAP
have been estimated using the closing spot exchange rate at the
period end.
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 133
(SFAS No. 133), "Accounting for Derivative Instruments and
Hedging Activities". In June 1999, the FASB issued Statement
No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement
No. 133". In June 2000, the FASB issued Statement 138,
"Accounting for Certain Derivative Instruments and Certain
Hedging Activities, an amendment of FASB Statement No. 133".
SFAS No. 133, as amended, establishes accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability
measured at its fair value. SFAS No. 133 required that changes
in the derivative instrument's fair value be recognized
currently in earnings unless specific hedge accounting criteria
are met. Special accounting for qualifying hedges allows a
derivative instrument's gains and losses to offset related
results on the hedged item in the income statement, to the
extent effective, and requires that a company must formally
document, designate, and assess the effectiveness of
transactions that receive hedge accounting.
F-56
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(p) Forward contracts, continued:
SFAS No. 133, as amended, is effective for fiscal years
beginning after June 15, 2000. Statement 133 cannot be applied
retroactively. SFAS No. 133 must be applied to (a) derivative
instruments and (b) certain derivative instruments embedded in
hybrid instruments. With respect to hybrid instruments, a
Company may elect to apply SFAS No. 133, as amended, to (1) all
hybrid instruments, (2) only those hybrid instruments that were
issued, acquired, or substantively modified after December 31,
1997, or (3) only those hybrid instruments that were issued,
acquired, or substantively modified after December 31, 1998.
The Company applied SFAS No. 133 to only those hybrid
instruments that were issued, acquired, or substantively
modified after December 31, 1998.
SFAS No. 133, in part, allows special hedge accounting for
"fair value" and "cash flow" hedges. SFAS No. 133 provides that
the gain or loss on a derivative instrument designated and
qualifying as a "fair value" hedging instrument as well as the
offsetting loss or gain on the hedged item attributable to the
hedged risk be recognized currently in earnings in the same
accounting period. While the Company enters into derivatives
for the purpose of mitigating its global financial and
commodity risks, these operations do not meet the documentation
requirements to qualify for hedge accounting under U.S. GAAP.
Therefore changes in the respective fair values of all
derivatives are reported in earnings when they occur.
The cumulative effect resulting from the adoption of SFAS No.
133 on January 1, 2001 was a net gain of ThCh$61,972 which is
presented net of tax of ThCh$11,601, and minority interest
under the caption "Cumulative effect of change in accounting
principles. The adjustment is due to the difference between
recording forward contracts at spot exchange rates under
Chilean GAAP and marking the forward contracts to market using
forward rates in according with US GAAP. The effect of the
adjustment between the current market values and the fair value
for the years ended December 31, 2001 is included in paragraph
I(r) below.
(q) Elimination of gain on Joint-venture:
During July 2001, the Company deconsolidated its subsidiary
Crowpla Reicolite S.A. as part of a joint venture transaction
with Andina Inversiones Societarias S.A., in which the Company
retained a 50% interest in Crowpla Reicolite S.A. Under Chilean
GAAP a gain of ThCh$ 1,989,949 was recognized based on the
difference between the net assets contributed as part of the
joint-venture and the Company's share in the joint-venture's
equity. This occurred as two transactions, first Cristalerias
sold capital in Crowpla Reicolite S.A. which Andina Inversiones
Societarias S.A. purchased, and secondly, Andina Inversiones
transferred assets into Crowpla Reicolite (now called "Envases
CMF S.A.") to complete the joint venture. Under U.S. GAAP,
these series of transactions are viewed as one transaction and
contributions to joint ventures are recorded at book value of
net assets contributed with a gain being recorded only to the
extent that cash is received, unless it is reinvested in the
business. The gain is recognized as goodwill, which will not be
amortized as the transaction occured during July 2001. The
effects of the adjustments are included under paragraph I(r)
below.
F-57
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(r) Effects of conforming to U.S. GAAP:
The adjustments to reported net income required to conform with
U.S. GAAP are as follows (all amounts are expressed in
thousands of constant Chilean pesos as of December 31, 2001):
1999 2000 2001
----------------------------------------------
ThCh$ ThCh$ ThCh$
Net income as reported under Chilean GAAP 21,338,434 17,570,548 17,770,611
Revaluation of property, plant and equipment (paragraph I(b)) 354,009 345,371 330,057
Allocation of certain overhead costs to inventories (paragraph I(c)) (513,543) 503,987 (264,203)
Deferred income taxes (paragraph I(d)) (14,027) (291,143) 273,275
Accounting for investments in related companies (paragraph I(e)) 576,620 (190,732) (1,742,729)
Furnace repair provision (paragraph I(g)) 662,935 306,867 (2,337,831)
Capitalization of molds as property, plant and equipment (paragraph I(h)) 312,244 135,419 498,157
Amortization of intangibles assets (paragraph I(j)) (169,044) (157,153) (145,335)
Amortization of unrealized profit (paragraph I(l)) 22,214 22,215 22,285
Goodwill (paragraph I(m)) (32,318) (32,201) 1,609,765
Goodwill amortization (paragraph I(m)) 473,775 442,896 (302,177)
Results of subsidiaries in the development stage (paragraph I(n)) (292,973) (110,870) (123,129)
Forward contracts (paragraph I(p)) - 122,121 1,073,033
Joint-venture accounting (paragraph I(q)) - - (1,989,949)
Effect of minority interests on U.S. GAAP adjustments (12,281) 223,684 (145,699)
Deferred tax effect of the above adjustments (72,575) (145,274) 25,340
----------------------------------------------
Net income in accordance with U.S. GAAP before cumulative effect of change 22,633,470 18,745,735 14,551,471
in accounting principles
----------------------------------------------
Cumulative effect of change in accounting principle, net of taxes of - - 61,972
ThCh$11,601 and minority interest
----------------------------------------------
Net income in accordance with U.S. GAAP 22,633,470 18,745,735 14,613,443
----------------------------------------------
Other comprehensive income:
Unrealized holding gain on marketable securities, net of applicable taxes 1,723,758 281,790 (995,146)
(paragraphs I(i))
Foreign exchange translation adjustment (99,785) 701,183 1,604,256
----------------------------------------------
Comprehensive income in accordance with U.S. GAAP 24,257,443 19,728,708 15,222,553
==============================================
F-58
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(r) Effects of conforming to U.S. GAAP, continued:
The adjustments required to conform net equity amounts to U.S. GAAP
are as follows (all amounts are expressed in thousands of constant
Chilean pesos as of December 31, 2001):
2000 2001
------------------------------
ThCh$ ThCh$
Net shareholders' equity as reported under Chilean GAAP 203,307,074 213,388,700
Revaluation of property, plant and equipment (paragraph I(b)) (10,270,195) (8,286,374)
Revaluation of property, plant and equipment, accumulated
depreciation (paragraph 1(b)) 8,053,208 6,399,443
Allocation of certain overhead costs to inventories (paragraph 1(c)) 4,131,425 3,867,224
Deferred income taxes (paragraph I(d)) 246,157 519,431
Accounting for investments in related companies (paragraph I(e)) 4,971,655 3,216,639
Minimum dividend required by Chilean law (paragraph 1(f)) (985,636) (673,455)
Furnace repair provision (paragraph I(g)) 6,661,701 4,323,870
Capitalization of molds as property, plant and equipment (paragraph I(h)) 1,271,942 1,770,099
Investments in marketable securities (paragraph 1(i)) 2,997,970 1,848,964
Intangibles assets (paragraph 1(j)) (2,558,880) (2,704,214)
Amortization of unrealized profit (paragraph I(l)) (219,778) (197,565)
Goodwill (paragraph I(m)) (4,439,374) (2,829,609)
Goodwill amortization (paragraph I(m)) 2,760,398 2,458,221
Forward contracts (paragraph I(p)) 122,121 1,286,953
Joint-venture accounting (paragraph I(q)) - -
Effect of minority interests on U.S. GAAP adjustments (529,520) (678,988)
Deferred tax effect of the above adjustments (2,226,489) (2,061,059)
-----------------------------
Net equity in accordance with U.S. GAAP 213,293,779 219,658,331
=============================
F-59
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(r) Effects of conforming to U.S. GAAP, continued:
The following summarizes the changes in shareholders` equity under
U.S. GAAP during the years ended December 31, 1999, 2000 and 2001:
1999 2000 2001
--------------------------------------------------------
ThCh$ ThCh$ ThCh$
Balance as of January 1 185,415,156 200,903,864 213,293,779
Dividends paid (7,828,878) (8,298,274) (9,170,182)
Change in minimum dividends accrued (939,857) 959,481 312,181
Net income in accordance with U.S. GAAP 22,633,470 18,745,735 14,613,443
Foreign exchange translation adjustment (99,785) 701,183 1,604,256
Unrealized holding gain (loss) on marketable 1,723,758 281,790 (995,146)
securities, net of applicable taxes
--------------------------------------------------------
Balance as of December 31 200,903,864 213,293,779 219,658,331
========================================================
(s) Comprehensive Income:
In accordance with US GAAP, Cristalerias reports a measure of all
changes in shareholders' equity that result from transactions and
other economic events of the period other than transactions with
owners ("comprehensive income"). Comprehensive income is the total
of net income and other non-owner equity transactions that result in
changes in net shareholders' equity.
The following represents the components of other comprehensive
income, together with the related tax effects by component for the
years ended December 31, 1999, 2000 and 2001 (in thousands of
constant Chilean pesos as of December 31, 2001).
F-60
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(s) Comprehensive Income, continued:
Before-Tax Amount Tax (Expense) or Net of Tax
Benefit Amount
-----------------------------------------------------------
For the year ended December 31, 1999 ThCh$ ThCh$ ThCh$
Unrealized holding gains on marketable
securities arising during period: 2,027,951 (304,193) 1,723,758
Foreign exchange translation adjustment (99,785) - (99,785)
-----------------------------------------------------------
Other comprehensive income 1,928,166 (304,193) 1,623,973
===========================================================
For the year ended December 31, 2000
Unrealized holding gains on marketable
securities arising during period: 331,517 (49,727) 281,790
Foreign exchange translation adjustment 701,183 - 701,183
-----------------------------------------------------------
Other comprehensive income 1,032,700 (49,727) 982,973
===========================================================
For the year ended December 31, 2001
Unrealized holding loss on marketable securities
arising during period: (1,149,006) 153,860 (995,146)
Foreign exchange translation adjustment 1,604,256 1,604,256
-----------------------------------------------------------
Other comprehensive income 455,250 153,860 609,110
===========================================================
The following represents accumulated other comprehensive income
balances as of December 31, 2000 and 2001 (in thousands of constant
Chilean pesos as of December 31, 2001).
As of December 31, 2000
-------------------------------------------------------------
Unrealized Cumulative Accumulated
Gains on Foreign Other
Securities Translation Comprehensive
Adjustment Income
Beginning balance 2,266,485 (99,785) 2,166,700
Current-period change 281,790 701,183 982,973
-------------------------------------------------------------
Ending balance 2,548,275 601,398 3,149,673
=============================================================
As of December 31, 2000
-------------------------------------------------------------
Unrealized Cumulative Accumulated
Gains on Foreign Other
Securities Translation Comprehensive
Adjustment Income
Beginning balance 2,548,275 601,398 3,149,673
Current-period change (995,146) 1,604,256 609,110
--------------------------------------------------------------
Ending balance 1,553,129 2,205,654 3,758,783
==============================================================
F-61
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
II. Additional Disclosure Requirements:
(a) Earnings per share:
The following earnings per share information is not generally
required for presentation in the financial statements under Chilean
GAAP but is required under U.S. GAAP:
1999 2000 2001
----------------------------------
Ch$ Ch$ Ch$
Chilean GAAP basic earnings per share (Ch$) (1) 333.41 274.54 277.67
==================================
U.S. GAAP basic earnings per share (Ch$1) (1):
U.S. GAAP earnings per share before cumulative effect of 353.65 292.90 227.37
change in accounting principle
Cumulative effect of change in accounting principle - - 0.97
----------------------------------
U.S. GAAP net earnings per share 353.65 292.90 228.34
==================================
(1) The earnings per share data shown above are determined by
dividing net income available to common shareholders by the
weighted-average number of shares outstanding.The Company has a
simple capital structure and has not issued any convertible debt
securities. Consequently, there are no dilutive effects on the
earnings per share of the Company.
(b) Income taxes:
The provision for income taxes was as follows:
Chilean GAAP: 1999 2000 2001
--------------------------------------------------------
ThCh$ ThCh$ ThCh$
Current tax expense 3,760,448 3,884,993 3,879,690
Deferred tax expense (benefit) and others as
calculated under Chilean GAAP: (20,682) (121,534) 1,102,622
--------------------------------------------------------
Charge for the year under Chilean GAAP 3,739,766 3,763,459 4,982,312
U.S. GAAP Adjustments
Deferred tax effect of applying FAS 109 14,027 291,143 (273,275)
Deferred tax effect of adjustments to U.S. GAAP 72,575 145,274 (25,340)
Deferred tax effect of cumulative effect of change
in accounting principle - - 11,601
--------------------------------------------------------
Charge for the year under U.S. GAAP 3,826,368 4,199,876 4,695,298
========================================================
F-62
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(b) Income taxes, continued:
Deferred tax assets (liabilities) as of each year-end are summarized
as follows:
2000 2001
--------------------------------------------------------------------------------------------
SFAS No. 109 SFAS No. 109 Total SFAS No. 109 SFAS No. 109 Total
applied to applied to US Deferred applied to applied to US Deferred
Chilean GAAP GAAP Taxes under Chilean GAAP GAAP Taxes under
Balances Adjustments SFAS No. 109 Balances Adjustments SFAS No. 109
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
Deferred income tax assets:
Tax loss carryforwards (1) 4,872,728 - 4,872,728 5,389,909 - 5,389,909
Furnace repair provision 999,256 (999,256) - 714,294 (714,294) -
Provision for doubtful accounts 90,036 - 90,036 85,249 - 85,249
Provision for items used in
warehousing 252,976 - 252,976 462,286 - 462,286
Accrued Vacation expense 173,279 - 173,279 166,773 - 166,773
Profit realized for tax purposes, not
for financial accounting purposes 460,305 - 460,305 376,343 - 376,343
Staff severance indemnities 52,320 - 52,320 34,483 - 34,483
Other 177,815 - 177,815 549,319 - 549,319
--------------------------------------------------------------------------------------
Total deferred income tax assets 7,078,715 (999,256) 6,079,459 7,778,656 (714,294) 7,064,362
--------------------------------------------------------------------------------------
Deferred income tax liabilities:
Depreciation (5,846,284) - (5,846,284) (7,115,288) - (7,115,288)
Prepaid expenses (57,684) - (57,684) (275,449) - (275,449)
Inventories (163,104) (619,713) (782,817) (251,801) (618,756) (870,557)
Molds (152,537) (190,792) (343,329) (262,739) (292,067) (554,806)
Forwards Contracts - - - - (220,415) (220,415)
Other (4,689) (416,728) (421,417) - (215,527) (215,527)
--------------------------------------------------------------------------------------
Total deferred income tax liabilities (6,224,298) (1,227,233) (7,451,531) (7,905,277) (1,346,765) (9,252,042)
--------------------------------------------------------------------------------------
Net deferred tax assets (liabilities) 854,417 (2,226,489) (1,372,072) (126,621) (2,061,059) (2,187,680)
resulting from SFAS No. 109 ======================================================================================
(1) In accordance with the current enacted tax law in Chile, such tax losses
may be carried forward indefinitely.
F-63
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(b) Income taxes, continued:
The provision for income taxes differs from the amount of income tax
determined by applying the applicable Chilean statutory income tax
rate to pretax income calculated in accordance with U.S. GAAP as a
result of the following differences:
1999 2000 2001
-------------------------------------------------------
ThCh$ ThCh$ ThCh$
Tax provision at statutory Chilean tax rates 3,968,976 3,520,916 3,090,647
Increase (decrease) in taxes resulting from:
Amortization of goodwill and other intangibles 101,092 55,845 (289,206)
Price-level restatement not accepted for tax
purposes 42,405 154,903 (153,737)
Equity in net income of related companies 168,072 448,074 1,392,237
Tax credits and other permanent differences (454,177) 20,138 655,357
-------------------------------------------------------
Effective tax provision 3,826,368 4,199,876 4,695,298
=======================================================
The Chilean statutory first category (corporate) income tax rate was
15% for 1999 through 2001, however tax rates will increase to 16% in
2002, 16.5% in 2003, and 17% in 2004, in accordance with the
currently enacted tax legislation.
In accordance with Chilean law, Cristalerias de Chile S.A. and each
of its subsidiaries compute and pay tax on an individual basis.
The Company had net operating tax-loss carry forwards related to its
subsidiaries of approximately ThCh$31,802,806 as of December 31, 2001
that can be carried forward indefinitely.
(c) Cash flows:
As described in Note 12, the Company's subsidiary Vina Dona Paula was
not consolidated until 2001 because the company was in the
development stage prior to that year. Additionally, in October 2000
the Company began Simetral S.A. Simetral is not consolidated during
2000 or 2001 because it is still in the development stage. Under U.S.
GAAP these subsidiaries would be consolidated, regardless of when
their operations begin.
Cash flow amounts reconciled in accordance with U.S. GAAP, as
presented below include restatement to constant Chilean pesos as of
December 31, 2001 as part of the comprehensive basis used by the
Company in preparing its price-level adjusted financial statements.
Foreign registrants that prepare comprehensive price-level adjusted
financial statements are permitted to not reconcile the effects of
price level changes to U.S. GAAP. Consequently, the effects of the
price level adjustments have not been reconciled.
F-64
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(c) Cash flows, continued:
Consolidation of the Company's development stage operations would
result in the following differences under U.S. GAAP:
1999 2000 2001 2001
ThCh$ ThCh$ ThCh$ ThUS$
Cash provided by operating activities reported under Chilean GAAP 23,953,749 34,476,818 39,289,746 60,003
Effect of consolidation of subsidiary in Vina Dona Paula (478,148) (475,588) - -
Effect of consolidation of subsidiary in Simetral - (142,834) (173,226) (265)
-----------------------------------------------------------
Cash provided by operating activities under US GAAP 23,475,601 33,858,396 39,116,520 59,738
Cash provided by financing activities reported under Chilean GAAP (7,999,396) 45,870,978 5,015,698 7,660
Effect of consolidation of subsidiary in Vina Dona Paula 941,574 1,233,387 - -
Effect of consolidation of subsidiary in Simetral - 290,237 152,003 232
Proceeds from loans from related companies 1,267,612 1,868,797 1,331,054 2,033
-----------------------------------------------------------
Cash provided by financing activities under US GAAP (5,790,210) 49,263,399 6,498,755 9,925
Cash used in investing activities reported under Chilean GAAP (3,935,912) (76,302,249) (33,947,884) (51,846)
Effect of consolidation of subsidiary in Vina Dona Paula (695,693) (663,181) - -
Effect of consolidation of subsidiary in Simetral - - - -
Proceeds from loans from related companies (1,267,612) (1,868,797) (1,331,054) (2,033)
-----------------------------------------------------------
Cash used in investing activities under US GAAP (5,899,217) (78,834,227) (35,278,938) (53,879)
Effect of inflation on cash and cash equivalents under Chilean GAAP (397,546) (1,809,889) (1,252,114) (1,912)
Effect of consolidation of subsidiary in Vina Dona Paula 5,317 - - -
Effect of consolidation of subsidiary in Simetral - - -
-----------------------------------------------------------
Effect of inflation on cash and cash equivalents under Chilean GAAP (392,229) (1,809,889) (1,252,114) (1,912)
Net change in cash and cash equivalents under Chilean GAAP 11,620,895 2,235,658 9,105,446 13,906
Effect of consolidation of subsidiary in Vina Dona Paula (226,950) 94,618 - -
Effect of consolidation of subsidiary in Simetral 147,403 (21,223) (32)
-----------------------------------------------------------
Net change in cash and cash equivalents under US GAAP 11,393,945 2,477,679 9,084,223 13,873
Cash and cash equivalents at beginning of year under Chilean GAAP 14,813,512 26,434,407 28,670,065 43,785
Effect of consolidation of subsidiary in Vina Dona Paula 242,735 15,786 - -
Effect of consolidation of subsidiary in Simetral - - 142,971 218
-----------------------------------------------------------
Cash and cash equivalents at beginning of year under US GAAP 15,056,247 26,450,193 28,813,036 44,003
Cash and cash equivalents at end of year under Chilean GAAP 26,434,407 28,670,065 37,775,511 57,691
Effect of consolidation of subsidiary in Vina Dona Paula 15,785 110,404 - -
Effect of consolidation of subsidiary in Simetral - 147,403 121,748 186
-----------------------------------------------------------
Cash and cash equivalents at end of year under US GAAP 26,450,192 28,927,872 37,897,259 57,877
F-65
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(d) For purposes of the statements of cash flows under U.S. GAAP, the
company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents
as follows:
1999 2000 2001
--------------------------------------------------------
ThCh$ ThCh$ ThCh$
Cash deposits that are cash equivalents 2,391,922 2,362,964 2,937,609
Time deposits that are cash equivalents 22,543,540 17,531,716 13,792,047
Mutual Funds - - 9,794,119
Repurchase agreements 1,514,731 9,033,192 11,463,484
--------------------------------------------------------
Total cash and cash equivalents 26,450,193 28,927,872 37,987,259
========================================================
Supplementary Cash flow information:
1999 2000 2001
--------------------------------------------------------
ThCh$ ThCh$ ThCh$
Interest paid 4,578,774 3,799,415 6,310,222
========================================================
Taxes paid 3,011,608 3,872,746 3,872,036
========================================================
F-66
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(e) Investments in related companies:
The following tables show combined summary financial information of
the related companies accounted for using the equity method. All
amounts are in thousands of constant Chilean pesos of December 31,
2001 purchasing power.
The condensed information shown here has been combined from each
company's individual financial statements prepared in accordance with
Chilean GAAP. For the overall effect on the financial statements of
Cristalerias de Chile S.A. of the application of U.S. GAAP to the
financial statements of these companies, see paragraph I(r) above.
1999 2000 2001
-------------------------------------------------------
ThCh$ ThCh$ ThCh$
Current assets 18,404,574 43,580,498 57,237,482
Non-current assets 80,956,057 405,712,728 441,707,847
-------------------------------------------------------
Total assets 99,360,631 449,293,226 498,945,329
=======================================================
Current liabilities 16,196,588 40,363,483 46,820,568
Non-current liabilities 2,433,279 27,471,038 50,932,957
-------------------------------------------------------
Total liabilities 18,629,867 67,834,521 97,753,525
=======================================================
Net sales 24,351,205 68,491,283 100,072,631
=======================================================
Gross profit 8,289,921 19,636,208 24,347,169
=======================================================
Net income 3,526,641 (13,025,544) (29,644,660)
=======================================================
Company's share of net (loss) income (Note 12) 1,007,418 (2,798,850) (7,394,602)
=======================================================
(f) Segment information:
The Company operates principally in three business segments,
substantially all of which are located in Chile, which comprise the
(i) the production and sale of glass and plastic containers, (ii) the
wine segment, (iii) the media and communications business and (iv)
other, which includes real estate operations. Total revenues by
segment are comprised of sales to unaffiliated customers, as reported
in Cristalchile's consolidated income statement and inter-segment
sales, which are accounted for at invoice prices. Operating expenses
are allocated between Cristalchile's operating segments on a
proportionate basis.
The methods of revenue recognition by segment are (i) (a) glass
containers: when a sales commitment has been made through the
issuance of a sales invoice and the product has been delivered and
(b) plastic containers: upon delivery, (ii) wine: upon delivery,
(iii) media and communications: upon broadcast of the program or
advertisement, and (iv) other, which includes real estate: upon
period of rental.
F-67
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(f) Segment information, continued:
The Company's segment data, based on Chilean GAAP balances, are as
follows:
Glass and
Plastics Wines Communications Other Total
-----------------------------------------------------------------
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
As for and for the year ended December 31, 1999
Revenues from external customers 62,159,951 54,790,757 15,695,058 (4,076,091) 128,569,675
Revenues from transactions with
other operating segments of the
same enterprise 4,534,342 - - (4,534,342) -
Interest income 3,114,918 132,985 57,225 6,433 3,311,561
Interest expense (727,953) (1,374,880) (793,607) (34,213) (2,930,653)
Depreciation (7,515,839) (2,162,538) (1,313,692) (420) (10,992,489)
Amortization (356,902) (190,508) (327,318) - (874,728)
Income tax expense (3,392,289) (356,135) - 8,658 (3,739,766)
Earnings (loss) from equity-method 542,721 417,637 47,060 - 1,007,418
Net Income 19,873,273 4,980,971 (3,466,109) (49,701) 21,338,434
Total Assets 158,446,809 90,534,029 45,451,547 1,563,649 295,996,034
Capital Expenditures 5,954,653 2,785,875 415,904 - 9,156,432
As for and for the year ended December 31, 2000
Revenues from external customers 72,355,078 61,983,423 15,484,619 (4,861,054) 144,962,066
Revenues from transactions with
other operating segments of the
same enterprise 5,263,774 - - (5,263,774) -
Interest income 2,625,074 293,987 82,745 6,630 3,008,436
Interest expense (2,764,751) (1,699,879) (662,648) (2,779) (5,130,057)
Depreciation (7,796,755) (2,374,979) (1,278,991) - (11,450,725)
Amortization (717,853) (142,706) (221,888) - (1,082,447)
Income tax expense (3,311,203) (1,114,516) 660,363 1,897 (3,763,459)
Earnings (loss) from equity-method 639,555 501,504 (3,939,909) - (2,798,850)
Net Income 16,302,366 6,201,573 (4,923,178) (10,213) 17,570,548
Total Assets 153,918,383 94,186,557 114,585,623 1,182,988 363,873,551
Capital Expenditures 14,564,776 5,016,988 225,006 - 19,806,770
As for and for the year ended December 31, 2001
Revenues from external customers 65,783,571 65,075,765 16,122,182 (5,052,702) 141,928,816
Revenues from transactions with
other operating segments of the
same enterprise 6,187,606 - - (6,187,606) -
Interest income 1,607,836 1,158,879 71,331 1,366 2,839,412
Interest expense (3,933,041) (2,488,800) (509,406) - (6,931,247)
Depreciation (7,638,228) (3,104,193) (1,039,130) - (11,781,551)
Amortization (1,490,389) (269,635) (248,311) (24,728) (2,033,063)
Income tax expense (3,340,435) (1,682,776) 39,345 1,554 (4,982,312)
Earnings (loss) from equity-method (862,391) 473,525 (7,005,284) (452) (7,394,602)
Net Income 19,465,741 7,219,871 (6,771,547)(2,143,454) 17,770,611
Total Assets 154,125,324 114,571,320 105,972,813 18,459,179 393,128,636
Capital Expenditures 24,845,080 7,594,193 290,824 - 32,730,097
F-68
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(g) Geographic information:
Although all of the Company's operations are located in Chile, export
revenues, primarily from customers in the United Kingdom, the United
States and Canada, totaled ThCh$23,083,754, ThCh$29,093,690 and
ThCh$31,381,538 for the years ended December 31, 1999, 2000 and 2001,
respectively.
(h) Supplementary information on marketable securities:
Supplementary information on available for sale marketable
securities is as follows:
As of December 31, 2000
----------------------------------------------------
Carrying value Unrealized Market value
Holding Gains
ThCh$ ThCh$ ThCh$
Government securities 2,581,949 - 2,581,949
Equity securities and mutual funds 5,816,730 2,997,970 8,814,700
----------------------------------------------------
Total 8,398,679 2,997,970 11,396,649
====================================================
The contracted maturities of these securities are as Within one year After one year After five years
follows: But within five but within 10
years years
----------------------------------------------------
ThCh$ ThCh$ ThCh$
Government securities 2,581,949 - -
Equity securities and mutual funds 8,814,700 - -
----------------------------------------------------
Total 11,396,649 - -
====================================================
As of December 31, 2001
----------------------------------------------------
Carrying value Unrealized Market value
Holding Gains
ThCh$ ThCh$ ThCh$
Bonds 71,599 - 71,599
Equity securities and mutual funds 12,973,641 1,848,964 14,822,605
----------------------------------------------------
Total 13,045,240 1,848,964 14,894,204
====================================================
The contracted maturities of these securities are as Within one year After one year After five years
follows: But within five but within 10
years years
-----------------------------------------------------
ThCh$ ThCh$ ThCh$
Bonds 71,599 - -
Equity securities and mutual funds 14,822,605 - -
-----------------------------------------------------
Total 14,894,204 - -
=====================================================
Equity stock investments and mutual fund investment do not have a fixed
maturity date, but are anticipated to be sold within one year.
F-69
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(h) Supplementary information on marketable securities, continued:
Supplementary information on held-to-maturity marketable securities is as
follows:
As of December 31, 2000
----------------------------------------------------
Carrying value Unrealized Market value
Holding Gains
ThCh$ ThCh$ ThCh$
Bonds - - -
----------------------------------------------------
Total - - -
====================================================
The contracted maturities of these securities are as Within one year After one year After five years
follows: But within five but within 10
years years
----------------------------------------------------
ThCh$ ThCh$ ThCh$
Bonds - - -
----------------------------------------------------
Total - - -
====================================================
As of December 31, 2001
----------------------------------------------------
Carrying value Unrealized Market value
Holding Loss
ThCh$ ThCh$ ThCh$
Bonds 9,070,345 (101,166) 8,969,179
----------------------------------------------------
Total 9,070,345 (101,166) 8,969,179
====================================================
The contracted maturities of these securities are as Within one year After one year After five years
follows: But within five but within 10
years years
----------------------------------------------------
ThCh$ ThCh$ ThCh$
Bonds - 8,969,179 -
Total - 8,969,179 -
F-70
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(i) Other disclosures:
The Company has accounted for its liability for severance indemnities
as disclosed in Notes 2(h) and 21. Except for severance indemnities,
the Company does not provide any post-employment or post-retirement
benefits to its employees and accordingly, there is no need to record
any additional obligations in accordance with either SFAS 106
(Employers' Accounting for Post-retirement Benefits other than
Pensions) or SFAS 112 (Employers' Accounting for Post-employment
Benefits).
The Company had advertising expenses of ThCh$2,731,759,
ThCh$2,756,377 and ThCh$3,050,694 for the years ended December 31,
1999, 2000 and 2001. There were no significant lease obligations or
rental expenses for the years ended December 31, 1999, 2000 and 2001.
Reliance on Significant Customers:
The Company sells glass to three unrelated companies that have from
time to time accounted for more than 10% of the Company's glass
segment sales over the last three years. Sales to these companies
accounted for 34.1% (17.0%, 9.2% and 7.9%), 33.5% (16.8%, 8.9% and
7.8%) and 31.2% (15.0%, 9.5% and 6.7%) of the Company's total net
sales for the years ended December 31, 1999, 2000 and 2001 of the
company's glass segment sales, respectively.
(j) Concentrations of Credit Risk
The Company holds bank balances and places deposits in a number of
different financial institutions and in this way attempts to reduce
counterparty risk. The Company does not believe that it is exposed to
any material credit risk from any single financial institution. No
customer has outstanding receivables of more than 10%. The
concentration of the Company's accounts receivable balances are as
follows:
Percentage of accounts receivable
Sector 2001
----
Glass Container
Liquor 4.50%
Beer 7.48%
Soft Drink 7.10%
Wine 29.06%
Other Glass Container 0.81% 48.95%
-------------
TV Advertisement 9.72%
Wine 41.33%
The Company's debtors are all dependent on the Chilean economy, and
significant proportions of these debtors operate in the beverage
industry. As a result, the Company could be vulnerable to a downturn
in economic activity in Chile. However, the Company so far does not
have any experience of credit losses due to non-payment by major
customers. Additionally, the credit risk that the Company has faced
from creditors has been reduced as a result of the Company's position
in the market for the production of glass bottles. In the event of
failure by the Company's counterparties, the Company would be exposed
to a loss equivalent to the amount shown in the balance sheet.
F-71
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(k) Disclosure regarding the fair value of financial instruments:
In accordance with SFAS No. 107, "Disclosures about Fair Value of
Financial Instruments" and SFAS No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments" under
US GAAP, information is provided about the fair value of certain
financial instruments for which it is practicable to estimate that
value. For the purposes of SFAS No. 107, the estimated fair value of
a financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties.
There are certain limitations inherent in the fair value data, since
while the data represents Management's best estimates and certain
assumptions; the data is subjective, involving significant estimates
and assumptions regarding current economic and market conditions.
The methods and assumptions used to estimate the fair values are as
follows:
o For cash, short-term deposits and investments, and current
receivables and payables the carrying amounts approximate the
fair value due to the short-term maturity of these instruments.
o For interest earning assets and interest bearing liabilities
that are contracted at variable interest rates, book value is
considered to be equivalent to fair value.
o Estimates of fair values of financial instruments for which no
quoted prices or secondary market exists have been made using
valuation techniques such as forward pricing models, present
value of estimated future cash flows, and modeling techniques.
These estimates of fair values include assumptions made by the
Company about market variables that may change in the future.
Changes in assumptions could have a significant impact on the
estimate of fair values disclosed. As a result, such fair value
amounts are subject to significant uncertainty and are highly
dependent on the quality of the assumptions used.
o For interest earning assets and interest bearing liabilities,
contracted at fixed interest rates with an original maturity of
more than one year, the fair values have been calculated by
discounting contractual cash flows at the current market
origination rates for financial instruments with similar terms.
F-72
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(k) Disclosure regarding the fair value of financial instruments,
continued:
2000 2001
Carrying Estimated Carrying Estimated Fair
Value Fair Value Value Value
------------------------------------ --------------------------------------
Assets ThCh$ ThCh$ ThCh$ ThCh$
Cash 2,105,158 2,105,158 2,815,861 2,815,861
Time deposits 18,403,839 18,102,738 22,731,793 22,705,744
Marketable securities 8,398,679 11,397,660 13,045,240 14,807,272
Other instruments 9,060,989 9,059,876 11,531,338 11,456,801
Long-term receivables 1,392,783 1,392,783 228,703 228,703
Other accounts receivables 39,578,693 39,578,693 37,071,073 37,071,073
Long-term other instruments 1,409,534 1,409,534 12,136,960 12,035,794
Forward contracts, net 690,222 782,021 - -
Liabilities
Accounts payable 15,283,722 15,283,722 12,275,338 12,275,338
Long-term bank liabilities 81,352,566 81,526,821 79,730,407 80,248,202
Bonds payable 1,023,058 1,023,058 20,180,959 20,180,959
Miscellaneous creditors 1,395,809 1,395,809 3,092,196 3,092,196
Forward contracts, net - - 2,730,982 1,444,029
The Company entered into foreign currency exchange contracts to
transfer its exposure in U.S. dollars to an exposure in UF. The
Company's accounting policy for such contracts is described in Note
2(m).
F-73
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(l) Restrictions on payment of dividends:
As of December 31, 2001, the Company had undistributed earnings of
ThCh$2,324,210 in companies accounted for by the equity method,
included as a part of consolidated retained earnings.
Dividends received from such entities were ThCh$1,225,230,
ThCh$330,270 and ThCh$$436,897 for the years ended December 31,
1999, 2000 and 2001, respectively.
(m) Recent accounting pronouncements:
On July 20, 2001, the Financial Accounting Standards Board issued
Statements No. 141, "Business Combinations" ("SFAS No. 141") and No.
142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). SFAS
No. 141 requires all business combinations initiated after June 30,
2001 to be accounted for using the purchase method. Poolings
initiated prior to June 30, 2001 are grandfathered. SFAS No. 142
replaces the requirements to amortize intangible assets with
indefinite lives and goodwill with a requirement for an impairment
test. SFAS No. 142 also requires an evaluation of intangible assets
and their useful lives and a transitional impairment test for
goodwill and certain intangible assets. After transition, the
impairment tests are to be performed annually. The Company is
required to adopt SFAS No. 142 on January 1, 2002. Under SFAS No.
142, the Company will cease to amortize existing goodwill related to
previous acquisitions beginning on January 1, 2002. The effect of
not amortizing goodwill will be to increase annual net income
determined under U.S. GAAP by approximately ThCh$488,661,
notwithstanding any future transactions. The Company is still
assessing the events of impairment, if any, of goodwill, that may
need to be recorded as a result of the adoption of these new
accounting standards.
In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations" ("SFAS No. 143"). This standard
requires that obligations associated with the retirement of tangible
long-lived assets be recorded as liabilities when those obligations
are incurred, with the amount of the liability initially measured at
fair value. Upon initially recognizing a liability for an asset
retirement obligation, an entity must capitalize the cost by
recognizing an increase in the carrying amount of the related
long-lived asset. Over time, this liability is accreted to its
present value, and the capitalized cost is depreciated over the
useful life of the related asset. Upon settlement of the liability,
an entity either settles the obligation for its recorded amount or
incurs a gain or loss upon settlement. SFAS No. 143 is effective for
financial statements issued for fiscal years beginning after June
15, 2002. The Company will adopt SFAS No. 143 effective January 1,
2003. The Company does not expect that the adoption of this
statement will have a material impact on their results of
operations, financial position or cash flows.
F-74
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(m) Recent accounting pronouncements, continued:
In August 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" ("SFAS 144"). SFAS 144 supersedes FASB Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," and the accounting and
reporting provisions of APB Opinion No. 30, "Reporting the Results
of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," for the disposal of a segment of a
business (as previously defined in that opinion). SFAS 144 requires
that one accounting model be used for long-lived assets to be
disposed of by sale, whether previously held and used or newly
acquired, and broadens the presentation of discontinued operations
to include more disposal transactions than were included under the
previous standards. For the Company and other calendar-year
companies, SFAS No. 144 is effective beginning January 1, 2002. The
Company does not expect the adoption of SFAS 144 to have a material
impact on its results of operations, financial position or cash
flows.
In April 2002, the FASB issued Statement of Financial Accounting
Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections". This
statement rescinds FASB Statement No. 4, "Reporting Gains and Losses
from Extinguishment of Debt", and an amendment of that Statement,
Statement No. 64, "Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements". This Statement also amends other
existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under
changed conditions. The Company does not expect the adoption of SFAS
145 to have a material impact on its results of operations,
financial position or cash flows.
F-75
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(n) Effects of conforming to U.S. GAAP
Certain reclassifications would be made to the line items of the
Chilean GAAP income statement to show the same presentation as would
be required under a U.S. GAAP format. Amounts that are included in
non-operating income and expenses would be included as operating
income under U.S. GAAP. These reclassifications are as follows (the
column labeled "U.S. GAAP presentation" discloses amounts using a
U.S. GAAP presentation, although the amounts displayed have been
determined in accordance with Chilean GAAP):
1999
--------------------------------------------------------
U.S. GAAP
Chilean GAAP Reclassification Presentation
ThCh$ ThCh$ ThCh$
Operating income 23,413,537 (760,175) 22,653,362
Non-operating income 2,039,828 (1,239,218) 800,610
Non-operating expenses (2,851,288) 1,999,393 (851,895)
2000
--------------------------------------------------------
U.S. GAAP
Presentation
Chilean GAAP Reclassification
ThCh$ ThCh$ ThCh$
Operating loss 30,851,557 (1,418,929) 29,432,628
Non-operating income 1,774,426 (682,148) 1,092,278
Non-operating expenses (2,707,626) 2,101,077 (606,549)
2001
U.S. GAAP
Presentation
Chilean GAAP Reclassification
ThCh$ ThCh$ ThCh$
Operating loss 32,584,528 (5,830,279) 26,754,249
Non-operating income 6,709,775 (6,302,744) 407,031
Non-operating expenses (2,746,373) 2,257,539 (488,834)
Extraordinary income 1,785,074 (1,785,074) -
F-76
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(n) Effects of conforming to US GAAP, continued:
Certain reclassifications would be made to the line items of the
Chilean GAAP balance sheet to show the same presentation as would be
required under a U.S. GAAP format. Amounts payable or receivable
under forward contacts would only be stated net if there was a right
of offset, and current bond payable for the year-ended December 31,
2000, would be stated as long-term because the debt was refinanced
subsequent to year-end. These reclassifications are as follows (the
column labeled "U.S. GAAP presentation" presents amounts using U.S.
GAAP format although the amounts displayed have been determined in
accordance with Chilean GAAP):
2000
---------------------------------------------------------
U.S. GAAP
Chilean GAAP Reclassification Presentation
ThCh$ ThCh$ ThCh$
Total current assets 114,278,868 46,387 114,325,255
Total other assets 128,728,422 - 128,728,422
Total current liabilities 46,419,804 (1,029,731) 45,390,073
Total long-term liabilities 81,854,064 1,076,117 82,930,181
2001
----------------------------------------------------------
U.S. GAAP
Chilean GAAP Reclassification Presentation
ThCh$ ThCh$ ThCh$
Total current assets 119,896,652 1,707,454 121,604,106
Total other assets 144,686,977 - 144,686,977
Total current liabilities 50,360,188 1,707,454 52,067,642
Total long-term liabilities 95,057,480 - 95,057,480
F-77
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
39. Differences between Chilean and United States
Generally Accepted Accounting Principles, continued:
(o) Valuation and qualifying accounts:
Balance at Charged to Charged Balance
Beginning cost and to other at end
Description of period expenses accounts Deductions of period
--------- -------- -------- ---------- ---------
ThCh$ ThCh$ ThCh$ ThCh$ ThCh$
1999
Allowance for doubtful accounts:
Trade receivables 678,724 14,590 (12,645) (76,429) 604,240
2000
Allowance for doubtful accounts:
Trade receivables 604,240 172,529 (26,526) (210,261) 539,982
2001
Allowance for doubtful accounts:
Trade receivables 539,982 163,196 (154,692) (19,497) 528,989
F-78
CRISTALERIAS DE CHILE S.A. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Translation of financial statements originally issued in Spanish - See Note 2)
(Restated for general price-level changes and
expressed in thousands of constant
Chilean pesos as of December 31, 2001 except as indicated)
-----------------------
40. Consolidated Financial Statements of Cordillera Comunicaciones Ltda.
and Subsidiaries
In accordance with Chilean GAAP, as of December 31, 2001, the Company included
its equity method investment in Cordillera Comunicaciones Ltda. and
subsidiaries ("Cordillera") (See Note 10) in the balance sheet account
"Investments in related companies" and its participation in earnings for the
years ended December 31, 1999, 2000 and 2001 in the income statement account
"Equity participation in net income (loss) of related companies". The Company
is required to present separately, the Chilean GAAP audited financial
statements with a reconciliation to U.S. GAAP of Cordillera as of December 31,
2000 and 2001 and for the three years in the period ended December 31, 2001,
as Cordillera met the definition of a significant subsidiary under Rule 1-02
(w) of Regulation S-X as of December 31, 2001.
F-79