TOTAL NUMBER OF SEQUENTIAL PAGES 59
EXHIBIT INDEX ON SEQUENTIAL PAGE NUMBER 3
File No:333-10702
---------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the nine-month period ending September 30, 2002.
COCA-COLA EMBONOR S.A.
----------------------
(translation of registrant's name into English)
Avenida Apoquindo 3721, Piso 10
Las Condes, Santiago, Chile
---------------------------
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of form 20-F or 40-F:
Form 20-F x - Form 40-F
--- ---
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g 3-2(b)
under the Securities Exchange Act of 1934:
Yes No
--- ---
FORM 6-K FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2002 -1-
ITEM 1. Filing of financial results with the Superintendencia de Valores y
Seguros.
On November 14, 2002, Registrant filed with the Superintendencia de
Valores y Seguros, Santiago, Chile, its Ficha Estadistica Codificada
Uniforme containing its results of financial operations for the period
ended September 30, 2002. Registrant has caused an English translation
of such filing to be prepared, a copy of which is annexed hereto as
Exhibit 99.1
FORM 6-K FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2002 -2-
ITEM 2. Exhibits
Exhibit No. Description
- ----------------- -----------
Page Number
- -----------
99.1 Translation of Ficha Estadistica Codificada
- -5-
FORM 6-K FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2002 -3-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
COCA-COLA EMBONOR S.A.
----------------------
(Registrant)
Date: December 6, 2002. By:
Roger Ford
Chief Financial Officer
FORM 6-K FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2002 -4-
Coca-Cola Embonor S.A and Subsidiaries
Consolidated General Balance Sheets
as of September 30,
Assets 2002 2001
Current Assets TCH$ TCH$
Cash 3.613.715 4.273.151
Time deposits 6.543.601 4.096.097
Marketable securities (net) 11.512.897 3.932.954
Sales receivables (net) 10.600.564 9.496.404
Documents receivables (net) 4.860.864 5.670.039
Sundry receivables (net) 2.626.556 2.749.823
Documents and accounts receivable
from related companies 1.019.688 734.675
Inventory (net) 11.014.071 11.899.321
Recoverable taxes 7.366.701 11.649.401
Prepaid expenses 8.760.989 7.430.027
Deferred taxes 556.458 447.750
Other current assets 4.654.163 4.807.566
----------------- -----------------
Total current assets 73.130.267 67.187.208
----------------- -----------------
Property, Plant and Equipment
Land 14.364.479 13.808.420
Construction and infrastructure 49.205.948 47.377.984
Machinery and equipment 124.395.561 125.595.441
Other fixed assets 149.533.846 137.765.039
Higher value in technical reappraisal of
property, plant and equipment 1.829.233 1.809.430
Depreciation (less) (158.887.016) (144.303.810)
----------------- -----------------
Total property, plant and equipment 180.442.051 182.052.504
----------------- -----------------
Other assets
Investment in related companies 1.499.321 1.687.153
Investment in other companies 125.688 152.442
Goodwill 296.795.701 310.168.633
Negative goodwill, net (908.920) -
Long-term receivables 261.921 268.202
Intangibles 24.216.765 22.982.558
Amortization (less) (6.563.100) (5.071.138)
Other 6.599.659 8.111.913
----------------- -----------------
Total other assets 322.027.035 338.299.763
----------------- -----------------
Total assets 575.599.353 587.539.475
----------------- -----------------
The attached notes 1 to 38 form an
integral part of these financial statements
5
Coca-Cola Embonor S.A and Subsidiaries
Consolidated General Balance Sheets
as of September 30,
2002 2001
Liabilities TCH$ TCH$
Current liabilities
Short-term bank debt 997 5.029
Current portion of long-term bank liabilities 18.012.624 7.046.260
Bonds - short-term portion 48.003.243 1.301.345
Accounts payable 11.419.323 10.832.442
Documents payable 1.208.692 1.579.573
Sundry payable 1.802.984 3.291.200
Documents and accounts payable to
related companies 2.550.746 3.727.674
Provisions 7.638.718 7.737.819
Withholdings 4.135.771 3.754.140
Other current liabilities 81.673 234.367
----------------- -----------------
Total current liabilities 94.854.771 39.509.849
----------------- -----------------
Long-term liabilities
Bank debt 34.737.733 51.719.553
Long-term bonds 137.974.890 178.994.337
Long-term provisions 1.909.887 1.684.912
Long-term deferred taxes 11.925.410 12.831.265
Other long-term liabilities 8.691.457 8.283.487
----------------- -----------------
Total long-term liabilities 195.239.377 253.513.554
----------------- -----------------
Minority Interest 55.335.013 53.812.683
Equity
Paid-in capital 217.054.962 215.160.205
Capital revaluation reserve 2.821.715 4.733.525
Premium on the sale of treasury stock 20.520.286 20.521.878
Other reserves 9.692.468 8.025.683
Retained earnings (19.919.239) (7.737.902)
Accrued profit
Accrued loss (less) (9.896.325) (1.337.141)
Fiscal year profit (loss) (10.022.914) (6.400.761)
----------------- -----------------
Total equity 230.170.192 240.703.389
----------------- -----------------
Total liabilities and equity 575.599.353 587.539.475
----------------- -----------------
The attached notes 1 to 38 form an
integral part of these financial statements
6
Coca-Cola Embonor S.A. and Subsidiaries
Consolidated Statements of Income
for the nine months ending September 30,
2002 2001
Operating Income (loss) TCH$ TCH$
Operating revenue 174.027.052 171.955.298
Operating costs (less) (99.712.772) (97.420.970)
----------------- -----------------
Operating margin 74.314.280 74.534.328
Selling and Administration Expenses (55.943.210) (53.099.181)
----------------- -----------------
Operating income (loss) 18.371.070 21.435.147
----------------- -----------------
Non-operating Income (loss)
Financial income 1.325.420 935.313
Other non-operating income 2.779.205 7.555.486
Loss on investment in related companies (less) (160.782) (318.876)
Goodwill amortization (less) (13.542.064) (13.327.718)
Financial expenses (less) (11.919.936) (13.559.818)
Other non-operating expenses (less) (4.614.444) (4.751.479)
Price-level restatement (582.273) (3.649.861)
Exchange differentials 726.339 2.033.213
----------------- -----------------
Non-operating profit (loss) (25.988.535) (25.083.740)
----------------- -----------------
Income before tax and extraordinary items (7.617.465) (3.648.593)
Income tax (3.163.826) (5.458.323)
Extraordinary items 1.171.600 2.712.069
----------------- -----------------
Profit (loss) before minority interest (9.609.691) (6.394.847)
Minority Interest (428.628) (5.914)
Net Profit (loss) (10.038.319) (6.400.761)
Amortization of negative goodwill 15.405 -
----------------- -----------------
Profit (loss) in the fiscal year (10.022.914) (6.400.761)
----------------- -----------------
The attached notes 1 to 38 form an
integral part of these financial statements
7
Coca-Cola Embonor S.A. and Subsidiaries
Statements of Consolidated Cash Flow
for the nine months ending September 30,
2002 2001
Cash flow from operating activities: TCH$ TCH$
Collection of sales receivables 230.650.357 237.334.038
Financial income received 1.357.513 939.730
Dividends received
Other income received 4.414.282 6.388.463
Payments to suppliers and employees (less) (179.782.483) (178.608.258)
Interest paid (less) (16.116.671) (18.154.980)
Income tax paid (less) (22.632) (44.772)
Other expenses paid (less) (1.650.619) (2.743.738)
VAT and other similar taxes paid (less) (30.830.705) (30.359.755)
----------------- ---------------
Cash flow from operating activities 8.019.042 14.750.728
----------------- ---------------
Inflow from Finance Activities:
Loans secured 253.060 -
Other sources financing 165.501 219.544
Loan payment (less) (5.693.440) -
Bond payment (less) (25.277) (203.623)
Other disbursements for financing (less) (419.385) (325.340)
----------------- ---------------
Cash flows from financing activities (5.719.541) (309.419)
----------------- ---------------
Cashflows from Investment Activities:
Sales of property, plant and equipment 296.409 1.071.646
Collection loans to related companies - 4.740.155
Collection other loans to related companies 100.650 -
Other investment incomes - 16.605
Additions to property, plant and equipment (less) (8.784.178) (11.416.662)
Long-term investments (871.398) (1.010.976)
Other loans to related companies
Other investment disbursements (less) (110.644) (93.340)
----------------- ---------------
Cashflow from investment activities (9.369.161) (6.692.572)
----------------- ---------------
Total net cashflows for the period (7.069.660) 7.748.737
----------------- ---------------
Effect of inflation on cash and cash equivalent 772.752 58.785
----------------- ---------------
Net change in cash and cash equivalent (6.296.908) 7.807.522
Initial balance of cash and cash equivalent 27.967.121 4.494.680
----------------- ---------------
Ending balance of cash and cash equivalent 21.670.213 12.302.202
----------------- ---------------
The attached notes 1 to 38 form an
integral part of these financial statements
8
Coca-Cola Embonor S.A. and Subsidiaries
Statements of Consolidated Cash Flow
for the nine months ending September 30,
2002 2001
Reconciliation of Net Inflow from Operating TCH$ TCH$
Activities to Fiscal Year Income
Fiscal year profit (loss) (10.022.914) (6.400.761)
Income from asset sales:
(Profit) loss on sale of property,
plant and equipment (108.094) (19.664)
(Profit) loss on sale of investment (449)
(Profit) loss on sale of other assets
Debits (credits) against income not
representing cash flow:
Depreciation in the fiscal year 18.657.194 18.987.569
Amortization of intangibles 913.022 866.172
Write-offs and provisions 366.629 527.546
Loss accrued on investments in related companies 160.782 318.876
Amortization of goodwill 13.542.064 13.327.718
Amortization of negative goodwill (15.405) -
Net price-level restatement 582.273 3.649.861
Net change differential (726.339) (2.033.213)
Other credits against income not
representing cash flow 1.536.135 1.416.893
Other debits against income not
representing cash flow (1.291.288) (6.320.957)
Variation in assets affecting cash flows:
(increase) decrease in sales receivables 6.392.919 6.157.788
(Increase) decrease in inventory (95.605) (1.753.675)
(Increase) decrease in other assets (1.156.143) (6.722.496)
Variation in liabilities affecting cash flows:
(Increase) decrease in accounts payable
relating to operating income (10.971.316) (6.448.689)
(Increase) decrease in interest payable (4.456.512) -
Net (Increase) decrease in income tax payable (1.207.141) 920.138
Increase (decrease) in other accounts payable
in relation to non-operating income (2.927.546) 566.883
VAT and other similar taxes payable (net) (1.582.301) (2.294.726)
(Profit) loss on minority interest 428.628 5.914
----------------- -----------------
Net cash flows from Operating Activities 8.019.042 14.750.728
----------------- -----------------
The attached notes 1 to 38 form an
integral part of these financial statements
9
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
1. Registration in the Securities Registry:
The Parent Company, Coca-Cola Embonor S.A., is an open corporation registered
under No. 622 in the Securities Registry, together with its financial statements
as of December 31, 1996; therefore, it is regulated by the Superintendency of
Securities and Insurance. The Company's shares were registered on September 25,
1997 and listed on the Santiago Stock Exchange on December 1, 1997, where they
are currently traded. The Special Shareholders Meeting approved a change in the
corporate name on April 27, 2000 from Embotelladora Arica S.A. to Coca-Cola
Embonor S.A.
2. Accounting Principles:
a) Accounting period:
The consolidated financial statements cover the period from January 1 to
September 30, 2002 and 2001.
b) Basis for preparation:
The financial statements of the Parent Company and its Subsidiaries were
prepared as of September 30, 2002 and 2001 according to generally accepted
accounting principles of Chile and instructions issued by the Superintendency of
Securities and Insurance. There are no discrepancies between either. The
specific provisions on corporations contained in Law 18.046 and the regulations
thereto have also been taken into account.
c) Basis for presentation:
The financial statements and amounts indicated in the notes as of September 30,
2001 have been adjusted for comparison purposes by the percentage change of 2.2%
in the Consumer Price Index.
Certain reclassifications have been made to the 2002 and 2001 financial
statements to conform to the current year presentation.
d) Basis for consolidation:
The consolidation of the financial statements includes Coca-Cola Embonor S.A.
and its Subsidiaries where the shareholdings and/or interests are greater than
or equal to 50% of equity, either directly or indirectly.
For consolidation purposes, as of September 30, 2002, the financial statements
of Inversora Los Andes S.A., Sociedad de Cartera del Pacifico S.R.L. and
Embotelladora Arica Overseas have been expressed in Chilean pesos according to
the rules in Technical Bulletin No. 64 of the Chilean Accountants Association,
which determined that the financial statements of foreign companies must be
adjusted to generally accepted accounting principles of Chile and converted into
Chilean pesos.
10
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
All intercompany transactions and balances have been eliminated in the
consolidation.
The consolidated financial statements as of September 30, 2002 and 2001 include
the following subsidiaries:
Taxpayer ID No. Company Name Percentage interest
----------------------------------------------------
2002 2001
----------------------------------------------------
Direct Indirect Total Total
% % % %
Foreign Inversora Los Andes S.A. and Subsidiaries - 99.99999 99.99999 99.99999
Foreign Embotelladoras Bolivianas Unidas S.A. - 99.99897 99.99897 99.99897
96.517.310-2 Embotelladora Iquique S.A. 99.90000 - 99.90000 99.90000
96.891.720-K Embonor S.A. 99.84188 - 99.84188 99.56729
Foreign Embotelladora Arica Overseas 45.16943 54.83057 99.99999 99.99999
Foreign Sociedad de Cartera del Pacifico S.R.L. - 79.34191 79.34191 79.34191
Foreign Embotelladora Latinoamericana S.A. - 58.72520 58.72520 57.14205
Foreign Industrial Iquitos S.A. - 43.49138 43.49138 76.11100
96.972.720-K Embonor Holdings S.A. 99.99999 - 99.99999 -
96.705.990-0 Envases Central S.A. 33.00000 - 33.00000 33.00000
e) Price-level restatement:
The financial statements of the Company have been price-level restated to
reflect the effects of changes in the purchasing power of the currency during
each year (note 24). The restatements were calculated using the official indexes
of the National Statistics Bureau that show a change of 1.3% for the period
December 1, 2001 to August 31, 2002 (2.2% for the same period in the previous
year). Furthermore, balances in income and expense accounts have been adjusted
for inflation to express them at closing values.
f) Basis for conversion:
Balances in U.S. dollars and in Unidades de Fomento ("UF") are converted to
pesos at the exchange rate in effect at the close of each period, as indicated
below:
2002 2001
$ $
United States Dollar (US$1) 748.73 695.02
Unidades de Fomento (U.F.1) 16,455.03 16,094.96
g) Time deposits:
Time deposits are presented at investment values plus interest accrued through
the close of the period, which have been credited against income.
h) Marketable securities:
Marketable securities consist of investments in mutual funds, which are shown at
their redemption value at the close of the period.
11
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
i) Allowance for doubtful accounts:
As of September 30, 2002 and 2001, the Parent Company and its Subsidiaries
established provisions for estimated uncollectible accounts which encompass all
debt more than 360 days past-due and are shown deducted from the balance of
sales receivable, documents receivable and miscellaneous receivables. They total
TCH$ 2.878.564 (TCH$ 2.818.239 in 2001).
j) Inventory:
Inventories of raw materials and finished products are recorded at the purchase
price or at the production cost, and are price-level restated. Inventories do
not exceed their estimated net realizable value.
k) Other current assets:
Other current assets include materials and spare parts at their adjusted cost.
l) Property, Plant and Equipment:
Property, plant and equipment are stated at their acquisition cost plus legal
revaluations accumulated as of September 30, 2002 and 2001.
The higher value on the technical revaluation of fixed assets recorded in 1979
and 1994 is shown adjusted at the closing date. Depreciation is calculated on
the adjusted value in terms of the useful life remaining of the revalued goods,
using the straight-line method.
m) Depreciation of property, plant and equipment:
The depreciation of machinery and transport equipment has been calculated
according to the real times of use of the assets. The debit due to depreciation
for the fiscal year was determined by multiplying the rate in pesos, for each
hour of use, by the real hours during the exercise. Depreciation of all other
assets was calculated according to the straight-line method, based on the useful
life of goods. The debit against income for depreciation was TCH$18.657.194 in
2002 (TCH$18.987.569 in 2001).
n) Bottles and cases:
Glass bottles and refillable plastic bottles and cases held in plants,
warehouses and in the possession of third parties are presented in other fixed
assets at cost plus price-level restatement at their cost price. The
corresponding depreciation is shown under accumulated depreciation. Bottles and
cases that are broken or obsolete at the plants and warehouses are charged to
expenses during the period, forming part of the fiscal year depreciation.
Depreciation of the bottles and cases has been calculated under the
straight-line method, based on their estimated useful life.
12
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
o) Deposits for bottles and cases:
The estimated liability for returnable bottles and cases deposits is assessed on
an annual stock basis of bottles and cases in the possession of customers. They
are valued at the average value of deposits received during the last five years
for each type of bottle or case.
This liability is shown under the heading "Other long-term liabilities",
considering that the bottles and cases placed in the market during a given
operating period have historically exceeded the bottles and cases returned by
customers during the same period.
p) Investments in Other Companies:
Investments in shares of other companies in which the Company does not have
significant influence have been stated at cost plus price-level restatement.
q) Investments in related companies:
This balance includes the investments in Envases Central S.A. and Comptec S.A.,
valued in accordance with the proportional equity method. The share in results
of these related companies is included in the line "loss on investment in
related companies."
r) Goodwill and negative goodwill:
The lower value resulting from differences between the proportional equity value
of investment and the value paid on the investment acquisition date has been
charged to the goodwill account and is shown under the line other assets, net of
the related amortization. Goodwill is amortized over twenty years, as provided
by Circular No. 1358 of the SVS.
The Company has classified the proportion of the net equity of companies
acquired in purchase transactions in excess of the acquisition cost as negative
goodwill, which is presented net of amortization. Negative goodwill generated on
acquisitions is amortized on a straight-line basis over five years, in
accordance with Circular N(degree) 368 of de Superintendency of Securities and
Insurance.
s) Intangibles:
Intangibles refer to trademarks that have been acquired, which are shown at the
adjusted cost, net of amortization, determined using the straight-line method on
the basis of a useful life of 20 years.
t) Income Taxes and Deferred Taxes:
Income taxes are charged to results in the same period in which the income and
expenses are recorded, and are calculated in accordance with current tax laws.
13
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
Pursuant to Technical Bulletins No. 71 and 60 of the Chilean Accountants
Association and Circular No. 1466 of the Superintendency of Securities and
Insurance, the Company records the effects of deferred taxes originating in
temporary differences, tax losses that imply a tax benefit and other events that
create differences between the financial accounting and the tax basis.
Deferred taxes originating in these temporary differences that had accumulated
at the beginning of the fiscal year were recorded as assets and liabilities with
a credit or debit, respectively, in complementary accounts. These latter are
amortized against expenses for the year's income tax in a weighted average term
for reversing. Such complementary accounts are presented deducting the
corresponding assets and liabilities generated by such deferred taxes.
u) Bonds:
Bonds correspond to bonds to the order on the U.S. and Chilean markets that are
appraised at the actual issue rate. The difference between the actual issue rate
and the actual placement rate is recorded as a deferred asset and higher
obligation. This asset is being amortized on a straight-line basis over the term
of the obligation.
v) Staff Severance Indemnities:
The Parent Company and its subsidiary Embotelladora Iquique S.A. have not
recorded any provision for severance indemnities because they have not
stipulated all-events severance payment with their employees. However, in those
cases where such payments have been made to employees, they are charged to
results in the year the payment is made.
As of September 30, 2002 and 2001, Inversora Los Andes S.A. and Embonor S.A.
established a provision for severance indemnities in accordance with their
collective agreements with their employees. This liability is recorded at the
present value of the accrued benefits, which were calculated by applying an
annual rate of 11.5% (Inversora Los Andes) and 7.0% (Embonor S.A.) over an
average remaining service period of 15 years.
Sociedad de Cartera del Pacifico S.R.L. and its subsidiary and Industrial
Iquitos S.A. make advance severance indemnity payments every 6 months according
to the laws of Peru. The provision is recorded against income as it accrues for
the amount payable if the employee were to resign as of the date of the
Financial Statements.
w) Operating income
Income is recognized when products are delivered and invoiced to customers.
Costs and expenses are recognized as they accrue, regardless of the time of
payment, and are registered in the periods to which they relate.
14
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
x) Vacation Provision:
The Parent Company and its subsidiaries provide for vacation benefits on an
accrual basis.
y) Statement of cash flow:
For purposes of preparation of the statement of cash flow, the Parent Company
and Subsidiaries consider investments in time deposits and in fixed-income
mutual fund units which expire within 90 days to be cash equivalent.
The cash flows relating to the business of the Company, interest paid, interest
income received, dividends received and all others not defined as investment or
finance are recorded under "inflow originating in operating activities."
z) Financial risk hedging:
The financial risk hedging transactions conform with the stipulations in
Technical Bulletin N(degree) 57 of the Chilean Accountants Associations.
3. Changes in Accounting Principles
There were no changes in the accounting principles applied for the nine months
ending September 30, 2002.
15
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
4. Time Deposits
This line includes deposits in the following financial institutions, appraised
as described in Note 2(g), as follows:
Investment Expiration Interest 2002 2001
Institution Country Currency Date Date Rate TCH$ TCH$
%
Citibank N.Y. Dollars 30.09.2002 01.10.2002 5.75 2.697.972 -
Banco de Credito e Inversiones Chile Dollars 11.09.2002 31.10.2002 1.80 1.377.477 -
Banco de Credito del Peru Peru Dollars 01.06.2002 01.10.2002 1.50 1.010.508 -
BBVA Banco Continental Peru New Soles 01.06.2002 01.10.2002 3.75 825.986 -
BankBoston N.A. Peru New Soles 01.06.2002 01.10.2002 4.20 90.508 -
Banco Santander Central Hispano Peru New Soles 01.06.2002 01.10.2002 5.00 121.228 -
Citibank Peru Dollars 01.06.2002 01.10.2002 1.50 419.173 -
Banco de Credito de Bolivia Bolivia Dollars 28.09.2002 27.10.2002 5.70 749 -
Banco de Credito e Inversiones Chile Dollars 12.09.2001 11.12.2001 3.16 - 964.552
Banco de Credito e Inversiones Chile Dollars 28.09.2001 05.10.2001 3.25 - 284.124
Banco de Credito e Inversiones Chile Dollars 07.09.2001 05.10.2001 3.25 - 710.310
Banco de Credito del Peru Peru New Soles 28.09.2001 01.10.2001 6.00 - 130.912
Banco de Credito del Peru Peru Dollars 24.09.2001 01.10.2001 2.13 - 153.605
Banco Continental Peru Dollars 25.09.2001 05.10.2001 2.60 - 103.705
Banco Santander Central Hispano Peru Dollars 31.08.2001 05.10.2001 3.60 - 204.569
Banco Santander Central Hispano Peru Dollars 07.09.2001 09.10.2001 3.40 - 426.186
Banco Santander Central Hispano Peru Dollars 18.09.2001 18.10.2001 3.15 - 426.186
Banco Santander Central Hispano Peru Dollars 19.09.2001 19.10.2001 2.50 - 213.093
Banco Santander Central Hispano Peru Dollars 20.09.2001 19.10.2001 2.75 - 106.547
Banco Santander Central Hispano Peru Dollars 21.09.2001 19.10.2001 2.50 - 163.372
Banco Santander Central Hispano Peru Dollars 24.09.2001 19.10.2001 2.55 - 163.372
Banco Santander Central Hispano Peru Dollars 26.09.2001 03.10.2001 3.70 - 44.854
Banco de Credito de Bolivia Bolivia Dollars 28.09.2001 27.10.2001 5.70 - 710
--------------------------
Totals 6.543.601 4.096.097
--------------------------
5. Marketable Securities
Marketable securities are valued as described in Note 2(h) and are as
follows:
Instruments Account value
2002 2001
TCH$ TCH$
Mutual fund units 11.512.897 3.932.954
----------------------------------
Totals 11.512.897 3.932.954
----------------------------------
16
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
Breakdown of mutual fund units as of September 30 is as follows:
Entity Unit value Amount in units Amount Amount
$ TCH$ TCH$
2002 2001
Corp Banca Mutual Funds 1,160.42 344,872.48 400.196 -
BCI Mutual Funds 16,744.3045 56,508.0850 950.251 -
BCI Mutual Funds 16,805.2777 18,684.6064 314.204 -
BCI Mutual Funds 458,192.4209 436,4978 200.107 -
Citibank Mutual Funds 750.244 12,860,000 9.648.139 -
BCI Mutual Funds Conveniencia 3,265.3922 228,968.44 - 747.672
BCI Mutual Funds Competitivo 16,370.02 179,888.73 - 2.944.781
BCI Mutual Funds 553.84 434.238.11 - 240.501
----------------------------
Total 11.512.897 3.932.954
----------------------------
6. Short- and long-term receivables
Short- and long-term receivables are broken down as follows, including estimates
of uncollectibles:
In thousands chilean pesos
- ------------------------- ------------------------------------------------------------------------------------ -----------------
Short-term receivables Total Long-term
Receivables
- ------------------------- ------------------------- ----------------------- ------------ --------------------- -----------------
Line Out to 90 days More than 90 days and Subtotal Total short-term
out to 1 year receivables (net)
- ------------------------- ------------- ----------- ----------- ----------- ------------ ---------- ---------- --------- ---------
2002 2001 2002 2001 2002 2002 2001 2002 2001
- ------------------------- ------------- ----------- ----------- ----------- ------------ ---------- ---------- --------- ---------
Sales receivables 9.836.548 9.167.596 1.696.121 1.305.943 11.532.669
10.600.564 9.496.404 - -
- ------------------------- ------------- ----------- ----------- ----------- ------------ ---------- ---------- --------- ---------
Estimated uncollectibles (53.261) (175.694) (878.844) (801.441) (932.105)
- ------------------------- ------------- ----------- ----------- ----------- ------------ ---------- ---------- --------- ---------
Documents receivable 4.577.594 5.371.307 1.750.932 1.598.476 6.328.526
4.860.864 5.670.039 - -
- ------------------------- ------------- ----------- ----------- ----------- ------------ ---------- ---------- --------- ---------
Estimated uncollectibles (19.907) (26.440) (1.447.755) (1.273.304) (1.467.662)
- ------------------------- ------------- ----------- ----------- ----------- ------------ ---------- ---------- --------- ---------
Sundry receivables 2.485.016 2.527.063 620.337 764.120 3.105.353
2.626.556 2.749.823 261.921 268.202
- ------------------------- ------------- ----------- ----------- ----------- ------------ ---------- ---------- --------- ---------
Estimated uncollectibles (45.232) (143.472) (433.565) (397.888) (478.797)
- ---------------------------------------------------------------------------------------- ---------- ---------- --------- ---------
Total 18.087.984 17.916.266 261.921 268.202
- ---------------------------------------------------------------------------------------- ---------- ---------- --------- ---------
17
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
7. Balances and transactions with related companies:
The intercompany receivable and payable balances as of September 30, 2002 and
2001 are summarized below:
a) Documents and accounts receivable:
Taxpayer ID No. Company Short-Term Long-Term
2002 2001 2002 2001
TCH$ TCH$ TCH$ TCH$
96.714.870-9 Coca Cola de Chile S.A. 774.043 92.954 - -
96.648.500-0 Vital S.A. 3.496 8.182 - -
78.826.600-6 Inversiones Eudocia - 2.890 - -
Foreign Coca Cola Peru 71.963 242.816 - -
81.752.100-2 Distribuidora Direnor 43.976 - - -
Foreign Comptec S.A. 126.210 148.337 - -
96.705.990-0 Envases Central S.A. - 239.496
----------------------------- ----------------------------
Totals 1.019.688 734.675 - -
----------------------------- ----------------------------
b) Documents and accounts payable:
Taxpayer ID No. Company Short-Term Long-Term
---------------------------- --------------------------
2002 2001 2002 2001
TCH$ TCH$ TCH$ TCH$
96.714.870-9 Coca- Cola de Chile S.A. 1.595.907 2.842.419 - -
96.648.500-0 Vital S.A. 589.124 828.943 - -
96.705.990-0 Envases Central S.A. 365.715 38.172 - -
Foreign Coca Cola Peru - 4.833 - -
81.752.100-2 Direnor S.A. - 13.307 - -
----------------------------- ----------------------------
Totals 2.550.746 3.727.674 - -
----------------------------- ----------------------------
18
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
c) Transactions with related companies:
The commercial account corresponds to the purchase and sale of raw materials,
products, bottles and cases, which were made at market prices and relate to the
business of the related companies. Purchases are debited against operating costs
and sales are credited to income. The terms of payment and collection of these
transactions are similar to those stipulated with suppliers or customers in the
business.
The principal transactions with related parties were as follows during the 2002
and 2001 fiscal years:
2002 2001
---------------------------------------------------
Company Taxpayer ID Relationship Transaction
Amount Effect on Amount Effect on
results results
(debit) (debit)
credit credit
TCH$ TCH$ TCH$ TCH$
Coca Cola de Chile 96.714.870-9 Shareholder Purchase of raw 22.117.579 - 26.871.372 -
S.A. materials
Sale of raw materials 4.230 - - -
Sale of services 160 - 911.419 -
Sale of advertising 293.534 - 256 -
Coca Cola Peru Foreign Indirect Purchase of 2.891.387 - 139.343 -
advertising
Purchase of services 123.202 - 54.831 -
Purchase of raw 2.513.485 - 1.123.958 -
materials
Sales of raw materials - - 452.907 -
Sales of advertising 668.760 - 563.808 -
Sales of services 3.804 - 21.063 -
Sales of products 15.794 5.164 - -
Vital S.A. 96.648.500-0 Common Purchase of products 3.450.501 - 5.099.986 -
Director
Sales of services - - 323 -
Envases Central S.A. 96.705.990-0 Affiliate Purchase of products 4.246.035 - 2.048.227 -
Purchase of services - - - -
Direnor S.A. 81.752.100-2 Common Purchase of products 46.918 - 113.548 -
Director
Purchase of services - - 2.375 2.375
19
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
8. Inventories
Inventories, as described in Note 2(j), break down as follows as of September
30, 2002 and 2001:
2002 2001
TCH$ TCH$
Finished products 2.647.840 2.282.290
Raw materials 5.997.589 5.654.903
Raw materials in transit 1.612.048 2.989.018
Promotional and other products 756.594 973.110
----------------- ---------------
Total 11.014.071 11.899.321
----------------- ---------------
9. Income tax and deferred taxes:
In accordance with Circular No. 1466 of the SVS related to income taxes and
deferred taxes, the Parent Company and its subsidiaries have recorded the
following information as of September 30, 2002 and 2001:
a) Income tax provision:
The Parent Company did not establish a income tax provision as it reported a
loss for tax purposes. The balance of recoverable taxes, in the Parent Company
and its subsidiaries amounting to TCH$7.366.701 in 2002 (TCH$11.649.401 in 2001)
corresponds to provisional monthly payments made in excess of income tax,
training expenses and tax benefits due to tax losses.
The Parent Company did not have taxable retained earnings from previous fiscal
years pending distribution with respect to which it had not provisioned for the
respective income tax. The balance of recoverable taxes amounting to TCH$5.452
in 2002 (TCH$5.412 in 2001) corresponds to fiscal credits and training expenses.
The subsidiary Embonor S.A. did not establish a first category income tax
provision. The balance of recoverable taxes amounting to TCH$4.728.117 in 2002
(TCH$9.046.956 in 2001) corresponds to tax benefits for tax losses and training
expenses.
The subsidiary Embotelladora Iquique did not establish a income tax provision as
it reported a loss for tax purposes. The balance of recoverable taxes in the
amount of TCH$48.971 in 2002 (TCH$6.557 in 2001) corresponds to provisional
monthly payments made in excess of income tax and training expenses.
20
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
For Inversora Los Andes S.A. and its subsidiary, according to Bolivian Law, the
corporate profit tax is considered payment on account of transaction tax
(calculated on net revenue) for the following fiscal year. In the case of
Inversora Los Andes S.A. and its subsidiary, the transaction tax exceeds the
profit tax, so no deferred tax must be recorded for the temporary differences
existing between the book base and the tax base.
The subsidiaries Sociedad de Cartera del Pacifico S.R.L. and its subsidiary, and
Industrial Iquitos S.A., have not established any first-category income tax
provision since they recorded a negative net taxable income for the period. The
recoverable taxes of these subsidiaries amount to TCH$2.584.161 in 2002
(TCH$2.590.476 in 2001) and correspond to fiscal credits.
b) Taxable retained earnings:
The Parent Company has negative taxable retained earnings as of September 30,
2002 in the amount of TCH$38.645.449 that break down as follows:
2002
TCH$
Without a credit (38.933.938)
With a 15% credit 288.489
------------------
Total (38.645.449)
------------------
c) Deferred Taxes:
Pursuant to Circular No. 1450 of the Superintendency of Securities and
Insurance, as of September 30, 2002 and 2001 deferred taxes shall be recorded in
the manner established in Technical Bulletins No. 60 and No. 71 of the Chilean
Accountants Association (except for differences already recorded according to
Technical Bulletin No. 41).
As stipulated in Law No. 19,753 of September 28, 2001, an increase in the first
category income tax was established from the current rate of 15% to 16% for
2002, 16.5% for 2003 and 17% as from 2004.
As of September 30, 2002 and 2001, the accumulated balances of the temporary
differences caused by deferred taxes are as follows:
21
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
Concept 2002 2001
--------------------------------------------------- -----------------------------------------------
Deferred Asset Deferred Liability Deferred Asset Deferred Liability
Temporary Differences Short-Term Long-Term Short-Term Long-Term Short-Term Long-Term Short-Term Long-Term
TCH$ TCH$ TCH$ TCH$ TCH$ TCH$ TCH$ TCH$
Uncollectibles provision 224.923 372.381 - - 203.371 402.334 - -
Inventories 872.888 - - - 955.870 - - -
Vacation provision 166.754 - - - 175.826 - - -
Amortization of intangibles - - - 5.697.372 - - - 6.042.225
Leasing assets - - - 658.768 - - - 728.249
Depreciation of fixed assets - - - 7.092.046 6.941 - - 3.365.020
Severance - - - 629.344 - - - 692.779
Revaluation of fixed assets - - - 3.642.788 - - - 4.154.788
Obsolescence provision 6.153 121.224 - - 7.807 74.306 - -
Tax losses - 1.259.901 - 1.602.385 - 2.745.700 - -
Other events 204.884 - - - 621.510 - - -
---------------------------------------------------------------------------------------------------
Sub-total 1.475.602 1.753.506 - 19.322.703 1.971.325 3.222.340 - 14.983.061
---------------------------------------------------------------------------------------------------
Net complementary accounts - (919.144) - - (5.643.787) (1.523.575) (1.070.544) - -
net of amortization
Valuation provision - - - - - - - -
---------------------------------------------------------------------------------------------------
Total 556.458 1.753.506 - 13.678.916 447.750 2.151.796 - 14.983.061
---------------------------------------------------------------------------------------------------
d) Neither the Parent Company nor its subsidiaries have made a provision for
the recorded value of deferred tax assets and liabilities as of December
31, 1999, except for the severance indemnities provision of Embonor S.A.
Deferred taxes began to be recorded beginning January 1, 2000.
e) The income tax account as of September 30, 2002 and 2001 and the effect on
fiscal year income due to the recognition of deferred taxes and income tax
are broken down as follows:
ITEM 2002 2001
TCH$ TCH$
Current tax expense (tax provision) (817.250) (928.940)
Adjustment of tax expenses (previous fiscal year) - 21.052
Effect of deferred tax assets and liabilities in the fiscal year (7.405.165) (7.831.913)
Effect of amortization of deferred asset and liability
complementary accounts 5.058.589 3.281.478
Other charges - -
------------------------------
Total (3.163.826) (5.458.323)
------------------------------
22
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
10. Other Current Assets
Other current assets as of September 30, 2002 and 2001, as valued according to
Note 2(k), include the following:
2002 2001
TCH$ TCH$
Spare parts and supplies 4.654.163 4.807.566
------------- ------------
Total other current assets 4.654.163 4.807.566
------------- ------------
11. Property, plant and equipment
a) Principal Concepts Included in Property, Plant and Equipment
Property, plant and equipment are composed principally of land, buildings and
infrastructure, machinery and equipment, bottles and cases, advertising
equipment and furniture and fixtures located at plants in Chile, Bolivia and
Peru.
The machinery and equipment are comprised principally of production lines,
carbonators, mixers, fillers, and sugar blending and treatment equipment,
transportation vehicles, and computer equipment and systems.
Other fixed assets include furniture and fixtures, tools and advertising
equipment and bottles and cases. These latter include returnable glass and
plastic bottles and plastic cases.
23
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
b) Property, plant and equipment as of September 30, 2002 and 2001 are as
follows:
2002 2001
Gross Value Accumulated Gross Value Accumulated
Depreciation Depreciation
TCH$ TCH$ TCH$ TCH$
Land: 14.364.479 - 13.808.420 -
Buildings and Infrastructure:
Buildings and Constructions 48.551.971 11.042.770 45.953.930 9.588.317
Works underway 653.977 - 1.424.054 -
--------------------------------- --------------------------------
Subtotal 49.205.948 11.042.770 47.377.984 9.588.317
--------------------------------- --------------------------------
Machinery and Equipment:
Machines and Equipment 109.945.265 52.969.633 110.661.651 53.502.811
Transportation Equipment 14.450.296 13.219.058 14.933.790 13.356.552
--------------------------------
---------------------------------
Subtotal 124.395.561 66.188.691 125.595.441 66.859.363
--------------------------------- --------------------------------
Other fixed assets:
Office furniture and fixtures 23.529.959 19.465.234 24.677.606 19.269.312
Advertising equipment 54.049.038 30.451.614 47.486.780 20.590.972
Bottles and cases 69.534.528 31.028.979 63.535.780 27.518.047
Other 2.420.321 328.215 2.064.873 142.913
--------------------------------- --------------------------------
Subtotal 149.533.846 81.274.042 137.765.039 67.521.244
--------------------------------- --------------------------------
Higher value resulting from 1.829.233 381.513 1.809.430 334.886
technical reappraisal of
property, plant and equipment
--------------------------------- --------------------------------
Total property, plant and
equipment 339.329.067 158.887.016 326.356.314 144.303.810
--------------------------------- --------------------------------
c) The balance in "higher value resulting from technical reappraisal of
property, plant and equipment pertains to the following:
Net Value 2002 2001
TCH$ TCH$
Land 1.052.302 1.055.010
Buildings and constructions 394.857 418.458
Machinery and equipment 561 1.076
------------------------------
Total higher value of technical reappraisal 1.447.720 1.474.544
------------------------------
d) The debit against income for fiscal year depreciation amounted to
TCH$18.657.194 (TCH$18.987.569 in 2001). TCH$14.263.302 (TCH$14.515.872 in
2001) of this amount is recorded in operating costs and TCH$4.393.892
(TCH$4.471.697 in 2001) in selling and administration expenses.
24
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
12. Investments in Related Companies
Investments in related companies and the corresponding interest in equity and
profits recorded as described in Note 2(q), are as follows:
a) As of September 30, 2002:
Fiscal Propor-
year Accrued tional Book
Country Currency in Number of Issuer's Profit Profit Equity Unrealizd Value
Of Which Invest. Shares Interest Equity (Loss) (Loss) Value Earnings of Invest
Taxpayer ID Company Origin is Recorded % TCH$ TCH$ TCH$ TCH$ TCH$ -ment TCH$
96.705.990-0 Envases Central Chile Pesos 3.123.745 33.00 2.541.792 (487.218) (160.782) 838.791 - 838.791
S.A.
Foreign Comptec S.A. Colombia Dollar 130.000 20.00 3.302.648 - - 660.530 - 660.530
----------------------------------------
Total (160.782) 1.499.321 - 1.499.321
----------------------------------------
b) As of September 30, 2001:
Fiscal Propor-
year Accrued tional Book
Country Currency in Number of Issuer's Profit Profit Equity Unrealizd Value
Of Which Invest. Shares Interest Equity (Loss) (Loss) Value Earnings of Invest
Taxpayer ID Company Origin is Recorded % TCH$ TCH$ TCH$ TCH$ TCH$ -ment TCH$
96.705.990-0 Envases Central Chile Pesos 3.123.745 33,00 3.160.739 (688.191) (227.103) 1.043.044 - 1.043.044
S.A.
Foreign Comptec S.A. Colombia Dollar 130.000 20,00 3.220.548 (458.863) (91.773) 644.109 - 644.109
----------------------------------------
Total (318.876) 1.687.153 - 1.687.153
----------------------------------------
13. Goodwill and negative goodwill
A. Goodwill:
Goodwill as of September 30, 2002 and 2001, amounting to TCH$296.795.701 and
TCH$310.168.633, respectively, is valued according to the accounting criteria
described in Note 2(r) and was generated by the acquisition of operations in
Bolivia, Chile and Peru. The charge to consolidated income for amortization
totaled TCH$13.542.064 in 2002 and TCH$13.327.718 in 2001. Goodwill and the
effect on income is broken down as follows:
2002 2001
--------------------------- -------------------------
Taxpayer ID Amortization Goodwill Amortization Goodwill
in the period in the
period
TCH$ TCH$ TCH$ TCH$
Foreign Industrial Iquitos S.A. 86.694 1.890.261 75.730 1.902.927
96.891.720-K Embonor S.A. 9.477.502 210.611.152 9.478.237 223.265.136
Foreign Sociedad de Cartera del Pacifico S.R.L. 2.568.987 57.431.581 2.437.163 57.734.148
Foreign Industrial Tisco y Cia. de Transporte Cural S.A. 104.751 2.074.166 99.376 2.100.236
Foreign Merger of North-South Division on January 1,1998 424.624 8.459.910 402.836 8.562.923
Foreign Inansa S.A. 879.506 16.328.631 834.376 16.603.263
-----------------------------------------------------
Total 13.542.064 296.795.701 13.327.718 310.168.633
-----------------------------------------------------
25
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
Goodwill is comprised mainly as follows:
BOLIVIA
a) On July 3, 1995, the subsidiary, Inversora Los Andes S.A., acquired 99.9% of
the shares in Embotelladoras Bolivianas Unidas S.A., a productive company. This
transaction generated goodwill of TCH$8.244.542 before amortization as compared
to the proportional equity value of the investment. The amortization period
pending at the close of the financial statements is 12.75 years.
b) On January 8, 1996, Embotelladoras Bolivianas Unidas S.A. took over assets of
Sociedad Boliviana Cotoca S.A., which gave Inversora Los Andes S.A. control of
81.7% of the shares in Embotelladoras Bolivianas Unidas S.A. The valuation of
this additional investment generated goodwill of TCH$7.160.586 before
amortization. The amortization period pending at the close of financial
statements is 13.25 years.
c) On December 24 and 30, 1997, Inversora Los Andes S.A. acquired 18.3% of the
shares in Embotelladoras Bolivianas Unidas S.A. and took over control of 99.99%
of the shares in the latter company. The valuation of the additional investment
resulted in goodwill of TCH$10.065.320, which corresponds to the difference
between the value paid and the proportional equity value. The amortization
period pending at the close of the financial statements is 15.25 years.
Goodwill also includes trademark royalties, which correspond to the following:
- - The right to use the fame, prestige and clientele of Vascal S.A. and
Embotelladora Cotoca S.A. in relation to the operation of the industrial
plants in La Paz, Oruro, Cochabamba, Santa Cruz, Sucre and Tarija and their
products for a period of 50 years.
- - The definitive rights to the "Mineragua", "Vital" and "Cotoca" trademarks.
The goodwill is amortized over a period of 20 years in accordance with Circular
No. 1358 of the Superintendency of Securities and Insurance.
The debit against fiscal year income amounted to TCH$879.506 in 2002
(TCH$834.376 in 2001).
26
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
PERU
(a) Embotelladora Latinoamericana S.A.
The goodwill as of September 30, 2002, amounting to TCH$12.424.337
(TCH$12.566.086 in 2001), corresponds to firstly the unamortized balance
generated by the takeover of the subsidiaries Industrial Tisco S.A. and Compania
de Transporte Cural S.A. (January 1997) amounting to TCH$2.074.066 in 2002
(TCH$2.100.236 in 2001), and secondly to the merger of operations as of January
1, 1998 with: Negociacion Sur Peruana S.A., Compania Industrial Nor Peruana
S.A., Empresa Productora de Plasticos S.A., Transportadora and Comercializadora
Lambayeque S.A. and Costos y Margenes S.A. (January 1998) amounting to
TCH$8.459.910 in 2002 (TCH$8.562.923 in 2001); as well as the acquisition of
Industrial Iquitos S.A. (April 11, 2001) from its parent company for the price
of TCH$1.890.261 in 2002 (TCH$1.902.927 in 2001).
The debit against fiscal year income amounted to TCH$616.069 (TCH$557.042 in
2001).
(b) Sociedad de Cartera del Pacifico S.R.L.
The goodwill as of September 30, 2002, amounting to TCH$57.431.581
(TCH$57.734.148 in 2001), corresponds to the unamortized balance generated in
the acquisition of Embotelladora Latinoamericana S.A. from Inchcape Bottling,
which occurred in June 1999.
The debit against fiscal year income was TCH$2.568.987 in 2002 (TCH$2.437.163 in
2001).
CHILE
(a) Embonor S.A.
The goodwill as of September 30, 2002 amounting to TCH$210.611.152
(TCH$223.265.136 in 2001), corresponds to the unamortized balance generated by
the acquisition of the Chilean bottling operations of Inchcape Bottling Chile
S.A. which occurred in May 1999.
The debit against fiscal year income was TCH$9.477.502 in 2002 (TCH$9.478.237 in
2001).
(b) Coca-Cola Embonor S.A.
The debit against fiscal year income amounted to TCH$0 in 2002 (TCH$20.900 in
2001). This debit corresponds to the amortization of its investment in
Industrial Iquitos S.A. through the date of its sale. This subsidiary was sold
on April 11, 2001 to its subsidiary Embotelladora Latinoamericana S.A..
27
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
B. Negative goodwill:
The negative goodwill as of September 30, 2002, amounting to ThCH$908.920 (TCH$
0 in 2001), corresponds to the unamortized balance generated in the acquisition
of 13.424.542 shares of Embotelladora Latinoamericana S.A. that occurred in May
2002.
The credit against fiscal year income was ThCh$15.405 for this concept.
The Negative Goodwill and the effect on income is broken down as follows:
2002 2001
------------------------------- ---------------------------
Taxpayer ID Amortization Goodwill Amortization Goodwill
in the period in the period
TCH$ TCH$ TCH$ TCH$
Foreign Embotelladora Latinoamericana S.A. 15.405 908.920 - -
-----------------------------------------------------------
Total 15.405 908.920 - -
-----------------------------------------------------------
14. Intangibles
Intangibles held by the Company as of September 30, 2002 and 2001 are as
follows:
2002 2001
Trademarks Gross Value Accumulated Net value Gross Value Accumulated Net value
TCH$ amortization amortization
TCH$ TCH$ TCH$ TCH$ TCH$
San Luis 17.314.415 (4.698.074) 12.616.341 16.425.960 (3.629.628) 12.796.332
Kola Inglesa 6.863.927 (1.862.215) 5.001.712 6.511.719 (1.439.135) 5.072.584
Other 38.423 (2.811) 35.612 44.879 (2.375) 42.504
--------------------------------------------------------------------------------------------
Total 24.216.765 (6.563.100) 17.653.665 22.982.558 (5.071.138) 17.911.420
--------------------------------------------------------------------------------------------
As of September 30, 2002 and 2001, the trademarks are being amortized over a
period of 20 years. The debit due to amortization in the fiscal year amounts to
TCH$913.022 (TCH$866.172 in 2001).
15. Other Assets:
Other assets, totaling TCH$6.599.659 as of September 30, 2002 (TCH$8.111.913 in
2001) corresponds to the following:
2002 2001
TCH$ TCH$
Deferred expenses in the U.S. bond issue 1.903.548 2.561.906
Deferred expenses in Chilean bond issue 3.415.165 4.041.287
Deferred expenses of syndicated UF credit facility 460.019 700.344
Other 820.927 808.376
--------------- --------------
Total 6.599.659 8.111.913
--------------- --------------
28
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
16. Short-term bank debt
Short-term bank debt was as follows as at September 30, 2002 and 2001:
Taxpayer Bank or
ID Financial
Institution TYPE OF CURRENCY AND ADJUSTMENT INDEX
Other foreign
Dollar currencies UF Non-adjustable Total
2002 2001 2002 2001 2002 2001 2002 2001 2002 2001
TCH$ TCH$ TCH$ TCH$ TCH$ TCH$ TCH$ TCH$ TCH$ TCH$
Short - term
Foreign Banco Continental - 4.593 997 - - - - - 997 4.593
Foreign Banco de Credito del Peru - 36 - - - - - - - 36
Foreign Interbank - 400 - - - - - - - 400
-------------------------------------------------------------------------------------------
Totals - 5.029 997 - - - - - 997 5.029
-------------------------------------------------------------------------------------------
Principal owed - 5.029 997 - - - - - 997 5.029
Annual average interest rate - 28.0% 9.0% - - - - - 9.0% 28.0%
Long - term
97008000-7 Chilean syndicated banks - - - - 17.891.419 6.972.404 - - 17.891.419 6.972.404
Foreign Banco de Credito del Peru 43.109 38.791 - - - - - - 43.109 38.791
Foreign Banco Santander del Peru 78.096 - - - - - - - 78.096 -
Foreign Banco Weise Sudameris - - - 35.065 - - - - - 35.065
-------------------------------------------------------------------------------------------
Totals 121.205 38.791 - 35.065 17.891.419 6.972.404 - - 18.012.624 7.046.260
-------------------------------------------------------------------------------------------
Principal owed 121.205 38.791 - 35.065 51.240.963 5.691.371 - - 51.362.168 5.765.227
Annual average interest rate 13.0% 13.0% - 28.0% TAB+1.4% TAB+1.4% - -
Percentage in foreign
currency (%) 0.67
Percentage in domestic
currency (%) 99.33
29
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
17. Long-term bank debt:
Long-term bank debt as of September 30, 2002 and 2001 is broken down as follows:
Years to Maturity Closing Date of Closing
Actual Period Date of
Previous
Period
Tax Ident. Bank or Currency More than More than More More More Total as Annual Total as
Number Financial Or 1 up to 2 2 up to 3 than 3 than 5 than 10 of 2002 Interest of 2001
Index of up to 5 up to 10 Rate
Adjustment
Institution TCH$ TCH$ TCH$ TCH$ TCH$ TCH$ % TCH$
97008000-7 Chilean
syndicated banks U.F. 17.080.321 17.080.321 - - - 34.160.642 TAB+1.4% 51.719.553
Foreign Banco de
Credito del Peru Dollar 249.577 184.060 15.598 - - 449.235 13.00% -
Foreign Banco Santander Dollar 95.478 32.378 - - - 127.856 7.00% -
---------------------------------------------------------------------------------------
Total 17.425.376 17.296.759 15.598 - - 34.737.733 - 51.719.553
---------------------------------------------------------------------------------------
% in domestic
currency 99.00% 100.00%
---------------------------------------------------------------------------------------
% in foreign
currency 1.00% 0.00%
---------------------------------------------------------------------------------------
30
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
18. Notes and Bonds payable
At the period end, long-term debt from the bonds to the order issued by the
Parent company amounted to TCH$184.789.451 in 2002 (TCH$178.994.337 in 2001),
with accrued interest of TCH$1.188.682 in 2002 (TCH$1.301.345 in 2001), and is
detailed below:
Frequency Par Value Placement
Listing No. Series Face amount Bond Interest Maturity Interest Amortization in Chile
placed and unit rate payment or abroad
outstanding of
adjust 2002 2001
-ment TCH$ TCH$
Long-term bonds--short-term portion:
New York Unique 160.000.000 US$ 9,875% 15-03-2006 Semiannual At maturity 340.755 467.621 Foreign
224 A1 645.000 UF 7,000% 01-08-2003 Semiannual At maturity 10.739.360 133.761 Domestic
224 A2 2.200.000 UF 7,000% 01-08-2003 Semiannual At maturity 36.630.377 456.240 Domestic
224 B1 155.000 UF 6,750% 01-02-2020 Semiannual As from 2004 29.181 24.294 Domestic
224 B2 1.400.000 UF 6,750% 01-02-2020 Semiannual As from 2004 263.570 219.429 Domestic
--------------------------
Total short-term portion 48.003.243 1.301.345
--------------------------
Long-term Bonds:
New York Unique 160.000.000 US$ 9,875% 15-03-2006 Semiannual At maturity 112.387.318 106.618.521 Foreign
224 A1 645.000 UF 7,000% 01-08-2003 Semiannual At maturity - 10.609.636 Domestic
224 A2 2.200.000 UF 7,000% 01-08-2003 Semiannual At maturity - 36.187.908 Domestic
224 B1 155.000 UF 6,750% 01-02-2020 Semiannual As from 2004 2.550.530 2.549.603 Domestic
224 B2 1.400.000 UF 6,750% 01-02-2020 Semiannual As from 2004 23.037.042 23.028.669 Domestic
--------------------------
Total- Long-term portion: 137.974.890 178.994.337
--------------------------
19. Provisions and write-offs
Short-term and long-term provisions were comprised as follows as at September
30, 2002 and 2001:
a) Current liabilities
2002 2001
TCH$ TCH$
Provision for invoices to be received and
other payments 1.845.013 1.831.502
Provision for fiscal year expenses 1.144.358 1.005.303
Provision for bonuses 1.637.558 1.895.456
Vacation provision 2.112.404 2.414.337
Severance indemnities provision 615.333 509.609
Other 284.052 81.612
---------------- --------------
Total 7.638.718 7.737.819
---------------- --------------
b) Long-term liabilities
2002 2001
TCH$ TCH$
Severance indemnities provision 1.909.887 1.684.912
---------------- --------------
Total 1.909.887 1.684.912
---------------- --------------
31
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
20. Other long-term liabilities
This line includes the following liabilities without any specific expiration
date:
2002 2001
TCH$ TCH$
Bottle and case deposits in guarantee 5.813.276 5.538.094
Leasing 1.856.073 2.109.300
Others 1.022.108 636.093
---------------- --------------
Total 8.691.457 8.283.487
---------------- --------------
21. Minority Interest
As of September 30, 2002 the effect of minority interest on liabilities and
income is as follows:
Taxpayer ID Company Minority Company Fiscal Year Passive Profit (loss)
Interest Equity Profit (loss) Minority for Minority
Interest Interest
% TCH$ TCH$ TCH$ TCH$
96.517.310-7 Embotelladora Iquique S.A. 0,10000 11.408.081 305.882 11.408 (306)
96.891.720-K Embonor S.A. 0,06675 199.046.185 3.995.899 132.855 (2.667)
Foreign Elsa S.A. 26,39689 114.648.792 3.242.425 30.263.713 (855.904)
Foreign Socap SRL 20,65809 121.961.403 (2.111.143) 25.194.892 436.122
Foreign Industrial Iquitos S.A. 23,88900 (1.121.766) 24.575 (267.979) (5.871)
Foreign Inansa S.A. 0,00013 59.196.400 562.801 75 (1)
Foreign Embol S.A. 0,00010 50.866.761 944.140 48 (1)
96.972.720-K Embonor Holdings S.A. 0,00000 230.404.132 (810.467) 1 -
--------------------------
Total 55.335.013 (428.628)
--------------------------
32
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
22. Changes in equity:
The following were the changes in equity accounts from January 1 to September
30, 2002 and 2001, in currency as of each date:
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ -------------
Concept Paid-In Reserve for Premium on Other Accumulated Fiscal year Total
Capital revaluation the sale of reserves Results profit
of treasury (loss)
shareholder stock
equity
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
TCH$ TCH$ TCH$ TCH$ TCH$ TCH$ TCH$
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Balances at 01.01.2001 210.528.576 - 19.647.862 970.039 11.707.793 (12.987.987) 229.866.283
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Profit distribution - - - - (12.987.987) 12.987.987 -
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ -------------
Final dividend paid - - - - - - -
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Capital decrease - - - - - - -
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Revaluation of shareholders' 4.631.629
equity - 432.253 - (28.163) - 5.035.719
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Interim dividend paid - - - - - - -
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Cumulative adjustment for -
exchange differential - - 6.882.880 - - 6.882.880
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Fiscal year profit (loss) - - - - - (6.262.976) (6.262.976)
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Balances at 09.30.2001 210.528.576 4.631.629 20.080.115 7.852.919 (1.308.357) (6.262.976) 235.521.906
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Balances at 09.30.2001
adjusted by 2.2% 215.160.205 4.733.525 20.521.878 8.025.683 (1.337.141) (6.400.761) 240.703.389
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Balances at 01.01.2002 217.054.962 - 20.256.945 4.308.479 (1.319.879) (8.449.445) 231.851.062
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Income distribution - - - - (8.449.445) 8.449.445 -
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Capital decrease - - - - - - -
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Revaluation of shareholders' 2.821.715
equity - 263.341 - (127.001) - 2.958.055
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Cumulative adjustment for
exchange differential - - - 5.383.989 - - 5.383.989
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Fiscal year profit (loss) - - - - - (10.022.914) (10.22.914)
- ----------------------------- ----------- ----------- ------------ ---------- ------------ ------------ ------------
Balances at 09.30.2002 217.054.962 2.821.715 20.520.286 9.692.468 (9.896.325) (10.022.914) 230.170.192
============================= =========== =========== ============ ========== ============ ============ ============
According to Law 18,046, the revaluation of paid-in capital must be added to
paid-in capital at the annual close of the respective fiscal years. The capital
is represented by 244,420,704 Series A shares and 266,432,526 Series B shares at
a paid-in value of $424.89 each. The Company's shares have no par value.
33
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
a) Number of shares
No. of No. of paid-in No. of voting
Series subscribed shares shares
shares
A 244.420.704 244.420.704 244.420.704
B 266.432.526 266.432.526 266.432.526
-----------------------------------------------------
Total 510.853.230 510.853.230 510.853.230
-----------------------------------------------------
b) Capital
Series Subscribed capital Paid-in capital
TCH$ TCH$
A 105.922.821 105.922.821
B 111.132.141 111.132.141
---------------------------------------
Total 217.054.962 217.054.962
---------------------------------------
c) Other reserves:
According to Official Circular No. 5294 of October 20, 1998 and Technical
Bulletin No. 64 on the registration of permanent investments abroad, the
following can be reported as of September 30, 2002:
1) Liabilities of Coca-Cola Embonor S.A. abroad amounted to TCH$119.796.800
(US$160.000.000) and correspond to the bonds issued on the US market. This
liability is allocated as follows:
Acquisition Amount
US$
Embotelladoras Bolivianas Unidas S.A. 10.000.000
Embotelladora Latinoamericana S.A. 150.000.000
------------
Total 160.000.000
------------
2) The reserve account called "Cumulative adjustment for exchange differential",
due to the conversion of investments abroad, is comprised as follows:
ITEMIZATION Embonor Holdings Inansa S.A. Socap S.R.L. TOTAL
TCH$ TCH$ TCH$ TCH$
2001 Balances 14.087.878 4.195.269 (13.974.668) 4.308.479
Liability hedging - (871.383) (13.036.402) (13.907.785)
Proportional equity value per 19.291.774 - - 19.291.774
Technical Bulletin No. 64
------------------------------------------------------------------
TOTALS 33.379.652 3.323.886 (27.011.070) 9.692.468
------------------------------------------------------------------
34
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
e) Shareholder Distribution
Shareholders in the Parent Company were as follows at the close of the financial
statements, according to Circular No. 792 of the Superintendency of Securities
and Insurance:
Type of Shareholder Equity Interest (%) Number of Shareholders
2002 2001 2002 2001
Interest of 10% or more 70.82 70.81 02 02
Interest of less than 10% with an
investment greater than or equal to 28.77 29.00 85 169
UF 200
Interest of less than 10% with an 0.41 0.19 339 266
investment of less than UF 200
----------------------------------------------------------------------
Total 100 100 426 437
----------------------------------------------------------------------
Company controller 25.32 25.32 01 01
f) Dividends
The Company has not distributed dividends to its shareholders during the 2002
and 2001 fiscal years.
35
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
23. Other Non-Operating Income and Disbursements:
As of September 30, 2002 and 2001 the details are as follows:
a) Other non-operating income: 2002 2001
TCH$ TCH$
Profit on asset sales 150.585 141.935
Profit on sale of other products 480.498 744.532
Reversal restructuring provision (1) - 2.400.009
Profit on the sale of broken glass 62.109 57.011
Conversion adjustments 1.233.930 3.885.037
Other miscellaneous income 852.083 326.962
-------------- -------------
Total 2.779.205 7.555.486
-------------- -------------
b) Other non-operating disbursements: 2002 2001
TCH$ TCH$
Miscellaneous expenses and fees 294.660 286.417
Loss on asset sales 145.902 205.735
Bottles and cases write-off 235.921 301.960
Amortization of prepaid expenses 1.378.549 1.348.325
Amortization of intangibles 913.022 866.172
Amortization expenses investment sales - 456.127
Payment of patent 114.208 -
Other miscellaneous disbursements 1.532.182 1.286.743
-------------- ------------
Total 4.614.444 4.751.479
-------------- ------------
(1) As of December 31, 2000, a provision was recorded in the accounts of
Embonor S.A. for the adjustment of its administrative structure as well as
changes to the computer systems and other items in order to adapt it to its
new reality and to the requirements of information from The Coca-Cola
Company. Within the provisioned items, the most important amount referred
to the implementation of the SAP computer information and management
system, at a cost to the Company fluctuating from ThUS$3.500 to ThUS$
4.000. As a result of the world recession that was predicted and
considering that the growth of the bottling companies was lower than
projected, the application of SAP in the short term was postponed and it
was decided to reverse the restructuring provision in order to credit other
non-operating income in the amount of TCH$2.400.009 as of September 30,
2001.
36
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
24. Price-level Restatement
Application of price-level restatement as described in Note 2e) caused a net
debit of TCH$582.273 against income in 2002 (a net debit of TCH$3.649.861 in
2001), as follows:
Assets - (debits) and credits Adjustment Index 2002 2001
TCH$ TCH$
Inventories CPI 20.227 5.347
Property, plant and equipment CPI 1.998.199 1.483.750
Investment in related companies CPI 20.906 41.204
Other non-monetary assets CPI 4.753.072 6.114.122
Expense and cost accounts CPI 611.413 971.921
----------------------------------
Total 7.403.817 8.616.344
----------------------------------
Liabilities and equity - (debits) and Adjustment Index 2002 2001
credits TCH$ TCH$
Equity CPI (2.958.055) (5.146.505)
Bank debt UF (610.714) (1.163.420)
Bonds U.F. (1.900.857) (3.239.810)
Other non-monetary liabilities CPI-U.F. (1.793.178) (1.566.952)
Income accounts CPI (723.286) (1.149.518)
----------------------------------
Total (7.986.090) (12.266.205)
----------------------------------
Profit (loss) due to price-level restatement (582.273) (3.649.861)
----------------------------------
25. Exchange Differential
The application of price-level restatement as described in Note 2e) and f)
caused a net credit of TCH$726.339 in 2002 for the exchange differential (a net
credit of TCH$2.033.213 in 2001), as follows:
Line Currency Amount
2002 2001
TCH$ TCH$
Accounts and documents receivable Dollar 728.571 1.293.844
Inventory Dollar 604.409 801.856
Other non-monetary assets Dollar 2.818.091 6.179.571
--------------------------------
Total (Debits) Credits 4.151.071 8.275.271
--------------------------------
Bonds Dollar (300.044) -
Documents and accounts payable Dollar (2.292.454) (2.819.442)
Other non-monetary liabilities Dollar (832.234) (3.422.616)
--------------------------------
Total (Debits) Credits (3.424.732) (6.242.058)
--------------------------------
Profit (loss) on exchange differential 726.339 2.033.213
--------------------------------
37
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
26. Extraordinary Items
As of September 30, 2002, the subsidiary Embonor S.A. accounted for
TCH$1.171.600 (TCH$2.712.069 in 2001) as tax refund due to tax losses, from the
Internal Revenue Service.
27. Expenses of issuance and placement of bonds:
The expenses of issuance and placement of Bonds in the U.S. and Chilean market
are as follows:
2002 Deferred Expenses Increase Amortization Balance
TCH$ TCH$ TCH$ TCH$
U.S. Bonds 3.088.017 - (530.125) 2.557.892
Chile Bonds 4.713.446 - (581.163) 4.132.283
---------------------------------------------------------------
Total 7.801.463 - (1.111.288) 6.690.175
---------------------------------------------------------------
2001 Deferred Expenses Increase Amortization Balance
TCH$ TCH$ TCH$ TCH$
U.S. Bonds 3.812.482 - (547.468) 3.265.014
Chile Bonds 4.737.127 615.417 (543.936) 4.808.608
---------------------------------------------------------------
Total 8.549.609 615.417 (1.091.404) 8.073.622
---------------------------------------------------------------
28. Cash flow statement
(a) Composition of cash and cash equivalent: As of September 30, 2002 and 2001,
the Company has considered the following items as cash and cash equivalent:
2002 2001
TCH$ TCH$
Cash and Bank balances 3.613.715 4.273.151
Time Deposits 6.543.601 4.096.097
Marketable securities 11.512.897 3.932.954
-------------------------------
Total 21.670.213 12.302.202
-------------------------------
(b) Investment activities relating to future cash flows are as follows:
Amount Remaining
TCH$ Months
Incorporation of assets in leasing 2.154.210 107
------------------------------
Total 2.154.210 107
------------------------------
38
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
(c) Other income received breaks down as follows:
2002 2001
TCH$ TCH$
Net collection of guarantee deposits 216.329 1.176.399
Sale of broken glass and others not in use 76.537 148.883
Share in advertising 1.764.641 2.258.188
Recovery of other income 280.399 -
Sale of promotional articles 587.691 605.767
Miscellaneous services (processing) 468.746 257.931
Sale of investments 73.325 432.662
Sales of assets and other products 415.387 1.099.833
Other 531.227 408.800
---------------------------
Total 4.414.282 6.388.463
---------------------------
(d) Other paid-in expenses as follows:
2002 2001
TCH$ TCH$
Repurchase of bottles and cases - 775.950
Investors commissions - 615.417
Remuneration of Board of Directors 236.504 255.217
Tax previous years 136.484 230.445
Previous years expenses 260.785 -
Central administration expenses 407.336 355.417
Other miscellaneous 609.510 511.292
---------------------------
Total 1.650.619 2.743.738
---------------------------
(e) Other funding disbursements as follows:
2002 2001
TCH$ TCH$
Dividends - 295.063
Return of received guarantees 183.333 -
Other disbursements 236.052 30.277
---------------------------
Total 419.385 325.340
---------------------------
39
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
29. Derivative Agreements:
On June 20, 2002, the Company signed an interest rate swap agreement with a
foreign bank with a notional principal amount of US$ 160,000,000 to hedge the
interest rate of the 144-A bonds issued on the U.S. market.
On August 7, 2002, the Subsidiary, Embotelladora Latinoamericana S.A., entered
into a forward contract to hedge cash flow risk involved in the payment of
foreign currency denominated raw materials and supplies.
The details are as follows:
- -----------------------------------------------------------------------------------------------------------------------------------
Description of the contracts Value of Accounts that affects
- ---------------------------------------------------------------------------------- the ----------------------------------------
Type of Type of Value of Expiration Specific Position Transaction guarantee Assets/Liabilities Effect on results
derivative agreement agreement date Item buys protected protected Name Amount Fact Not Fact
sale Name Amount
- -----------------------------------------------------------------------------------------------------------------------------------
US$ TCH$ TCH$ TCH$ TCH$ TCH$
- -----------------------------------------------------------------------------------------------------------------------------------
S CCPE 160.000.000 I USD- B U.S. 109.604.800 119.604.800 Notes and - - 594.880
quarter LIBOR- Bonds Bonds
2006 BBA payable
- -----------------------------------------------------------------------------------------------------------------------------------
II USD
FR CCPE 24.000.000 quarter USD B Accounts 16.793.259 16.793.259 Accounts - 30.921 128.039
2003 payable payable
- -----------------------------------------------------------------------------------------------------------------------------------
30. Contingencies and commitments
As of September 30, 2002 and 2001, there were no liens or guarantees of the
Parent Company or subsidiaries nor mortgages nor were their assets given in
guarantee, except as shown in Note 30 c).
(a) Direct commitments
As of September 30, 2002 and 2001, there were no direct commitments.
(b) Indirect commitments:
As of September 30, 2002 and 2001, there were no indirect commitments.
(c) Lawsuits or other legal actions
Sociedad de Cartera del Pacifico S.R.L. and Embotelladora Latinoamericana S.A.
(ELSA) are parties to various legal, labor and tax lawsuits relating to their
operations in Peru. In the opinion of the Management and legal counsel, the
outcome of these processes will not result in significant expense for the
Company.
40
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
The principal processes in relation to these matters are:
i) The tax authorities have required that ELSA pay a General Sales Tax (IGV) on
the value of the Kola Inglesa and San Luis trademarks acquired in March 1997 by
Porvent S.A. According to Peruvian tax laws, intangible assets are assessable by
the IGV only if they are contained on tangible objects and, in the case of
imports, if the seller is a Peruvian entity.
The Management of the Company and its legal counsel consider that the above
requirements do not apply to this transaction. The IGV and the fines set by the
tax authorities total approximately TCH$ 11.170.827. If the Company must pay the
IGV, it could be used as a credit against future payments of that tax. As of May
31, 2002, Embotelladora Latinoamericana S.A. invoked the Law for Reactivation
through Exoneration of Tax Debt (RESIT) with regard to the fines. This
invocation was formalized on July 12, 2002.
ii) The Company did not pay the Minimum Income Tax (IMR) for the year ending
December 31, 1996 based on a resolution issued by the Constitutional Court of
Peru in October 1996 in favor of two other entities, which provided that the IMR
did not apply to those companies because they had tax losses during that period.
The tax totaled TCH$1.118.694 as of September 30, 2002.
The Company has filed legal actions to prevent any attempt by the tax
authorities to demand that tax. In the opinion of the Company's Management and
its legal counsel, those actions will be adjudged in favor of the Company.
iii) The tax authorities have made comments to the fiscal credit used in the
period from April 1997 to March 1998. Those comments relate to the write-off of
returnable plastic and glass bottles that was made, in their opinion, before two
years had passed since the date of acquisition. According to governing law, the
General Sales Tax used as a fiscal credit that is assessed on purchases of those
bottles must be reimbursed if the related assets have been sold or written-off
before two years have passed since the date of their acquisition.
The amount claimed by the tax authorities in relation to this period of audit
totals approximately TCH$ 2.003.479. There would also be an unquantified
contingent liability related to this matter for the years open to fiscal audit
(1997 to 2001). As to fines, the subsidiary invoked the Law for Reactivation
through Exoneration of Tax Debt (RESIT) as of May 31, 2002. That invocation was
formalized on July 12, 2002.
ELSA is at this time gathering supporting documentation to show that the bottles
written-off related to purchases made more than two years earlier. In the
opinion of Management and its legal counsel, the resolution of this issue will
not be of significant expense to the Company.
41
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
iv) The tax authorities have audited the 1999 period. That work was done between
October 18, 2000 and March 20, 2001. As a result of this audit, it noted 737
voided invoices, not exhibited to the tax auditors, for which ISC (Selective
Excise Tax) and the IGV (General Sales Tax) were due. The Company invoked the
Law for Reactivation through the Exoneration of Tax Debt (RESIT) effective May
31, 2002, in regard to these taxes and paid the sum of TCH$ 136.684.
d) Restrictions:
U.S. Bonds
The placement of Bonds for US$160.000.000 by Coca-Cola Embonor S.A. on the U.S.
market is not subject to obligations, limitations and prohibitions.
Chile Bonds
The placement of Bonds for UF 4.400.000 by Coca-Cola Embonor S.A. on the Chilean
market is subject to the following obligations, limitations and prohibitions:
(i) The debt/equity ratio in its individual and consolidated quarterly
financial statements must be no more than 1.20 at all times.
(ii) The ebitda/financial expense ratio in consolidated quarterly financial
statements must be no less than 2.1 as of December 31, 2000, 2.2 through
March 30, 2001 and 2.5 from December 31, 2001 onward. This ratio must be
calculated for the last twelve months as of the date of the corresponding
Uniform Codified Statistical Record (FECU).
Chilean Syndicated Loan
The Syndicated Loan received by Coca-Cola Embonor S.A. on the Chilean market
amounting to UF 3.460.000 is subject to the following obligations, limitations
and prohibitions:
(i) The debt/equity ratio in its consolidated quarterly financial statements
must be no more than 1.20 at all times.
(ii) The ebitda/financial expense ratio as measured in consolidated quarterly
financial statements must be no less than 2.5 times. This ratio must be
calculated for the last twelve months as of the date of the corresponding
Uniform Codified Statistical Record (FECU).
(iii) Equity must be no less than UF 14.233.000 at December 31 each year.
42
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
31. Third-party guarantees
There are no guarantees or securities received from third parties in favor of
the Parent Company and its subsidiaries as of September 30, 2002 and 2001.
32. Local and Foreign Currency:
Balances of assets and liabilities in foreign currency, included in the
financial statements as of September 30, 2002 and 2001, are summarized as
follows:
a) Assets:
----------------------------------------------------------------------------------------------------
Line Currency Amount Amount
====================================================================================================
2002 2001
----------------------------------------------------------------------------------------------------
TCH$ TCH$
-----------------------------------------------------------
Cash Non-adjustable pesos 2.599.442 2.374.989
-----------------------------------------------------------
Dollars 206.468 205.541
-----------------------------------------------------------
Bolivianos 41.177 759.813
-----------------------------------------------------------
New Soles 766.028 932.808
----------------------------------------------------------------------------------------------------
Time deposits Dollars 5.506.272 3.920.332
-----------------------------------------------------------
Non-adjustable pesos - -
-----------------------------------------------------------
New Soles 1.037.329 175.765
----------------------------------------------------------------------------------------------------
Marketable securities Non-adjustable pesos 1.864.758 3.932.954
-----------------------------------------------------------
Dollars 9.648.139 -
----------------------------------------------------------------------------------------------------
Sales receivables Non-adjustable pesos 6.217.837 5.368.656
-----------------------------------------------------------
Dollars 44.064 85.850
-----------------------------------------------------------
Bolivianos 1.191.250 910.271
-----------------------------------------------------------
New Soles 3.147.413 3.131.627
----------------------------------------------------------------------------------------------------
Documents receivable Non-adjustable pesos 4.336.990 5.035.805
-----------------------------------------------------------
Dollars 8.671 5.710
-----------------------------------------------------------
Bolivianos 384.607 457.313
-----------------------------------------------------------
New Soles 130.596 171.211
----------------------------------------------------------------------------------------------------
Sundry receivables Non-adjustable pesos 1.108.472 848.403
-----------------------------------------------------------
Dollars 472.551 220.101
-----------------------------------------------------------
Bolivianos 58.912 917.462
-----------------------------------------------------------
New Soles 986.621 763.857
----------------------------------------------------------------------------------------------------
43
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
----------------------------------------------------------------------------------------------------
Line Currency Amount Amount
----------------------------------------------------------------------------------------------------
2002 2001
----------------------------------------------------------------------------------------------------
TCH$ TCH$
-----------------------------------------------------------
Accounts and documents related companies Adjustable pesos - 239.495
-----------------------------------------------------------
Non-adjustable pesos 191.721 104.027
-----------------------------------------------------------
Dollars 827.967 391.153
-----------------------------------------------------------
New Soles - -
----------------------------------------------------------------------------------------------------
Inventories Non-adjustable pesos 3.260.511 3.160.742
-----------------------------------------------------------
Dollars 4.743.474 4.279.498
-----------------------------------------------------------
Bolivianos 1.367.822 1.383.033
-----------------------------------------------------------
New Soles 1.642.264 3.076.048
----------------------------------------------------------------------------------------------------
Recoverable taxes Non-adjustable pesos 4.782.540 9.058.925
-----------------------------------------------------------
New Soles 2.584.161 2.590.476
-----------------------------------------------------------
Bolivianos - -
----------------------------------------------------------------------------------------------------
Prepaid expenses Non-adjustable pesos 2.592.777 2.647.840
Dollars 3.886.353 3.587.865
-----------------------------------------------------------
Bolivianos 1.741.808 151.817
-----------------------------------------------------------
New Soles 540.051 1.042.505
----------------------------------------------------------------------------------------------------
Deferred taxes Non-adjustable pesos 556.458 447.750
----------------------------------------------------------------------------------------------------
Other current assets Non-adjustable pesos 940.873 1.051.153
-----------------------------------------------------------
Dollars 1.437.859 2.105.644
-----------------------------------------------------------
New Soles 2.275.431 1.650.769
-----------------------------------------------------------
Bolivianos - -
----------------------------------------------------------------------------------------------------
Total current assets 73.130.267 67.187.208
----------------------------------------------------------------------------------------------------
Land Non-adjustable pesos 3.600.859 3.598.178
-----------------------------------------------------------
Dollars 3.032.961 2.875.231
-----------------------------------------------------------
New Soles 7.730.659 7.335.011
----------------------------------------------------------------------------------------------------
Buildings and Infrastructure Non-adjustable pesos 24.261.649 24.016.222
-----------------------------------------------------------
Dollars 5.210.956 4.943.250
-----------------------------------------------------------
New Soles 19.733.343 18.418.512
----------------------------------------------------------------------------------------------------
Machinery and equipment Non-adjustable pesos 37.960.438 36.660.370
-----------------------------------------------------------
Dollars 28.077.395 26.453.950
-----------------------------------------------------------
New Soles 58.357.728 62.481.121
----------------------------------------------------------------------------------------------------
Other fixed assets Non-adjustable 53.599.654 52.020.668
pesos
-----------------------------------------------------------
Dollars 29.794.905 26.901.427
-----------------------------------------------------------
New Soles 66.139.287 58.842.944
----------------------------------------------------------------------------------------------------
Higher value in technical reappraisal Non-adjustable pesos 1.829.233 1.809.430
of property, plant and equipment
----------------------------------------------------------------------------------------------------
Accumulated Depreciation Non-adjustable pesos (56.926.775) (50.913.589)
-----------------------------------------------------------
Dollars (19.007.737) (15.292.631)
-----------------------------------------------------------
New Soles (82.952.504) (78.097.590)
----------------------------------------------------------------------------------------------------
Total property, plant and equipment 180.442.051 182.052.504
----------------------------------------------------------------------------------------------------
44
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
----------------------------------------------------------------------------------------------------
Line Currency Amount Amount
----------------------------------------------------------------------------------------------------
2002 2001
----------------------------------------------------------------------------------------------------
TCH$ TCH$
-----------------------------------------------------------
Investment in related companies Non-adjustable pesos 838.791 1.043.044
-----------------------------------------------------------
Dollars 660.530 644.109
----------------------------------------------------------------------------------------------------
Investment in other companies Non-adjustable pesos 962 33.330
-----------------------------------------------------------
Dollars 82.449 79.044
-----------------------------------------------------------
New Soles 42.277 40.068
----------------------------------------------------------------------------------------------------
Goodwill Non-adjustable pesos 210.611.152 223.265.136
-----------------------------------------------------------
Dollars 73.760.212 16.603.263
-----------------------------------------------------------
New Soles 12.424.337 70.300.234
----------------------------------------------------------------------------------------------------
Long-term receivables Dollars 43.789 268.202
-----------------------------------------------------------
New Soles 218.132 -
----------------------------------------------------------------------------------------------------
Intangibles Non-adjustable pesos 19.222 19.273
-----------------------------------------------------------
Dollars - -
-----------------------------------------------------------
New Soles 24.197.543 22.963.285
----------------------------------------------------------------------------------------------------
Amortization Non-adjustable pesos (2.811) (2.375)
-----------------------------------------------------------
Dollars - -
-----------------------------------------------------------
New Soles (6.560.289) (5.068.763)
----------------------------------------------------------------------------------------------------
Other Non-adjustable pesos 6.599.659 7.629.010
-----------------------------------------------------------
Dollars - 482.903
----------------------------------------------------------------------------------------------------
Negative goodwill Dollars (908.920) -
----------------------------------------------------------------------------------------------------
Total other assets 322.027.035 338.299.763
----------------------------------------------------------------------------------------------------
Total assets
----------------------------------------------------------------------------------------------------
Adjustable pesos - 239.495
----------------------------------------------------------------------------------------------------
Non-adjustable pesos 310.844.412 333.209.941
----------------------------------------------------------------------------------------------------
Dollars 147.528.358 78.760.442
----------------------------------------------------------------------------------------------------
New Soles 112.440.407 170.749.888
----------------------------------------------------------------------------------------------------
Bolivianos 4.786.176 4.579.709
----------------------------------------------------------------------------------------------------
45
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
b) Liabilities:
- ------------------------------------------------------------------------------------------------------------------------------------
Line Currency Out to 90 days From 90 days to 1 year
-------------------------------------------------------------------------------------------------
2002 2001 2002 2001
-------------------------------------------------------------------------------------------------
Amount Annual Amount Annual Amount Annual Amount Annual
TCH$ average TCH$ average TCH$ average TCH$ average
interest interest interest interest
rate rate rate rate
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Short-term Adjustable - - - - - - - -
bank debt pesos
--------------------------------------------------------------------------------------------------------------------
New Soles 997 9.00% 5.029 9.0% - - - -
--------------------------------------------------------------------------------------------------------------------
Dollars - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term bank Adjustable pesos - - 1.281.033 TAB+1.4% 17.891.419 TAB+1.4% 5.691.371 TAB+1.4%
debt -
short-term
portion
--------------------------------------------------------------------------------------------------------------------
New Soles - - - - - - 35.065 -
--------------------------------------------------------------------------------------------------------------------
Dollars 10.505 13.00% - - 110.700 13.00% 38.791 -
- ------------------------------------------------------------------------------------------------------------------------------------
Bonds - Adjustable pesos - - - - 47.662.488 7.00% 833.724 7.00%
short-term
portion
--------------------------------------------------------------------------------------------------------------------
Dollars 340.755 9.875% - - - - 467.621 9.875%
- ------------------------------------------------------------------------------------------------------------------------------------
Accounts Dollars 4.433.188 - 4.075.552 - - - - -
payable
--------------------------------------------------------------------------------------------------------------------
New Soles 145.196 - - - - - - -
--------------------------------------------------------------------------------------------------------------------
Non-adjustable $ 4.616.651 - 4.981.239 - - - 213.823 -
--------------------------------------------------------------------------------------------------------------------
Bolivianos 2.224.288 - 1.561.828 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Documents Dollars 1.067.123 - 1.095.371 - - - 354.437 -
payable
--------------------------------------------------------------------------------------------------------------------
New Soles 141.569 - 129.765 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Sundry payables Non-adjustable $ 1.072.289 - 2.104.693 - - - - -
--------------------------------------------------------------------------------------------------------------------
Dollars - - 1.066.465 - - - - -
--------------------------------------------------------------------------------------------------------------------
New Soles 730.695 - - - - - - -
--------------------------------------------------------------------------------------------------------------------
Bolivianos - - 120.042 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Intercompany Non-adjustable $ 1.470.706 - 1.604.849 - - - 880.422 -
documents and
accounts
payable
--------------------------------------------------------------------------------------------------------------------
Dollars 1.080.040 - 1.242.403 - - - - -
--------------------------------------------------------------------------------------------------------------------
New Soles - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
46
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
- ------------------------------------------------------------------------------------------------------------------------------------
Line Currency Out to 90 days From 90 days to 1 year
- ------------------------------------------------------------------------------------------------------------------------------------
2002 2001 2002 2001
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Annual Amount Annual Amount Annual Amount Annual
TCH$ average TCH$ average TCH$ average TCH$ average
interest interest interest interest
rate rate rate rate
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Provisions Adjustable $ - - - - - - - -
--------------------------------------------------------------------------------------------------------------------
Non-adjustable $ 1.129.401 - 1.544.081 - 1.516.768 - 1.566.490 -
--------------------------------------------------------------------------------------------------------------------
New Soles 733.637 - 3.397.037 - - - - -
--------------------------------------------------------------------------------------------------------------------
Bolivianos 3.703.614 - 1.230.211 - 537.066 - - -
--------------------------------------------------------------------------------------------------------------------
Dollars 18.232 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Withholdings Non-adjustable $ 1.664.988 - 1.738.281 - - - - -
--------------------------------------------------------------------------------------------------------------------
New Soles 1.536.138 - 1.127.730 - - - - -
--------------------------------------------------------------------------------------------------------------------
Bolivianos 934.645 - 888.129 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term Dollars - - - - - - - -
liabilities -
short-term
portion
--------------------------------------------------------------------------------------------------------------------
New Soles - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Other current Non-adjustable $ - - 58.591 - - - 175.776 -
liabilities
- ------------------------------------------------------------------------------------------------------------------------------------
Total current Non-adjustable $ 10.035.708 - 11.973.142 - 1.516.768 - 2.660.735 -
liabilitie s
--------------------------------------------------------------------------------------------------------------------
Adjustable $ - - 1.339.624 - 65.553.907 - 6.700.872 -
--------------------------------------------------------------------------------------------------------------------
Dollars 6.949.843 - 6.413.327 - 110.700 - 860.849 -
--------------------------------------------------------------------------------------------------------------------
New Soles 8.337.301 - 7.287.853 - - - 35.065 -
--------------------------------------------------------------------------------------------------------------------
Bolivianos 1.813.478 - 2.238.382 - 537.066 - - -
- ------------------------------------------------------------------------------------------------------------------------------------
47
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
As of September 30, 2002:
- ------------------------------------------------------------------------------------------------------------------------------------
Line Currency 1 to 3 years 3 to 5 years 5 to 10 years More than 10 years
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Annual Amount Annual Amount Annual Amount Annual
TCH$ average TCH$ average TCH$ average TCH$ average
interest interest interest interest
rate rate rate rate
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Bank debt Adjustable $ 34.160.642 TAB+1.4% - - - - - -
-----------------------------------------------------------------------------------------------------------------
Dollars 529.114 13.00% 47.977 13.00% - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Bonds Adjustable $ - - - - - - 25.587.572 6,75%
-----------------------------------------------------------------------------------------------------------------
Dollars - - 112.387.318 9.875% - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term Non-adjustable $ 740.077 - 53.026 - 71.401 - 61.769 -
provisions
-----------------------------------------------------------------------------------------------------------------
New Soles - - - - - - - -
-----------------------------------------------------------------------------------------------------------------
Bolivianos - - 983.614 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term Non-adjustable $ 360.766 - 243.077 - 122.023 - 490.018 -
deferred tax
-----------------------------------------------------------------------------------------------------------------
New Soles 10.709.526 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Other long-term Adjustable $ 618.691 - 412.460 - 824.742 - - -
liabilities
-----------------------------------------------------------------------------------------------------------------
Non-adjustable $ 417.565 - 5.463 - 784.600 - 2.730.070 -
-----------------------------------------------------------------------------------------------------------------
Dollars - - - - - - - -
-----------------------------------------------------------------------------------------------------------------
New Soles 1.482.213 - 36.744 - 50.471 - - -
-----------------------------------------------------------------------------------------------------------------
Bolivianos - - 1.328.438 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total long-term Adjustable $ 34.779.333 - 412.460 - 824.742 - 25.587.572 -
liabilities
-----------------------------------------------------------------------------------------------------------------
Non-adjustable $ 1.518.408 - 301.566 - 978.024 - 3.281.857 -
-----------------------------------------------------------------------------------------------------------------
Dollars 529.114 - 112.435.295 - - - - -
-----------------------------------------------------------------------------------------------------------------
New Soles 12.191.739 - 36.744 - 50.471 - - -
-----------------------------------------------------------------------------------------------------------------
Bolivianos - - 2.312.052 - - - - -
-----------------------------------------------------------------------------------------------------------------
48
As of September 30, 2001:
- ------------------------------------------------------------------------------------------------------------------------------------
Line Currency 1 to 3 years 3 to 5 years 5 to 10 years More than 10 years
-------------------------------------------------------------------------------------------------
Amount Annual Amount Annual Amount Annual Amount Annual
TCH$ average TCH$ average TCH$ average TCH$ average
interest interest interest interest
rate rate rate rate
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------------
Bank debt Adjustable $ 34.148.226 TAB+1.4% 17.074.112 TAB+1.4% - - - -
-----------------------------------------------------------------------------------------------------------------
Dollars 177.578 13.00% 319.637 7.00% - - - -
-----------------------------------------------------------------------------------------------------------------
New Soles - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Bonds Adjustable $ 46.797.545 7.00% - - - - 25.578.272 6,75%
- ------------------------------------------------------------------------------------------------------------------------------------
Dollars - - - - 106.618.520 9.875% - -
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term Non-adjustable $ 828.592 - 405.251 - 810.045 - 645.771 -
deferred tax
-----------------------------------------------------------------------------------------------------------------
New Soles 10.141.606 - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term Non-adjustable $ 309.797 - 141.622 - 212.432 - 221.284 -
provisions
-----------------------------------------------------------------------------------------------------------------
New Soles - - - - - - - -
-----------------------------------------------------------------------------------------------------------------
Bolivianos - - 799.777 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Long-term sundry New Soles - - - - - - - -
payable
- ------------------------------------------------------------------------------------------------------------------------------------
Other long-term Non-adjustable $ 1.421.480 - 3.831 - 85.997 - 1.412.708 -
liabilities
-----------------------------------------------------------------------------------------------------------------
Adjustable $ 632.790 - 421.860 - 1.054.650 - - -
-----------------------------------------------------------------------------------------------------------------
New Soles 1.637.760 - - - - - - -
-----------------------------------------------------------------------------------------------------------------
Bolivianos - - 1.612.411 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total long-term Adjustable $ 81.578.561 - 17.495.972 - 1.054.650 - 25.578.273 -
liabilities
-----------------------------------------------------------------------------------------------------------------
Non-adjustable $ 2.559.869 - 550.703 - 1.108.474 - 2.279.763 -
-----------------------------------------------------------------------------------------------------------------
Dollars 177.578 - 319.637 - 106.618.520 - - -
-----------------------------------------------------------------------------------------------------------------
New Soles 11.779.366 - - - - - - -
-----------------------------------------------------------------------------------------------------------------
Bolivianos - - 2.412.188 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
49
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
33. Sanctions:
No sanctions have been applied to the Parent Company, its subsidiaries, their
directors or managers by the Superintendency of Securities and Insurance or
other administrative authorities.
34. Research and Development Expenses:
As of September 30, 2002 and 2001, neither the Parent Company nor its
Subsidiaries had made disbursements for research and development as defined in
Circular No. 981 of the Superintendency of Securities and Insurance.
35. Board Compensation:
The Parent Company and its subsidiaries made payments of allowances and
compensation to Directors amounting to TCH$236.504 for the 2002 fiscal year and
TCH$255.217 for the 2001 fiscal year.
36. Material Events
1. Regular General Shareholders Meeting
A Regular General Shareholders Meeting was held of Coca-Cola Embonor S.A. on
April 29, 2002. The purpose was:
a) to approve the Annual Report, General Balance Sheet and Financial
Statements for the fiscal year running from January 1, 2001 to December 31,
2001;
b) to discuss the results in the 2001 fiscal year;
c) to appoint the external auditors for the 2002 fiscal year;
d) to decide on the compensation of the Board of Directors for the 2002 fiscal
year;
e) to report on Board resolutions relative to the transactions listed in
Article 44 of the Companies Law occurring after the last Shareholders Meeting;
f) to decide on the newspaper in which notices will be published of upcoming
Regular or Special General Shareholders Meetings, if pertinent;
g) to decide on the 2002 dividend policy;
h) to set the compensation of the Directors Committee and its expense budget;
i) to hear and analyze, in general, any matter relating to the management and
administration of the corporate business and to adopt the resolutions deemed
convenient that are within the purview of the Regular General Shareholders
Meeting according to the By-Laws and Governing Law.
50
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
37. Subsequent events
The Chilean Syndicated Loan Agreement was amended October 21, 2002 as follows:
a) The minimum required Equity of the Company was reduced from UF 14.233.000
to UF 11.000.000.
b) A new obligation was established where the Company undertook to maintain a
ratio of funded debt to EBITDA below 5.5 times as of December 2003.
There are no other material subsequent events as of September 30, 2002 to the
date of preparation of these financial statements that affect or will affect the
assets, liabilities and/or results of the Parent Company and its Subsidiaries.
38. The Environment
The Parent Company and its Subsidiaries have developed the following
environmental protection projects. The expenses of those projects are shown
below:
Concept Budgeted Spent
TCH$ TCH$
Effluent Treatment 221.759 198.956
Operating Cost 140.422 -
---------------- --------------
Total 362.181 198.956
---------------- --------------
51
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
EXPLANATORY ANALYSIS
I) Third Quarter 2002 vs. 2001
The consolidated sales volume was 125.7 million unit cases, which represents a
1.9% increase compared to the previous year. Broken down by country, the sales
volume decreased 0.4% in Chile, increased 4.2% in Peru and 1.3% in Bolivia.
Operating revenue rose 1.2% on a consolidated level to a total of
TCH$174.027.052 (MUS$232.429,6). Operating profit declined 14.3% to a total of
TCH$18.371.070 on a consolidated level (MUS$24.536,3), which represents 10.6% of
revenues compared to 12.5% in the previous year. During the nine months ending
September 2002, the operating cash flow was TCH$37.028.264 (MUS$49.454,8)
(operating profit (loss) + depreciation), a decrease of 8.4% compared to the
previous year, which accounts for 21.2% of consolidated revenues. There was a
non-operating loss of TCH$25.988.535 (MUS$34.710,2) compared to a loss of
TCH$25.083.740 in the previous year. The increase in the non-operating loss is
due primarily to the decline in other non-operating income compared to the
previous year. The non-operating loss in 2002 included a goodwill amortization
of TCH$13.542.064, which represents no cash flow.
There was a net loss of TCH$10.022.914, which compares to the net loss of
TCH$6.400.761 in the first semester of 2001.
Chilean Operation
In Chile, the physical sales volume decreased by 0.4%. This impact was also
transferred to sales revenue, which totaled TCH$80.039.744 (MUS$106.900,7), or a
decline of 3.3% compared to the previous year. Operating profit totaled
TCH$9.518.631 (MUS$12.713,0), which is a decrease of 16.1% compared to the
previous year. The operating profit accounts for 11.89% of revenues from this
operation. Operating cash flow (operating profit + depreciation) in the Chilean
operation totaled TCH$15.186.288 (MUS$20.282,7), which represents 18.9% of
revenues compared to 22.5% in the previous year.
Peruvian Operation
In Peru, physical sales rose 4.2% compared to the previous year. Net revenues
totaled TCH$69.153.432 (MUS$92.361,0), which represents a 10.4% increase in
relation to 2001. The operating profit was TCH$6.289.712 (MUS$8.400,5) and the
operating cash flow (operating profit + depreciation) was TCH$16.063.754
(MUS$21.454,7), which accounts for 23.2% of revenues compared to 25.5% in the
previous year.
52
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
Bolivian Operation
In Bolivia, physical sales rose 1.3% with respect to the previous year. Net
revenues totaled TCH$24.833.876 (MUS$33.168,1), which represents a 6.7% decrease
in relation to 2001. Operating profit totaled TCH$2.562.727 (MUS$3.422,8) and
the operating cash flow (operating profit + depreciation) was TCH$5.778.222
(MUS$7.717,4), which accounts for 23.3% of revenues in comparison to 22.1% in
the previous year.
Financial economic indicators
The principal financial-economic indicators related to the consolidated
financial statements as of September 30, 2002 and 2001 are shown below:
- ---------------------------------------------------------- ---------------- ----------------
Concepts 2002 2001
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Liquidity
- ---------------------------------------------------------- ---------------- ----------------
Current assets 73.130.267 67.187.208
- ---------------------------------------------------------- ---------------- ----------------
Current liabilities 94.854.771 39.509.849
- ---------------------------------------------------------- ---------------- ----------------
Liquidity 0.77 1.70
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Acid ratio
- ---------------------------------------------------------- ---------------- ----------------
Current assets - Inventories 62.116.196 55.287.887
- ---------------------------------------------------------- ---------------- ----------------
Current liabilities 94.854.771 39.509.849
- ---------------------------------------------------------- ---------------- ----------------
Acid ratio 0.65 1.40
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Debt ratio
- ---------------------------------------------------------- ---------------- ----------------
Current liabilities + Long-term liabilities 290.094.148 293.023.403
- ---------------------------------------------------------- ---------------- ----------------
Equity + Minority interest 285.505.205 294.516.072
- ---------------------------------------------------------- ---------------- ----------------
Debt ratio 1.02 0.99
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Current liabilities/Total debt 32.70% 13.48%
- ---------------------------------------------------------- ---------------- ----------------
Long-term debt/Total debt 67.30% 86.52%
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Financial expenses coverage
- ---------------------------------------------------------- ---------------- ----------------
EBIT+FE-FI+A+D+OIE+PLR-Loss in Related Companies 39.807.469 43.226.723
- ---------------------------------------------------------- ---------------- ----------------
Net financial expenses 10.594.516 12.624.505
- ---------------------------------------------------------- ---------------- ----------------
Coverage 3.76 3.42
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
ACTIVITY
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Total assets 575.599.353 587.539.475
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Inventories rotation
- ---------------------------------------------------------- ---------------- ----------------
Cost of sales 99.712.772 97.420.970
- ---------------------------------------------------------- ---------------- ----------------
Average inventories 10.670.244 11.008.747
- ---------------------------------------------------------- ---------------- ----------------
Inventories rotation 9.34 8.85
- ---------------------------------------------------------- ---------------- ----------------
53
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
Concepts 2002 2001
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Inventory turnover in days
- ---------------------------------------------------------- ---------------- ----------------
Average inventories 10.670.244 11.008.747
- ---------------------------------------------------------- ---------------- ----------------
Cost of sales 99.712.772 97.420.970
- ---------------------------------------------------------- ---------------- ----------------
Inventory turnover in days 28.89 30.51
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Net sales
- ---------------------------------------------------------- ---------------- ----------------
Chile 80.039.744 82.737.892
- ---------------------------------------------------------- ---------------- ----------------
Peru 69.153.432 62.614.439
- ---------------------------------------------------------- ---------------- ----------------
Bolivia 24.833.876 26.602.968
- ---------------------------------------------------------- ---------------- ----------------
Consolidated 174.027.052 171.955.298
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Sales in thousand unit cases
- ---------------------------------------------------------- ---------------- ----------------
Chile 49.510 49.730
- ---------------------------------------------------------- ---------------- ----------------
Peru 56.840 54.565
- ---------------------------------------------------------- ---------------- ----------------
Bolivia 19.341 19.086
- ---------------------------------------------------------- ---------------- ----------------
Consolidated 125.691 123.381
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Cost of sales
- ---------------------------------------------------------- ---------------- ----------------
Chile (49.896.328) (50.611.726)
- ---------------------------------------------------------- ---------------- ----------------
Peru (35.832.751) (31.764.517)
- ---------------------------------------------------------- ---------------- ----------------
Bolivia (13.983.693) (15.044.727)
- ---------------------------------------------------------- ---------------- ----------------
Consolidated (99.712.772) (97.420.970)
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Operating Income 18.371.070 21.435.147
- ---------------------------------------------------------- ---------------- ----------------
Financial expenses (11.919.936) (13.559.818)
- ---------------------------------------------------------- ---------------- ----------------
Non-operating income (25.988.535) (25.083.740)
- ---------------------------------------------------------- ---------------- ----------------
EBITDA 39.807.469 43.226.723
- ---------------------------------------------------------- ---------------- ----------------
Income (loss) before income taxes (7.617.465) (3.648.593)
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Profitability
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Return on Equity
- ---------------------------------------------------------- ---------------- ----------------
Income (loss) net (10.022.914) (6.400.761)
- ---------------------------------------------------------- ---------------- ----------------
Average equity 235.436.932 237.784.257
- ---------------------------------------------------------- ---------------- ----------------
Return on equity (4.26%) (2.69%)
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Return on Assets
- ---------------------------------------------------------- ---------------- ----------------
Income (loss) net (10.022.914) (6.400.761)
- ---------------------------------------------------------- ---------------- ----------------
Average assets 581.569.555 565.316.809
- ---------------------------------------------------------- ---------------- ----------------
Return on Assets (1.72%) (1.13%)
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
54
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
Concepts 2002 2001
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Average operating assets 210.706.240 204.590.159
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Return on average operating assets (4.76%) (3.13%)
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Income (loss) per share
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Income (loss) net (10.022.914) (6.400.761)
- ---------------------------------------------------------- ---------------- ----------------
Number of subscribed and paid-in shares 510.853.230 510.853.230
- ---------------------------------------------------------- ---------------- ----------------
Income (loss) per share (19.62) (12.53)
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Dividend return:
- ---------------------------------------------------------- ---------------- ----------------
Series A
- ---------------------------------------------------------- ---------------- ----------------
Dividends paid in year/No. of shares in series 0.00 0.00
- ---------------------------------------------------------- ---------------- ----------------
Closing price of share 158 320
- ---------------------------------------------------------- ---------------- ----------------
Dividend return 0.00% 0.00%
- ---------------------------------------------------------- ---------------- ----------------
- ---------------------------------------------------------- ---------------- ----------------
Series B
- ---------------------------------------------------------- ---------------- ----------------
Dividends paid in year/No. of shares in series 0.00 0.00
- ---------------------------------------------------------- ---------------- ----------------
Closing price of share 135 376
- ---------------------------------------------------------- ---------------- ----------------
Dividend return 0.00% 0.00%
- ---------------------------------------------------------- ---------------- ----------------
55
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
II. Analysis of Balance Sheet
As of December 31,
2002 2001 Variations Variations%
TCH$ TCH$ TCH$
Current assets 73.130.267 67.187.208 5.943.059 8.85%
Property, plant and equipment 180.442.051 182.052.504 (1.610.453) (0.88%)
Other assets 322.027.035 338.299.763 (16.272.728) (4.81%)
--------------- --------------- ---------------- -------------
Total Assets 575.599.353 587.539.475 (11.940.122) (2.03%)
--------------- --------------- ---------------- -------------
Current liabilities 94.854.771 39.509.849 55.344.922 140.08%
Long-term liabilities 195.239.377 253.513.554 (58.274.177) (22.099%)
Minoritary interest 55.335.013 53.812.683 1.522.330 2.83%
Equity 230.170.192 240.703.389 (10.533.197) (4.38%)
--------------- --------------- ---------------- -------------
Total liabilities and equity 575.599.353 587.539.475 (11.940.122) (2.03%)
--------------- --------------- ---------------- -------------
Current assets increased by TCH$5.943.059 due mainly to the increase in time
deposits and marketable securities. Moreover, there was a rise of TCH$55.344.922
in current liabilities. This increase in current liabilities is explained by the
transfer to short term of part of the principal under the syndicated loan and
Chilean bonds serie A owed by the Company, which must be paid during 2002 and
2003. This change results in a decrease in the Company's liquidity ratio, which
went from 1.70 to 0.77.
There was also an improvement in operating ratios. Inventory turnover went from
8.85 to 9.34 and there was a drop in days in inventory from 31 to 29. The ratio
of consolidated existing US debt to equity plus minority interest rose from 0.99
to 1.02 given the increase, in pesos, of dollar debt and the drop in equity due
to the fiscal year loss.
56
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
III. Analysis of Book Values and the Economic Value of Assets
The following is noted regarding the principal assets of the company and its
subsidiaries:
(a) Given the high turnover of items, the book values of working capital
represent their market prices.
(b) The fixed assets of domestic companies are shown at their acquisition price,
after price-level restatement. The book values of the property plant and
equipment of Embonor S.A. (formerly Embotelladoras Williamson Balfour S.A.)
which were acquired during 1999 do not differ from their market values. The
property plant and equipment of foreign companies are appraised according to the
provisions in Technical Bulletin No. 64 of the Chilean Accountants Association.
It was determined at the time of acquisition that the book values were distorted
in comparison to a reasonable market price, so the property plant and equipment
were adjusted to their market price based on external appraisals. The book
values do not at this time differ from market prices.
All property plant and equipment considered dispensable are valued at the
respective sale prices. The capacity of these fixed assets to generate flows has
also been evaluated, and cover the cost of depreciation during their remaining
useful life.
(c) The stock investments by the Company in companies in which it has a
significant influence have been valued according to the proportional equity
value method (VPP). The Company's equity income was recognized on an accrual
basis. Unrealized income on transactions between related companies was
eliminated.
(d) The goodwill arising from the differences between the proportional equity
value of the investment and the value paid on the date of purchase of the
investments is shown at the acquisition price, after price-level restatement,
and amortized in a period of 20 years according to Circular No. 1.358 of the
Superintendency of Securities and Insurance.
In summary, the assets are shown according to generally accepted accounting
principles and instructions issued by the Superintendency of Securities and
Insurance. Therefore, these amounts do not exceed their net market values.
57
Coca-Cola Embonor S.A. and Subsidiaries
Notes to Consolidated Financial Statements
IV. Analysis of the Principal Components of Cash Flow.
Summary Consolidated Statements of Cash Flow
For the nine months ending September 30,
2002 2001 Variations Variations
TCH$ TCH$ TCH$ %
Net Cash flow from operating activities 8.109.042 14.750.728 (6.731.686) (45.64%)
Net Cash flow from finance activities (5.719.541) (309.419) (5.410.122) (1,748.48%)
Net Cash flow from investment activities
(9.369.161) (6.692.572)
(2.676.589) (39.99%)
--------------- --------------- -------------- ------------
Total Net cash flow for the period (7.069.660) 7.748.737 (14.818.397) (191.24%)
--------------- --------------- -------------- ------------
The Company and its subsidiaries reported a negative net cash flow of
TCH$7.069.660 during the first nine months of 2002, which implied a negative
variation of TCH$14.818.397 compared to the previous year. This net cash flow
can be broken down as follows:
Operating activities generated a positive flow of TCH$8.019.042, which is lower
by TCH$6.731.686 than the one generated in the same period in the previous year.
The difference is due mainly to increased payments to suppliers and employees
and taxes.
Financing generated a negative flow of TCH$5.719.541, which meant a negative
change of TCH$5.410.122 compared to the previous year. The difference stems
principally from the payment of bank loans.
Investment activities resulted in a negative flow of TCH$9.369.161, which is
TCH$2.676.589 greater than the investment flow in 2001. This variation is
principally the result of recording collection of loans to related companies in
2001.
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V. Analysis of Market Risk
(a) Debt Risk
Interest-bearing debt dropped during 2001, to the equivalent to US$365 million
as of September 30. There was a significant restructuring of interest-bearing
liabilities through the issue of long-and short-term bonds on the Chilean market
for a total of UF 4.400.000 and a syndicated loan for close to UF 3.460.000. The
principal benefits from this restructuring were the significant reduction in
exposure to exchange rate fluctuations since approximately 60% of the
consolidated debt is in UF. The interest rate on interest-bearing debt was also
reduced. As of September 30, 2002, US$160 million was owed to third parties,
recognized in foreign currency. The exchange rate risk has been minimized for
this debt because these monies are invested in assets abroad which are
controlled in dollars. Therefore, there is a natural hedging according to
Technical Bulletin No. 64 of the Chilean Accountants Association.
50% of total operating revenue of the company and its subsidiaries corresponds
to sales in Chilean pesos and 50% to income that is treated according to
Technical Bulletin No. 64 of the Chilean Accountants Association because the
sales are made abroad.
(b) Commodities Risk
The Company faces the risk of price fluctuations on the international sugar,
carbonic gas, plastic bottles and other markets. Significant progress was made
at the level of centralized purchasing through medium-term contracts in order to
minimize and/or stabilize this risk during 2002. The company did not use any
hedging instruments for commodities.
59