EX-99.1 3 finstmt.txt CONSOLIDATED FINANCIAL STATEMENTS EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES Consolidated financial statements As of and for the nine-month periods ended September 30, 2001 and 2002 CONTENTS Unaudited interim consolidated balance sheets Unaudited interim consolidated statements of income Unaudited interim consolidated statements of cash flows Notes to the unaudited interim consolidated financial statements [GRAPHIC OMITTED] THIS REPORT IS COMPOSED OF AN ENGLISH TRANSLATION OF A THIRD QUARTER REPORT FILED WITH THE SUPERINTENDENCIA DE VALORES Y SEGUROS (SVS) IN CHILE, EXCEPT FOR THE AND THOUSAND OF US$ COLUMNS INCORPORATED TO PROVIDE ADDITIONAL INFORMATION. TABLE OF CONTENTS Page - Unaudited interim consolidated balance sheets at September 30, 2001 and 2002 1 - Unaudited interim consolidated statements of income for the nine-month periods ended September 30, 2001 and 2002 3 - Unaudited interim consolidated statements of cash flows for the nine-month periods ended September 30, 2001 and 2002 4 - Notes to unaudited interim consolidated financial statements 6 THE FINANCIAL STATEMENTS SUBMITTED IN THIS DOCUMENT WERE PREPARED PURSUANT TO ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN CHILE, AND UNLESS OTHERWISE INDICATED, AMOUNTS ARE EXPRESSED IN CH$ AS OF SEPTEMBER 30, 2002. THE OBSERVED RATE OF EXCHANGE ON SUCH DATE WAS US$ 1 = CH$ 748.73 EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEET (Unaudited) (Restated for general price-level changes and expressed in thousands of constant Chilean pesos of September 30, 2002 and thousands of U.S. dollars)
At September 30, ------------------------------------------- ASSETS 2001 2002 2002 ------ ---- ---- ---- ThCh$ ThCh$ ThUS$ CURRENT ASSETS: Cash .................................................... 16,674,445 13,901,990 18,567 Time deposits............................................ 26,607,814 1,923,893 2,570 Marketable securities.................................... 21,501,266 14,407,356 19,242 Accounts receivable (net)................................ 43,869,799 33,027,067 44,111 Amounts due from related companies....................... 526,271 234,089 312 Inventories.............................................. 22,701,082 18,199,806 24,308 Recoverable taxes........................................ 8,686,275 3,333,270 4,452 Deferred taxes........................................... 4,700,910 377,723 505 Other current assets..................................... 50,766,541 6,714,835 8,968 ----------- ---------- -------- Total current assets................................ 196,034,403 92,120,029 123,035 ----------- ---------- -------- PROPERTY, PLANT AND EQUIPMENT Land .................................................... 16,403,155 16,848,011 22,502 Buildings and construction............................... 104,323,914 106,860,401 142,722 Machinery and equipment.................................. 258,269,929 257,181,905 343,491 Other property, plant and equipment...................... 176,697,197 188,209,492 251,372 Technical reappraisal of property, plant and equipment.......................................... 1,847,299 1,846,858 2,467 Less: Accumulated depreciation.......................... (315,197,290) (355,794,069) (475,197) ----------- ----------- -------- Total property, plant and equipment................. 242,344,204 215,152,598 287,357 ----------- ----------- -------- OTHER ASSETS: Investments in related companies......................... 17,908,341 19,698,092 26,309 Goodwill (net)........................................... 124,041,369 120,595,138 161,066 Investments in other companies........................... 728,874 768,297 1,026 Accounts due from related companies...................... 295,639 88,304 118 Long-term receivables.................................... 1,846,749 104,965 140 Intangible assets (net).................................. 1,129,868 727,998 972 Other......................................... 158,005,619 212,865,458 284,302 ----------- ----------- -------- Total other assets.................................. 303,956,459 354,848,252 473,933 ----------- ----------- -------- Total assets........................................ 742,335,066 662,120,879 884,325 =========== =========== =======
The accompanying Notes 1 to 17 are an integral part of these consolidated financial statements. 1 EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEET (Unaudited) (Restated for general price-level changes and expressed in thousands of constant Chilean pesos of September 30, 2002 and thousands of U.S. dollars)
At September 30, ------------------------------------------- LIABILITIES 2001 2002 2002 ----------- ---- ---- ---- ThCh$ ThCh$ ThUS$ CURRENT LIABILITIES: Short-term bank liabilities.............................. 389,412 1,511 2 Current portion of long-term bank liabilities............................................ 5,730,041 1,301,818 1,739 Current portion of bonds payable......................... 4,513,445 3,358,487 4,486 Dividends payable........................................ 4,000,331 14,310,869 19,114 Trade accounts payable and notes payable................. 33,112,996 21,370,982 28,543 Other accrued liabilities and provisions................. 16,600,037 14,886,924 19,883 Amounts payable to related companies..................... 11,058,796 5,443,470 7,270 Income taxes payable..................................... 8,432,690 6,211,383 8,295 Other taxes payables..................................... 6,688,821 2,702,982 3,610 ----------- ----------- -------- Total current liabilities........................... 90,526,569 69,588,426 92,942 ----------- ----------- -------- LONG-TERM LIABILITIES: Long-term bank liabilities............................... 59,185,346 61,341,271 81,927 Bonds payable............................................ 165,309,728 142,196,393 189,917 Notes payable............................................ - - - Various creditors........................................ 358,715 64,764 86 Amounts payable to related companies..................... - - - Other accrued liabilities and provisions................. 6,008,786 9,686,033 12,937 Deferred taxes........................................... 558,989 1,505,538 2,011 Other long-term liabilities.............................. 12,019,063 6,892,926 9,206 ----------- ----------- -------- Total long-term liabilities......................... 243,440,627 221,686,925 296,084 ----------- ----------- -------- Minority interest........................................ 47,863 48,026 64 ----------- ----------- -------- SHAREHOLDERS' EQUITY: Paid-in capital.......................................... 181,492,072 181,477,998 242,381 Other reserves........................................... 85,157,568 70,204,356 93,764 Retained earnings........................................ 118,944,899 94,212,651 125,830 Net income for the period................................ 22,725,468 24,902,497 33,260 ----------- ----------- -------- Total shareholders' equity.......................... 408,320,007 370,797,502 495,235 ----------- ----------- -------- Total liabilities and shareholders' equity.......... 742,335,066 662,120,879 884,325 =========== =========== ========
The accompanying Notes 1 to 17 are an integral part of these consolidated financial statements. 2 EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF INCOME (Unaudited) (Restated for general price-level changes and expressed in thousands of constant Chilean pesos at September 30, 2002 and thousands of U.S. dollars)
Nine months ended September 30, ---------------------------------------------- 2001 2002 2002 ---- ---- ---- ThCh$ ThCh$ ThUS$ OPERATING INCOME: Net sales................................................ 365,554,341 291,194,234 388,918 Cost of sales............................................ (231,620,911) (193,146,228) (257,965) ----------- ----------- -------- Gross profit........................................ 133,933,430 98,048,006 130,953 Administrative and selling expenses...................... (97,334,771) (73,810,397) (98,581) ----------- ----------- -------- Operating income.................................... 36,598,659 24,237,609 32,372 ----------- ----------- -------- OTHER INCOME AND EXPENSES: Financial income......................................... 14,889,924 16,038,266 21,420 Other non-operating income............................... 13,418,028 2,390,740 3,193 Financial expenses....................................... (14,715,338) (16,110,583) (21,517) Other non-operating expenses............................. (6,495,143) (23,049,191) (30,784) Share of income (loss) from affiliate companies.................................... (961,315) 11,690,933 15,614 Amortization of goodwill................................. (7,960,236) (6,241,761) (8,336) Price-level restatement.................................. (6,115,646) 25,075,066 33,490 ----------- ----------- -------- Non-operating income................................ (7,939,726) 9,793,470 13,080 ----------- ----------- -------- Income before income taxes and minority interest.............................. 28,658,933 34,031,079 45,452 Income taxes............................................. (5,910,381) (9,126,753) (12,190) ----------- ----------- -------- Income before minority interest..................... 22,748,552 24,904,326 33,262 Income (loss) attributable to minority interest.......... (23,084) (1,829) (2) ----------- ----------- -------- Net income.......................................... 22,725,468 24,902,497 33,260 =========== =========== ========
The accompanying Notes 1 to 17 are an integral part of these consolidated financial statements. 3 EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Restated for general price-level changes and expressed in thousands of constant Chilean pesos at September 30, 2002 and thousands of U.S. dollars)
Nine months ended September 30, ---------------------------------------------- 2001 2002 2002 ---- ---- ---- ThCh$ ThCh$ ThUS$ CASH FLOWS FROM OPERATING ACTIVITIES: Collection of accounts receivable........................ 547,143,688 419,714,342 560,568 Financial income received................................ 10,097,564 16,088,047 21,487 Other income received.................................... 17,363,612 15,147,516 20,231 Payments to suppliers and personnel...................... (408,895,267) (321,142,665) (428,916) Interest paid............................................ (8,931,251) (14,032,723) (18,742) Income tax payments...................................... (1,126,458) (3,696,488) (4,937) Other expenses........................................... (2,351,847) (4,343,815) (5,802) VAT and other similar items paid......................... (63,665,458) (56,164,185) (75,013) ------------ ------------ --------- Net cash provided by operating activities........... 89,634,583 51,570,029 68,876 ------------ ------------ --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of shares in subsidiary........... 5,674 - - Borrowings from banks and others......................... 91,343,441 30,829,386 41,176 Proceeds from issuance of bonds.......................... 112,671,386 - - Dividends paid........................................... (55,423,764) (43,798,390) (58,497) Payments of loans........................................ (103,248,104) (58,640,475) (78,320) Payments of bonds........................................ (129,625,206) (5,626,097) (7,514) Payments of expenses from issuance of bonds.............. (1,712,113) - - ------------ ------------ --------- Net cash provided by (used in) financing activities. (85,988,686) (77,235,576) (103,155) ------------ ------------ --------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sales of property, plant and equipment..... 3,120,852 511,999 684 Proceeds from sales of other investments................. 626,816,228 34,127,352 45,580 Other income............................................. - - - Collection of loans to related companies................. 347,616 - - Proceeds from other investing activities................. 35,813,162 12,234,547 16,340 Additions to property, plant and equipment............... (15,609,565) (15,684,757) (20,948) Permanent investments.................................... (15,737,827) - - Investments in financial instruments..................... (682,777,987) (28,520,384) (38,091) Others loans to related companies........................ (841,708) (290,304) (388) ------------ ------------ --------- Net cash flow provided by (used in) investing activities (48,869,229) 2,378,453 3,177 ------------ ------------ --------- Net (decrease) increase in cash and cash equivalents (45,223,332) (23,287,094) (31,102) Effect of inflation on cash and cash equivalents......... (1,930,143) (5,074,804) (6,778) ------------ ------------ --------- Net (decrease) increase in cash and cash equivalents (47,153,475) (28,361,898) (37,880) ------------ ------------ --------- Cash and cash equivalents at beginning of period......... 102,406,100 58,475,574 78,100 Cash and cash equivalents at end of period............... 55,252,625 30,113,676 40,220 ============ ============ =========
The accompanying Notes 1 to 17 are an integral part of these consolidated financial statements. 4 EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Restated for general price-level changes and expressed in thousands of constant Chilean pesos at September 30, 2002 and thousands of U.S. dollars)
Nine months ended September 30, ---------------------------------------------- 2001 2002 2002 ---- ---- ---- ThCh$ ThCh$ ThUS$ SECONCILIATION BETWEEN NET INCOME FOR THE PERIOD AND NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES Net income............................................... 22,725,468 24,902,497 33,260 Income on sale of assets: Loss (gain) on sale of property, plant and equipment..... (1,068,045) 318,953 426 Loss on sale of investments.............................. 49,928 - - Loss (gain) on sale of other assets...................... (71,883) 7,789 10 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation............................................. 32,688,494 30,700,110 41,003 Amortization of intangibles.............................. 3,425,613 515,519 689 Write-offs and provisions................................ 6,528,022 9,659,425 12,901 Participation in (earnings) losses of investments under equity method ......................................... 961,315 (11,690,933) (15,614) Amortization of goodwill................................. 7,960,236 6,241,761 8,336 Price-level restatement.................................. 6,115,656 (25,075,066) (33,490) Other credits to income that do not represent cash flows............................................. (29,443,338) (9,239,997) (12,341) Other debits to income that do not represent cash flows............................................. 5,051,347 28,771,065 38,426 Income attributable to minority interest................. 23,084 1,829 2 CHANGE IN OPERATING ASSETS / LIABILITIES: Decrease in accounts receivable.......................... 26,698,117 25,227,872 33,694 Decrease (increase) in inventories....................... 1,970,735 (3,723,743) (4,973) Decrease in other current assets......................... 9,716,970 3,033,397 4,051 Decrease in trade accounts payable and notes payable relating to operating activities......... (7,498,586) (31,800,729) (42,473) Increase (decrease) in interest payable.................. 6,073,516 (2,243,823) (2,997) Increase (decrease) in income taxes payable.............. 2,169,080 5,504,465 7,352 Increase in accounts payable relating to non-operating income................................... (512,520) 4,061,054 5,424 Decrease in VAT and other similar taxes.................. (3,928,626) (3,601,416) (4,810) ---------- ---------- ------ Net cash provided by operating activities........... 89,634,583 51,570,029 68,876 ========== ========== ======
The accompanying Notes 1 to 17 are an integral part of these consolidated financial statements. 5 EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION ------------------------------ In the opinion of the Company's management, the accompanying interim consolidated financial statements of the Company include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results for such interim periods. The interim results for the nine-month period ended September 30, 2002, are not necessarily indicative of the results for the full calendar year. These financial statements should be read in conjunction with the Company's consolidated audited financial statements and the related notes for the fiscal year ended December 31, 2001. All significant accounting policies followed in the preparation of these interim financial statements are described in Note 1 to the Company's audited consolidated financial statements referred to above, with the exception of the following: The net adjustment of non-monetary assets, liabilities and equity accounts was made on the basis of a variation of 1.3% in the Consumer Price Index ("CPI") applicable for the nine-month period ended September 30, 2002 (2.2% in 2001) and was included in the price-level restatement account in the statements of income. Values for the UF are as follows (historical Chilean pesos per UF): Year At September 30, ---- ---------------- Ch$ 2001 16,094.96 2002 16,455.03 For comparative purposes, the September 30, 2001 interim financial statements and the amounts disclosed in the related notes have been restated in terms of Chilean pesos of September 30, 2002 purchasing power. The Company maintains its accounting records and prepares its financial statements in Chilean pesos. The U.S. dollar amounts disclosed in the accompanying September 30, 2002 interim financial statements are presented solely for the convenience of the foreign reader at the closing exchange rate of Ch$ 748.73 per US $ 1.00 quoted by the Central Bank of Chile for September 30, 2002. No representation is made that the Chilean peso amounts could have been, or could be, converted into U.S. dollars at that rate or any other rate. 6 NOTE 2 - PRICE-LEVEL RESTATEMENT -------------------------------- The detail of the composition of the price-level restatement is as follows:
Variation in UF, Variation in IVP or other index foreign currency Variation in CPI Accumulated total Price-level restatement 2001 2002 2001 2002 2001 2002 2001 2002 ----------------------- ---- ---- ---- ---- ---- ---- ---- ---- ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Assets Current - 1,796 16,781,317 11,291,974 336,638 20,743 17,117,955 11,314,513 Fixed assets - - - - 2,026,399 1,020,756 2,026,399 1,020,756 Other - - 29,353,605 46,015,367 8,395,065 6,535,925 37,748,670 52,551,292 Liabilities Current (11,708) (1,607,504) (5,579,603) (2,591,446) (451,333) (991,795) (6,042,644) (5,190,745) Long-term (672,638) - (43,761,049) (26,621,550) (4,355,487) (3,428,053) (48,789,174) (30,049,603) Equity - - - - (7,743,333) (4,256,684) (7,743,333) (4,256,684) Income and expense accounts - - - - (433,519) (314,463) (433,519) (314,463) -------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- Total (684,346) (1,605,708) (3,205,730) 28,094,345 (2,225,570) (1,413,571) (6,115,646) 25,075,066 ======== ========== ========== =========== ========== ========== ========== ==========
NOTE 3 - TIME DEPOSITS ---------------------- Time deposits at each period-end are as follows: At September 30, --------------------------- 2001 2002 ---- ---- ThCh$ ThCh$ Local currency deposits...................... - - Foreign currency deposits.................... 26,607,814 1,923,893 ---------- --------- Total............................... 26,607,814 1,923,893 ========== ========= NOTE 4 - MARKETABLE SECURITIES Marketable securities at each period-end are as follows: At September 30, ------------------------- 2001 2002 ---- ---- ThCh$ ThCh$ Mutual Funds................................ 21,419,986 14,407,356 Investment Funds............................ 81,280 - ---------- ---------- Total.............................. 21,501,266 14,407,356 ========== ========== 7 NOTE 5 - ACCOUNTS RECEIVABLE ---------------------------- Accounts receivable (net) at each period-end consist of the following: At September 30, --------------------------- 2001 2002 ---- ---- ThCh$ ThCh$ Trade accounts receivable (net)............ 27,833,992 17,064,571 Notes receivable (net)..................... 9,355,715 6,858,162 Miscellaneous accounts receivable (net).... 6,680,092 9,104,334 ---------- ---------- Accounts receivable (net)......... 43,869,799 33,027,067 ========== ========== Accounts receivable are shown net of a total provision for doubtful accounts of ThCh$ 2,290,685 at September 30, 2002. Notes receivable consist primarily of post-dated checks. Miscellaneous accounts receivable consist primarily of advance payments made to suppliers and amounts due from employees. NOTE 6 - PROPERTY, PLANT AND EQUIPMENT a) Property, plant and equipment at each period-end are as follows: At September 30, --------------------------- 2001 2002 ---- ---- ThCh$ ThCh$ Land...................................... 16,403,155 16,848,011 Buildings and improvements................ 104,323,914 106,860,401 Machinery and equipment................... 258,269,929 257,181,905 ----------- ----------- Total............................ 378,996,998 380,890,317 =========== =========== b) Other property, plant and equipment at each period-end are as follows: At September 30, --------------------------- 2001 2002 ---- ---- ThCh$ ThCh$ Containers................................ 93,655,466 101,008,738 Furniture and fixtures.................... 26,422,099 27,915,386 Marketing and displays.................... 40,852,748 44,586,654 Other..................................... 15,766,884 14,698,714 ----------- ----------- Total other property, plant and equipment.................... 176,697,197 188,209,492 =========== =========== 8 c) Technical reappraisal of property, plant and equipment: This item represents the increase in value of property, plant and equipment resulting from a technical reappraisal made by the Company in 1979 under SVS regulations. At September 30, --------------------------- 2001 2002 ---- ---- ThCh$ ThCh$ Land ................................. 1,234,703 1,234,410 Buildings and construction................ 171,200 171,160 Machinery and equipment................... 441,396 441,288 --------- --------- Total............................ 1,847,299 1,846,858 ========= ========= Accumulated depreciation.................. 515,861 525,157 ========= ========= NOTE 7 - INVENTORIES Inventories are composed as follows: At September 30, --------------------------- 2001 2002 ---- ---- ThCh$ ThCh$ Finished Products......................... 13,216,246 8,457,824 Products in process....................... 39,582 44,401 Raw Materials............................. 9,489,357 6,294,962 Raw Materials in transit.................. 295,081 3,552,407 Provision for obsolescence................ (339,184) (149,788) ---------- ---------- Total............................ 22,701,082 18,199,806 ========== ========== NOTE 8 - INVESTMENTS IN RELATED COMPANIES, GOODWILL AND INVESTMENTS IN OTHER COMPANIES At September 30, --------------------------- 2001 2002 ---- ---- ThCh$ ThCh$ Investments in equity of related companies... 17,908,341 19,698,092 Goodwill (net)............................... 124,041,369 120,595,138 ----------- ----------- Total............................... 141,949,710 140,293,230 =========== =========== Investments in other companies............... 728,874 768,297 =========== =========== 9 a) Investments in equity of related companies: The detail is as follows:
Investment value Participation Ownership percentage at September 30, in net income at September 30, 2002 2001 2002 2001 2002 --------------------- ---- ---- ---- ---- % ThCh$ ThCh$ ThCh$ ThCh$ Envases CMF (Crowpla Reicolite) 50.00 11,348,229 13,392,621 - (10,625) Envases Central S.A. 48.00 1,315,063 1,015,122 (332,009) (239,539) Agromax S.A. 48.62 585,414 - (14,952) - KAIK Participacoes Ltda. 11.32 1,383,418 2,099,478 (542,027) 11,860,391 Centralli Refrigerante S.A. 25.00 - - (64,245) - Cican S.A. 15.20 3,276,217 3,190,871 (8,082) 80,706 ----- ---------- ---------- -------- ---------- Total 17,908,341 19,698,092 (961,315) 11,690,933 ========== ========== ======== ==========
On June 29, 2001, Embotelladora Andina S.A. (Andina") and Cristalerias de Chile S.A. ("Cristalerias") entered into a series of contracts in order to establish an association or joint venture to conduct the PET plastic container businesses previously operated by their respective subsidiaries, Envases Multipack S.A. ("Multipack") and Crowpla Reicolite S.A. ("Crowpla"). This joint venture was formed by the issue of shares in Crowpla Reicolite S.A. to the subsidiary Andina Inversiones Societarias S.A., resulting in that company owning 50% of the shares in Crowpla. Cristalerias retained ownership of the remaining 50%. At the same time, Crowpla purchased from Multipack the assets necessary to operate the joint venture. On October 16, 2001 the Extraordinary Meeting of Shareholders of Crowpla agreed to change the name of the society for "ENVASES CMF S.A." An unrealized profit of ThCh$ 1,356,761 (historical) arose as a result of the sale of assets previously referred to; this profit will be recognized in results over the remaining useful life of the assets sold to Envases CMF S.A. There are no liabilities used as hedging instruments of the investments abroad. Foreign subsidiaries have no accumulated earnings that could be paid or otherwise transferred to the Company, with the sole exception of the Uruguayan subsidiary The Sterling Pacific Corp., in the amount of US$ 40 million. On March 19, 2002 the Canadian brewery Molson signed a joint agreement with Heineken for 100% control of Cervejarias Kaiser S.A. (Brazil). Embotelladora Andina S.A., through its subsidiary Rio de Janeiro Refrescos (RJR), holds an indirect interest in Kaik Participacoes Ltda. (KAIK). RJR, in turn, controls 11.32% of Kaiser. Consequently, RJR received as dividend US$ 15 million, as a result of a payment in cash for the sale of Kaiser's shares. The remaining part of the sale was received in shares issued by Molson to guarantee eventual contingencies. 10 b) Transactions with related companies:
Amount of transactions for Type of the nine months ended September 30, Company Relation transaction 2001 2002 ------- -------- ----------- ---- ---- ThCh$ ThCh$ Envases Central S.A. Investee Sales Raw materials 622,302 907,191 Services 1,450 65,513 Purchases Finished products 4,671,581 9,088,657 Plant and equipment 13,448 5,096 Services and others 2,960 1,363 Commercial accounts Loan given 488,916 - Interest - 1,142 Envases Italprint S.A. Shareholder in common Purchases Raw materials 723,998 511,697 Fixed assets 37,827 - Others - 32,621 Parque Arauco S.A Majority shareholder Rental of advertising space 17,572 - Coca-Cola de Chile S.A. Related company through Sales shareholders Advertising - 957,455 Others 141,735 104,907 Purchases Concentrate 26,941,011 24,978,524 Advertising 921,288 1,392,791 Others 2,163,611 631,754 Coca-Coca de Argentina Related company through Purchases S.A. shareholders Concentrate 16,205,987 7,335,803 Advertising 2,041,294 67,059 Cican S.A. (Argentina) Equity investee Purchases Finished products 5,239,282 - Cervejarias Kaiser S.A. Equity investee Purchases (Brazil) Finished products 33,601,155 4,563,685 Coca-Cola Industrial Related company through Purchases Shareholders Concentrate 35,182,876 - Claudio Cabrera Subsidiary manager Financial advice 8,073 Berceruelo Envases del Pacifico Ltda. Director in common Purchases Labels 260,993 17,893 Raw materials 24,672 50,733 Others 1,683 8,992 Recofarma Industrias do Director in common Purchases Amazonas Ltda. Concentrate - 19,917,972 Advertising - 7,987,217 Envases CMF S.A. Equity investee Purchases Raw materials 747,344 3,862,437 Containers - 1,386,437 Centralli Refrigerantes Investee Purchases S.A. Finished products - 3,454,790
11 c) Amounts receivable and amounts payable with related companies: Short-term accounts: --------------------
Amounts receivable Amounts payable at September 30, at September 30, ---------------------- ---------------------- Company 2001 2002 2001 2002 ------- ---- ---- ---- ---- ThCh$ ThCh$ ThCh$ ThCh$ Envases Central S.A....................... 367,918 - - 210,837 Coca-Cola de Chile S.A. .................. - - 2,804,569 2,285,555 Recofarma Industrias do Amazonas Ltda.......................... - 234,089 3,871,140 - ECPG Net Inc (USA)........................ 29,038 - - - Envases del Pacifico S.A.................. - - 23,384 11,167 Envases Italprint S.A..................... - - 148,684 126,275 Centralli Refrigerante S.A................ - - 161,186 67,121 Envases CMF S.A........................... - - 1,856,744 2,003,245 Cervejarias Kaiser S.A. (Brazil).......... 49,344 - - 71,509 Coca-Cola (Argentina)..................... - - 667,853 495,004 Coca-Cola Industrial Ltda................. 79,971 - - - Cican S.A. (Argentina).................... - - 1,525,236 172,757 ------- ------- ---------- --------- Total short term................. 526,271 234,089 11,058,796 5,443,470 ======= ======= ========== =========
Long-term accounts: -------------------
Amounts receivable Amounts payable at September 30, at September 30, ------------------------ ------------------------ Company 2001 2002 2001 2002 ------- ---- ---- ---- ---- ThCh$ ThCh$ ThCh$ ThCh$ Centralli Refrigerante S.A................ 237,985 51,519 - - Cervejarias Kaiser S.A. (Brazil).......... - 36,785 - - Coca-Cola Industrial Ltda................. 57,654 - - - ------- ------ ------- ------- Total long term.................. 295,639 88,304 - - ======= ====== ======= =======
12 NOTE 9 - OTHER ASSETS --------------------- Other assets at each period-end are as follows: At September 30, ---------------- 2001 2002 ---- ---- ThCh$ ThCh$ Bonds ................................... 85,085,075 135,581,867 Prepaid expenses............................ 2,728,550 2,340,805 Time deposits............................... 57,609,791 68,281,457 Recoverable taxes........................... - 54,435 Long term deferred taxes.................... - - Deferred bond issuance costs................ 5,646,992 4,096,989 Fixed assets not used in operations......... 3,529,183 782,796 Other (1)................................... 3,406,028 1,727,109 ----------- ----------- Total ............................. 158,005,619 212,865,458 =========== =========== (1) Includes ThCh$ 877,264 (ThCh$ 818,816 in 2001) relating to amounts to be received from the former stockholders of the subsidiary Rio de Janeiro Refrescos Ltda. who agreed to compensate the Company for the cost of any liabilities relating to transactions prior to the purchase of the subsidiary. These guarantees cover not only the existing contingent liabilities but also any future contingency that could arise in Rio de Janeiro Refrescos Ltda. from operations prior to the purchase of that subsidiary. The balance in Other assets is equal to the amount of the related liability to third parties included under Other long-term liabilities. NOTE 10 - BANK LIABILITIES a) Short-term bank liabilities: The weighted average interest rate on short-term borrowings, denominated in US$ and outstanding at September 30, 2002 was 2.36%. b) Long-term bank liabilities consist of loans in Brazilian Reales and U.S. dollars, the terms of which are as follows: Terms ----- Lenders Various banks Payments of interest Semiannually in arrears 13 The Long-term bank liabilities outstanding at each period-end, are as follows: At September 30, ---------------- 2001 2002 ---- ---- ThCh$ ThCh$ Long-term bank loans in U.S. dollars......... 472,484 510,835 Long-term bank loans in Brazilian reales..... 64,442,903 62,132,254 ---------- ---------- Total bank loans.................... 64,915,387 62,643,089 Less: current portion....................... (5,730,041) (1,301,818) ---------- ---------- Total long-term portion............. 59,185,346 61,341,271 ========== ========== Scheduled maturity of the long-term portion of bank liabilities at September 30, 2002 are as follows: Maturing during the period ending September 30, ThCh$ ----- 2004 .......................................... 63,437 2005 .......................................... 49,331 2006 and beyond.................................... 61,228,503 ---------- Total..................................... 61,341,271 ========== NOTE 11 - BONDS PAYABLE ----------------------- a) At September 30, 2002, the balance of bonds payable, amounting to ThCh$ 145,554,880 (ThCh$ 169,823,173 in 2001), is recorded at par value and is classified as follows: At September 30, ---------------- 2001 2002 ---- ---- ThCh$ ThCh$ Current portion of bonds payable: Bonds payable in UF.......................... 2,673,272 2,403,737 Bonds payable in foreign currency (US$)...... 1,840,173 954,750 ----------- ----------- Total current portion of bonds payable.. 4,513,445 3,358,487 =========== =========== Long-term bonds payable: Bonds payable in UF ......................... 115,143,342 115,185,210 Bonds payable in foreign currency (US$)...... 50,166,386 27,011,183 ----------- ----------- Total long-term bonds payable........... 165,309,728 142,196,393 =========== =========== 14 b) The terms and conditions of the bonds issued in US dollars outstanding at September 30, 2002 are as follows:
Series A Series B Series C -------- -------- -------- Issue date October 3, 1997 October 3, 1997 October 3, 1997 Nominal outstanding principal US$ 32,076,000 US$ 4,000,000 US$ 0 Basis of readjustment US$ exchange rate US$ exchange rate US$ exchange rate Amortization term 10 years 30 years 100 years Principal payments Due October 1, 2007 Due October 1, 2027 Due October 1, 2097 Annual interest rate 7.0% 7.625% 7.875% Interest payments Semiannually Semiannually Semiannually
During the period, the subsidiary The Sterling Pacific Corp. repurchased bonds in the international markets amounting to US$ 14.6 million (US$ 198.9 million in 2001). The total of repurchased bonds to date is US$ 314 million. c) The terms and conditions of bonds issued in UF in the local market outstanding at September 30, 2002 are as follows: Series A Series B -------- -------- Issue date July 2001 July 2001 Amount of issuance UF 3,300,000 UF 3,700,000 Basis of readjustment UF exchange rate UF exchange rate Amortization term 5 years 17 years Principal payments Due June 1, 2008 Due June 1, 2026 Annual interest rate 6.2% 6.5% Interest payments Semiannually Semiannually NOTE 12 - OTHER ACCRUED LIABILITIES AND PROVISIONS -------------------------------------------------- Other accrued liabilities and provisions at each period-end are as follows: At September 30, ---------------- 2001 2002 ---- ---- ThCh$ ThCh$ Other accrued liabilities: Accrued obligations at period-end.......... 13,935,974 10,572,932 Provision for employee vacations........... 1,074,891 1,514,014 Employee severance indemnities ............ 397,016 328,171 Publicity.................................. 1,063,532 2,345,952 Unearned revenue........................... 128,624 125,855 ---------- ---------- Total................................. 16,600,037 14,886,924 ========== ========== Long-term provisions: Accrued obligations at period-end.......... 3,884,555 7,462,805 Employee severance indemnities............. 2,124,231 2,223,228 ---------- ---------- Total ................................ 6,008,786 9,686,033 ========== ========== 15 NOTE 13 - INCOME TAXES ---------------------- a) Taxes The parent company and its subsidiaries have set up a provision to cover income taxes based on existing laws. The effect on income is as follows: At September 30, ---------------- 2001 2002 ---- ---- ThCh$ ThCh$ Current year income tax charge.................. (6,207,677) (8,613,008) Deferred tax movement........................... 193,962 (37,542) Amortization of deferred tax complementary accounts..................... (162,883) (216,787) Other........................................... 266,217 (259,416) ---------- ---------- Total...................................... (5,910,381) (9,126,753) ========== ========== b) Taxable retained earnings The Taxable Profits Fund totaled ThCh$ 34,036,663 as of September 30, 2002 which cannot be used as a credit in the event of distribution to shareholders. c) Deferred taxes Beginning January 1, 2000, the Company began recognizing in net income on a prospective basis the effect of deferred taxes in accordance with Technical Bulletin No. 60 of the Chilean Institute of Accountants. 16 The accumulative balance of these deferred taxes are shown below: 2001 ----
Temporary differences Deferred asset Deferred liability (Deferred taxes) Short-term Long-term Short-term Long-term ---------------- ---------- --------- ---------- --------- ThCh$ ThCh$ ThCh$ ThCh$ Allowance for doubtful accounts............. 952,457 - - - Unearned revenue............................ 82,703 - - - Accrued vacation expenses................... 119,467 - - - Accumulated depreciation.................... - 940,788 - 7,338,294 Intangible depreciation..................... - - - - Staff severance indemnities................. - 5,169 5,383 585,525 Provision for fixed assets held for sale.... - 2,943,463 - - Judicial deposits........................... - 497,975 - - Social contribution......................... - - - - Tax loss carryforward....................... 3,448,540 - - - Deposits in guarantee....................... - - - 3,510,497 Other ................................... 497,800 979,649 189,057 89,952 --------- --------- ------- ---------- Total 5,100,967 5,367,044 194,440 11,524,268 Complementary accounts, Net of amortization...................... (207,957) (588,058) (2,340) (6,186,293) --------- --------- ------- ---------- Total.............................. 4,893,010 4,778,986 192,100 5,337,975 ========= ========= ======= ==========
17 2002 ----
Temporary differences Deferred asset Deferred liability (Deferred taxes) Short-term Long-term Short-term Long-term ---------------- ---------- --------- ---------- --------- ThCh$ ThCh$ ThCh$ ThCh$ Allowance for doubtful accounts............. 245,787 284,319 - - Unearned revenue............................ 81,318 - - Accrued vacation expenses................... 126,195 - 13,684 - Intangible depreciation..................... - - - Accumulated depreciation.................... - - 4,156,426 Staff severance indemnities................. - - 476,247 Fabrication expenses........................ - - - Provision for fixed assets held for sale.... 503,633 - - Judicial deposits........................... 104,383 - - Tax loss carryforwards...................... 13,741 - - Leasing debtors............................. 53,231 - - 11,125 Fixed asset valuation....................... - - - Deposits in guarantee....................... - - 440,671 Social contribution......................... 3,328,383 - - Debt issue expenses......................... - - 252,299 Provision for lawsuits...................... 295,207 - - Provision income taxes...................... 8,235,165 - - Losses for devaluation...................... 15,551,256 - - Other ................................... 183,323 2,091,573 116,598 3,102,998 -------- ----------- ------- ---------- Total 608,536 30,488,978 130,282 8,439,766 Complementary accounts, net of amortization........................ (100,531) (3,437,134) - (5,546,504) Valuation allowance......................... - (25,664,120) - - -------- ----------- ------- ---------- Total.............................. 508,005 1,387,724 130,282 2,893,262 ======== =========== ======= ==========
NOTE 14 - CONTINGENCIES AND COMMITMENTS --------------------------------------- a) Guarantees: Embotelladora Andina S.A. The Company is in litigation for tax related matters for a total amount of ThCh$ 57,905 plus interest and monetary correction. The court ruled partially against the Company and awarded the plaintiff ThCh$ 23,609 plus interest and monetary correction. The Company has appealed the ruling and the result is pending. Complejo Industrial Pet S.A. The Company faces litigation related to labor laws and other civil actions with a maximum possible liability of ThUS$ 197. 18 Embotelladora del Atlantico S.A. The Company faces litigation related to labor laws and other civil actions with a maximum possible liability of ThUS$ 1,713. Rio de Janeiro Refrescos Ltda. (RJR) The Company faces litigation related to labor laws, federal taxes and other civil actions related to contingencies of the prior owners of RJR for a total estimated amount of ThUS$ 3,792. At September 30, 2002, the Company has established a provision for the possible losses that could arise from the litigation described above. b) Contingencies: Argentina Economic Situation At September 30, 2002 the assets in Argentina represents the 17.10% of the consolidated assets (22.72% at September 30, 2001). Likewise, the investments held in Argentina represents the 20.57% of the shareholder's equity at September 30, 2002. As it is widely known, it is difficult to forecast the future developments of the Argentinean economy and its consequences on the economic and financial position of Embotelladora Andina's subsidiaries in this country. Therefore, the present financial statements do not include all the adjustments that could result from such adverse conditions, consequently they must be read considering these circumstances. From the Company's management point of view, the consequences of these uncertainties would not have a significant effect on the financial position of the Company. c) Covenants The bond issue and placement in the US market for US$ 350 million does not impose administrative restrictions, covenants or financial ratios to the Company. The bond issued and placement in Chile of UF 7,000,000 is subject to the following covenants: o Leverage, defined as the Total Debt / Equity + Minority Interest, must not exceed 1.2 times. o The Company must maintain consolidated assets free of mortgages or any kind of encumbrance for an amount at least equal to 1.3 times the consolidated not-guaranteed outstanding liabilities. o The Company must maintain and by no means lose, sell or transfer to a third party its rights on the geographical zone called "Region Metropolitana" (the Company's franchised territory of The Coca-Cola Company in Chile). The Company must also maintain and renew the license for the manufacture, production, sale and distribution of the products and trademarks. o The Company must never lose, sell or transfer to a third party other territory of Argentina or Brazil that is franchised to Andina by The Coca Cola Company for the manufacture, production, sale and distribution of the products and trade marks conferred by the license if it represents more than 40% of the Company's adjusted consolidated operational cash flow, as defined. 19 NOTE 15 - SHAREHOLDERS' EQUITY ------------------------------ a) The variations in the capital and reserves of the Company during the periods ended September 30, 2002 and 2001 were as follows:
Net income Paid-in Capital Other Retained for the Interim capital revaluation reserves (1) earnings period dividends Total ---------- ----------- ----------- ----------- ----------- ----------- ---------- ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ At January 1, 2001 173,762,425 - 38,132,910 178,915,081 31,500,734 (11,640,959) 410,670,191 Prior year income allocation - - - (15,472,743) (31,500,734) 11,640,959 (35,332,518) Definitive dividends - - - - - - - Price-level restatement of equity accounts - 3,822,773 838,924 2,941,772 - (26,822) 7,576,647 Accumulated translation adjustment of foreign investments - - 44,352,597 - - - 44,352,597 Supplementary dividend - - - (42,309,278) - - (42,309,278) Interim dividends - - - - - (7,663,568) (7,663,568) Net income for the period - - - - 22,236,270 - 22,236,270 ----------- --------- ---------- ----------- ----------- ----------- ----------- At September 30, 2001 173,762,425 3,822,773 83,324,431 124,074,832 22,236,270 (7,690,390) 399,530,341 =========== ========= ========== =========== =========== =========== =========== Balance at September 30, 2001 restated in constant Chilean pesos of September 30, 2002 (2.2%) 177,585,198 3,906,874 85,157,568 126,804,478 22,725,468 (7,859,579) 408,320,007 =========== ========= ========== =========== =========== =========== =========== At January 1, 2002 179,149,060 - 46,252,421 125,211,171 33,066,958 (11,587,314) 372,092,296 Prior year income allocation - - - 21,479,644 (33,066,958) 11,587,314 - Definitive dividends - - - (46,141,062) - - (46,141,062) Price-level restatement of equity accounts - 2,328,938 601,281 1,353,288 - (26,823) 4,256,684 Accumulated translation adjustment of foreign investments (2) - - 23,350,654 - - - 23,350,654 Interim dividends - - - - - (7,663,567) (7,663,567) Net income for the period - - - - 24,902,497 - 24,902,497 ----------- --------- ---------- ----------- ----------- ----------- ----------- At September 30, 2002 179,149,060 2,328,938 70,204,356 101,903,041 24,902,497 (7,690,390) 370,797,502 =========== ========= ========== =========== =========== =========== ===========
(1) Other reserve includes the accumulated translation adjustment of ThCh$ 69,298,093 (ThCh$ 84,251,236 in 2001) and other reserves of ThCh$ 906,263 (ThCh$ 906,332 in 2001). (2) Represents the accumulated exchange rate difference arising upon consolidation of the Company's investments in Argentina and Brazil in accordance with Technical Bulletin No. 64 of the Chilean Institute of Accountants and Official Circular No. 5294 of the SVS, as shown in the following detail:
Exchange rate Balance at difference during the year Balance at Company January 1, 2002 Investment Liability September 30, 2002 ------- --------------- ---------- --------- ------------------ ThCh$ ThCh$ ThCh$ ThCh$ Rio de Janeiro Refrescos Ltda. 28,038,851 13,182,624 - 41,221,475 Embotelladora del Atlantico S.A. 12,240,833 7,256,006 - 19,496,839 Complejo Industrial Pet S.A. 5,667,755 2,912,024 - 8,579,779 ---------- --------- -------- ---------- Total 45,947,439 23,350,654 - 69,298,093 ========== ========== ======== ==========
20 b) Dividends paid and agreed During the period from January to September 2002, the Company distributed Interim Dividend No. 129 for Ch$ 4.80 per Series A share and Ch$ 5.28 per Series B share; Definitive Dividend No. 130 for Ch$ 4.80 per Series A share and Ch$ 5.28 per Series B share; the first payment of the Definitive Dividend No. 131 for Ch$ 40.0 per Series A share and Ch$ 44.0 per Series B share; and Interim Dividend No. 132 for Ch$ 4.80 per Series A share and Ch$ 5.28 per Series B share. Further payments of dividends was agreed as follows: Month of Type of Ch$ per share Ch$ per share No of dividend payment dividend series A series B -------------- ------- -------- -------- -------- 131 Dec-02 Definitive (2nd payment) 13.00 14.30 During the period from January to September 2001, the Company distributed Interim Dividend No. 124 for Ch$ 4.80 per Series A share and Ch$ 5.28 per Series B share; Definitive Dividend No. 125 for Ch$ 4.80 per Series A share and Ch$ 5.28 per Series B share; Definitive Dividend No. 126 for Ch$ 53.00 per Series A share and Ch$ 58.30 per Series B share; and Interim Dividend No. 127 for Ch$ 4.80 per Series A share and Ch$ 5.28 per Series B share. NOTE 16 - OTHER NON-OPERATING INCOME AND EXPENSES ------------------------------------------------- Other non-operating income and expenses include the following items: a) Other non-operating income: 2001 2002 ---- ---- ThCh$ ThCh$ Gain on sale of fixed assets..................... 1,002,557 585,596 Income from Aguas Brasil lawsuit................. - 1,024,000 Currency exchange rate difference arising from translation of financial statements........ 11,751,309 - Other miscellaneous income....................... 664,162 781,144 ---------- --------- Total................................... 13,418,028 2,390,740 ========== ========= b) Other non-operating expenses: 2001 2002 ---- ---- ThCh$ ThCh$ Write-off of non-operating assets................ - (304,924) Loss on sale of fixed assets..................... - (301,219) Obsolescence and write-offs of operating fixed assets................................... (3,750,282) (5,408,172) Indemnities...................................... (1,297,398) (3,155,486) Litigation....................................... (580,557) (2,708,716) Currency exchange rate difference arising from translation of financial statements....... - (8,837,521) Other miscellaneous expenses..................... (866,906) (2,333,153) ---------- ----------- Total................................... (6,495,143) (23,049,191) ========== =========== 21 NOTE 17 - SUBSEQUENT EVENTS --------------------------- Reorganization of subsidiary Embotelladora del Atlantico S.A. ------------------------------------------------------------- The Argentinean subsidiary Embotelladora del Atlantico S.A. ("EDASA") has started a reorganization process of its operations which will concentrate the production in the Cordoba province plant, in order to reach a better operative efficiency. This process will affect the production, marketing and distribution operations throughout the rest of the franchised territories in Argentina. As a result, the production plants at Mendoza and Rosario will be modified to become distribution centers. Interim Dividend No. 133 ------------------------ During the Board of Directors' meeting held on September 24, 2002, it was agreed the distribution of Interim Dividend No. 133 for Ch $ 4.80 per Series A share and Ch$ 5.28 per Series B share. This dividend was charged to the result for the year ended December 31, 2002 and was available to shareholders on October 31, 2002. The closing date of the shareholders' registry for the payment of this dividend was October 25, 2002. There have been no other subsequent events, either financial or otherwise, during the nine-month period ended September 30, 2002 up to the date on which these financial statements were prepared, which could significantly affect their interpretation. 22