6-K 1 a10-20007_16k.htm 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

PURSUANT TO RULE 13a-16 OR 15b-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

 

October 2010

Date of Report (Date of Earliest Event Reported)

 

Embotelladora Andina S.A.

(Exact name of registrant as specified in its charter)

 

Andina Bottling Company, Inc.

(Translation of Registrant´s name into English)

 

Avda. El Golf 40, Piso 4

Las Condes

Santiago, Chile

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F x

 

Form 40-F o

 

Indicate by check mark if the Registrant is submitting this Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes o

 

No x

 

Indicate by check mark if the Registrant is submitting this Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes o

 

No x

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form 6-K is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934

Yes o

 

No x

 

 

 


 

For Immediate Distribution

 

Contact in Santiago, Chile

 

Contacts in New York

Embotelladora Andina

 

i-advize Corporate Communications, Inc.

Giuliana Gorrini, Head of Investor Relations

 

Peter Majeski / Rafael Borja

(56-2) 338-0520 / ggorrini@koandina.com

 

(212) 406-3690 / andina@i-advize.com

 

Embotelladora Andina announces Consolidated Results

for the Third Quarter and Nine Months ended September 30, 2010

 

All figures included in this analysis, are expressed under IFRS and in nominal Chilean pesos and therefore all variations regarding 2009 are in nominal terms. The main differences between Chilean GAAP and IFRS are posted on Note 3 to our Company’s FECU. For a better understanding of the analysis by country, we include a chart based on nominal local currency for the quarter and Nine Months ended September 30, 2010.

 

·                  Consolidated Sales Volume for the quarter amounted to 111.4 million unit cases, an increase of 7.6%.

 

·                  Operating Income for the quarter reached Ch$29,490 million, a 16.9% increase. Operating Margin was 14.5%.

 

·                  Third Quarter EBITDA totaled Ch$38,712 million, a 12.3% increase. EBITDA Margin was 19.0%.

 

·                  Net Income for the Quarter reached Ch$18,342 million, stable compared to the same period in 2009.

 

·                  Consolidated Sales Volume for the Nine Months ended September 30, 2010 amounted to 344.0 million unit cases, an increase of 6.5%.

 

·                  Operating Income for the Nine Months ended September 30, 2010 reached Ch$98,448 million, a 20.3% increase. Operating Margin was 15.7%.

 

·                  Nine Months ended September 30, 2010 EBITDA totaled Ch$126,275 million, a 15.6% increase. EBITDA Margin was 20.2%.

 

·                  Net Income for the Nine Months ended September 30, 2010 of 2010 reached Ch$67,061 million, a 4.8% growth.

 

(Santiago-Chile, October 26, 2010) — Embotelladora Andina announced today its consolidated financial results for the Third Quarter and Nine Months ended September 30, 2010.

 

Comments from the Chief Executive Officer, Mr. Jaime García R.

 

“The wide array of products we offer in the three franchises and the market strategies applied have resulted in solid volume growths, above 7%; we have also recovered the inflation of costs, maintaining our margins. All of this has translated into an almost 17% increase in Operating Income. We are very pleased with Andina’s good performance during the third quarter and we firmly believe that we will continue generating sustainable value to our shareholders looking for new growth opportunities.”

 

2


 

CONSOLIDATED SUMMARY

 

Third Quarter 2010 vs. Third Quarter 2009

 

On average during the quarter and with respect to the U.S. dollar, the Chilean peso and the Brazilian real appreciated 6.3% and 6.2% respectively; the Argentine peso devalued 2.9%. With respect to the Chilean peso, the Argentine peso devalued by 8.9% resulting in a negative accounting effect over results upon translation of figures from Argentina; the Brazilian real remained constant so there is no accounting effect over results upon translation of figures from Brazil for the quarter.

 

Consolidated Sales Volume for the Quarter reached 111.4 million unit cases, a 7.6% increase with respect to the same period of 2009, mainly driven by our Chilean and Brazilian operations. Soft Drinks grew 5.2% while Juices, Waters, and Beers (“other categories”) altogether recorded a significant growth of 33.7%.

 

Net Sales amounted to Ch$203,870 million, a 13.8% increase, due to increased volumes and price adjustments above local inflations; partially offset by the negative effect upon translation of figures from Argentina.

 

Cost of Sales per unit case increased 5.3% mainly due to (i) increased PET resin prices; (ii) moderate cost increases of sugar; (iii) devaluation of the Argentine peso; and (iv) increased labor costs in Argentina. All of these factors were partially offset by the effect upon translation of figures from Argentina along with the appreciation of the Chilean peso and Brazilian real.

 

Marketing, Distribution and Administration (MD&A) expenses were higher by 13.6%, due to greater volumes along with increased: (i) freight fees in the three franchises; (ii) labor costs in Argentina and Brazil; and (iii) advertising investments in Chile and Argentina resulting from product launches during the quarter. These factors were partially offset by the effect upon translation of figures from Argentina and lower advertising investments in Brazil.

 

Increased consolidated volumes and local prices in addition to the impacts over costs and expenses, resulted in a Consolidated Operating Income of Ch$29,490 million, a 16.9% increase. Operating Margin was 14.5%, an increase of 40 basis points.

 

Finally, Consolidated EBITDA amounted to Ch$38,712 million, a 12.3% increase. EBITDA Margin was 19.0%, a decrease of 20 basis points.

 

Nine Months ended September 30, 2010 vs. Nine Months ended September 30, 2009

 

On average during the First Nine-Month period and with respect to the U.S. dollar, the Chilean peso and the Brazilian real appreciated 9.3% and 14.5% respectively; the Argentine peso devalued 5.2%. With respect to the Chilean peso, the Argentine peso devalued by 13.8% resulting in a negative accounting effect over results upon translation of figures from Argentina; the Brazilian real appreciated 6.2%, resulting in a positive accounting impact over results upon translation of figures from Brazil for this period.

 

Consolidated Sales Volume amounted to 344.0 million unit cases, an increase of 6.5%.  Soft Drinks grew 4.5%, while the other categories of, Juices, Waters and Beers together increased by 28.4%. In particular, the Waters segment recorded a significant 47.1% increase. Net Sales amounted to Ch$625,385 million, a 14.5% increase explained by higher consolidated volumes and price increases in the three countries, along with the positive effect upon translation of figures from Brazil and the negative effect upon translation of figures from Argentina. Cost of Sales per unit case and MD&A Expenses increased 7.5% and 11.2% respectively mainly due to the same reasons given for the quarter, except for the effect upon translation of figures from Brazil that is observed during the nine-month period ended September 30.  Consolidated Operating Income amounted to Ch$98,448 million, a 20.3% increase. Operating Margin was 15.7%, an increase of 70 basis points.  Consolidated EBITDA amounted to Ch$126,275 million, an increase of 15.6%. EBITDA Margin was 20.2%, an increase of 20 basis points.

 

3


 

 

SUMMARY BY COUNTRY

 

CHILE — EMBOTELLADORA ANDINA

 

Third Quarter 2010 vs. Third Quarter 2009

 

During the quarter, Sales Volume amounted to 37.2 million unit cases, a 7.4% growth driven by Soft Drinks (+3.9%) and the categories of Juices and Waters (+25.4%). During the quarter, we launched the 250 cc returnable glass bottle for Andina brand nectars as well as for Aquarius and Nestea products.  We also introduced a new formula for Hugo and the 250 cc non-returnable glass bottle for Burn. Our volume market share for Soft Drinks was 69.2% during the quarter.

 

Net Sales amounted to Ch$68,701 million, reflecting a growth of 10.7%, explained by increased volumes and by a 3.2% increase of average income during this quarter.

 

Cost of Sales per unit case increased by 3.4% mainly due to increases in the prices of PET resin, sugar, and concentrate; partially offset by the revaluation of the Chilean peso which has a positive impact over U.S. dollar denominated costs.

 

MD&A expenses increased 6.1% mainly explained by higher volumes and advertising investments that supported the launch of the new products and higher freight fees.

 

Increased prices and volumes, and the previously explained effects upon Costs and Expenses, resulted in an Operating Income of Ch$10,870 million, an increase of 17.7%. Operating Margin was 15.8%.

 

EBITDA amounted to Ch$14,793 million, an increase of 11.5%. EBITDA Margin was 21.5%.

 

Nine Months ended September 30, 2010  vs. Nine Months ended September 30, 2009

 

During the Nine Months ended September 30, 2010, Sales Volume amounted to 113.4 million unit cases a 5.7% growth. Soft drink volumes increased 3.6% and the segment of Juices and Waters together increased 16.8%. Net Sales amounted to Ch$206,973 million, an increase of 8.4%. Cost of Sales per unit case and MD&A expenses increased 3.7% and 8.1% respectively, mainly due to the same reasons given for the quarter, except for the increase in PET resin prices (that is mainly reflected only during the quarter). Operating Income amounted to Ch$35,700 million, an increase of 4.7%. Operating Margin was 17.2%, a decrease of 70 basis points. EBITDA amounted to Ch$47,669 million, an increase of 2.4%.  EBITDA Margin was 23.0%.

 

4


 

BRAZIL — RIO DE JANEIRO REFRESCOS

 

Third Quarter 2010 vs. Third Quarter 2009

 

The Brazilian real appreciated 6.2% on average during the quarter with respect to the U.S. dollar, which has a direct positive impact over our U.S. dollar denominated costs. With respect to the Chilean peso, it remained constant, and therefore there is no accounting effect upon translation of figures for consolidation. For a better understanding of the operation in Brazil, we include a chart based on nominal local currency.

 

Sales Volume for the quarter amounted to 46.3 million unit cases, representing a 10.6% increase. Soft Drinks increased 9.2% and the Other Categories (Juices, Waters, and Beers) increased 31.3%. Our volume market share for Soft Drinks was 57.9% and we did not have any launchings during the quarter.

 

Net Sales reached Ch$92,248 million, representing an increase of 15.0%, explained by higher volumes and price adjustments.

 

Cost of Sales per unit case increased 3.9% mainly explained by: (i) higher PET resin prices; and (ii) a moderate increase in sugar prices; both effects partially offset by the revaluation of the Brazilian real.

 

MD&A expenses increased 13.9% due to (i) greater sales volume; (ii) higher freight fees; and (iii) greater distribution labor costs.

 

The increase in volumes and prices along with the impact upon costs and expenses resulted in an Operating Income of Ch$14,671 million (+17.2%). Operating Margin was 15.9% (+30 basis points).

 

EBITDA amounted to Ch$18,223 million, an increase of 15.7%. EBITDA Margin was 19.8% (+20 basis points).

 

Nine Months ended September 30, 2010 vs. Nine Months ended September 30, 2009

 

The Brazilian real appreciated 14.5% on average during the Nine Months ended September 30, 2010 with respect to the U.S. dollar, which has a direct positive impact over our U.S. dollar denominated costs. With respect to the Chilean peso, it appreciated 6.2% with a positive accounting effect upon translation of figures for consolidation. For a better understanding of the operation in Brazil, we include a chart based on nominal local currency.

 

Sales Volume amounted to 143.1 million unit cases, a 10.3% increase. Soft Drinks grew 9.0% and the other categories of Juices, Waters and Beer together increased 30.1%. Net Sales reached Ch$289,554 million, a 26.2% increase (increase in volumes, prices and the effect upon translation of figures). Cost of Sales per unit case and MD&A expenses increased by 14.4% and 15.7% respectively, mainly due to the same reasons given for the quarter, along with the effects upon translation of figures in the case of the nine-month period ended September 30. Operating Income amounted to Ch$51,441 million representing an increase of 45.8% compared to that of 2009. Operating Margin was 17.8%, an increase of 240 basis points. EBITDA amounted to Ch$61,776 million, an increase of 40.2%.  EBITDA Margin was 21.3%, an increase of 210 basis points.

 

5


 

ARGENTINA — EMBOTELLADORA DEL ATLÁNTICO

 

Third Quarter 2010 vs. Third Quarter 2009

 

During the quarter, the Argentine peso devalued 2.9% on average with respect to the U.S. dollar, which has a direct negative impact over our U.S. dollar denominated costs. With respect to the Chilean peso, it devalued 8.9%, resulting in a negative accounting impact over income and a positive impact over costs and expenses upon translation of figures for consolidation, in the end, having a negative impact over results. For a better understanding of the operation in Argentina, we include a chart based on nominal local currency.

 

Sales Volume for the quarter reached 27.9 million unit cases, representing a 3.3% increase. Soft Drinks volumes increased 0.5% and Juices and Waters increased 109%. Our volume market share for Soft Drinks continues increasing and amounted to 55.6%. During this quarter, we launched Fanta Pomelo (in non returnable formats of 500 cc, 1.5 lt. and 2.0 lt.).

 

Net Sales reached Ch$42,921 million; an increase of 15.4%, explained by increased volumes and significant price adjustments of our costs, partially offset by the effect upon translation of figures.

 

Cost of Sales per unit case increased 9.1%, mainly explained by (i) increased concentrate costs (due to higher prices); (ii) significant labor costs increases; (iii) increased prices of sweeteners and PET resin; and (iv) the effect of the devaluation of the Argentine peso during the period over U.S. dollar denominated raw materials. All of these factors were partially offset by the effect upon translation of figures.

 

MD&A expenses were 23.5% greater due to increased (i) salaries, (ii) freight costs (due to higher oil prices and labor costs), and (iii) advertising investments carried out during the period resulting from a stronger advertising effort focused on the Juices and Isotonic segment and the new launchings during the quarter.  All of which was partially offset by the effect upon translation of figures.

 

The increase in local prices, the translation of figures along with the effects upon costs and expenses, resulted in a 6.9% increase of Operating Income, which amounted to Ch$4,621 million. Operating Margin was 10.8%.

 

EBITDA reached Ch$6,368 million, representing a 1.0% increase. EBITDA Margin was 14.8%.

 

Nine Months ended September 30, 2010 vs. Nine Months ended September 30, 2009

 

During the Nine Months ended September 30, 2010, the Argentine peso devalued 5.2% on average with respect to the U.S. dollar, which has a direct negative impact over our U.S. dollar denominated costs. With respect to the Chilean peso, it devalued 13.8%, resulting in a negative accounting impact over income and a positive impact over costs and expenses upon translation of figures for consolidation, in the end, having a negative impact over results. For a better understanding of the operation in Argentina, we include a chart based on nominal local currency.

 

Sales Volume for the Nine Months ended September 30, 2010 reached 87.5 million unit cases, an increase of 1.7%. The Soft Drinks category decreased 1.1% while Juices and Waters together increased 128%. Net Sales reached Ch$128,857 million, representing an increase of 1.1%, explained by the price adjustments and increased volumes, and offset by the effect upon translation of figures. Cost of Sales per unit case decreased 2.6% and MD&A expenses increased 7.4%, mainly explained for by the same reasons set forth during the quarter, along with a greater effect upon translation of figures for the Nine Months ended September 30, 2010. Operating Income amounted to Ch$14,266 million, representing a decrease of 4.6% compared to 2009. Operating Margin was 11.1%, 60 basis points lower. EBITDA reached Ch$19,790 million, a decrease of 6.3%.  EBITDA Margin was 15.4%.

 

6


 

OTHERS

 

The account with greater variation was Other Income and expenses: reflecting a greater loss of Ch$4,031 million given the negative effect of losses due to the earthquake in Chile on February 27, 2010 (lower than the deductibles of our insurance policies), readjustment of contingencies and donations.

 

Finally, as of September 30, 2010, Net Income amounted to Ch$67,061 million, an increase of 4.8% than what was reported for the same period in 2009. Net Margin was 10.7%.

 

ANALYSIS OF THE BALANCE SHEET

 

As of September 30, 2010, the Company’s Net Cash Position amounted to US$43.0 million. Accumulated excess cash is invested in short-term time deposits with top of the line banks and money markets.

 

The Company holds 59.7% of its financial assets in UF*, 26.9% in Chilean pesos, 11.7% in Brazilian reais, 0.8% in U.S. dollars, and 0.9% in Argentine pesos. Total financial assets amounted to US$223.6 million. Financial debt level as of September 30, 2010 amounted to US$180.6 million, 89.2% of which is UF-denominated, 10.5% in Argentine pesos, and 0.3% is in Brazilian reais.

 

*Unidad de Fomento. Chilean peso-denominated monetary unit daily indexed to the Chilean inflation rate of the previous month.

 

CONFERENCE CALL

 

We will be hosting a conference call with analysts and investors to discuss our 2010 Third Quarter and Nine Months ended September 30, 2010  results on Wednesday, October 27, 2010 at 9:00 am New York Time (10:00 am Santiago Time).

 

To access the call, please dial (800) 311-9401 from within the U.S., (334) 323-7224 from elsewhere outside the U.S. and Chile Toll Free: 1-230-020-3417 - Conference ID Number: 87604. A replay of this call will be available until Midnight ET on November 8, 2010. To obtain the replay, please call: 877-919-4059 from within the U.S., 334-323-7226 outside the U.S. ID Number: 91896527.

 

The audio file will be permanently available on the Company’s website: www.embotelladoraandina.com beginning Wednesday, October 27, 2010.

 

Embotelladora Andina is among the ten largest Coca-Cola bottlers in the world, servicing franchised territories with 37 million people, delivering over 7 million liters of Soft Drinks, juices, and bottled waters on a daily basis. It is a stock corporation controlled in equal parts by the Garcés Silva, Hurtado Berger, Said Handal and Said Somavía families. In Chile, Andina has the franchise to produce and commercialize Coca-Cola products through Embotelladora Andina; in Brazil through Rio de Janeiro Refrescos; and in Argentina through Embotelladora del Atlántico. The Company’s value creation proposal is to be the market leader for non-alcoholic beverages, developing an excellent relationship with the consumers of its products as well as with its employees, clients, suppliers and with Coca-Cola, its strategic partner. For more information, visit the Company’s website.

 

This release may contain forward-looking statements reflecting Embotelladora Andina’s good faith expectations and are based upon currently available data; however, actual results are subject to numerous uncertainties, many of which are beyond the control of the Company and any one or more of which could materially impact actual performance. Among the factors that can cause performance to differ materially are:  political and economic conditions on consumer spending, pricing pressure resulting from competitive discounting by other bottlers, climatic conditions in the Southern Cone, and other risk factors applicable from time to time and listed in Andina’s periodic reports filed with relevant regulatory institutions, also available on our website under “The Company-Risk Factors.”

 

7

 


 

Embotelladora Andina S.A.

Third Quarter Results for the period ended September 30, IFRS GAAP

(In nominal million  Chilean Pesos, except per share)

 

 

 

July - September 2010

 

July - September 2009

 

 

 

 

 

Chilean
Operations

 

Brazilian
Operations

 

Argentine
Operations

 

Total (1)

 

Chilean
Operations

 

Brazilian
Operations

 

Argentine
Operations

 

Total (1)

 

% Ch.

 

VOLUME TOTAL BEVERAGES (Million UC)

 

37.2

 

46.3

 

27.9

 

111.4

 

34.6

 

41.8

 

27.0

 

103.5

 

7.6

%

Soft Drinks

 

30.2

 

42.8

 

26.4

 

99.5

 

29.1

 

39.2

 

26.3

 

94.6

 

5.2

%

Mineral Water

 

1.7

 

0.9

 

1.0

 

3.6

 

1.4

 

0.5

 

0.4

 

2.4

 

50.7

%

Juices

 

5.2

 

1.8

 

0.5

 

7.4

 

4.1

 

1.3

 

0.3

 

5.7

 

31.4

%

Beer

 

NA

 

0.8

 

NA

 

0.8

 

NA

 

0.8

 

NA

 

0.8

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

68,701

 

92,248

 

42,921

 

203,870

 

62,034

 

80,224

 

37,203

 

179,203

 

13.8

%

COST OF SALES

 

(40,772

)

(52,059

)

(24,044

)

(116,875

)

(36,726

)

(45,305

)

(21,337

)

(103,110

)

13.3

%

GROSS PROFIT

 

27,929

 

40,189

 

18,878

 

86,995

 

25,307

 

34,919

 

15,866

 

76,093

 

14.3

%

Gross Margin

 

40.7

%

43.6

%

44.0

%

42.7

%

40.8

%

43.5

%

42.6

%

42.5

%

 

 

MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES

 

(17,059

)

(25,518

)

(14,256

)

(56,833

)

(16,071

)

(22,401

)

(11,545

)

(50,017

)

13.6

%

CORPORATE EXPENSES (2)

 

 

 

 

 

 

 

(672

)

 

 

 

 

 

 

(848

)

-20.7

%

OPERATING INCOME

 

10,870

 

14,671

 

4,621

 

29,490

 

9,236

 

12,518

 

4,321

 

25,227

 

16.9

%

Operating Margin

 

15.8

%

15.9

%

10.8

%

14.5

%

14.9

%

15.6

%

11.6

%

14.1

%

 

 

EBITDA (3)

 

14,793

 

18,223

 

6,368

 

38,712

 

13,263

 

15,746

 

6,305

 

34,465

 

12.3

%

Ebitda Margin

 

21.5

%

19.8

%

14.8

%

19.0

%

21.4

%

19.6

%

16.9

%

19.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL EXPENSE/INCOME (Net)

 

 

 

 

 

 

 

(1,184

)

 

 

 

 

 

 

(1,181

)

0.3

%

RESULTS FROM AFFILIATED

 

 

 

 

 

 

 

(133

)

 

 

 

 

 

 

916

 

-114.5

%

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

(2,719

)

 

 

 

 

 

 

(208

)

1205.3

%

RESULTS BY READJUSTEMENT UNITS AND EXCHANGE RATE DIFFERENCE

 

 

 

 

 

 

 

(263

)

 

 

 

 

 

 

449

 

-158.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES; AND MINORITY INTEREST

 

 

 

 

 

 

 

25,190

 

 

 

 

 

 

 

25,203

 

-0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

 

 

 

 

 

(6,846

)

 

 

 

 

 

 

(7,008

)

-2.3

%

MINORITY INTEREST

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

 

(3

)

-8.7

%

NET INCOME

 

 

 

 

 

 

 

18,342

 

 

 

 

 

 

 

18,192

 

0.8

%

Net Margin

 

 

 

 

 

 

 

9.0

%

 

 

 

 

 

 

10.2

%

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

760.3

 

 

 

 

 

 

 

760.3

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

24.1

 

 

 

 

 

 

 

23.9

 

 

 

EARNINGS PER ADS

 

 

 

 

 

 

 

144.8

 

 

 

 

 

 

 

143.6

 

0.8

%

 

(1) Total may be different from the addition of the three countries because of intercountry eliminations

(2) Corporate expenses partially reclassified to the operations.

(3) EBITDA: Operating Income + Depreciation

 

8

 


 

Embotelladora Andina S.A.

Third Quarter Results for the period ended September 30, IFRS GAAP

(In nominal million US$, except per share)

 

 

Exch. Rate :

511.25

 

Exch. Rate :

545.56

 

 

 

July - September 2010

 

July - September 2009

 

 

 

 

 

Chilean
Operations

 

Brazilian
Operations

 

Argentine
Operations

 

Total (1)

 

Chilean
Operations

 

Brazilian
Operations

 

Argentine
Operations

 

Total (1)

 

% Ch.

 

VOLUME TOTAL BEVERAGES (Million UC)

 

37.2

 

46.3

 

27.9

 

111.4

 

34.6

 

41.8

 

27.0

 

103.5

 

7.6

%

Soft Drinks

 

30.2

 

42.8

 

26.4

 

99.5

 

29.1

 

39.2

 

26.3

 

94.6

 

5.2

%

Mineral Water

 

1.7

 

0.9

 

1.0

 

3.6

 

1.4

 

0.5

 

0.4

 

2.4

 

50.7

%

Juices

 

5.2

 

1.8

 

0.5

 

7.4

 

4.1

 

1.3

 

0.3

 

5.7

 

31.4

%

Beer

 

NA

 

0.8

 

NA

 

0.8

 

NA

 

0.8

 

NA

 

0.8

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

134.4

 

180.4

 

84.0

 

398.8

 

113.7

 

147.0

 

68.2

 

328.5

 

21.4

%

COST OF SALES

 

(79.8

)

(101.8

)

(47.0

)

(228.6

)

(67.3

)

(83.0

)

(39.1

)

(189.0

)

21.0

%

GROSS PROFIT

 

54.6

 

78.6

 

36.9

 

170.2

 

46.4

 

64.0

 

29.1

 

139.5

 

22.0

%

Gross Margin

 

40.7

%

43.6

%

44.0

%

42.7

%

40.8

%

43.5

%

42.6

%

42.5

%

 

 

MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES

 

(33.4

)

(49.9

)

(27.9

)

(111.2

)

(29.5

)

(41.1

)

(21.2

)

(91.7

)

21.3

%

CORPORATE EXPENSES (2)

 

 

 

 

 

 

 

(1.3

)

 

 

 

 

 

 

(1.6

)

-15.4

%

OPERATING INCOME

 

21.3

 

28.7

 

9.0

 

57.7

 

16.9

 

22.9

 

7.9

 

46.2

 

24.7

%

Operating Margin

 

15.8

%

15.9

%

10.8

%

14.5

%

14.9

%

15.6

%

11.6

%

14.1

%

 

 

EBITDA (3)

 

28.9

 

35.6

 

12.5

 

75.7

 

24.3

 

28.9

 

11.6

 

63.2

 

19.9

%

Ebitda Margin

 

21.5

%

19.8

%

14.8

%

19.0

%

21.4

%

19.6

%

16.9

%

19.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL EXPENSE/INCOME (Net)

 

 

 

 

 

 

 

(2.3

)

 

 

 

 

 

 

(2.2

)

7.1

%

RESULTS FROM AFFILIATED

 

 

 

 

 

 

 

(0.3

)

 

 

 

 

 

 

1.7

 

-115.5

%

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

(5.3

)

 

 

 

 

 

 

(0.4

)

1292.9

%

RESULTS BY READJUSTEMENT UNITS AND EXCHANGE RATE DIFFERENCE

 

 

 

 

 

 

 

(0.5

)

 

 

 

 

 

 

0.8

 

-162.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES; AND MINORITY INTEREST

 

 

 

 

 

 

 

48.0

 

 

 

 

 

 

 

46.2

 

3.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

 

 

 

 

 

(13.4

)

 

 

 

 

 

 

(12.8

)

4.2

%

MINORITY INTEREST

 

 

 

 

 

 

 

(0.0

)

 

 

 

 

 

 

(0.0

)

-2.5

%

NET INCOME

 

 

 

 

 

 

 

35.0

 

 

 

 

 

 

 

33.3

 

4.8

%

Net Margin

 

 

 

 

 

 

 

8.8

%

 

 

 

 

 

 

10.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

760.3

 

 

 

 

 

 

 

760.3

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

0.0

 

 

 

 

 

 

 

0.0

 

 

 

EARNINGS PER ADS

 

 

 

 

 

 

 

0.3

 

 

 

 

 

 

 

0.3

 

4.8

%

 

(1) Total may be different from the addition of the three countries because of intercountry eliminations

(2) Corporate expenses partially reclassified to the operations.

(3) EBITDA: Operating Income + Depreciation

 

9

 


 

Embotelladora Andina S.A.

Nine Months Results for the period ended September 30, IFRS GAAP

(In nominal million  Chilean Pesos, except per share)

 

 

 

January - September 2010

 

January - September 2009

 

 

 

 

 

Chilean
Operations

 

Brazilian
Operations

 

Argentine
Operations

 

Total (1)

 

Chilean
Operations

 

Brazilian
Operations

 

Argentine
Operations

 

Total (1)

 

% Ch.

 

VOLUME TOTAL BEVERAGES (Million UC)

 

113.4

 

143.1

 

87.5

 

344.0

 

107.4

 

129.7

 

86.1

 

323.1

 

6.5

%

Soft Drinks

 

93.5

 

132.7

 

83.3

 

309.5

 

90.3

 

121.7

 

84.2

 

296.3

 

4.5

%

Mineral Water

 

6.2

 

2.5

 

2.9

 

11.6

 

5.4

 

1.7

 

0.9

 

7.9

 

47.1

%

Juices

 

13.7

 

4.9

 

1.3

 

20.0

 

11.7

 

3.4

 

1.0

 

16.1

 

24.1

%

Beer

 

NA

 

2.9

 

NA

 

2.9

 

NA

 

2.9

 

NA

 

2.9

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

206,973

 

289,554

 

128,857

 

625,385

 

191,016

 

229,395

 

127,400

 

546,394

 

14.5

%

COST OF SALES

 

(120,766

)

(163,034

)

(73,349

)

(357,149

)

(110,174

)

(129,239

)

(74,034

)

(312,031

)

14.5

%

GROSS PROFIT

 

86,207

 

126,520

 

55,509

 

268,235

 

80,842

 

100,155

 

53,366

 

234,363

 

14.5

%

Gross Margin

 

41.7

%

43.7

%

43.1

%

42.9

%

42.3

%

43.7

%

41.9

%

42.9

%

 

 

MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES

 

(50,507

)

(75,079

)

(41,242

)

(166,828

)

(46,741

)

(64,864

)

(38,407

)

(150,011

)

11.2

%

CORPORATE EXPENSES (2)

 

 

 

 

 

 

 

(2,959

)

 

 

 

 

 

 

(2,492

)

18.7

%

OPERATING INCOME

 

35,700

 

51,441

 

14,266

 

98,448

 

34,101

 

35,291

 

14,960

 

81,860

 

20.3

%

Operating Margin

 

17.2

%

17.8

%

11.1

%

15.7

%

17.9

%

15.4

%

11.7

%

15.0

%

 

 

EBITDA (3)

 

47,669

 

61,776

 

19,790

 

126,275

 

46,543

 

44,056

 

21,132

 

109,240

 

15.6

%

Ebitda Margin

 

23.0

%

21.3

%

15.4

%

20.2

%

24.4

%

19.2

%

16.6

%

20.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL EXPENSE/INCOME (Net)

 

 

 

 

 

 

 

(2,793

)

 

 

 

 

 

 

(2,507

)

11.4

%

RESULTS FROM AFFILIATED

 

 

 

 

 

 

 

320

 

 

 

 

 

 

 

1,387

 

-76.9

%

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

(4,170

)

 

 

 

 

 

 

(139

)

2894.4

%

RESULTS BY READJUSTEMENT UNITS AND EXCHANGE RATE DIFFERENCE

 

 

 

 

 

 

 

(235

)

 

 

 

 

 

 

708

 

-133.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES; AND MINORITY INTEREST

 

 

 

 

 

 

 

91,570

 

 

 

 

 

 

 

81,308

 

12.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

 

 

 

 

 

(24,508

)

 

 

 

 

 

 

(17,299

)

41.7

%

MINORITY INTEREST

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

(2

)

-7.2

%

NET INCOME

 

 

 

 

 

 

 

67,061

 

 

 

 

 

 

 

64,007

 

4.8

%

Net Margin

 

 

 

 

 

 

 

10.7

%

 

 

 

 

 

 

11.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

760.3

 

 

 

 

 

 

 

760.3

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

88.2

 

 

 

 

 

 

 

84.2

 

 

 

EARNINGS PER ADS

 

 

 

 

 

 

 

529.2

 

 

 

 

 

 

 

505.1

 

4.8

%

 

(1) Total may be different from the addition of the three countries because of intercountry eliminations

(2) Corporate expenses partially reclassified to the operations.

(3) EBITDA: Operating Income + Depreciation

 

10

 


 

Embotelladora Andina S.A.

Nine Months Results for the period ended September 30, IFRS GAAP

(In nominal million US$, except per share)

 

 

Exch. Rate  :

$ 520.16

 

Exch. Rate  :

$ 573.28

 

 

 

January - September 2010

 

January - September 2009

 

 

 

 

 

Chilean
Operations

 

Brazilian
Operations

 

Argentine
Operations

 

Total (1)

 

Chilean
Operations

 

Brazilian
Operations

 

Argentine
Operations

 

Total (1)

 

% Ch.

 

VOLUME TOTAL BEVERAGES (Million UC)

 

113.4

 

143.1

 

87.5

 

344.0

 

107.4

 

129.7

 

86.1

 

323.1

 

6.5

%

Soft Drinks

 

93.5

 

132.7

 

83.3

 

309.5

 

90.3

 

121.7

 

84.2

 

296.3

 

4.5

%

Mineral Water

 

6.2

 

2.5

 

2.9

 

11.6

 

5.4

 

1.7

 

0.9

 

7.9

 

47.1

%

Juices

 

13.7

 

4.9

 

1.3

 

20.0

 

11.7

 

3.4

 

1.0

 

16.1

 

24.1

%

Beer

 

NA

 

2.9

 

NA

 

2.9

 

NA

 

2.9

 

NA

 

2.9

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

397.9

 

556.7

 

247.7

 

1,202.3

 

333.2

 

400.1

 

222.2

 

953.1

 

26.1

%

COST OF SALES

 

(232.2

)

(313.4

)

(141.0

)

(686.6

)

(192.2

)

(225.4

)

(129.1

)

(544.3

)

26.1

%

GROSS PROFIT

 

165.7

 

243.2

 

106.7

 

515.7

 

141.0

 

174.7

 

93.1

 

408.8

 

26.1

%

Gross Margin

 

41.7

%

43.7

%

43.1

%

42.9

%

42.3

%

43.7

%

41.9

%

42.9

%

 

 

MARKETING, DISTRIBUTION AND ADMINISTRATIVE EXPENSES

 

(97.1

)

(144.3

)

(79.3

)

(320.7

)

(81.5

)

(113.1

)

(67.0

)

(261.7

)

22.6

%

CORPORATE EXPENSES (2)

 

 

 

 

 

 

 

(5.7

)

 

 

 

 

 

 

(4.3

)

30.9

%

OPERATING INCOME

 

68.6

 

98.9

 

27.4

 

189.3

 

59.5

 

61.6

 

26.1

 

142.8

 

32.5

%

Operating Margin

 

17.2

%

17.8

%

11.1

%

15.7

%

17.9

%

15.4

%

11.7

%

15.0

%

 

 

EBITDA (3)

 

91.6

 

118.8

 

38.0

 

242.8

 

81.2

 

76.8

 

36.9

 

190.6

 

27.4

%

Ebitda Margin

 

23.0

%

21.3

%

15.4

%

20.2

%

24.4

%

19.2

%

16.6

%

20.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL EXPENSE/INCOME (Net)

 

 

 

 

 

 

 

(5.4

)

 

 

 

 

 

 

(4.4

)

22.8

%

RESULTS FROM AFFILIATED

 

 

 

 

 

 

 

0.6

 

 

 

 

 

 

 

2.4

 

-74.5

%

OTHER INCOME/(EXPENSE)

 

 

 

 

 

 

 

(8.0

)

 

 

 

 

 

 

(0.2

)

3200.2

%

RESULTS BY READJUSTEMENT UNITS AND EXCHANGE RATE DIFFERENCE

 

 

 

 

 

 

 

(0.5

)

 

 

 

 

 

 

1.2

 

-136.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES; AND MINORITY INTEREST

 

 

 

 

 

 

 

176.0

 

 

 

 

 

 

 

141.8

 

24.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

 

 

 

 

 

(47.1

)

 

 

 

 

 

 

(30.2

)

56.1

%

MINORITY INTEREST

 

 

 

 

 

 

 

(0.0

)

 

 

 

 

 

 

(0.0

)

2.2

%

NET INCOME

 

 

 

 

 

 

 

128.9

 

 

 

 

 

 

 

112

 

15.5

%

Net Margin

 

 

 

 

 

 

 

10.7

%

 

 

 

 

 

 

11.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

760.3

 

 

 

 

 

 

 

760.3

 

 

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

0.2

 

 

 

 

 

 

 

0.1

 

 

 

EARNINGS PER ADS

 

 

 

 

 

 

 

1.0

 

 

 

 

 

 

 

0.9

 

15.5

%

 

(1) Total may be different from the addition of the three countries because of intercountry eliminations

(2) Corporate expenses partially reclassified to the operations.

(3) EBITDA: Operating Income + Depreciation

 

11

 


 

Embotelladora Andina S.A.

Consolidated Balance Sheet

(In million of constant 09/30/10 Chilean Pesos)

 

 

 

09/30/2010

 

12/31/2009

 

09/30/2009

 

%Ch

 

ASSETS

 

 

 

 

 

 

 

 

 

Cash + Time deposits + market. Securit.

 

108,166

 

135,136

 

121,152

 

-10.7

%

Account receivables (net)

 

69,497

 

79,610

 

61,582

 

12.9

%

Inventories

 

41,540

 

39,407

 

36,105

 

15.1

%

Other current assets

 

9,192

 

14,650

 

12,193

 

-24.6

%

Total Current Assets

 

228,395

 

268,803

 

231,032

 

-1.1

%

Property, plant and equipment

 

690,252

 

668,146

 

681,690

 

1.3

%

Depreciation

 

(425,950

)

(420,523

)

(426,908

)

-0.2

%

Total Property, Plant, and Equipment

 

264,302

 

247,623

 

254,782

 

3.7

%

 

 

 

 

 

 

 

 

 

 

Investment in related companies

 

49,074

 

34,731

 

32,795

 

49.6

%

Goodwill

 

59,026

 

61,360

 

65,330

 

-9.7

%

Other long term assets

 

39,095

 

36,428

 

36,855

 

6.1

%

Total Other Assets

 

147,195

 

132,519

 

134,980

 

9.0

%

TOTAL ASSETS

 

639,892

 

648,945

 

620,794

 

3.1

%

LIABILITIES & SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Short term bank liabilities

 

9,368

 

615

 

1,412

 

563.6

%

Current portion of bonds payable

 

4,240

 

2,885

 

2,958

 

43.3

%

Trade accounts payable and notes payable

 

88,193

 

95,163

 

91,982

 

-4.1

%

Other liabilities

 

29,360

 

39,147

 

25,163

 

16.7

%

Total Current Liabilities

 

131,162

 

137,810

 

121,515

 

7.9

%

 

 

 

 

 

 

 

 

 

 

Long term bank liabilities

 

59

 

201

 

277

 

-78.9

%

Bonds payable

 

70,914

 

70,841

 

72,984

 

-2.8

%

Other long term liabilities

 

63,906

 

66,535

 

68,290

 

-6.4

%

Total Long Term Liabilities

 

134,879

 

137,577

 

141,551

 

-4.7

%

 

 

 

 

 

 

 

 

 

 

Minority interest

 

8

 

9

 

10

 

-24.4

%

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

373,843

 

373,549

 

357,718

 

4.5

%

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY

 

639,892

 

648,945

 

620,794

 

3.1

%

 

Financial Highlights

(In million of constant 09/30/10 Chilean Pesos)

 

 

 

Year to Date

 

 

 

 

 

09/30/2010

 

12/31/2009

 

09/30/2009

 

 

 

ADDITIONS TO FIXED ASSETS

 

 

 

 

 

 

 

 

 

Chile

 

25,012

 

22,935

 

16,800

 

 

 

Brazil

 

23,199

 

18,892

 

15,945

 

 

 

Argentina

 

6,671

 

7,656

 

5,647

 

 

 

 

 

54,882

 

49,483

 

38,392

 

 

 

 

 

 

 

 

09/30/2010

 

 

 

 

 

 

 

DEBT RATIOS

 

 

 

 

 

 

 

 

 

Financial Debt / Total Capitalization

 

0.18

 

 

 

 

 

 

 

Financial Debt / EBITDA L12M

 

0.45

 

 

 

 

 

 

 

EBITDA L12M / Interest Expense (net) L12M

 

24.61

 

 

 

 

 

 

 

L12M: Last twelve months

 

 

 

 

 

 

 

 

 

 

(*) To ease figure comparison we include September 30, 2009 only on this chart, since mandatory SVS information does not require it.

 

12

 


 

Embotelladora Andina S.A.

(In million nominal local currency of each period)

 

Third Quarter Results for the period ended September 30, 2010 IFRS GAAP

 

 

 

July - September 2010

 

July - September 2009

 

 

 

Chile Ch$

 

Brazil R$

 

Argentina AR$

 

Chile Ch$

 

Brazil R$

 

Argentina AR$

 

TOTAL BEVERAGES VOLUME (Million UC)

 

37.2

 

46.3

 

27.9

 

34.6

 

41.8

 

27.0

 

Soft Drinks

 

30.2

 

42.8

 

26.4

 

29.1

 

39.2

 

26.3

 

Mineral Water

 

1.7

 

0.9

 

1.0

 

1.4

 

0.5

 

0.4

 

Juices

 

5.2

 

1.8

 

0.5

 

4.1

 

1.3

 

0.3

 

Beer

 

N/A

 

0.8

 

N/A

 

N/A

 

0.8

 

N/A

 

NET SALES

 

68,684

 

315.9

 

331.5

 

62,034

 

273.8

 

261.2

 

COST OF SALES

 

(40,570

)

(178.3

)

(185.5

)

(36,726

)

(154.8

)

(149.8

)

GROSS PROFIT

 

28,114

 

137.6

 

146.1

 

25,307

 

119.0

 

111.4

 

Gross Margin

 

40.9

%

43.6

%

44.1

%

40.8

%

43.5

%

42.6

%

SELLING AND ADMINISTRATIVE EXPENSES

 

(17,244

)

(87.3

)

(110.1

)

(16,071

)

(76.5

)

(81.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

10,870

 

50.3

 

36.0

 

9,236

 

42.5

 

30.3

 

Operating Margin

 

15.8

%

15.9

%

10.9

%

14.9

%

15.5

%

11.6

%

EBITDA(1)

 

14,793

 

62.5

 

49.5

 

13,263

 

53.5

 

44.4

 

Ebitda Margin

 

21.5

%

19.8

%

14.9

%

21.4

%

19.5

%

17.0

%

 

Nine Months Results for the period ended September 30, 2010 IFRS GAAP

 

 

 

January - September 2010

 

January - September 2009

 

 

 

Chile Ch$

 

Brazil R$

 

Argentina AR$

 

Chile Ch$

 

Brazil R$

 

Argentina AR$

 

TOTAL BEVERAGES VOLUME (Million UC)

 

113.4

 

143.1

 

87.5

 

107.4

 

129.7

 

86.1

 

Soft Drinks

 

93.5

 

132.7

 

83.3

 

90.3

 

121.7

 

84.2

 

Mineral Water

 

6.2

 

2.5

 

2.9

 

5.4

 

1.7

 

0.9

 

Juices

 

13.7

 

4.9

 

1.3

 

11.7

 

3.4

 

1.0

 

Beer

 

NA

 

2.9

 

NA

 

NA

 

2.9

 

NA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

206,956

 

993.0

 

966.3

 

191,016

 

831.4

 

813.8

 

COST OF SALES

 

(120,564

)

(558.9

)

(549.5

)

(110,174

)

(468.5

)

(473.9

)

GROSS PROFIT

 

86,392

 

434.1

 

416.7

 

80,842

 

362.9

 

339.9

 

Gross Margin

 

41.7

%

43.7

%

43.1

%

42.3

%

43.6

%

41.8

%

SELLING AND ADMINISTRATIVE EXPENSES

 

(50,693

)

(257.1

)

(309.3

)

(46,741

)

(235.1

)

(245.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

35,700

 

176.9

 

107.5

 

34,101

 

127.9

 

94.3

 

Operating Margin

 

17.2

%

17.8

%

11.1

%

17.9

%

15.4

%

11.6

%

EBITDA(1)

 

47,669

 

212.3

 

148.8

 

46,543

 

159.6

 

134.3

 

Ebitda Margin

 

23.0

%

21.4

%

15.4

%

24.4

%

19.2

%

16.5

%

 

(1)EBITDA: Operating Income + Depreciation

 

13

 


 

NOTE 3 — FIRST-TIME APPLICATION OF IFRS

 

Embotelladora Andina S.A. and Subsidiaries have implemented IFRS starting January 1, 2010 and presents quarterly financial statements according to IFRS comparative to 2009.

 

The transition date for Embotelladora Andina and Subsidiaries is January 1, 2009.

 

These Financial Statements have been prepared according to IFRS issued until this date and under the premise that such standards will be the same applicable in adopting IFRS as of the 2010 fiscal year, comparatively to the 2009 fiscal year.

 

Sections 3.1 and 3.2 present the reconciliations required by IFRS N°1 between the beginning and closing balances of the year ending December 31, 2009 and the period ended September 30, 2009; and the beginning balances as of January 1, 2009, after applying these standards.

 

The exemptions in IFRS 1 that the Company decided to apply in its IFRS adoption are:

 

i)         Business combination:

 

The Company did not restate business combinations retroactively that took place prior to January 1, 2009.

 

ii)        Fair value or reappraisal of cost.

 

The Company considered the appraisals of certain items in property, plant, and equipment at the fair value to be used as the cost attributable to the historic cost on the transition date. Those assets are virtually all of the land of our operations in Chile, Argentina and Brazil and selected real estate, machinery and equipment the values of which, in local currency, were significantly distant from the fair values determined by appraisals.

 

The group of assets of Chilean Companies for which the fair value was not made the attributed cost was assigned the historic cost, plus a legal price-level restatement to represent the cost attributed on the transition date.

 

iii)     Cumulative actuarial profits and losses for post-employment benefits:

 

The effects of applying actuarial calculations to post-employment benefits were recognized directly in cumulative results as of January 1, 2009.

 

iv)      Translation reserves:

 

The Company considered all cumulative translation reserves through the transition date to be nil or zero.

 

Below is a detailed description of the main differences between Generally Accepted Accounting Principles in Chile (Chile GAAP) and International Financial Reporting Standards (IFRS) applied by the Company, and of the impact on Shareholders’ Equity at September 30, 2010, December 31, 2009, and January 1, 2009 and on the net gain at September 30, and December 31, 2009:

 

14


 

3.1             Reconciliation of Net Shareholders’ Equity from generally accepted accounting principles in Chile to International Financial Reporting Standards at January 1, September 30, and December 31, 2009:

 

 

 

 

 

09/30/2009

 

12/31/2009

 

01/01/2009

 

 

 

 

 

ThCh$

 

ThCh$

 

ThCh$

 

Shareholders’ Equity according to Chilean GAAP

 

 

 

318,138,871

 

336,578,506

 

346,248,602

 

Adjustments to IFRS

 

 

 

 

 

 

 

 

 

Property, plant and equipment, reappraisal and change in functional currency

 

3.3.1

 

45,031,105

 

42,893,951

 

28,469,859

 

Change in functional currency and suspension of goodwill amortization

 

3.3.2

 

13,584,226

 

15,085,550

 

—

 

Post-employment benefits

 

3.3.4

 

1,509,647

 

1,554,045

 

1,114,217

 

Reversal of price-level restatement

 

3.3.6

 

3,236,826

 

2,520,859

 

—

 

Hedging instruments

 

3.3.7

 

—

 

(2,079,511

)

173,211

 

Deferred taxes

 

3.3.9

 

(19,414,766

)

(17,205,160

)

(20,324,257

)

Investments in equity investees

 

3.3.8

 

3,163,348

 

3,591,820

 

1,400,227

 

Minority interest

 

 

 

9,994

 

9,141

 

10,837

 

Other

 

 

 

495,819

 

(51,493

)

481,399

 

Subtotal

 

 

 

365,755,070

 

382,897,708

 

357,574,095

 

Minimum dividend

 

3.3.10

 

(8,026,580

)

(9,339,973

)

(11,279,813

)

Net Shareholders’ Equity according to IFRS

 

 

 

357,728,490

 

373,557,735

 

346,294,282

 

 

3.2             Reconciliation of the year’s income from Chile GAAP to IFRS at September 30, and December 31, 2009:

 

 

 

 

 

09/30/2009

 

07/01/2009 to
09/30/2009

 

12/31/2009

 

 

 

 

 

ThCh$

 

ThCh$

 

ThCh$

 

Income according to Chilean GAAP

 

 

 

54,209,357

 

19,581,837

 

86,918,333

 

Adjustments to IFRS

 

 

 

 

 

 

 

 

 

Depreciation

 

3.4.1

 

(2,526,990

)

(414,254

)

(4,276,931

)

Goodwill amortization

 

3.4.2

 

4,494,821

 

1,758,412

 

6,094,120

 

Intercompany account considered investment in subsidiary

 

3.4.3

 

11,743,568

 

1,162,703

 

13,804,730

 

Post-employment benefits

 

3.4.4

 

368,920

 

34,410

 

439,828

 

Reversal of translation adjustment according to Chilean standard

 

3.4.5

 

(5,541,458

)

(2,484,206

)

(4,977,864

)

Translation of results at average exchange rate

 

3.4.5

 

1,902,491

 

(1,177,769

)

2,412,869

 

Reversal of price-level restatement

 

3.4.6

 

(987,746

)

(43,634

)

(1,240,956

)

Hedging instruments

 

3.4.7

 

—

 

—

 

(2,252,722

)

Deferred taxes

 

3.4.8

 

4,184

 

370,965

 

1,476,431

 

Investments in equity investees

 

3.4.9

 

73,581

 

(53,172

)

(382,625

)

Minority interest

 

 

 

1,743

 

529

 

2,748

 

Other

 

 

 

(188,753

)

(541,023

)

(32,483

)

Statement of Income according to IFRS

 

 

 

64,008,718

 

18,194,798

 

97,985,478

 

 

15


 

3.3             Reconciliation of Net Cash Flows and Cash Equivalents from Chilean GAAP to IFRS at December 31, 2009:

 

 

 

Provided by

 

Description

 

Operating
Activities at
12/31/2009
ThCh$

 

Investment
Activities at
12/31/2009
ThCh$

 

Financing
Activities at
12/31/2009
ThCh$

 

Cash flows in accordance with previous standards

 

122,051,640

 

(72,136,450

)

(67,531,694

)

Exchange rate effects due to IFRS implementation

 

9,074,780

 

(2,041,393

)

(224,616

)

Cash flows in accordance with IFRS

 

131,126,420

 

(74,177,843

)

(67,756,310

)

 

Description

 

Net Cash Flow
at 12/31/2009
ThCh$

 

Inflationary
effects at
12/31/2009
ThCh$

 

Beginning
balance at
12/31/2009
ThCh$

 

Cash flows in accordance with previous standards

 

(17,616,504

)

3,814,675

 

126,246,838

 

Exchange rate effects due to IFRS implementation

 

6,808,771

 

(9,780,804

)

2,972,033

 

Cash flows in accordance with IFRS

 

(10,807,733

)

(5,966,129

)

129,218,871

 

 

3.4             Explanation of main differences between Chilean GAAP and IFRS

 

3.4.1          Property, plant and equipment

 

The Company reappraised property, plant, and equipment in order to consider their fair value to be the attributed cost at the historic cost on the transition date. Those assets are virtually all of the land of our operations in Chile, Argentina and Brazil and selected real estate, machinery and equipment whose value in local currency was significantly distant from the fair values determined in appraisals.

 

The group of assets of Chilean Companies for which the fair value was not used as the attributed cost was assigned the historic cost, plus legal price-level restatement, as the cost attributed on the transition date.

 

Moreover, according to Chilean GAAP, property, plant and equipment of operations in Brazil and Argentina were controlled in U.S. Dollars while according to IFRS, those same assets are now controlled in the functional currency of each of the countries of origin. The differences in appraisal are also included in this adjustment.

 

According to the changes in the initial balances for property, plant and equipment described above, there was a greater debit against income that is presented in the reconciliation of income between Chilean GAAP and IFRS.

 

The amount shown in property, plant and equipment totaled, on a consolidated basis, ThCh$223,676,043 at December 31, 2008 according to Chilean GAAP.

 

16


 

3.4.2          Goodwill

 

The equity adjustment originates in the change in functional currency between Chilean GAAP and IFRS. According to Chilean GAAP, goodwill on the operations in Argentina and Brazil was controlled in dollars while under IFRS, it is controlled directly in the functional currency of each country.

 

The effects on results presented in the reconciliation between Chilean GAAP and IFRS come from suspending the straight-line amortization that had been performed through December 31, 2009. Under IFRS, those amounts are not amortizable and the value is reduced only provided the impairment test shows a recovery value that is less than the accounting value.

 

3.4.3          Intercompany account treated as investment in subsidiary

 

Within its corporate structure, the Company has intercompany accounts receivable in U.S. dollars from its subsidiaries abroad. According to Chilean GAAP, the exchange rate differences originating in the Chilean Companies resulting from these accounts receivable were accounted for directly in income, while the foreign subsidiaries recognized this effect and the rest of the items controlled in U.S. dollars as a translation effect in the income statement. Under IFRS, those U.S. dollar accounts receivable and accounts payable have been assigned as part of the investment abroad, therefore any difference between the U.S. dollar and the functional currency of each of the entities is accounted for in equity accounts.

 

3.4.4          Post-employment benefits

 

Under IFRS, the all-event severance indemnity stipulated in individual or collective employment contracts creates a liability that must be determined by the actuarial value of the accrual cost of the benefit. This means making estimates of variables such as future permanence, interest rate at which benefits are discounted, mortality rate, employee turnover rate and future salary increase, among others. According to Chilean GAAP, this same obligation was recognized at the actual value according to the benefit accrual cost and a period of capitalization that considered the expected time of employment of employees on the date of their retirement.

 

The difference from applying actuarial calculations to the employee severance benefits is shown in the reconciliation of shareholders’ equity and income statement between Chilean GAAP and IFRS.

 

3.4.5          Translation effects

 

Under Chilean GAAP, according to Bulletin 64 of the Chilean Accountants Association, the non-monetary assets and liabilities of foreign companies were controlled in historic dollars and results were translated from local currency to the control currency (U.S. dollar) and then the figures in the control currency translated to Chilean pesos at the closing exchange rate.

 

17


 

According to IFRS, non-monetary asset and liability accounts are controlled in the functional currency of each reporting entity and income accounts are translated at the functional currency of the parent company at the average exchange rate for each transaction.

 

In the reconciliation of results between Chilean GAAP and IFRS, the translation effects recognized under Chilean standards have been reversed and the differential income that results from the translation according to IFRS as compared to Chilean GAAP has been recognized.

 

3.4.6          Price-level restatement

 

The accounting principles in Chile require that the financial statements be adjusted to reflect the effect of the loss in the purchasing power of the Chilean peso on the financial position and operating income of the reporting entities. This method was based on a model that required calculating the profit or loss from net inflation attributed to monetary assets and liabilities exposed to variations in the purchasing power of the local currency. The historic cost of non-monetary assets and liabilities, equity accounts and income accounts are restated to reflect the variations in CPI from the date of acquisition to the close of the fiscal year.

 

The gain or loss in the purchasing power, included in net profits or losses, reflected the effects of inflation on monetary assets and liabilities held by the Company.

 

IFRS does not consider indexing by inflation in countries that are not hyperinflationary, like Chile. So, the income and balance sheet accounts are not adjusted for inflation and variations are nominal. The reconciliation of equity and income between Chilean GAAP and IFRS shows the effects of eliminating price-level restatement recorded during 2009.

 

3.3.7          Hedging instruments

 

The Company holds hedging agreements to hedge exchange rates, prices of raw materials and adjustment indicators. Under Chilean GAAP, pursuant to Technical Bulletin 57, theses were appraised according to variations in their fair value. The effects on income in those items defined as expected hedging transactions of items are deferred until settlement. However, under IFRS, these agreements have not demonstrated their effective hedging, so the effects on variations in their fair value are recorded directly in income at each end of period.

 

3.3.8          Deferred taxes

 

Differences from deferred taxes correspond to deferred taxes recognized according to the new treatment of each of the financial items according to IFRS as well as the reversal of the complementary deferred tax accounts in effect under Chilean GAAP at December 31, 2008.

 

3.3.9          Investment in Equity Investees

 

This corresponds to the effects of the adoption of IFRS by companies where the parent company holds investments accounted according to the equity method.

 

18


 

3.3.10       Minimum dividend

 

Chilean Company Law requires companies to pay a cash dividend of at least 30% of its net profits, unless otherwise decided by shareholders.  Since paying a dividend on net profits in each year is a requirement, under IFRS, the dividend liability pursuant to Chilean law must be recorded on an accrual basis.  This liability did not exist under Chilean GAAP.

 

19


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Santiago, Chile.

 

 

EMBOTELLADORA ANDINA S.A.

 

By:

/s/ Osvaldo Garay

 

Name: Osvaldo Garay

 

Title: Chief Financial Officer

 

 

Santiago, October 26, 2010

 

20