----

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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      20-F**

**(Mark      One) **

|  ̈ | **REGISTRATION                STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE                ACT                OF 1934** |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------|

**OR**

| x | **ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|---|---------------------------------------------------------------------------------------------------------------------------------------|

**For      the fiscal year ended December 31, 2007**

**OR**

|  ̈ | **TRANSITION                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE                ACT OF                1934** |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

**Commission      file number 333-7616**

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**Distribución      y Servicio D&S S.A.**

*(Exact      name of Registrant as specified in its charter)*

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**Distribution      and Service D&S Inc.**

*(Translation      of Registrant’s name into English)*

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**The      Republic of Chile**

*(Jurisdiction      of incorporation or organization)*

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**Avenida      Presidente Eduardo Frei Montalva 8301**

**Quilicura**

**Santiago,      Chile**

**(56-2)      200-5000**

*(Address      and telephone number of principal executive offices)*

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**Alejandro      Droste **
**Bertolo**
**      (Chief Financial Officer)**

**Avenida      Presidente Eduardo Frei Montalva 8301**

**Quilicura**

**Santiago,      Chile**

**Telephone:      (56-2) 200-5000**

**Facsimile:      (56-2) 200-5100**

**Email:      adrsote@dys.cl**

*(Name,      address, telephone number, facsimile number and e-mail of company contact      person)*

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| **Title of each class**                                                             |   | **Name of each exchange on which registered** |
|----------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------|
| Common                Stock of Registrant represented by American Depositary                Shares |   | New                York Stock Exchange                                      |

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** **

| Large                accelerated filer  ̈ | Accelerated                filer x | Non-accelerated                filer  ̈ |
|-----------------------------------------------|------------------------------------|---------------------------------------------|

| U.S.                  GAAP  ̈ | International Financial Reporting Standards as issuedby the International Accounting Standards Board  ̈ | Other                  x |
|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|

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**TABLE      OF CONTENTS**

|                                                                   | **Page**                                                                                                   |
|------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------|
| INTRODUCTION                                                           | 1                                                                                                          |
| PRESENTATION                OF FINANCIAL AND CERTAIN OTHER INFORMATION | 2                                                                                                          |
| PART                I                                                  | 3                                                                                                          |
| Item                1.                                                 | IDENTITY                OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS                                       | 3 |
| Item                2.                                                 | OFFER                STATISTICS AND EXPECTED TIMETABLE                                                     | 3 |
| Item                3.                                                 | KEY                INFORMATION                                                                             | 3 |
| Item                4.                                                 | INFORMATION                ON THE COMPANY                                                                  | 15 |
| Item                4A.                                                | UNRESOLVED                STAFF COMMENTS                                                                   | 40 |
| Item                5.                                                 | OPERATING                AND FINANCIAL REVIEW AND PROSPECTS                                                | 40 |
| Item                6.                                                 | DIRECTORS,                SENIOR MANAGEMENT AND EMPLOYEES                                                  | 70 |
| Item                7.                                                 | MAJOR                SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                                           | 79 |
| Item                8.                                                 | FINANCIAL                INFORMATION                                                                       | 81 |
| Item                9.                                                 | THE                OFFER AND LISTING                                                                       | 81 |
| Item                10.                                                | ADDITIONAL                INFORMATION                                                                      | 84 |
| Item                11.                                                | QUANTITATIVE                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                  | 101 |
| Item                12.                                                | DESCRIPTION                OF SECURITIES OTHER THAN EQUITY SECURITIES                                      | 103 |
| PART                II                                                 |                                                                                                       | 104 |
| Item                13.                                                | DEFAULTS,                DIVIDEND ARREARAGES AND DELINQUENCIES                                             | 104 |
| Item                14.                                                | MATERIAL                MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF                PROCEEDS | 104 |
| Item                15.                                                | CONTROLS                AND PROCEDURES                                                                     | 104 |
| Disclosure                Controls and Procedures                      | 104                                                                                                        |
| Item                16.                                                | [Reserved]                                                                                                 | 106 |
| Item                16A.                                               | AUDIT                COMMITTEE FINANCIAL EXPERT                                                            | 106 |
| Item                16B.                                               | CODE                OF ETHICS                                                                              | 106 |
| Item                16C.                                               | PRINCIPAL                ACCOUNTANT FEES AND SERVICES                                                      | 106 |
| Item                16D.                                               | EXEMPTIONS                FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                                  | 107 |
| Item                16E.                                               | PURCHASES                OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED                PURCHASERS       | 107 |
| PART                III                                                |                                                                                                       | 108 |
| Item                17.                                                | FINANCIAL                STATEMENTS                                                                        | 108 |
| Item                18.                                                | FINANCIAL                STATEMENTS                                                                        | 108 |
| Item                19.                                                | EXHIBITS                                                                                                   | 108 |
| INDEX                TO EXHIBITS                                       | 109                                                                                                        |
| *SIGNATURE*                                                            | 110                                                                                                        |

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**INTRODUCTION**

*Latibex*
*Bolsa      de Comercio de Santiago*
*Bolsa      Electrónica de Chile*
*)*
*Bolsa      de Valores de Valparaíso*
*)*

**Special      Note Regarding Forward-Looking Statements**

|   | · | our                strategy; |
|--------|--------|------------------------------|

|   | · | general                economic, political and business conditions in                Chile; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | any                new store openings and same store                sales; |
|--------|--------|----------------------------------------------------------------------------|

|   | · | our                expectations regarding ongoing litigation, and particularly the likelihood                of recovery on the purchase price owed on our sale of *Ekono                Argentina*; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                capital expenditure plans; |
|--------|--------|-----------------------------------------------|

|   | · | industry                trends; and |
|--------|--------|-------------------------------------|

|   | · | other                expectations, intentions and plans contained in this annual report                that                are not historical fact. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

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**PRESENTATION      OF FINANCIAL AND CERTAIN OTHER INFORMATION**

|   | · | “U.S.                dollars”, “dollars”, “$”, or “US$” refer to United States                dollars; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “pesos”                or “Ch$” refer to Chilean pesos, the legal currency of                Chile; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | “Argentine                pesos” or “A$” refer to Argentine pesos, the legal currency of                Argentina; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “UF”                refers to *Unidades                de Fomento*,                an inflation-indexed, peso-denominated monetary unit. The UF rate                is set                daily in advance based on changes in the previous month’s inflation rate;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “€”                refers to euros, the legal currency of the European Union. |
|--------|--------|-------------------------------------------------------------------------------------------------|

*** ***
*Asociación      Chilena de Supermercados*
*** ***
*Instituto      Nacional de*
*Estadísticas*

*Superintendencia      de*
*Valores      y Seguros*

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**PART      I**

**Item      1.**
**IDENTITY      OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS**

**Item      2.**
**OFFER      STATISTICS AND EXPECTED TIMETABLE**

**Item      3.**
**KEY      INFORMATION**

***General***

***Recent      Developments***

*Launch      of New Stores under the SuperBodega Acuenta Brand*
*SuperBodega      Acuenta *
*SuperBodega      Acuenta *
*SuperBodega      Acuenta *
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*

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*Termination      of Merger with S.A.C.I Falabella. *
*Tribunal      de Defensa de la Libre Competencia*
*S.A.C.I.      Falabella*

*Issuance      of Series E Bonds*
*—“*
*—*
*—“*
*—*

*Entry      into Syndicated Credit Agreement*

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**Selected      Financial and Operating Data of D&S**

|                                                                                               |   | **At and for the year ended December 31,**                                                                                                                                                                                 |       |
|----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                                                               |   | **2003**                                                                                                                                                                                                                                                      |       | **2004** |   | **2005** |   | **2006** |   | **2007** |   | **2007(1)** |   |
|                                                                                               |   | **(amounts in millions of constant Ch$ and millions of US$, except per share and****per ADS information and percentages or as otherwise indicated)** |       |
| **INCOME                STATEMENT DATA:****Chilean                GAAP:**                          |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |
| Net                revenue                                                                    |   | Ch$                                                                                                                                                                                                                                                           | 1,354,232  |   | Ch$ | 1,636,408 |   | Ch$ | 1,753,134 |   | Ch$ | 1,822,218 |   | Ch$ | 1,905,780 |   | US$ |  3,835.4 |   |
| Cost                of sales                                                                  |   |                                                                                                                                                                                                                                                          | (1,049,286 | ) |   | (1,258,626 | ) |   | (1,262,272 | ) |   | (1,320,395 | ) |   | (1,365,292 | ) |   | (2,747.7 | ) |
| Gross                profit                                                                   |   |                                                                                                                                                                                                                                                          | 304,946    |   |   | 377,782 |   |   | 490,862 |   |   | 501,823 |   |   | 540,488 |   |   | 1,087.7 |   |
| Selling                and administrative expenses                                            |   |                                                                                                                                                                                                                                                          | (264,971   | ) |   | (344,246 | ) |   | (416,221 | ) |   | (431,464 | ) |   | (443,393 | ) |   | (892.3 | ) |
| Operating                income                                                               |   |                                                                                                                                                                                                                                                          | 39,975     |   |   | 33,535 |   |   | 74,641 |   |   | 70,359 |   |   | 97,095 |   |   | 195.4 |   |
| Non-operating                income                                                           |   |                                                                                                                                                                                                                                                          | 1,728      |   |   | 3,282 |   |   | 4,501 |   |   | 5,392 |   |   | 2,719 |   |   | 5.5 |   |
| Non-operating                expenses                                                         |   |                                                                                                                                                                                                                                                          | (21,576    | ) |   | (25,034 | ) |   | (25,570 | ) |   | (29,348 | ) |   | (37,720 | ) |   | (75.9 | ) |
| Net                price-level restatement and foreign exchange gain                (loss)    |   |                                                                                                                                                                                                                                                          | (1,015     | ) |   | 2,400 |   |   | (1,819 | ) |   | 1,361 |   |   | (483 | ) |   | (1.0 | ) |
| Non-operating                loss                                                             |   |                                                                                                                                                                                                                                                          | (20,862    | ) |   | (19,351 | ) |   | (22,888 | ) |   | (22,595 | ) |   | (35,484 | ) |   | (71.4 | ) |
| Income                before income taxes                                                     |   |                                                                                                                                                                                                                                                          | 19,113     |   |   | 14,183 |   |   | 51,753 |   |   | 47,764 |   |   | 61,611 |   |   | 124.0 |   |
| Income                taxes                                                                   |   |                                                                                                                                                                                                                                                          | (5,412     | ) |   | (2,418 | ) |   | (5,295 | ) |   | (5,177 | ) |   | (8,930 | ) |   | (18.0 | ) |
| Net                income                                                                     |   | Ch$                                                                                                                                                                                                                                                           | 13,701     |   | Ch$ | 11,766 |   | Ch$ | 46,458 |   | Ch$ | 42,587 |   | Ch$ | 52,681 |   | US$ |  106.0 |   |
| Basic                and diluted earning per share(2)                                         |   | Ch$                                                                                                                                                                                                                                                           | 2.48       |   | Ch$ | 1.80 |   | Ch$ | 7.13 |   | Ch$ | 6.55 |   | Ch$ | 8.14 |   | US$ |  0.016 |   |
| Basic                and diluted earning per ADS(3)                                           |   |                                                                                                                                                                                                                                                          | 148.92     |   |   | 108.28 |   |   | 427.80 |   |   | 392.93 |   | Ch$ | 488.31 |   | US$ |  0.983 |   |
| Dividends                per share(4)                                                         |   | Ch$                                                                                                                                                                                                                                                           | 2.69       |   | Ch$ | 3.33 |   | Ch$ | 2.15 |   | Ch$ | 4.30 |   | Ch$ | 4.00 |   | US$ |  0.008 |   |
| Dividends                per ADS(3)(4)                                                        |   |                                                                                                                                                                                                                                                          | 161.10     |   |   | 199.76 |   |   | 128.88 |   |   | 258.00 |   |   | 240.0 |   |   | 0.483 |   |
| Weighted                average shares outstanding (in                millions)(5) (17)  |   |                                                                                                                                                                                                                                                          | 5,520      |   |   | 6,520 |   |   | 6,520 |   |   | 6,503 |   |   | 6,473 |   |   |   |   |
| **U.S.                GAAP:**                                                                      |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                revenue                                                                    |   | Ch$                                                                                                                                                                                                                                                           | 1,243,966  |   | Ch$ | 1,644,790 |   | Ch$ | 1,589,872 |   | Ch$ | 1,647,520 |   | Ch$ | 1,726,675 |   | US$ |  3,475.0 |   |
| Operating                income                                                               |   |                                                                                                                                                                                                                                                          | 36,508     |   |   | 30,032 |   |   | 70,765 |   |   | 58,029 |   |   | 84,429 |   |   | 169.9 |   |
| Net                income                                                                     |   |                                                                                                                                                                                                                                                          | 17,163     |   |   | 10,881 |   |   | 50,883 |   |   | 41,176 |   |   | 53,699 |   |   | 108.1 |   |
| Basic                and diluted earning per share(2)                                         |   | Ch$                                                                                                                                                                                                                                                           | 3.10       |   | Ch$ | 1.66 |   | Ch$ | 7.81 |   | Ch$ | 6.33 |   | Ch$ | 8.30 |   | US$ |  0.02 |   |
| Basic                and diluted earning per ADS(3)                                           |   |                                                                                                                                                                                                                                                          | 186.55     |   |   | 100.13 |   |   | 468.24 |   |   | 379.91 |   |   | 498.00 |   |   | 1.00 |   |
| Weighted                average shares outstanding (in                millions)(5) (17)  |   |                                                                                                                                                                                                                                                          | 5,520      |   |   | 6,520 |   |   | 6,520 |   |   | 6,503 |   |   | 6,473 |   |   |   |   |
| **BALANCE                SHEET DATA:****Chilean                GAAP:**                             |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                current assets                                                           |   | Ch$                                                                                                                                                                                                                                                           | 363,119    |   | Ch$ | 433,471 |   | Ch$ | 421,590 |   | Ch$ | 367,279 |   | Ch$ | 410,741 |   | US$ |  826.6 |   |
| Property,                plant and equipment-net                                              |   |                                                                                                                                                                                                                                                          | 581,803    |   |   | 675,954 |   |   | 664,717 |   |   | 694,710 |   |   | 753,683 |   |   | 1,516.8 |   |
| Total                assets                                                                   |   |                                                                                                                                                                                                                                                          | 973,081    |   |   | 1,177,067 |   |   | 1,210,882 |   |   | 1,294,605 |   |   | 1,431,548 |   |   | 2,881.0 |   |
| Short-term                debt                                                                |   |                                                                                                                                                                                                                                                          | 157,254    |   |   | 114,904 |   |   | 234,527 |   |   | 147,480 |   |   | 283,957 |   |   | 571.5 |   |
| Long-term                debt                                                                 |   |                                                                                                                                                                                                                                                          | 203,851    |   |   | 263,814 |   |   | 132,792 |   |   | 288,492 |   |   | 264,120 |   |   | 531.5 |   |
| Total                shareholders’ equity                                               |   |                                                                                                                                                                                                                                                          | 351,398    |   |   | 517,931 |   |   | 535,453 |   |   | 556,236 |   |   | 562,641 |   |   | 1,132.3 |   |
| Ratio                of shareholders’ equity to capitalization(6)                       |   |                                                                                                                                                                                                                                                          | 59.8       | % |   | 64.3 | % |   | 69.0 | % |   | 64.7 | % |   | 66.3 | % |   |   |   |
| **U.S.                GAAP:**                                                                      |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                assets                                                                   |   | Ch$                                                                                                                                                                                                                                                           | 973,304    |   | Ch$ | 1,179,330 |   | Ch$ | 1,221,304 |   | Ch$ | 1,314,631 |   | Ch$ | 1,443,513 |   | US$ |  2,905.1 |   |
| Long-term                debt                                                                 |   |                                                                                                                                                                                                                                                          | 208,854    |   |   | 267,434 |   |   | 139,462 |   |   | 304,878 |   |   | 440,876 |   |   | 887.3 |   |
| Total                shareholders’ equity                                               |   |                                                                                                                                                                                                                                                          | 339,402    |   |   | 514,417 |   |   | 538,121 |   |   | 558,657 |   |   | 566,080 |   |   | 1,139.2 |   |
| **OTHER                FINANCIAL INFORMATION****Chilean                GAAP:**                     |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital                expenditures                                                           |   | Ch$                                                                                                                                                                                                                                                           | 51,420     |   | Ch$ | 171,617 |   | Ch$ | 68,128 |   | Ch$ | 85,583 |   | Ch$ | 122,834 |   | US$ |  247.2 |   |
| Depreciation                and amortization                                                  |   |                                                                                                                                                                                                                                                          | 44,247     |   |   | 55,976 |   |   | 60,472 |   |   | 58,546 |   |   | 63,067 |   |   | 126.9 |   |
| Net                cash provided (used in) from operating activities                          |   |                                                                                                                                                                                                                                                          | 38,952     |   |   | (15,318 | ) |   | 69,863 |   |   | 58,465 |   |   | 35,366 |   |   | 71.2 |   |
| **Financial                Ratios(7)****(Chilean                GAAP):**                           |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                margin                                                                   |   |                                                                                                                                                                                                                                                          | 22.5       | % |   | 23.1 | % |   | 28.0 | % |   | 27.5 | % |   | 28.4 | % |   |   |   |
| Operating                margin                                                               |   |                                                                                                                                                                                                                                                          | 3.0        | % |   | 2.0 | % |   | 4.3 | % |   | 3.9 | % |   | 5.1 | % |   |   |   |
| Net                margin                                                                     |   |                                                                                                                                                                                                                                                          | 1.0        |   |   | 0.70 |   |   | 2.6 |   |   | 2.3 | % |   | 2.8 | % |   |   |   |
| Current                ratio                                                                  |   |                                                                                                                                                                                                                                                          | 88.6       | % |   | 111.2 | % |   | 78.9 | % |   | 83.2 |   |   | 68.1 | % |   |   |   |
| Financial                debt/total shareholders’ equity                                |   |                                                                                                                                                                                                                                                          | 102.8      | %  |   | 73.1 | %  |   | 68.6 | %  |   | 78.4 | % |   | 97.4 |   |   |   |   |
|                                                                                               |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Operating                Information:**                                                          |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Number                of stores (at end of period):                                                |   |                                                                                                                                                                                                                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Almac*                                                                                       |   |                                                                                                                                                                                                                                                          | —    |   |   | — |   |   | — |   |   | — |   |   | — |   |   |   |   |
| *Ekono*                                                                                       |   |                                                                                                                                                                                                                                                          | —    |   |   | — |   |   | — |   |   | — |   |   | 32 |   |   |   |   |
| *Express                de Lider*                                                             |   |                                                                                                                                                                                                                                                          | 26         |   |   | 23 |   |   | 27 |   |   | 44 |   |   | 49 |   |   |   |   |
| *Hiper                Lider*(9)                                                               |   |                                                                                                                                                                                                                                                          | 42         |   |   | 55 |   |   | 58 |   |   | 33 |   |   | 62 |   |   |   |   |
| *SuperBodega                Acuenta*                                                               |   |                                                                                                                                                                                                                                                          | —    |   |   | — |   |   | — |   |   | — |   |   | 2 |   |   |   |   |

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|                                                                 |   | **At and for the year ended December 31,**                                                                                                                                                                                          |    |
|----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                                                                 |   | **2003**                                                                                                                                                                                                                                                               |    | **2004** |   | **2005** |   | **2006** |   | **2007** |   | **2007(1)** |   |
|                                                                 |   | **(amounts in millions of constant Ch$ and millions of US$, and except per share and****per ADS information and percentages or as otherwise indicated)** |    |
| Total                                                           |   |                                                                                                                                                                                                                                                                   | 68      |   |   | 78 |   |   | 85 |   |   | 103 |   |   | 145 |   |   | — |   |
| Total                selling space                              |   |                                                                                                                                                                                                                                                                   | 333,344 |   |   | 404,467 |   |   | 426,126 |   |   | 464,980 |   |   | 508,009 |   |   | — |   |
| Average                selling space per store(10)              |   |                                                                                                                                                                                                                                                                   | 4,902   |   |   | 5,185 |   |   | 5,013 |   |   | 4,735 |   |   | 3,503 |   |   | — |   |
| Average                sales per store (in millions)(11)(12)    |   | Ch$                                                                                                                                                                                                                                                                    | 16,858  |   | Ch$ | 16,982 |   | Ch$ | 17,266 |   | Ch$ | 14,619 |   | Ch$ | 14,710 |   |   | 29.6 |   |
| Increase                (decrease) in same store sales(12)(13)  |   |                                                                                                                                                                                                                                                                   | 0.30    | % |   | 1.60 | % |   | -1.30 | % |   | -                3.4 | % |   | 0.5 | % |   | — |   |
| Sales                per square meter (in millions)(12)(14)     |   | Ch$                                                                                                                                                                                                                                                                    | 3.7     |   | Ch$ | 3.5 |   | Ch$ | 3.7 |   | Ch$ | 3.4 |   | Ch$ | 3.2 |   |   | 0.006 |   |
| Total                number of employees(15)                    |   |                                                                                                                                                                                                                                                                   | 19,494  |   |   | 26,333 |   |   | 30,124 |   |   | 29,717 |   |   | 30,117 |   |   | — |   |
| Sales                per employee(12)(16)                       |   | Ch$                                                                                                                                                                                                                                                                    | 67.5    |   | Ch$ | 64.1 |   | Ch$ | 56.2 |   | Ch$ | 57.3 |   |   | 65.1 |   |   | 0.13 |   |

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| (1) | Chilean                peso amounts (except dividends) have been translated into U.S. dollars                at                the rate of Ch$ 496.89 per U.S. dollar, the Observed Exchange Rate                at                December 31, 2007. Dividends are translated at the Observed Exchange                Rate                on the date of payment. Such U.S. dollar transactions are presented                for                the convenience of the reader and should not be construed as                representations that the Chilean peso amounts have been or could                be                converted into U.S. dollars at that rate or any other                rate. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Net                income per share expressed in constant Chilean pesos by dividing                net                income by number of shares outstanding at period-end. In U.S. GAAP,                earnings per share are calculated on the basis of the weighed average                shares outstanding. The figures for 2004 reflect a capital increase                of                250,000,000 shares of common stock in August 2004 and a stock split                of                one-to-four in December 2004. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Earnings                  per ADS reflect a ratio of 60 common shares per                  ADS. |
|-----|-------------------------------------------------------------------------------------------------|

| (4) | Figures                are in constant Chilean pesos and U.S. dollars. U.S. dollar amounts                for                dividends are calculated by applying the Observed Exchange Rate on                the                dividend payment date to the nominal peso                amount. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Calculated                on the basis of the number of shares outstanding and fully paid. |
|-----|--------------------------------------------------------------------------------------------|

| (6) | Capitalization                is equal to the current portion of long-term debt plus long-term                debt plus                minority interest and equity. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | These                ratios, which are expressed as percentages, were calculated as follows:                Gross margin = Gross profit/Net revenues; Operating margin = Operating                income/Net revenues; Net margin = Net income/Net revenues; Current                ratio =                Current assets/Current liabilities. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | Includes                stores formerly operated under the *Almac*                and *Ekono*                brands. |
|-----|----------------------------------------------------------------------------------------------------------------------|

| (9) | Includes                stores formerly operating under the Lider and Lider Vecino                brands. |
|-----|-----------------------------------------------------------------------------------------------------------|

| (10) | In                square meters. Calculated by adding the average monthly selling space                for                each month during the year and dividing the result by 12. Average                monthly                selling space is defined as total selling space as of the last day                of the                month divided by the number of stores open on the last day of such                month.                Sales area of *FarmaLider*                stores not included (marginal). Each square meter is equivalent to                10,764                square feet. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | Sales                for the period divided by the average number of stores at the end                of each                month during the period. Includes sales from *FarmaLider*                stores until 2006 (inclusive). Sales from our *Ekono*                discount stores are excluded for 2007. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (12) | “Sales”                set forth net revenues under Chilean GAAP, excluding vendor allowances.                As                such, sales are equal to net revenues under U.S.                GAAP. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (13) | Reflects                increase (decrease) in net revenues of all stores open and operated                by our                company through out two corresponding financial periods and, consequently,                excludes net revenues of stores opened or closed or which underwent                renovation during either of such                periods. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (14) | Sales                for the period divided by the average square meters of selling space                at                the end of each month during the period. For the years prior to 2007,                includes sales from *FarmaLider*                stores (although the sales area of these stores is not included).                Sales                from our *Ekono*                discount stores are excluded for 2007. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (15) | Number                of full-time equivalent employees at period-end (company total). |
|------|----------------------------------------------------------------------------------------|

| (16) | Sales                for the period divided by the average number of employees at the                end of                each month during the period (full time shifts in stores) including                employees in *FarmaLider*                stores for the years prior to 2007. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (17) | In                August 2004, we made a capital increase at 250,000,000 common shares,                which was entirely subscribed and paid. As a result of this, the                number of                our outstanding shares increased from 1,380,000,000 to 1,630,000,000                shares. Effective December 6, 2004, we conducted a one-to-four stock                split                of our common shares in Chile. As a result of the stock split, the                number                of our outstanding shares increased from 1,630,000,000 to 6,520,000,000.                In order to maintain the same economic and corporate rights for the                ADRs                as the underlying common shares, the number of shares representing                each                ADS was increased from 15 common shares per ADS to 60 common shares                per                ADS. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Exchange      Rates**

*Mercado      Cambiario Formal*
*Mercado      Cambiario Informal*

----

|                                     |   | **Observed Exchange Rate (4)** |   |
|------------------------------------------|--------|-----------------------------------------------|--------|
| **Period**                               |   | **Low (1)**                              |   | **High (1)** |   | **Average** |   | **Year End** |   |
|                                     |   |                                          |   |   |   |   |   |   |   |
| 2003                (2)                  |   | Ch$                                           | 593.10 |   | Ch$ | 758.21 |   | Ch$ | 691.40 |   | Ch$ | 593.80 |   |
| 2004                (2)                  |   |                                          | 557.40 |   |   | 649.45 |   |   | 609.53 |   |   | 557.40 |   |
| 2005                (2)                  |   |                                          | 509.70 |   |   | 592.75 |   |   | 559.86 |   |   | 512.50 |   |
| 2006                (2)                  |   |                                          | 511.44 |   |   | 549.63 |   |   | 529.64 |   |   | 532.39 |   |
| 2007                (2)                  |   |                                          | 495.49 |   |   | 548.67 |   |   | 523.69 |   |   | 496.89 |   |
| December                2007 (3)         |   |                                          | 495.49 |   |   | 506.79 |   |   | 499.28 |   |   | — |   |
| January                2008 (3)          |   |                                          | 463.52 |   |   | 498.05 |   |   | 480.90 |   |   | — |   |
| February                2008 (3)         |   |                                          | 458.02 |   |   | 476.44 |   |   | 467.22 |   |   | — |   |
| March                2008 (3)            |   |                                          | 431.22 |   |   | 454.94 |   |   | 442.94 |   |   | — |   |
| April                2008 (3)            |   |                                          | 433.98 |   |   | 457.20 |   |   | 446.43 |   |   | — |   |
| May                2008 (3)              |   |                                          | 461.49 |   |   | 479.54 |   |   | 469.52 |   |   | — |   |
| June                2008 (3)             |   |                                          | 482.53 |   |   | 526.05 |   |   | 495.83 |   |   | — |   |
| July                2008 (as of July 10) |   |                                          | 505.75 |   |   | 529.25 |   |   | 515.35 |   |   | — |   |

----

| (1) | Reflects                pesos at historical values rather than constant pesos. |
|-----|--------------------------------------------------------------------------------|

| (2) | The                average of observed exchange rates for pesos on the last day of each                full                month during the relevant period. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The                average of closing observed exchange rates for pesos for each day                of                transactions during the month. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Transactions                carried out on the previous bank business day reported by the Central                Bank. |
|-----|------------------------------------------------------------------------------------------------------------------------|

----

**RISK      FACTORS**

*An      investment in our common shares involves a high degree of risk. Investors in      our      common shares should carefully consider the following risk factors and the      other      information in this annual report.*

**Risks      Relating to Our Company**

***Our      current strategy may not have the expected results on our      profitability.***

|   | · | we                depend upon high sales volume and we may generate less additional                sales                volume than expected; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                may fail to achieve desired reductions in selling and administrative                expenses; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | our                competitors may decide to match or undercut some or all of our reduced                prices, making it difficult to sustain a sufficient price differential                to                attract the desired increase in                customers; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                may encounter difficulties obtaining additional vendor allowances                from                suppliers in the expected amounts and within the timeframe we currently                anticipate; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | we                may encounter difficulties expanding our operations due to factors                beyond                our control, including increased competition and unfavorable                macroeconomic, sociopolitical and demographic conditions;                and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | even                if we are successful in implementing our strategy, it may take longer                than                planned to achieve the desired                results. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Increased      competition may adversely affect our results of operations and sales volume.***

*Lider*

----

***The      Chilean retail and supermarket industries may become saturated and prevent      us      from carrying out our plans for expansion through development and      growth.***

***The      growth of our credit card operations may expose us to increased credit and      financial risk, which may adversely affect our financial condition and results      of operations.***

*Presto      *
*Presto      *

|   | · | *Economic                Downturns*–                Our credit card business is affected by general economic conditions                beyond                our control, including employment levels, consumer confidence and                interest                rates. A downturn in the Chilean economy may lead to a decrease in                credit                sales; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Increased                Delinquencies and Charge-offs*–                Subject to our credit standards, we seek to increase the in-store                credit                available to our customers, particularly to permit the purchase of                more                expensive, higher-margin durable goods. As a result, our credit card                operations accept a significant portion of applicants otherwise rejected                by credit card operations administered by local Chilean banks. These                customers generally have higher rates of charge-offs and delinquencies                and                are more adversely affected by downturns in the Chilean economy than                customers with better credit                profiles; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Inability                to Predict Future Charge-offs*–                The approaches we use to select our customers may not be as effective                at                predicting future charge-offs due to changes in the economy, which                may                result in higher incidence of delinquencies among our customers;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Changes                in Credit Card Use*–A                variety of social factors may cause changes in credit card use, including                changes in consumer confidence levels, the public’s perception of the use                of credit cards, and changing attitudes about incurring                debt. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***If      we are unable to access capital markets in the future, our financial condition      may be adversely affected.***

***A      change in antitrust law, regulation or regulatory oversight in Chile could      require that we take certain compliance measures including the incurrence of      significant incremental expenses which could adversely impact our ability to      expand our business.***

*Fiscalía      Nacional Económica *
* *
*,      *
* *
* *
*Términos      y Condiciones Generales de Aprovisionamiento*

* *

***The      default on the payment of the deferred amount of the purchase price for      Ekono-Argentina may adversely affect our results of      operations.***

*Ekono-Argentina,      *

----

***Our      controlling shareholders own a substantial majority of our share capital and      exercise significant influence over board decisions.***

|   | · | the                election of a majority of the members of our board of directors; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | the                determination of the amount of dividends we distribute (subject to                the                legally mandated minimum of 30% of net                income); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                acquisition of assets; |
|--------|--------|-------------------------------------------|

|   | · | the                disposition of assets not exceeding 50% of the company’s assets;                and |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | future                issuance of debt securities not convertible into                stock. |
|--------|--------|----------------------------------------------------------------------------------------------|

***The      decision of our controlling shareholders to dispose of a significant number      of      their shares could adversely affect the trading price of our shares and      ADSs.***

***Increased      labor and employment regulation may adversely affect our results of      operations.***

*Ley      de Subcontratación*

----

**Risks      Relating to Chile**

***Our      growth and profitability depend on the level of economic activity in Chile      and      other emerging markets.***

|   | · | the                economic or other policies of the Chilean government, which has a                substantial influence over many aspects of the private                sector; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | other                political or economic developments in or affecting Chile; |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | regulatory                changes or administrative practices of Chilean authorities; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | inflation,                including increases in food prices, and government policies to combat                inflation; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | currency                exchange movements; |
|--------|--------|---------------------------------------------|

|   | · | global                and regional economic conditions; |
|--------|--------|---------------------------------------------------------|

|   | · | copper                prices, which influence the profitability of Chile’s copper                exports; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | increasing                energy prices; and |
|--------|--------|----------------------------------------------|

|   | · | other                factors. |
|--------|--------|-------------------------------|

***Currency      fluctuations could adversely affect our financial condition and results of      operations and the value of our shares and ADSs.***

----

*** ***

***The      Chilean market for our shares may be volatile and illiquid and such volatility      and lack of liquidity may have adverse effects on the market for our      ADSs.***

***Chile      imposes controls on foreign investment and repatriation of investments that      may      affect your investment in, and earnings from, our      ADSs.***

----

***Chile      has different corporate disclosure, governance and accounting standards than      those you may be familiar with in the United States.***

----

**Item      4.**
**INFORMATION      ON THE COMPANY**

**Overview**

|   | · | Comercial                D&S S.A., which oversees all of the Company’s retail activities,                including our supermarket operations operating under the *Lider*,                *Ekono*                and *SuperBodega                Acuenta*brands. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Servicios                Financieros D&S S.A., which oversees our financial businesses,                including our *Presto*                credit card; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Sociedad                Anónima Inmobiliaria Terrenos y Establecimientos Comerciales S.A.                (“Saitec”), which oversees our real estate development                operations. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Hiper      Lider *
*Express      de*
*Lider      *
*Ekono*
*SuperBodega      Acuenta*
*Lider      *
*Ekono      *
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*
*Lider      *
*Hiper      Lider*
*Express      de Lider*
*Ekono*
*SuperBodega      Acuenta*
*Express      de Lider*

*Lider      *
*      FarmaLider*
*Ekono*
*SuperBodega      Acuenta*

|   | · | Our                63 *Hiper                Lider*                hypermarkets (which include compact hypermarkets formerly operated                under                the *Lider* *Vecino*brand)                have an average selling space of 6,659 square meters (approximately                71,678                square feet), and offer “one-stop” shopping for traditional food items and                non-food items such as apparel, electronics and appliances, housewares                and                furniture and general merchandise. In 2007, our hypermarkets generated                73.6% of our net revenues. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our                49 *Express                de Lider*                supermarkets (formerly operated under the *Lider* *Express*brand)                have an average selling space of 1,549 square meters (approximately                16,673                square feet), and emphasize quality groceries and perishables at                low                prices. In 2007, our supermarkets (including our two *SuperBodega                Acuenta*                discount supermarkets) generated 16.6% of our net revenues. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Our                40 *Ekono*                discount food stores have an average selling space of 400 square                meters                (approximately 4,306 square feet), and emphasize a limited assortment                of                quality food items at low prices in a convenient neighborhood setting.                Our                *Ekono*                stores are positioned as a low-cost food store and will compete with                mom-and-pop grocers in neighborhoods. In 2007, our discount food                stores                generated 0.8% of our net revenues. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our                three*** ****SuperBodega                Acuenta*                discount supermarkets have an average selling space of 2,049 square                meters                (approximately 22,055 square feet), and offer an assortment of 4,500                low-priced quality food and other items, including our private label                products (and specifically our *SuperBodega                Acuenta*                private label products) in a in a warehouse type setting. Revenues                generated by our two discount supermarket stores are accounted for                together with the revenues from our *Express                de Lider*                supermarkets. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Our      Core Strengths***

*Lider*

|   | · | ***Chile’s                value leader***.                Based on market surveys and our own monitoring of our competitors’                pricing, we believe we offer consumers the lowest overall prices                of any                major supermarket or hypermarket chain in Chile with the best                quality-price ratio. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ***Chile’s                leading supermarket company***.                Based on information on sales reported by the INE and public financial                information provided by some companies, we estimate that at December                31,                2007 our market share in the Chilean hypermarket and supermarket                industry                was 32.6%, compared to an estimated market share of 29.4% for our                nearest                competitor. We believe our leading market position gives us access                to the                largest customer base of any Chilean supermarket company and helps                us                establish and maintain strong supplier                relationships. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ***Strong                brand with a reputation for best quality-price                ratio***.                We believe that our stores derive substantial benefit from the widespread                recognition of the *Lider*brand                name in Chile and its reputation for                value. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Our      Strategy **

|   | · | ***Continuing                to improve our competitive position.***                We                believe improving our competitive position is essential to maintaining                our                leadership in the highly competitive markets in which we operate.                To                further improve our competitiveness we are: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ○ | *Offering                Exceptional Value*.                Our strategy aims to provide our customers with a superior shopping                experience, delivering a greater variety of quality products and                services                at a lower price than our competitors. Our focus on providing exceptional                value includes: |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Offering                higher quality perishables.                Perishables have historically formed the core of our business,                representing 36.3% of our sales in 2007. We believe that by working                closely with suppliers and investing in quality control we will be                able to                offer higher quality perishables, an essential factor to improving                customer loyalty and, thus, increasing customer traffic at our stores. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | Expanding                our lines of private label products.                In                2007, we fully reformulated our *SuperBodega                Acuenta*                line of products, improving quality standards, redesigning and repackaging                such products and expanding the line to include over 160 grocery                products.                We also launched a new line of beauty care products, *BGOOD*,                which includes 135 such products, complementing our existing *Body+*                line. In addition, we introduced a new line of over 120 premium private                label food products from American food retailer Safeway to replace                our                *President’s                Choice*                products. We similarly continued our expansion of our *Lider*                line of products in 2007, which included over 1,000 grocery products                as of                the end of the year, as well other new lines. As of December 31,                2007, our                lines of private label mass consumption products (groceries, including                beauty care products, and industrial perishables) included approximately                1,640 items. We intend to continue expanding such private label products,                focusing on the development of innovative products, premium brands                and                non-food brands. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Building                  our “*Mi                  Club Lider*”                  loyalty program.                  In                  June 2006, we instituted the “*Mi                  Club Lider*”                  (My Lider Club) loyalty program at our supermarkets. The program                  offers                  our customers special discounts and rewards on a variety of the                  products                  we offer at our supermarkets, as well as cross-promotions with                  some of our                  financial services products. We believe this program will allow                  us to                  expand and consolidate the loyalty of our customers, while allowing                  us to                  monitor their needs, preferences and                  habits. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Continuing                  to expand our *Presto*                  credit card.                  We                  aim to make our *Presto*                  credit card the most convenient payment option for customers in                  our                  stores. In order to further consolidate this position, we intend                  to                  continue expanding the services, benefits and promotions available                  to                  holders of our *Presto*                  credit card. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ○ | *Focusing                on Operational Excellence*.                We believe that the benefits of a lower cost structure can be passed                on to                our customers in the form of lower prices. We intend to steadily                improve                the productivity of our operations, elevating it to the standards                of major                international retailers, by reducing operational, supply and sales                costs                as well as improving our internal controls over all aspects of our                business. To implement this strategy, we intend to ensure our employees                and managers continue to focus on productivity and                innovation. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ***Expanding                our operations in Chile and abroad***.                We continuously explore and evaluate opportunities to expand our                operations both in Chile and in other countries in Latin America.                As part                of this growth strategy, we intend to expand our supermarket operations                and our complementary business (such as our financial services business                and our real estate development operations) by opening new units                and                developing new commercial formats, such as our recently launched                *Superbodega                Acuenta*                discount supermarkets. We also intend to capitalize on the favorable                conditions of other underserved and underdeveloped markets outside                Chile                and expand to other Latin American countries. Our growth strategy                includes: |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ○ | *Expanding                our coverage*.                We opened 11 new *Lider*stores                in 2007, including four *Hiper                Lider*hypermarkets                and seven *Express                de* *Lider*supermarkets.                During 2007, we also opened 32 new *Ekono*stores.                We also opened one new shopping center under our real estate subsidiary,                Saitec. We intend to continue expanding and plan to add 14 new stores                by                the end of 2008 and an additional 14 new stores by the end of 2009.                These                new stores will include both *Lider*                and *SuperBodega                Acuenta*                stores. As such, assuming no further acquisitions, we project increased                year-over-year selling space of 10% at year-end 2008 relative to                2007 and                20% at year-end 2009 relative to December 2007. We also plan to continue                investing in the development of additional shopping centers, purchases                of                properties for development and refurbishing existing                stores. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ○ | *Developing                new commercial formats.*                In                January 2007, we began the process of launching discount stores under                the                *Ekono*** **brand.                As of May 31, 2008, we operate 40 discount food stores under the                *Ekono*** **brand                name. We plan to have 72 and 112 such stores in operation by 2008                and                2009, respectively. Our primary focus on the expansion of these stores                will be the more densely populated residential neighborhoods of the                Metropolitan Region. *Ekono*** **stores                combine the convenience that characterize neighborhood food stores                with                the lower costs of our *Lider*                stores. Relative to our other store formats, these stores emphasize                a                limited assortment of quality food and non-food items, including                our                private label products.*Ekono*** **stores                follow a simple and austere design, presenting all products in a                pre-packaged format so as to eliminate the need for assisted sales.                In                October 2007, we continued expanding our commercial formats, launching                discount supermarkets under the *SuperBodega                Acuenta*brand.                As of May 31, 2008, we operate three discount supermarkets under                the                *SuperBodega                Acuenta*brand                name. *SuperBodega                Acuenta*stores                seek to leverage on what we perceive as the relatively low penetration                of                supermarkets into the low-income segments of the Chilean population                by                offering lower priced food and other items specifically targeting                the                needs and preferences of consumers in these segments. The low-income                segments in Chile account for approximately 3.5 million families,                which                represent 77.5% of Chile’s total population according to figures provided                by the INE. These supermarkets emphasize an assortment of 4,500 low-priced                quality food items, including our private label products (and specifically                our *SuperBodega                Acuenta*                private label products). Like our *Ekono*                stores, these supermarkets follow a simple and austere design, presenting                all products in a warehouse type setting. While both our *Ekono*                and *SuperBodega                Acuenta*                stores have low margins, we believe their low operating costs and                low                capital requirement make them an attractive                investment. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ○ | *Expanding                beyond Chile.*                We                intend to expand our operations to other Latin American countries                with                underserved and underdeveloped markets. Our focus will be on those                markets                that exhibit favorable macroeconomic, sociopolitical and demographic                conditions, creating not only profitable operations, but also those                with                attractive growth potential. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**History**

*sociedad      anónima abierta*

*Supermercado      Almac*

*Ekono      *
*Almac      *
*Ekono      *
*Lider      *
*Lider      *
*Presto*
*Lider*
*Ekono*
*Lider*
*Lider*
*Vecino      *
*Hiper      Lider *
*Lider*
*Express*
*Express      de*
*Lider      *
*SuperBodega      Acuenta*

*Hiper      Lider *
*Express      de*
*Lider*
*Ekono*
*SuperBodega      Acuenta*

----

*FarmaLider*

**Market      Overview**

***Supermarket      Industry in Chile***

----

**Our      Business**

***Retail      Division (Comercial D&S S.A)***

**Our      Store Formats**

*Hiper      Lider *
*Express      de*
*Lider      *
*Ekono      *
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*

|                                                                                       |   | **Number of****Stores** |   | **Total****Selling****Area(1)** |   | **Average****Selling Area****per Store(1)** |   | **Average****    Sales per    ****Square****Meter(2)(3)** |   | **   Number of   ****Employees(4)** |   | **   Sales Per   ****Employee(2)** |   |
|--------------------------------------------------------------------------------------------|--------|------------------------------|--------|---------------------------------|--------|-------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|
|                                                                                       |   |                         |   |                            |   |                                                  |   |                                                                                                   |   |                                                                   |   |                                                                  |   |
| Hypermarket                and Compact Hypermarket – *Hiper                Lider*(5) |   |                         | 62     |                            |   | 414,349                                               |   |                                                                                                   | 6,651  |                                                                   |   | 3.1                                                                   |   |   | 18,888 |   |   | 69.8 |   |
| Supermarket                – *Express                de* *Lider*(6)             |   |                         | 49     |                            |   | 76,725                                                |   |                                                                                                   | 1,566  |                                                                   |   | 3.8                                                                   |   |   | 5,660 |   |   | 53.4 |   |
| Discount                Store – *Ekono*                                              |   |                         | 32     |                            |   | 12,809                                                |   |                                                                                                   | 400    |                                                                   |   | 1.6                                                                   |   |   | 347 |   |   | 51.9 |   |
| Discount                Supermarket – *SuperBodega                Acuenta*           |   |                         | 2      |                            |   | 4,126                                                 |   |                                                                                                   | 2,063  |                                                                   |   | 1.6                                                                   |   |   | 117 |   |   | 34.5 |   |
| Total                                                                                      |   |                         | 145    |                            |   | 508,009                                               |   |                                                                                                   | 3,504  |                                                                   |   | 3.2                                                                   |   |   | 25,012 |   |   | 65.1 |   |

----

| (1) | In                square meters. Each square meter is equivalent to 10,764 square feet. |
|-----|-----------------------------------------------------------------------------------------|

| (2) | In                millions of constant Chilean pesos. “Sales” sets forth net revenues under                Chilean GAAP, excluding vendor allowances. As such, sales is equal                to net                revenues under U.S. GAAP. Considers sales for the period divided                by the                average number of full-time employees at the end of each month during                the                period. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Average                square meters. |
|-----|---------------------------------------|

| (4) | Full-time                equivalent employees at December 31, 2007 working in stores. |
|-----|---------------------------------------------------------------------------------------|

| (5) | Includes                stores formerly operating under the *Lider*                and *Lider                Vecino*                brands. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Includes                stores formerly operating under the *Lider* *Express*                brand. |
|-----|----------------------------------------------------------------------------------------------------------|

|                                    |               | **Year                ended December 31,**       |            |
|-----------------------------------------|--------------------|--------------------------------------------------|-----------------|
|                                    |               | **2005**                                         |            | **2006** |   | **2007** |   |
|                                    |               | **Net Revenues**                            |            | **% of Total****Net****Revenues** |   | **Net Revenues** |   | **% of Total****Net****Revenues** |   | **Net Revenues** |   | **% of Total****Net****Revenues** |   |
|                                    |               | **(in                millions of constant Ch$)** |            |
| *Hiper                Lider*(1)         |     | Ch$                                              |  1,429,938 |     |   | 81.6 | %   | Ch$ |  1,367,844 |     |   | 75.1 | %    | Ch$ | 1,403,003 |     |   | 73.6 | %  |
| *Express                de Lider*(2)(3) |               |                                             | 174,486         |   |   | 9.9 | %  |   | 273,702 |   |   | 15.0 |   |   | 314,708 |   |   | 16.5 | %  |
| *Ekono(4)*                              |               |                                             | —         |   |   | — |   |   | — |   |   | — |   |   | 14,787 |   |   | 0.8 | %  |
| *SuperBodega                Acuenta*    |               |                                             | —         |   |   | — |   |   | — |   |   | — |   |   | 1,325 |   |   | 0.1 | %  |
| *FarmaLider*                            |               |                                             | 38,734          |   |   | 2.2 | %  |   | 41,574 |   |   | 2.3 | %  |   | — |   |   | — | %  |
| Other(5)                                |               |                                             | 109,976         |   |   | 6.3 | %  |   | 139,098 |   |   | 7.6 | %  |   | 171,957 |   |   | 9.0 | %  |
| Total                                   |               | Ch$                                              | 1,753,134       |   |   | 100 | % | Ch$ | 1,822,218 |   |   | 100 | % | Ch$ | 1,905,780 |   |   | 100 | % |

----

| (1) | Includes                stores formerly operating under the *Lider*                and *Lider                Vecino*                brands. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

----

| (2) | Includes                stores formerly operating under the *Lider* *Express*                brand. |
|-----|----------------------------------------------------------------------------------------------------------|

| (3) | Includes                supermarkets formerly operated under the *Almac*and                *Ekono*brands. |
|-----|-----------------------------------------------------------------------------------------------------------|

| (4) | Includes                discount stores launched in January 2007. |
|-----|-------------------------------------------------------------------|

| (5) | “Other”                  includes revenues from financial services, logistics services and                  real                  estate operations. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Hypermarkets      and Compact Hypermarkets *
*–      Hiper Lider*

*Hiper      Lider *
*Lider*
*Lider      Vecino*
*Hiper      Lider *
*Hiper      Lider *
*Hiper      Lider*
*Hiper      Lider*
*Hiper      Lider*
*Lider      *
*Lider      *

*Hiper      Lider*

*Supermarkets      *
*–      Express de Lider*

*Express      de Lider*
*Lider      Express*
*Express      de Lider*
*Express      de Lider*

*Express      de Lider*

*Discount      Food Stores - Ekono*

*Ekono*
*Ekono*
*Lider*
*Ekono*
*Ekono*

----

*Ekono*

*Discount      Supermarkets- SuperBodega Acuenta*

*SuperBodega*
*Acuenta      *
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*

*SuperBodega      Acuenta *

*Complementary      Businesses*

*Real      Estate Development*

*Financial      services*
*Presto*

*Pharmacy      - FarmaLider*
*FarmaLider*
*Presto*
*FarmaLider*

----

**Our      Pricing and Marketing Strategy**

*Pricing*
*Lider*
*E!,      SuperBodega Acuenta *
*Buffet*
*Presto      *

*Marketing*
*      Hiper Lider *
*Express      de Lider *
*Lider’s      *

*Ekono*
*Ekono*

*Ekono*
*SuperBodega      Acuenta *
*SuperBodega      Acuenta *

*Lider*
*Lider*
*Lider*

*Presto*
*Lider*

***Our      Products***

*Product      Mix. *

----

|                                 |   | **Percentage of Selling Space****by Product Category****Year ended December 31, 2007** |   |
|--------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                 |   | **Groceries(1)**                                                                                                                    |   | **Perishables** |   | **Non-food****Products(1)** |   | **Total** |   |
|                                 |   |                                                                                                                                |   |   |   |   |   |   |   |
| *Hiper                Lider*(2)      |   |                                                                                                                                | 33     | % |   | 26 | % |   | 41 | % |   | 100 | % |
| *Express                de Lider*(2) |   |                                                                                                                                | 57     | % |   | 40 | % |   | 3 | % |   | 100 | % |
| *Ekono*                              |   |                                                                                                                                | 72     | % |   | 25 | % |   | 3 | % |   | 100 | % |
| *SuperBodega                Acuenta* |   |                                                                                                                                | 52     | % |   | 19 | % |   | 29 | % |   | 100 | % |

----

| (1) | “Non-food                products” includes apparel, electronics and appliances, housewares and                furniture, pharmaceuticals and general                merchandise. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes                stores formerly operating under the *Lider*                and *Lider                Vecino*                brands. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Includes                stores formerly operating under the *Lider* *Express*                brand. |
|-----|----------------------------------------------------------------------------------------------------------|

*Lider      *

|                                      |   | **Percentage Contribution to Sales by Product****Category****Year ended December 31,** |   |
|-------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------|--------|
|                                      |   | **2005**                                                                                                                       |   | **2006** |   | **2007** |   |
|                                      |   |                                                                                                                           |   |   |   |   |   |
| Groceries                                 |   |                                                                                                                           | 46.7   | % |   | 46.7 | % |   | 48.6 | % |
| Perishables                               |   |                                                                                                                           | 33.7   | %  |   | 34.9 | %  |   | 36.3 | %  |
| Apparel                                   |   |                                                                                                                           | 5.9    | %  |   | 4.8 | %  |   | 4.5 | %  |
| Electronics                and appliances |   |                                                                                                                           | 3.5    | %  |   | 3.5 | %  |   | 3.3 | %  |
| Housewares                and furniture   |   |                                                                                                                           | 2.3    | %  |   | 2.3 | %  |   | 2.1 | %  |
| Other                non-food products(1) |   |                                                                                                                           | 7.9    | %  |   | 7.8 | %  |   | 5.2 | %  |
| Total                                     |   |                                                                                                                           | 100.0  | % |   | 100 | % |   | 100 | % |

----

| (1) | Percentages                are of our total product sales from our retail operations and sets                forth                net revenues under Chilean GAAP, excluding vendor allowances. As                such,                sales are equal to net revenues under U.S. GAAP. “Other non-food products”                includes sporting goods, toys, office supplies, general merchandise                and                pharmacy products for the years 2005 and 2006. In 2007 “other non-food                products” does not include pharmacy products since we transferred the                pharmacy operations to FASA in December                2006. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Groceries*

*Perishables*

----

*Non-Food      Products*

*Apparel*
*BLVD      *

*Electronics      and Appliances*
*Gröven      *
*Haus      *
*Presto*

*Housewares      and Furniture*
*Haus      *
*Haus      *
*Haus      *

*Other      General Merchandise Products*
*Paragon      *
*Toi      *
*Alquimia      *

*Private      Label Products*

|   | · | generate                customer recognition of our image as a low price provider of high                quality                products; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | increase                the profitability of sales of both food and non-food products;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------|

|   | · | increase                brand loyalty by offering high quality goods that customers can only                find                at our stores. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Lider      *
*E!      *
*Ekono*
*Buffet      *
*SuperBodega      Acuenta *
*BLVD      *
*Haus      *
*Gröven      *
*Paragon*
*Toi      *
*Body      Plus*
*Alquimia*
*Safeway*
*Safeway      Select*
*Organics*

***Customer      Service and Standardization***

*Lider      *
*      Lider Punta Arenas*
*Lider*
*Lider*
*Lider*
*Lider*

***Seasonality***

***Purchasing      and Distribution***

*Purchasing      and Supply*

----

*Defensoría      del Proveedor*
*** ***

*Distribution      and Inventory Management *

*Distribution*

----

*i.e.*

*Inventory      Management*

***Financial      Services Division (Servicios Financieros D&S      S.A.)***

*Presto*

*Presto      Credit Card. *
*Presto      *
*Presto      *
*Lider      *
*Lider      *

----

*Presto      *
*Presto      *
*Lider      *

*Presto      *
*Presto      *

*Presto      *
*Presto*
*Presto      *

*Presto*
*Presto*
*Presto      *

* *
*Servicios      y Administración de Créditos Comerciales Presto S.A.*
*Presto*

----

|                                                         |   | **Year ended December 31,**                      |    |
|--------------------------------------------------------------|--------|-----------------------------------------------------------------|---------|
|                                                         |   | **2005**                                                        |    | **2006** |   | **2007** |   |
|                                                         |   | **(in                millions of constant Ch$)** |    |
|                                                         |   |                                                            |    |   |   |   |   |   |   |   |
| Net                revenues                                  |   | Ch$                                                             | 70,925  |   | Ch$ | 101,297 |   | Ch$ | 123,939 |   |
| Provisions                for doubtful accounts              |   |                                                            | 30,410  |   |   | 31,115 |   |   | 35,693 |   |
| Financial                expenses                            |   |                                                            | 2,722   |   |   | 8,949 |   |   | 13,996 |   |
| Other                expenses                                |   |                                                            | 30,269  |   |   | 45,050 |   |   | 53,343 |   |
| Selling                and administrative expenses           |   |                                                            | 63,400  |   |   | 85,115 |   |   | 103,032 |   |
| Operating                income (loss)                       |   |                                                            | 7,524   |   |   | 16,182 |   |   | 20,907 |   |
| Total                accounts receivable, end of period      |   |                                                            | 205,651 |   |   | 219,288 |   |   | 260,210 |   |
| Allowance                for doubtful accounts (credit card) |   |                                                            | 20,341  |   |   | 21,048 |   |   | 26,990 |   |
| Net                total accounts receivable, end of period  |   | Ch$                                                             | 185,310 |   | Ch$ | 198,240 |   | Ch$ | 233,220 |   |

|                                                                      |   | **At December 31,**                                                                      |      |
|---------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------|-----------|
|                                                                      |   | **2005**                                                                                           |      | **2006** |   | **2007** |   |
|                                                                      |   | **(in                millions of constant Ch$, except                percentages)** |      |
|                                                                      |   |                                                                                               |      |   |   |   |   |   |   |   |
| **Allowance                for Doubtful Accounts, Detail**                |   |                                                                                               |      |   |   |   |   |   |   |   |
| January                1, balance                                         |   | Ch$                                                                                                | 20,034    |   | Ch$ | 20,341 |   | Ch$ | 21,048 |   |
| Provisions                for doubtful accounts                           |   |                                                                                               | 30,480    |   |   | 44,656 |   |   | 41,200 |   |
| Write-off,                net                                             |   |                                                                                               | (30,173   | ) |   | (43,949 | ) |   | (35,258 | ) |
| December                31, balance                                       |   | Ch$                                                                                                | 20,341    |   | Ch$ | 21,048 |   | Ch$ | 26,990 |   |
| Number                of accounts in good standing (1)                    |   |                                                                                               | 1,510,532 |   |   | 1,588,852 |   |   | 1,681,458 |   |
| Delinquent                accounts (2)                                    |   |                                                                                               | 61,744    |   |   | 69,765 |   |   | 82,491 |   |
| Average                balance per account (in thousands of constant Ch$) |   |                                                                                               | 127       |   |   | 177 |   |   | 200 |   |
| Allowance                for doubtful accounts/Total net receivables      |   |                                                                                               | 11.0      | % |   | 10.6 | % |   | 11.6 | % |
| Allowance                for doubtful accounts/Total gross receivables    |   |                                                                                               | 9.9       | % |   | 9.6 | % |   | 10.4 | % |

----

*Lider      *
*Presto*

*Presto      *

----

*Presto      Corredores de Seguros, Presto Telecomunicaciones and Lider      Viajes*
*Presto*
*Corredora      de Seguros Presto Limitada*
*Lidertel*
*Lider*
*carrier      151*
***.***
*Lidertel*
*Lider      Viajes*

***Real      Estate Development Division (Saitec)***

As      of      December 31, 2007, we operated ten shopping malls that house a total of 411      large and small stores (including ten of our *Lider*      stores)      that total 218,227 square meters (approximately 2,348,995 square feet), 53%      of      which is rented to third-party merchants, with the remainder rented to our      stores (103,238 square meters, or approximately 1,111,254 square feet). The      real estate division also manages leases corresponding to approximately 729      retail locations, including five large stores and 626 small shares (648,860      square meters in total, or approximately 6,984,329 square feet) in our      supermarkets, the supermarkets we lease from other third-parties and      hypermarkets (small shops usually located in the front part of the store, past      the check-out counters and sales area). In total, at December 31, 2007, our      real      estate operations generated rental income from 867,087 square meters of rental      space (approximately 9,333,324 square feet), corresponding to 1,140 retail      locations in total: this includes 10 *Lider*      stores      in shopping malls, 103 supermarkets, 17 large stores leased to department stores      or home improvement centers and 1,000 minor stores in shopping centers or      supermarkets. In 2007, our real estate operations generated consolidated net      revenues in the amount of Ch$24,410 million (US$49.1 million) in annual rental      income from our properties representing approximately 1.3% of our net revenues,      after deducting Ch$49,527 million (US$99.7 million) in rental income received      from our supermarkets.

*Lider      *
*Hiper      Lider *
* *
*Express      de Lider s*
*Ekono*
*SuperBodega      Acuenta*
*Lider*
*SuperBodega      Acuenta*
*Lider      *
*Hiper      Lider *
* *
*Express      de Lider s*
*      Ekono *
*SuperBodega      Acuenta*
*Express      de Lider *
*SuperBodega      Acuenta*
*Lider*
*Ekono*
*SuperBodega*
*Acuenta      *

*Description      of Property*

*Carrefour*
*Ekono*

----

|                                                                                                                                                                                                                                                           |   | **UndevelopedSites** |   | **Stores** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------|--------|------------|--------|
| **Region**                                                                                                                                                                                                                                                     |   |                 |   |       |   |   |   |
| Valparaíso                and                Metropolitan Regions                                                                                                                                                                                         |   |                 | 11     |       |   | 70 |   |
| Libertador                General Bernardo O’Higgins,                Maule,                Bíobío,                Araucanía,                Lagos,                Ríos, Magallanes                and Antártica Chilena Regions |   |                 | 2      |       |   | 14 |   |
| Arica                and Parinacota, Tarapacá,                Antofagasta,                Atacama,                Coquimbo                Region                                                                                                          |   |                 | 2      |       |   | 5 |   |
| Total                                                                                                                                                                                                                                                          |   |                 | 15     |       |   | 89 |   |

**Information      Technology**

*Store      Systems*
*Presto      *

----

*Management      Information Systems*

|   | · | in                connection with distribution, JDA automated replenishment software,                which                includes AWR (formerly TRIM) and ASR (formerly SLIM), and Worldwide                Chain                Store System (a warehouse management system). In 2006 we began to                implement *Manhattan*                a                world class warehouse management system, in order to improve our                productivity; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | in                our stores, the NCR AS@R, a new POS software product with powerful                promotional features which allows for greater flexibility; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | in                our headquarters, the SAP platform (back-office solutions) JDA, PMM                and                Arthur Planning for non-food products (apparel, electronics, toys,                office                supplies, auto parts, gardening and general merchandise) and a platform                developed in-house for core business management, commercial tools,                price                and promotion management inventory service levels for the Grocery                and Food                categories; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | for                CRM and Business Intelligence platforms, we implemented Teradata                (NCR                Datawarehouse Division) that is connected to our promotional solutions                in                our POS platform. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Employees      and Human Resources**

*FarmaLider*
*FarmaLider      *

----

**Competition      **

|                                         |   | **Percentage ofSales** |   | **Number ofStores****at Year End** |   |
|----------------------------------------------|--------|-----------------------------|--------|---------------------------------------------------|--------|
|                                         |   |                        |   |                                              |   |   |   |
| D&S(1)                                   |   |                        | 32.6   | %                                                 |   | 145 |   |
| Cencosud(2)                                  |   |                        | 29.4   | %                                            |   | 147 |   |
| Saieh-Rendic                Joint Venture(3) |   |                        | 5.2    | %                                            |   | 63 |   |
| Falabella(4)                                 |   |                        | 4.9    | %                                            |   | 21 |   |
| Others                                       |   |                        | 33.1   | %                                            |   | 419 |   |
| Total                                        |   |                        | 100.0  | %                                                 |   | 795 |   |

----

*Hiper      Lider, Express de Lider*
*      SuperBodega Acuenta *
*Ekono*

*** ***

----

**Trademarks,      Tradenames and Service Marks**

*Lider*
*Hiper      Lider, Presto *
*      Ekono, *
*      SuperBodega Acuenta,*
*Almac*
*      Lider Vecino*
*      Lider Express*
*Lider*
*Ekono,      Buffet*
*SuperBodega      Acuenta*
*E!*
*Body+*
*B      Good *
*Boulevard*
*Paragon*
*Alquimia*
*Groven*

**Insurance**

**Regulation**

*Servicio      Nacional*
*de      Salud *
*Servicio      Agrícola y Ganadero *
*Servicio      Nacional del Consumidor *

----

*,      *
* *
* *

*** ***

----

*Presto*
*Presto*
*Servicios      y Administración de Créditos Comerciales Presto S.A.*
*Presto      *

* *
*Presto*

*Información      de Interés*

**Capital      Expenditures**

*Lider,*
*Ekono*
*SuperBodega      Acuenta*
*SuperBodega      Acuenta*

----

|                                                                         |   | **Actual for year ended December 31,** |    | **Projected** |   | **Total Projected** |   |
|------------------------------------------------------------------------------|--------|-----------------------------------------------------------------|---------|---------------|--------|--------------------------|--------|
|                                                                         |   | **2005**                                                        |    | **2006**      |   | **2007**                 |   | **2008** |   | **2009** |   | **2008-2009** |   |
|                                                                         |   |                                                            |    |          |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Number                of stores at beginning of period                       |   |                                                            | 78      |          |   | 85                       |   |   | 103 |   |   | 145 |   |   | 199 |   |   | 145 |   |
| New                stores opened or acquired or reopened                     |   |                                                            | 7       |          |   | 19                       |   |   | 45 |   |   | 54 |   |   | 54 |   |   | 108 |   |
| Stores                sold or closed                                         |   |                                                            | — |          |   | —                  |   |   | 3 |   |   | — |   |   | — |   |   | — |   |
| Existing                stores remodeled or expanded                         |   |                                                            | — |          |   | 1                        |   |   | 2 |   |   | — |   |   | — |   |   | — |   |
| Existing                stores transformed into another format               |   |                                                            | 7       |          |   | 5                        |   |   | — |   |   | 2 |   |   | — |   |   | — |   |
| Number                of supermarkets at end of period                       |   |                                                            | 85      |          |   | 103                      |   |   | 145 |   |   | 199 |   |   | 253 |   |   | 253 |   |
| Format                of stores at end of year:                              |   |                                                            | 85      |          |   | 103                      |   |   | 145 |   |   | 199 |   |   | 253 |   |   | 253 |   |
| *Almac/Lider                Express/* *Express                de Lider* |   |                                                            |    |          |   |                     |   |   | 49 |   |   | 52 |   |   | 57 |   |   | 57 |   |
| *Hiper                Lider*                                                 |   |                                                            | — |          |   | —                  |   |   | 62 |   |   | 66 |   |   | 70 |   |   | 70 |   |
| *Lider*                                                                      |   |                                                            | 27      |          |   | 44                       |   |   | — |   |   | — |   |   | — |   |   | — |   |
| *Lider                Vecino*                                                |   |                                                            | 32      |          |   | 33                       |   |   | — |   |   | — |   |   | — |   |   | — |   |
| *Ekono*                                                                      |   |                                                            | — |          |   | —                  |   |   | 32 |   |   | 72 |   |   | 112 |   |   | 112 |   |
| *SuperBodega                Acuenta*                                         |   |                                                            | — |          |   | —                  |   |   | 2 |   |   | 9 |   |   | 14 |   |   | 14 |   |
| Capital                expenditures(1) (in millions of Ch$)                  |   | Ch$                                                             | 55,205  |          | Ch$    | 85,583                   |   | Ch$ | 122,834 |   | Ch$ | 99,378 |   | Ch$ | 99,378 |   | Ch$ | 198,756 |   |
| Capital                expenditures(1) (in millions of US$)                  |   | US$                                                             | 111.1   |          | US$    | 172.2                    |   | US$ | 247.2 |   | US$ | 200.0 |   | US$ | 200.0 |   | US$ | 400.0 |   |

----

| (1) | In                millions of constant Chilean pesos and U.S. dollars. For 2005, it                does not                include Ch$12,923 million (US$26.0 million) invested to acquire 35%                of the                ownership of Alvi wholesale business. Exchange rate: US$1.00 = Ch$496.89                as of December 31, 2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Legal      Proceedings **

*Disco-Ahold      Litigation *

----

*Merger      with S.A.C.I Falabella*

----

**Item      4A.**
**UNRESOLVED      STAFF COMMENTS**

**Item      5.**
**OPERATING      AND FINANCIAL REVIEW AND PROSPECTS**

**Basis      of Presentation**

**Overview**

**Key      Factors Affecting Net Revenues and Results of Operations**

***Key      Factors Affecting Our Net Revenues***

*Our      Hypermarket and Supermarket Revenues. *

|   | · | *Pricing                policies.*  |
|--------|--------|------------------------------------------|

|   | ○ | *Pricing                strategy.*Our                pricing strategy is focused on offering the lowest possible prices                and                perceptual price positioning along with using incentives for holders                of                our *Presto*credit                card. Our pricing strategy is part of our broader commercial strategy,                which also includes delivering service and quality and developing                our                *Lider*brand                name. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ○ | *Product                mix.*The                mix of products we sell has a significant impact on our net revenues.                In                particular, because non-food products generally have higher average                margins than our food products, our operating results are positively                affected as the proportion of non-food products in our product mix                increases. Sales of our non-food products (excluding pharmacy sales)                increased by 1.3% in 2007 compared to 2006, a smaller increase relative                to                the increase in grocery sales (5.4%) and perishables (6.5%). Sales                of                non-food products represented 15.2% of our net sales for 2007 compared                to                15.5% for 2006. The decrease of 30 basis points in the relative weight                of                non-food products in total sales during 2007 as compared to 2006                is                explained by the higher proportion of food products in our total                sales.                Our gross margin increased by 90 basis points in 2007 compared to                2006 due                to the increase in financial and real estate revenues and not because                of                an increase in non-food sales. However, if the percentage of non-food                sales increased relative to total company sales, such increase would                result in a further increase of our gross margin given the higher                average                margins for non-food products over food                products. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Expansion                of sales area.*Opening                and acquiring new stores, and expanding existing stores, has been                one of                the principal drivers of sales volume in recent years, fueling much                of our                hypermarket and supermarket revenue growth. In 2007, new or remodeled                stores accounted for 7.8% of our net sales. We added 45 new stores                in 2007                (11 *Lider*                stores, two *SuperBodega                Acuenta*                stores and 32 *Ekono*                stores), and we plan to add 54 new stores in                2008. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Growth                in Same Store Sales (“SSS”)*.                Our same store sales showed a decline during the second half of 2005,                especially during the fourth quarter when SSS decreased by 3.5% due                to                increased competition resulting from new sales area added by our                competitors’ aggressive expansion programs and our own new stores, which                caused traffic reductions in our existing supermarkets. The full                year 2005                closed with a 1.3% decline in same store sales compared to the year                2004.                This declining trend continued during the first half of 2006, which                is                also explained by the tough comparison against higher SSS recorded                during                the first half of 2005. While our SSS improved during the second                half of                2006, our full year 2006 closed with a 3.4% decline in SSS. We have                implemented a comprehensive operating efficiency program that aims                at                improving processes and standardizing operating standards throughout                our                company, especially focusing in our stores. This program has reduced                expenses, which has lowered prices and led to an increase in the                competitiveness of our commercial products and an increase in traffic                in                our stores. The My Lider Club loyalty program also contributed to                the                increase in same store sales during 2007 by making our *Lider*                stores more attractive for large purchases since we distribute rebates                to                participating customers based on the amount they purchase. Thus,                same                store sales showed a favorable trend of sustained increases in 2007.                Same                store sales increased 0.7% in the first quarter of 2007, increased                1.0% in                the second quarter, and increased 1.7% in the third quarter. However,                in                the fourth quarter of 2007, we experienced the first signs of a consumer                slowdown. This consumer slowdown, together with certain logistic                failures                during the fourth quarter of 2007 that prevented us from fully meeting                our                demand during the peak retail season of December 2007, resulted in                a 1.3%                same store sales decrease for the fourth quarter of 2007. Consumer                slowdown also led to a decrease of 0.6% in same store sales for the                first                quarter of 2008. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Chilean                economic conditions.*Our                net revenues are strongly influenced by changes in Chilean economic                conditions that affect the purchasing power and habits of our customers.                Chile recorded GDP growth of 6.3% for 2005, 4.0% for 2006 and 5.1%                for                2007. During the same period, unemployment, measured on the last                moving                quarter October-December declined from 7.9% for 2005 to 6.0% in 2006                but                rose to 7.2% in 2007. Average unemployment rates for the full years                2005,                2006 and 2007 were 9.2%, 7.8% and 7.1%, respectively. As of April                30,                2008, (i.e., the moving quarter February-April), unemployment remained                stable at 7.6% from an unemployment rate of 7.6% for the previous                moving                quarter January-March. These figures represent an increase compared                to the                6.8% in the February-April quarter of last year at April 30, 2007. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                   |   | **Year ended December 31,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                                                                                   |   | **2005**                                   |   | **2006** |   | **2007** |   |
|                                                                                                                                   |   |                                       |   |   |   |   |   |   |   |   |
| Increase                in net revenues                                                                                                |   |                                       | 7.1    | % |   | 3.9 | % |   | 4.6 | % |
| Increase                in sales of groceries, perishables and non-food items (including                pharmacy                sales) |   |                                       | 4.5    | % |   | 2.5 | % |   | 3.0 | % |
| Increase                (decrease) in same store sales                                                                                 |   |                                       | (1.3   | )% |   | (3.4 | )% |   | 0.5 | % |
| Increase                in suppliers fees                                                                                              |   |                                       | 12.5   | % |   | 7.0 | % |   | 2.5 | % |
| Increase                in selling space (1)                                                                                      |   |                                       | 5.4    | % |   | 9.1 | % |   | 9.0 | % |
| Increase                (decrease) in sales per square meter                                                                           |   |                                       | 3.1    | %       |   | (6.1 | )% |   | 4.5 | % |
| Increase                in Chilean GDP (2)                                                                                        |   |                                       | 6.3    | %(2) |   | 4.0 | % |   | 5.1 | % |
| Increase                in Chilean consumption (2)                                                                                     |   |                                       | 8.2    | %(2) |   | 7.1 | % |   | 5.9 | % |

----

|   | · | *Vendor                allowances.*Vendor                allowances, which are generally recorded at an agreed-upon percentage                of                sales to customers, have increased over the last three years, primarily                as                a result of our increased purchase volumes with our suppliers. We                expect                this trend to continue to the extent we continue to increase our                purchase                volumes with our suppliers. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Financial      Services Revenues. *
*Presto      *
* *
*Presto      *
* *

|   | · | *Finance                charges*.                Since we currently use our *Presto*card                to help increase our total sales volume, our goal is to offer interest                rates that are competitive with those offered by the in-store credit                cards                of our principal competitors in order to complement our low prices                on our                products. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Average                account balances*.                Average account balances are generally a function of the credit limits                we                allocate to each account, and the frequency with which the cards                are used                as well as the average purchase volume. We set credit limits by analyzing                an applicant’s current income and credit record as obtained from Chilean                credit agencies. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Other                financial revenues*.                This refers to credit card commissions and fees. As Presto cards                are used,                a monthly statement is issued containing an invoicing fee. Also,                when                past-due accounts are collected, a collection fee is charged to the                customer. Additionally, as our card starts operating as an “open card”,                accepted by businesses unaffiliated to *Lider*stores,                its use generates a fee charged to these businesses referred to as                the                merchant discount. Finally, from January 2005, a monthly maintenance                fee                to the cardholder has been charged to offset the significant discounts                that *Presto*                cardholders are entitled to when shopping in our *Lider*stores.                These *Impactos                Presto*have                contributed to the growth in the number of new accounts opened and                active                accounts. As our financial services division further diversifies                its                services, including insurance brokerage among others, we expect to                derive                commissions from such sales. Other financial revenues including merchant                discounts, fees to cardholders and commissions are expected to grow                resulting in a reduction on the reliance of our financial services                division on revenues from credit, along with an increase of revenues                from                transactions or use of the card regardless of the use of                credit. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | *Mix                of sales- Food and Non-Food*.                In 2007, our *Presto*card                was used in approximately 22% of our sales with respect to food products                which has remained stable since 2006. Sales of food products represented                84.8% of our sales for 2007 as compared to 81.6% for 2006 resulting                from                our decision to increase competitiveness in our core business of                retail                food sales, and thus to open more supermarkets, which mainly sell                food                items, as well as the sale of our pharmacy operations. Our sales                of                non-food items have decreased as a result of increased competition                from                hyper-markets, department stores and the sale of our pharmacy operations.                For 2007, our *Presto*card                was used in approximately 29.2% of our sales in non-food areas as                compared                to 31% in 2006. Sales of non-food products represented 15.2% of our                sales                for 2007 as compared to 18.4% in 2006, when we were operating our                *FarmaLider*                pharmacies. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Other      revenues. *
*Centro      Urbano Las Rejas*
*Espacio      Urbano Los Andes*
*Espacio      Urbano Los Pioneros*

***Key      Factors Affecting Our Cost Structure***

*Cost      of Sales and Gross Profit*

*Selling      and Administrative Expenses*
* *

|   | · | *Labor                and personnel expenses*:* *Our                labor and personnel expenses are the main component of the total                operating                expenses and they represented 34.9% during the year 2007, 36.8% during                the                year 2006 and 35.2% in 2005. As a percentage of net revenues, labor                and                personnel expenses represented 8.1% in 2007, 8.7% in 2006 and 8.4%                in                2005. During 2007, our labor expenses decreased 2.9% compared to                2006, as                a result of our initiatives aimed at increasing productivity and                operating                efficiency. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Advertising                expenses*:                Our advertising expenses represented 5.3% of our total operating                expenses                in 2007, 6.5% in 2006 and 7.8% in 2005. As a percentage of net revenues,                advertising expenses represented 1.2% in 2007, 1.5% in 2006 and 1.9%                in                2005. During 2005, advertising expenses increased due to the cost                of                promotional incentives given to *Presto*card                holders and the implementation of the strategy which aimed to deliver                superior service and quality at the lowest possible price. During                2007,                advertising costs have decreased by 17.4% compared to 2006 as a result                of                the implementation of the “Operational Excellence” program, which is aimed                at reducing expenses throughout the                company. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | *Provisions                for doubtful accounts*.                In connection with our credit card operations, we record an allowance                for                doubtful accounts, which corresponded to 11% of net credit card                receivables or 9.9% of our gross credit receivables for 2007, which                is                used to offset write-offs and maintain an allowance deemed appropriate                to                the amount of total receivables. Our allowances for doubtful accounts                have                risen in recent years and are primarily a function of the total number                of                credit card accounts and delinquency rates. However, in 2006 and                2007,                this allowance as a percentage of our total net and gross receivables                has                decreased as we have established tighter controls on risk. Moreover,                as a                result of electing to open our *Presto*card                to unaffiliated merchants, we are subject to the regulations of the                SVS                and have, in accordance with its provisioning policies increased                our                allowances for doubtful accounts. We record provisions of a set percentage                of outstanding balances for each past due credit card loan and evaluate                these provisions based on the number of days past due and the historical                behavior of our customers. As we continue to expand our credit card                business, we expect our aggregate allowance for doubtful accounts                to                increase, and as we control the risk of our portfolio, this allowance                as a                percentage of net and gross receivables should                decrease. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Utilities*:* *Our                utility expenses represented 4.0% of our total revenues in 2007,                3.6% in                2006, and 3.7% in 2005.*** ***These                expenses represented 17.3% of our total operating expenses in 2007,                15.3%                in 2006, and 15.8% in 2005. Since 2007 the rise in global energy                prices,                particularly in petroleum, has led to a general increase in Chile’s                utility costs. Chile is highly dependent on energy inputs since it                is not                a producer of petroleum or natural gas. Continued increases in the                price                of energy inputs could raise operating costs as well as lead to a                lower                rate of GDP growth for Chile and lower personal disposable income,                both of                which would result in lower consumption growth for our                business. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Other      Factors Affecting Our Net Income***

*Price-level      Restatement and Foreign Exchange Gain (Loss). *

*Income      tax expense*

*Competition      and Regulation*

***Our      Business Model***

*Lider*
*SuperBodega      Acuenta*
*Ekono*
*Presto*

----

|   | · | *Low                prices drive higher volume*.                According to market surveys, price is one of the key factors Chilean                consumers consider when deciding where to shop. We are committed                to                becoming more competitive, maintaining a discernible price difference                compared to our competitors, we expect to attract more customers                to our                stores. Additionally, we plan on further increasing the low prices                perception by consumers through increasing our offerings of private                label                products. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Preferred                price to quality ratio*.                With our actual, and even more prominent, perceptual price advantage                and                reputation for low prices, we have strengthened our commitment to                providing a superior shopping experience through the combination                of                different elements that allow customers to get more value for their                money,                such as quality perishables, attractive non-food offerings, low interest                credit, money for** **purchasing** **through*** ***the                My Lider Club loyalty program. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *High                traffic provides opportunities for cross-selling*.                We intend to take advantage of the higher volume of customer traffic                we                expect to generate through our current strategy by cross-selling                an                expanding range of quality non-food products and complementary services                to                our customers, delivering service and quality at the lowest possible                price                by keeping a perceptual price positioning. By capturing a greater                share of                the consumer’s wallet and expanding our coverage both in Chile and                elsewhere in Latin America through our expansion program, we expect                to                increase our revenues. Our same store sales increased in 2007 by                0.5%                compared to a 3.4% decrease in 2006, mainly due to our more competitive                pricing. Increasing our competitiveness in terms of our value proposition,                and passing on the cost reductions achieved through operational excellence                to our customers in the form of even more competitive everyday prices,                will allow us to increase our same store                sales. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Critical      Accounting Policies and Estimates**

***Vendor      Allowances and Distribution Network Revenue***

----

***Allowance      for Doubtful Accounts and Delinquent Credit Card Balance      Policy***

|                                                                                                                                  |   | **2005**                                                    |    | **2006** |      | **2007** |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------|---------|----------|-----------|----------|--------|
|                                                                                                                                  |   | **(in                millions of Ch$, except percentages)** |    |
| Net                receivables (includes short and long term credit receivables plus                other                receivables) |   | Ch$                                                    | 185,310 |     | Ch$  | 198,240  |   | Ch$ | 233,220 |   |
| Allowance                for doubtful accounts                                                                                        |   |                                                        | 20,341  |     |      | 21,048   |   |   | 26,990 |   |
| Allowance                for doubtful accounts/total net receivables                                                                  |   |                                                        | 11      | %        |      | 10.6     | %      |   | 11.6 | % |
| Hypothetical                uncollectibility rose by 25%                                                                              |   |                                                        | 13.8    | %        |      | 13.3     | %      |   | 14.5 | % |
| Impact                on income statement (increase in expenses)                                                                      |   |                                                        | 5,230   |     |      | 5,318    |   |   | 6,827 |   |

***Receivable      from Disco S.A.***

*Ekono-Argentina      *

----

***Inventories***

|                                              |   | **2005**                                                                   |   | **2006** |      | **2007** |   |
|---------------------------------------------------|--------|----------------------------------------------------------------------------|--------|----------|-----------|----------|--------|
|                                              |   | **(in millions of Ch$,                except percentages)** |   |
|                                              |   |                                                                       |   |     |      |     |   |   |   |   |
| Shrinkage                                         |   | Ch$                                                                   | 30,177 |     | Ch$  | 32,104   |   | Ch$  | 32,564 |   |
| %/sales                                           |   |                                                                       | 2.0    | %        |      | 2.1      | %      |   | 2.1 | % |
| Hypothetical                increase by 25%       |   |                                                                       | 2.5    | %        |      | 2.6      | %      |   | 2.6 | % |
| Impact                on cost of sales (increase) |   |                                                                       | 6,889  |     |      | 7,401    |   |   | 8,117 |   |

***Purchase      Accounting and Goodwill***

|                                              |   | **2005**    |   | **2006**    |   | **2007**    |   |
|---------------------------------------------------|--------|-------------|--------|-------------|--------|-------------|--------|
|                                              |   | **Ch$**     |   | **US$**     |   | **Ch$**     |   | **US$** |   | **Ch$** |   | **US$** |   |
|                                              |   | **million** |   | **million** |   | **million** |   | **million** |   | **million** |   | **million** |   |
|                                              |   |        |   |        |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Maquinsa                (ex Fullmarket S.A.)      |   |        | 9,475  |        |   | 20.2        |   |   | 8,600 |   |   | 18.3 |   |   | 7,726 |   |   | 15.5 |   |
| Magallanes                S.A. (Carrefour Chile)  |   |        | 23,963 |        |   | 51.0        |   |   | 23,749 |   |   | 50.6 |   |   | 22,352 |   |   | 50.0 |   |
| Alvi                Supermercados Mayoristas S.A. |   |        | 7,591  |        |   | 16.1        |   |   | 7,208 |   |   | 15.3 |   |   | 6,823 |   |   | 13.7 |   |
| Total                                             |   |        | 41,029 |        |   | 87.3        |   |   | 39,557 |   |   | 84.2 |   |   | 36,901 |   |   | 79.2 |   |

|   | · | the                foreseeable life of the business or industry; |
|--------|--------|------------------------------------------------------------------|

|   | · | the                effects of product obsolescence, changes in demand and other economic                factors; |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

----

|   | · | the                service life expectancies of key individuals or groups of                employees; |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | expected                actions by competitors or potential competitors; and |
|--------|--------|------------------------------------------------------------------------------|

|   | · | legal,                regulatory or contractual provisions affecting the useful life. |
|--------|--------|---------------------------------------------------------------------------------------|

*Alvi*

***Severance      Indemnities***

----

| **Severance                Indemnities**                      |   | **Ch$ million** |   | **US$ million** |   |
|---------------------------------------------------------------|--------|----------------------|--------|----------------------|--------|
|                                                          |   |                 |   |                 |   |   |   |
| Short-term                and long-term with 5% discount rate |   |                 | 2,379  |                 |   | 4.8 |   |
| With                3% discount rate                          |   |                 | 2,619  |                 |   | 5.3 |   |
| Impact                on income statement (expense increase)  |   |                 | 240    |                 |   | 0.5 |   |
| With                7% discount rate                          |   |                 | 2,243  |                 |   | 4.5 |   |
| Impact                on income statement (expense decrease)  |   |                 | 136    |                 |   | 0.3 |   |

***Property,      Plant and Equipment***

| Buildings                and infrastructure |   |   | 20                to 60 years |   |
|---------------------------------------------|--------|--------|-------------------------------|--------|
| Machinery                and equipment      |   |   | 4                to 7 years   |   |
| Leased                assets                |   |   | 5                to 7 years   |   |
| Fixtures                                    |   |   | 10                years       |   |
| Other                fixed assets           |   |   | 4                years        |   |

|   | · | the                estimated service life of the asset; and |
|--------|--------|-------------------------------------------------------------|

|   | · | the                estimated technological life of the                asset. |
|--------|--------|------------------------------------------------------------------------------|

|                                                       |   | **2005**                                |   | **2006** |      | **2007** |   |
|------------------------------------------------------------|--------|-----------------------------------------|--------|----------|-----------|----------|--------|
|                                                       |   | **(in                millions of Ch$)** |   |
|                                                       |   |                                    |   |     |      |     |   |   |   |   |
| Depreciation                                               |   | Ch$                                | 58,521 |     | Ch$  | 55,910   |   | Ch$ | 60,355 |   |
| 10%                increase or decrease in depreciation(1) |   |                                    | 5,852  |     |      | 5,591    |   |   | 6,036 |   |

----

***Impairment      of Long-Lived Assets***

----

**Results      of Operations**

|                                                                    |   | **Year ended December 31,** |       |
|-------------------------------------------------------------------------|--------|--------------------------------------------|------------|
|                                                                    |   | **2005**                                   |       | **2006** |   | **2007** |   |
|                                                                    |   | **Ch$ millions**                      |       | **% ofrevenues** |   | **Ch$ millions** |   | **% ofrevenues** |   | **Ch$ millions** |   | **% of****revenues** |   |
|                                                                    |   |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                revenues                                             |   | Ch$                                   | 1,753,134  |   |   | 100.0 | % | Ch$  | 1,822,218 |   |   | 100.0 | % | Ch$ | 1,905,780 |   |   | 100.0 | % |
| Cost                of sales                                            |   |                                       | (1,262,272 | ) |   | (72.0 | )% |   | (1,320,395 | ) |   | (72.5 | )% |   | (1,365,292 | ) |   | (71.6 | )% |
| Gross                profit                                             |   |                                       | 490,862    |   |   | 28.0 | % |   | 501,823 |   |   | 27.5 | % |   | 540,488 |   |   | 28.4 | %  |
| Selling                and administrative expenses                      |   |                                       | (416,221   | ) |   | (23.7 | )% |   | (431,464 | ) |   | (23.7 | )% |   | (443,393 | ) |   | (23.3 | )% |
| Operating                income                                         |   |                                       | 74,641     |   |   | 4.3 | % |   | 70,359 |   |   | 3.9 | % |   | 97,095 |   |   | 5.1 | %  |
| Non-operating                income                                     |   |                                       | 4,501      |   |   | 0.3 | % |   | 5,392 |   |   | 0.3 | %  |   | 2,719 |   |   | 0.1 | %  |
| Non-operating                expenses                                   |   |                                       | (25,571    | ) |   | (1.5 | )% |   | (29,348 | ) |   | (1.6 | )% |   | (37,720 | ) |   | (2.0 | )% |
| Price-level                restatement and foreign exchange gain (loss) |   |                                       | (1,819     | ) |   | (0.1 | )% |   | 1,361 |   |   | 0.1 | % |   | (483 | ) |   | 0.0 | %  |
| Taxes                                                                   |   |                                       | (5,295     | ) |   | (0.3 | )% |   | (5,177 | ) |   | (0.3 | )% |   | (8,930 | ) |   | (0.5 | )% |
| Net                income                                               |   | Ch$                                   | 46,458     |   |   | 2.7 |   | Ch$  | 42,587 |   |   | 2.3 |   | Ch$ | 52,681 |   |   | 2.8 |   |

***2007      Compared to 2006***

***Net      Revenues***

|                                                                  |   | **Year ended December 31,**                                               |      |
|-----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------|-----------|
|                                                                  |   | **2006**                                                                                 |      | **2007** |   | **% change** |   |
|                                                                  |   | **(in millions of constant Ch$,                except percentages)** |      |
| Hypermarkets                and Supermarkets (including *FarmaLider*) |   | Ch$                                                                                      | 1,683,120 |   | Ch$ | 1,735,562 |   |   | 3.1 | % |
| Financial                Services                                     |   |                                                                                     | 88,140    |   |   | 117,860 |   |   | 33.7 | %  |
| Other                (real estate and logistics)                      |   |                                                                                     | 50,958    |   |   | 52,358 |   |   | 2.7 | %  |
| Total                                                                 |   | Ch$                                                                                      | 1,822,218 |   | Ch$ | 1,905,780 |   |   | 4.6 | %  |

*Hypermarket      and Supermarkets*
*(including*
*FarmaLider*

----

*Financial      Services*
*Presto*
*Presto      *

*Other      Revenues*
*Centro      Urbano*
*Las      Rejas*
*Espacio      Urbano Los Andes*
*Espacio      Urbano Pionero*

***Cost      of Sales and Gross Profit***

|                                                                  |   | **Year ended December 31,**                           |    |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|
|                                                                  |   | **2006**                                                             |    | **2007** |   | **% change** |   |
|                                                                  |   | **(in                millions of constant Ch$, except percentages)** |    |
| Hypermarkets                and Supermarkets (including *FarmaLider*) |   | Ch$                                                                  | 363,105 |   | Ch$  | 373,500 |   |   | 2.9 | %  |
| Financial                Services                                     |   |                                                                 | 88,140  |   |   | 108,819 |   |   | 23.5 | %  |
| Other                (real estate and logistics)                      |   |                                                                 | 50,578  |   |   | 58,169 |   |   | 15.0 | %  |
| Total                                                                 |   | Ch$                                                                  | 501,823 |   | Ch$  | 540,488 |   |   | 7.7 | %  |

*Hypermarket      and Supermarkets (including FarmaLider).*

*Financial      Services*

*Other      Revenues*

***Selling      and Administrative Expenses***

----

***Operating      Income***

|                                                                  |   | **Year ended December 31,**                           |   |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                                                  |   | **2006**                                                             |   | **2007** |   | **% change** |   |
|                                                                  |   | **(in                millions of constant Ch$, except percentages)** |   |
| Hypermarkets                and Supermarkets (including *FarmaLider*) |   | Ch$                                                                  | 28,825 |   | Ch$ | 39,562 |   |   | 37.2 | %  |
| Financial                Services                                     |   |                                                                 | 25,245 |   |   | 32,196 |   |   | 27.5 | %  |
| Other                (real estate and logistics)                      |   |                                                                 | 16,289 |   |   | 25,337 |   |   | 55.5 | %  |
| Total                                                                 |   | Ch$                                                                  | 70,359 |   | Ch$ | 97,095 |   |   | 38.0 | %  |

*Hypermarket      and Supermarkets (including FarmaLider).*

*Financial      Services.*

*Other      Revenues.*

**Non-operating      Income.**

|                                         |   | **As of December 31,**            |   |
|----------------------------------------------|--------|--------------------------------------------------|--------|
|                                         |   | **2006**                                         |   | **2007** |   |
|                                         |   | **(in                millions of constant Ch$)** |   |
|                                         |   |                                             |   |   |   |   |   |
| Financial                income              |   | Ch$                                              | 2,892  |   | Ch$ | 1,138 |   |
| Other                non-operating income(1) |   |                                             | 2,467  |   |   | 1,581 |   |
| Minority                Interest             |   |                                             | 33     |   |   | — |   |
| Total                non-operating income    |   | Ch$                                              | 5,392  |   | Ch$ | 2,719 |   |

----

----

***Non-operating      Expense***

|                                          |   | **As of December 31,**            |    |
|-----------------------------------------------|--------|--------------------------------------------------|---------|
|                                          |   | **2006**                                         |    | **2007** |   |
|                                          |   | **(in                millions of constant Ch$)** |    |
|                                          |   |                                             |    |   |   |   |   |
| Financial                expense              |   | Ch$                                              | 25,508  |   | Ch$ | 29,101 |   |
| Minority                interest              |   |                                             | — |   |   | 1 |   |
| Other                non-operating expense(1) |   |                                             | 1,204   |   |   | 5,906 |   |
| Amortization                of goodwill       |   |                                             | 2,636   |   |   | 2,712 |   |
| Total                non-operating expense    |   | Ch$                                              | 29,348  |   | Ch$ | 37,720 |   |

----

***Price-level      Restatement and Foreign Exchange Gain (Loss)***

***Income      Taxes***

***Net      Income***

***2006      Compared to 2005***

***Net      Revenues***

----

|                                                                  |   | **Year ended December 31,**                           |      |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|-----------|
|                                                                  |   | **2005**                                                             |      | **2006** |   | **% change** |   |
|                                                                  |   | **(in                millions of constant Ch$, except percentages)** |      |
| Hypermarkets                and Supermarkets (including *FarmaLider*) |   | Ch$                                                                  | 1,643,158 |   | Ch$ | 1,683,120 |   |   | 2.4 | % |
| Financial                Services                                     |   |                                                                 | 63,638    |   |   | 88,140 |   |   | 38.5 | % |
| Other                (real estate and logistics)                      |   |                                                                 | 46,338    |   |   | 50,958 |   |   | 10.0 | % |
| Total                                                                 |   | Ch$                                                                  | 1,753,134 |   | Ch$ | 1,822,218 |   |   | 3.9 | % |

*Hypermarkets      and Supermarkets (including FarmaLider)*.      Net      revenues derived from our hypermarkets, supermarkets and pharmacies for 2006      increased 2.4% to Ch$1,683,120      million      (US$3,387.3 million) compared to Ch$1,643,158 million      for 2005. This increase resulted principally from a 2.5% sales increase due      to      the opening of new stores.

*Financial      Services*
*Presto*
*Presto*
*Presto*
*Presto      *

*Other      Revenues*

***Cost      of Sales and Gross Profit***

|                                                                  |   | **Year ended December 31,**                           |    |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|
|                                                                  |   | **2005**                                                             |    | **2006** |   | **% change** |   |
|                                                                  |   | **(in                millions of constant Ch$, except percentages)** |    |
| Hypermarkets                and Supermarkets (including *FarmaLider*) |   | Ch$                                                                  | 374,242 |   | Ch$  | 363,105 |   |   | (3.0 | )% |
| Financial                Services                                     |   |                                                                 | 63,637  |   |   | 88,140 |   |   | 38.5 | %  |
| Other                (real estate and logistics)                      |   |                                                                 | 52,983  |   |   | 50,578 |   |   | (4.5 | )% |
| Total                                                                 |   | Ch$                                                                  | 490,862 |   | Ch$  | 501,823 |   |   | 2.2 | %  |

*Hypermarket      and Supermarkets*
*(including*
*FarmaLider*

----

*Financial      Services*

*Other      Revenues*
*** ***

***Selling      and Administrative Expenses***

***Operating      Income***

|                                                                  |   | **Year ended December 31,**                           |   |
|-----------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                                                  |   | **2005**                                                             |   | **2006** |   | **% change** |   |
|                                                                  |   | **(in                millions of constant Ch$, except percentages)** |   |
| Hypermarkets                and Supermarkets (including *FarmaLider*) |   | Ch$                                                                  | 56,980 |   | Ch$ | 28,825 |   |   | (49.4 | )% |
| Financial                Services                                     |   |                                                                 | 10,254 |   |   | 25,245 |   |   | 146.2 | %  |
| Other                (real estate and logistics)                      |   |                                                                 | 7,407  |   |   | 16,289 |   |   | 119.9 | %  |
| Total                                                                 |   | Ch$                                                                  | 74,641 |   | Ch$ | 70,359 |   |   | (5.7 | )% |

*Hypermarket      and Supermarkets*
*(including*
*FarmaLider*

*Financial      Services*

*Other      Revenues*

***Non-operating      Income***

----

|                                             |   | **As of December 31,**            |   |
|--------------------------------------------------|--------|--------------------------------------------------|--------|
|                                             |   | **2005**                                         |   | **2006** |   |
|                                             |   | **(in                millions of constant Ch$)** |   |
|                                             |   |                                             |   |   |   |   |   |
| Financial                income                  |   | Ch$                                              | 3,094  |   | Ch$ | 2,891 |   |
| Other                non-operating income(1)     |   |                                             | 1,002  |   |   | 2,468 |   |
| Amortization                of negative goodwill |   |                                             | 403    |   |   | — |   |
| Minority                Interest                 |   |                                             | 2      |   |   | 33 |   |
| Total                non-operating income        |   | Ch$                                              | 4,501  |   | Ch$ | 5,392 |   |

----

***Non-operating      Expense***

|                                          |   | **As of December 31,**            |   |
|-----------------------------------------------|--------|--------------------------------------------------|--------|
|                                          |   | **2005**                                         |   | **2006** |   |
|                                          |   | **(in                millions of constant Ch$)** |   |
|                                          |   |                                             |   |   |   |   |   |
| Financial                expense              |   | Ch$                                              | 22,032 |   | Ch$ | 25,508 |   |
| Other                non-operating expense(1) |   |                                             | 1,186  |   |   | 1,204 |   |
| Amortization                of goodwill       |   |                                             | 2,353  |   |   | 2,636 |   |
| Total                non-operating expense    |   | Ch$                                              | 25,571 |   | Ch$ | 29,348 |   |

----

***Price-level      Restatement and Foreign Exchange Gain (Loss)***

***Income      Taxes***

***Net      Income***

----

**Impact      of Inflation, Price-level Restatement and Foreign Exchange**

**Liquidity      and Capital Resources **

***Overview***

*Presto      *
*Presto      *

----

|   | · | repayment                or refinancing of short-term contractual obligations in the amount                of                Ch$186,334 million (US$375                million); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | budgeted                capital expenditures of Ch$99,378 million (US$200 million); |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | budgeted                cash dividends of approximately Ch$27,329 million (US$55 million);                and |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | increased                working capital needs, primarily in connection with our planned expansion                of our credit card operations in the amount of Ch$74,543 million                (US$150                million). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | cash                flow from operations; |
|--------|--------|-------------------------------------------|

|   | · | existing                cash resources and cash flow to be generated from our operations                in 2008;                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|   | · | additional                short-term and long-term debt that we will incur as                necessary. |
|--------|--------|---------------------------------------------------------------------------------------------------------|

**Sources      and Uses of Funds **

*Cash      and Working Capital*
**.**
*Presto      *

*Net      Cash Provided by (Used in) Operations*

*Net      Cash Used in Investing Activities*

*Net      Cash from Financing Activities*

----

*Contractual      Cash Obligations*

|                                                                   |   | **Payment due by period****(in millions of constant Ch$)** |    |
|------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|---------|
| **Contractual                Obligations**                             |   | **Total (1)**                                                                            |    | **Less than 1year (2)** |   | **1-3 years (2)** |   | **3-5years (2)** |   | **More than 5years (2)** |   |
|                                                                   |   |                                                                                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term                bank debt, including current portion          |   | Ch$                                                                                           | 146,232 |   | Ch$ | 8,890 |   | Ch$ |                 39,588 |   | Ch$ | 44,054 |   | Ch$ | 53,700 |   |
| Short-term                bank debt                                    |   |                                                                                          | 193,485 |   |   | 193,485 |   |   |   |   |   |   |   |   |   |   |
| Capital                lease obligations                               |   |                                                                                          | 9,335   |   |   | 2,844 |   |   | 3,221 |   |   | 897 |   |   | 2,372 |   |
| Sundry                creditors                                        |   |                                                                                          | 705     |   |   |   |   |   |   |   |   |   |   |   | 705 |   |
| Bonds                and commercial paper                              |   |                                                                                          | 198,321 |   |   | 78,738 |   |   | 14,313 |   |   | 5,229 |   |   | 100,041 |   |
| Total                contractual obligations (principal plus interest) |   | Ch$                                                                                           | 548,078 |   | Ch$ | 283,957 |   | Ch$ | 57,122 |   | Ch$ | 50,180 |   | Ch$ | 156,818 |   |
| Principal                                                              |   |                                                                                          | 542,098 |   |   | 277,978 |   |   | 57,122 |   |   | 50,180 |   |   | 156,818 |   |
| Interest                                                               |   |                                                                                          | 5,979   |   |   | 14,511 |   |   | 27,713 |   |   | 23,954 |   |   | 52,609 |   |

----

| (1) | Interest                recognized as of December 31, 2007. |
|-----|-------------------------------------------------------------|

| (2) | Interest                amounts for each of the periods shown in table and included with                their                respective obligations have been estimated considering the interest                rate                as of December 31, 2007, whether variable or                fixed. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Lider*
*Ekono*

|                                                    |   | **Ch$** |        |
|---------------------------------------------------------|--------|---------|-------------|
| 2008                                                    |   |    | 12,191,840  |   |
| 2009                                                    |   |    | 10,727,513  |   |
| 2010                                                    |   |    | 9,175,282   |   |
| 2011                                                    |   |    | 8,069,306   |   |
| 2012                                                    |   |    | 6,721,189   |   |
| Thereafter                                              |   |    | 59,173,124  |   |
| Present                value net minimum lease payments |   |    | 106,058,254 |   |

*Dividends*

*Capital      Expenditures*
*Express      de Lider*
*Hiper      Lider*
*SuperBodega      Acuenta*

*Working      Capital*
*Presto*
*Presto      *

----

***Debt***

*Debt      Status*

----

|   | · | long-term                debt including lease obligations of Ch$264,121 million (US$531.5                million),                which includes financial debt of Ch$256,925 million (US$517.1 million)                and                lease obligations in the amount of Ch$6,491 million (US$ 13.1 million)                and                sundry creditors in the amount of Ch$705 million (US$1.4 million);                and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | short-term                debt including the current portion of long-term debt of Ch$283,957                million                (US$571.5 million), including short-term financial debt of Ch$259,391                million (US$522.0 million) and the current portion of long-term debt                in                the amount of Ch24,566 million (US$49.4                million). |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Bonds                and commercial paper placed in the local capital markets in an aggregate                principal amount of Ch$198,321 million (US$399.1 million) at December                31,                2007. As of that date, we had issued two series of bonds in Chile,                our                Series C and D bonds, which bear interest at a rate of 4.5% and 5.5%,                respectively, and our subsidiary, Saitec, had issued Series B bonds                bearing interest at 4.2%. We had also issued commercial paper bearing                interest at a rate of 5.9% and                7.2%; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 60                million UF (approximately US$ 243.2 million) aggregate principal                amount of                Series E bonds; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Local                bank debt in an aggregate principal amount at December 31, 2007 of                Ch$                339,717 million (US$683.7 million). We have a Series of Chilean peso,                UF-                and U.S. dollar-denominated loans, the bulk of which are payable                in UF and                bear market interest rates according to the terms of the debt                agreements. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Bullet                bonds issued on April 25, 2008 bearing interest at a fixed rate of                UF                +2.6% annually; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Additional                local bank debt in an aggregate principal amount of Ch$ 61,200 million                (US$ 121.6 million), relating to our syndicated loan entered into                on 2008                in the form of a bullet loan, with a variable interest rate of 180-day                TAB                plus 45 basis points. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Interest      Rates*

*Debt      Restrictions*

----

**Our      Principal Loan Covenants **

| Ch$                119,788.5 million Local Syndicated Banking Loan with Banco de Chile,                Banco                Bilbao Vizcaya Argentaria Chile, Scotiabank Sud Americano, Banco                Itaú                Chile, Corpbanca and Banco Santander-Chile |   | 1.     | Maintain                an indebtedness relationship lower than 1.2 times, defined as the                ratio                between current liabilities that accrue interest and                equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                            |   | 2.     | Minimum                coverage of interest expenses of 3.5 times (operating results plus                depreciation and amortization of intangibles divided by interest                expenses).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                            |   | 3.     | Keeping                assets free from liens in a total amount equal to at least 1.3 times                the                outstanding balance of the total bonds issued for the issuer, which                are in                force, calculated and measured each quarter over the consolidated                balance                sheet.                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                            |   | 4.     | Keeping                consolidated total equity of an amount equal at least to UF13 million,                calculated and measured each quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                            |   | 5.     | Prohibition                to grant collateral or to guaranty to secure payment of third party                obligations on a substantial portion of our assets if such security                may                adversely affect the interest of the lenders.                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                            |   | 6.     | Prohibition                to substantially change corporate purpose or to perform a material                capital                reduction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                            |   | 7.     | Acceleration.                Loan will become immediately payable and enforceable under several                circumstances, among which the relevant cases are as follows: (a) Payment                default of interest accrued or principal under the loan or breach                of any                negative or positive pledges or representations under the                loan. (b) Attachment                of corporate assets amounting to US$10 million or more. (c) Condemnation                or imposition of any fine or award on us by any governmental authority                amounting or affecting 5% of our consolidated assets. |
|                                                                                                                                                                                                                                                                            |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                            |   |   | 8. Optional                Acceleration. Upon agreement by major lenders, the loan will become                immediately payable and enforceable under several circumstances,                among                which the relevant cases are as follows: (a) Cross                default or cross acceleration of indebtedness amounting to, at least,                US$10 million, provided such default is not remedied within the 15-day                term.                                                                                                                                                                                                     |

----

|                                                                     |   |   | (b) Liquidation,                wind-up, dissolution, whether legal or contractual, or the discontinuation                of corporate businesses. (c) If                our current controlling shareholders dispose in any manner, change                or                loose control of our management or business. (d) Amendment                of our by-laws causing a material adverse effect and not noticed                to the                agent bank. (e) Breach                of general *pari                passu*                indebtedness positive pledge.                                                                           |
|--------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                     |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| UF1.2                million Loan with Citibank, N.A. (Agencia en Chile) |   | 1.     | Maintain                an indebtedness relationship lower than 1.2 times, defined as the                ratio                between current liabilities that accrue interest and equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                     |   | 2.     | Minimum                coverage of interest expenses of 3.5 times (operating results plus                depreciation plus amortization of intangibles divided by interest                expenses).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                     |   | 3.     | Keeping                assets free from liens in a total amount equal to at least 1.3 times                the                outstanding balance of the total bonds issued for the issuer, which                are in                force, calculated and measured each quarter over the consolidated                balance                sheet.                                                                                                                                                                                                                                                                                                                                          |
|                                                                     |   | 4.     | Keeping                consolidated total equity of an amount equal at least to UF13 million,                calculated and measured each quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                     |   | 5.     | Prohibition                to grant collateral or to guaranty to secure payment of third party                obligations on a substantial portion of our assets if such security                may                adversely affect the interest of the Lenders.                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                     |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                     |   | 6.     | Prohibition                to substantially change corporate purpose or to perform a material                capital                reduction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                     |   | 7.     | Acceleration.                Loan will become immediately payable and enforceable under several                circumstances, among which the relevant cases are as follows: (a) Payment                default of interest accrued or principal under the loan or breach                of any                negative or positive pledges or representations under the                loan. (b) Attachment                of corporate assets amounting to US$10 million or more. (c) Condemnation                or imposition of any fine or award on us by any governmental authority                amounting or affecting 5% of our consolidated assets.  |
|                                                                     |   | 8.     | Optional                Acceleration. Upon agreement by major lenders, Loan will become                immediately payable and enforceable under several circumstances,                among                which the relevant cases are as follows: (a) Cross                default or cross acceleration of indebtedness amounting to, at least,                USD                10 million, provided such default is not remedied within the 15-day                term                 (b) Liquidation,                wind-up, dissolution, whether legal or contractual, or the discontinuation                of corporate businesses.                           |

----

|                                      |   |   | (c) If                our current controlling shareholders dispose in any manner, change                or                loose control of our management or business. (d) Amendment                of our By-laws causing a material adverse effect and not noticed                to the                Agent Bank. (e) Breach                of general *pari                passu*                indebtedness positive pledge.  |
|-------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                      |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Local                Bonds Series C and D |   | 1.     | Maintain                an indebtedness relationship lower than 1.2 times, defined as the                ratio                between current liabilities that accrue interest and equity.                                                                                                                                                                                                                                                                    |
|                                      |   | 2.     | Minimum                coverage of interest expenses of 3.5 times (operating results plus                depreciation plus amortization of intangibles divided by interest                expenses).                                                                                                                                                                                                                                                          |
|                                      |   | 3.     | Keeping                assets free from liens in a total amount equal to at least 1.3 times                the                outstanding balance of the total bonds issued for the issuer, which                are in                force, calculated and measured each quarter over the consolidated                balance                sheet.                                                                                                         |
|                                      |   | 4.     | Keeping                consolidated total equity of an amount equal at least to UF13 million,                calculated and measured each quarter.                                                                                                                                                                                                                                                                                                                 |
|                                      |   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| Commercial                Paper           |   | 1.     | Minimum                Coverage of interest expenses of 3.5 (operating income plus depreciation                divided by interest expenses) for March, June, September and                December.                                                                                                                                                                                                                                                          |
|                                      |   | 2.     | Leverage                less than 1.2 (current liabilities divided by equity) for March,                June,                September and December.                                                                                                                                                                                                                                                                                                               |

| Local                Bonds Series E |   | 1. | Maintain                an indebtedness relationship lower than 1.2 times, defined as the                ratio                between current liabilities that accrue interest and equity.                                                                                                                                                             |
|-------------------------------------|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |   | 2. | Minimum                coverage of interest expenses of 3.5 times (operating results plus                depreciation plus amortization of intangibles divided by interest                expenses).                                                                                                                                                   |
|                                |   | 3. | Keeping                assets free from liens in a total amount equal to at least 1.3 times                the                outstanding balance of the total bonds issued for the issuer, which                are in                force, calculated and measured each quarter over the consolidated                balance                sheet.  |
|                                |   | 4. | Keeping                consolidated total equity of an amount equal at least to UF13,000,000,                calculated and measured each                quarter.                                                                                                                                                                                           |

----

| 3.0                million UF Credit Agreement with Banco de Chile, Banco Bilbao Vizcaya                Argentaria Chile, Scotiabank Sud Americano, Banco Itaú Chile, Corpbanca                and Banco Santander-Chile |   | 1.     | Maintain                an indebtedness relationship lower than 1.2 times, defined as the                ratio                between current liabilities that accrue interest and equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                          |   | 2.     | Minimum                coverage of interest expenses of 3.5 times (operating results plus                depreciation and amortization of intangibles divided by interest                expenses).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                          |   | 3.     | Keeping                assets free from liens in a total amount equal to at least 1.3 times                the                outstanding balance of the total bonds issued for the issuer, which                are in                force, calculated and measured each quarter over the consolidated                balance                sheet.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                          |   | 4.     | Keeping                consolidated total equity of an amount equal at least to UF13 million,                calculated and measured each quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                          |   | 5.     | Prohibition                to grant collateral or to guaranty to secure payment of third party                obligations on a substantial portion of our assets if such security                may                adversely affect the interest of the lenders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                          |   | 6.     | Prohibition                to substantially change corporate purpose or to perform a material                capital                reduction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                          |   | 7.     | Acceleration.                Loan will become immediately payable and enforceable under several                circumstances, among which the relevant cases are as follows: (a) Payment                default of interest accrued or principal under the loan or breach                of any                negative or positive pledges or representations under the                loan. (b) Attachment                of corporate assets amounting to US$10 million or more. (c) Condemnation                or imposition of any fine or award on us by any governmental authority                amounting or affecting 5% of our consolidated assets.                                                                                                                                       |
|                                                                                                                                                                                                                          |   |   | 8. Optional                Acceleration. Upon agreement by major lenders, the loan will become                immediately payable and enforceable under several circumstances,                among                which the relevant cases are as follows: (a) Cross                default or cross acceleration of indebtedness amounting to, at least,                US$10 million, provided such default is not remedied within the 15-day                term. (b) Liquidation,                wind-up, dissolution, whether legal or contractual, or the discontinuation                of corporate businesses. (c) If                our current controlling shareholders dispose in any manner, change                or                loose control of our management or business.  |

----

|   |   |   | (d) Amendment                of our by-laws causing a material adverse effect and not noticed                to the                agent bank. (e) Breach                of general *pari                passu*                indebtedness positive pledge. |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**U.S.      GAAP Reconciliation and Accounting Pronouncements **

|                                                     |   | **Year ended December 31,**                                                    |    |
|----------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|---------|
|                                                     |   | **2005**                                                                                      |    | **2006** |   | **2007** |   |
|                                                     |   | **(in millions of constant Ch$ and millions of US$)** |    |
|                                                     |   |                                                                                          |    |   |   |   |   |   |   |   |   |   |   |
| Net                income (Chilean GAAP)                 |   | Ch$                                                                                           | 46,458  |   | Ch$ | 42,587 |   | Ch$ | 52,681 |   | US$ | (106.0 | ) |
| Net                income (U.S. GAAP)                    |   |                                                                                          | 50,883  |   |   | 41,176 |   |   | 53,699 |   | US$ | (108.1 | ) |
| Shareholders’                equity (Chilean GAAP) |   | Ch$                                                                                           | 535,453 |   | Ch$ | 556,236 |   | Ch$ | 562,641 |   | US$ | (1,132.3 | ) |
| Shareholders’                equity (U.S. GAAP)    |   |                                                                                          | 538,121 |   |   | 558,657 |   |   | 566,080 |   | US$ | (1,139.2 | ) |

|   | · | our                company occasionally enters into forward exchange contracts designated                as                “cash flow” hedges under Chilean GAAP. Unrealized gains on these contracts                are deferred on the balance sheet but recorded in income under U.S.                GAAP.                Any unrealized losses on these contracts are recorded in income in                both                Chilean and U.S. GAAP. Chilean and U.S. GAAP also differ in the                documentation requirements related to the designation of these contracts                as “hedges” and the types of transactions which may be hedged. With the                exception of the forward exchange contract which our company entered                into                to “hedge” the €100 million purchase of Carrefour S.A. on January 7, 2004,                during the periods presented, there have been no significant adjustments                recorded between Chilean GAAP and U.S. GAAP for these forward exchange                contracts. However, as more fully explained in Note 25 to our financial                statements, Chilean GAAP included the loss on the “hedge” of the purchase                of Carrefour S.A. as part of the purchase price, while U.S. GAAP                recognized the loss in income due to restrictions on the types of                transactions which may be designated as “hedges” under U.S.                GAAP; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                reversal under U.S. GAAP of the technical revaluation of certain                property,                plant and equipment under Chilean GAAP, along with the associated                accumulated depreciation, depreciation expense and any necessary                recalculation of gain/loss on disposal of such property, plant, and                equipment; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                reversal under U.S. GAAP of severance indemnities for prior service                costs                that arose when we began to record a severance indemnity liability,                which                were charged to income under Chilean GAAP and deferred and amortized                under                U.S. GAAP; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                tax effects for any deferred tax effects related to other differences                between Chilean GAAP and U.S. GAAP described                herein; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | the                reversal of the amortization of complementary accounts created upon                adoption of Technical Bulletin No. 60 under Chilean GAAP. See Note                25 to                the financial statements; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | differences                in purchase accounting for business combinations. Chilean GAAP, through                December 31, 2003, carried over the historic cost of assets acquired                and                liabilities assumed. Under U.S. GAAP, purchase accounting for business                combinations, the fair value of assets acquired and liabilities assumed                are recorded and the excess of the purchase price over such fair                value is                recorded as goodwill. These divergences cause subsequent year differences                in net income and shareholders’ equity for depreciation expense and                accumulated depreciation, respectively, as well as the associated                monetary                correction; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                reclassification of revenues obtained from suppliers to cost of goods                sold                under U.S. GAAP; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                timing difference related to the accrual of mandatory dividends under                Chilean law; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | U.S.                GAAP reflects notes and accounts receivable with stated maturity                dates at                their present value if there is no associated contractual interest                rate in                the instrument and accretes interest through maturity so that the                face                value of the amounts is reflected in the balance sheet at the maturity                date. Chilean GAAP presents the amount at its face value from recording                date (contract date) through maturity                date; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | volume                rebates associated with unsold inventory are capitalized under U.S.                GAAP; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | marketable                securities are designated as trading, available-for-sale, and                held-to-maturity under U.S. GAAP. The company holds certain                available-for-sale securities whose unrecognized gains, under Statement                of                Financial Accounting Standards No. 115, require treatment as adjustments                to other comprehensive income; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | deficit                during development stage on the U.S. GAAP adjustments. Effective                until                December 31, 2006 General Rule No. 981 of the SVS, investments in                majority-owned subsidiaries in the development stage are recorded                by the                equity method and the investor's proportional share of the subsidiary's                results of operations are taken to a reserve which forms part of                shareholders' equity. For U.S. GAAP purposes, the deficit in subsidiaries                in the development stage is consolidated and the results of their                operations charged directly to income. The effect of this adjustment                is                included in net income and shareholders’ equity reconciliation to U.S.                GAAP as presented below. On January 1, 2007, the balance recorded                in this                item was netted against retained earnings in accordance with the                new                General Rule No. 1,819 issued by the SVS, which superseded General                Rule                No. 981. There is no difference with U.S. GAAP in                2007; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | capitalization                of restructured loan expenses. In September 2006, the Company restructured                its loans with banks signing a long-term syndicated loan agreement                with                banks Santander-Santiago, Estado, BBVA and Citibank N.A., concentrating                by                this means all the short-term and long-term standing loans into only                one                loan of 8 year term. The expenses related to the restructure of these                loans, such as bank commissions, tax and legal expenses, have been                capitalized by the Company and are being amortized over the term                of the                loans, in accordance to Chilean GAAP. Under U.S. GAAP, each bank                in the                syndicated group was analyzed separately under EITF 96-19 to determine                whether a modification or extinguishment of debt had occurred. The                restructured loans with Banco Santander-Santiago, BBVA and Citibank                N.A.                are considered substantially different from the corresponding loans                before                the syndicated loan, therefore the unamortized balance of the                corresponding proportion of capitalized expenses at the date of the                restructure of the debt, was charged against income of the period.                Under                U.S. GAAP, the restructured debt with Banco Estado is considered                a                modification and therefore the proportional previously unamortized                costs                continue to be amortized and proportional third party costs associated                with the new debt were expensed. During 2007, the Company subscribed                a                credit agreement with Citibank for UF1,200,000. With this loan the                company                prepaid the Series B of Bonds. Under U.S. GAAP, the debt with Citibank                is                considered a modification of debt and therefore the proportional                previously unamortized costs continue to be amortized and porportional                third party costs associated with the new debt were expensed;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | sale                of portfolio. Under Chilean GAAP, in 2006 and 2007 a portion of the                Presto                portfolio (installment payments on credit cards) was defined as sold                and                the losses were deferred over the period of time that interest continued                to accrue on the installment payments. Under U.S. GAAP, under FAS                140,                this transaction qualified as a partial sale (servicing of the accrued                interest was retained by the Company). The loss on the sale or transfer                of                the receivable would be recognized immediately on the transaction                date.                Therefore, the deferred loss in Chile GAAP has been recognized in                the net                income reconciliation in Note 25 (a.16). No servicing liability has                been                incurred and it is impracticable to measure the fair value of any                servicing asset, therefore its value is assumed to be zero. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Recent      U.S. GAAP Pronouncements***

----

----

**Research      and Development**

**Trend      Information**

**Off-Balance      Sheet Arrangements**

**Item      6.**
**DIRECTORS,      SENIOR MANAGEMENT AND EMPLOYEES**

**Directors**

----

| **Name**                                               |   | **Position**         |   | **Age** |
|--------------------------------------------------------|--------|----------------------|--------|---------|
|                                                   |   |                 |   |    |
| Felipe                Ibáñez Scott           |   | Chairman             |   | 54      |
| Hans                Eben Oyanedel                      |   | Deputy Chairman |   | 66      |
| Nicolás                Ibáñez Scott (1) |   | Director             |   | 52      |
| Jonny                Kulka Fraenkel                    |   | Director             |   | 63      |
| Gerardo                Jofré Miranda              |   | Director             |   | 58      |
| Fernando                Larraín Cruzat(2)         |   | Director             |   | 49      |
| Verónica                Edwards Guzmán       |   | Director             |   | 50      |
| Felipe                Larraín Bascuñan       |   | Director             |   | 50      |
| Francisco                Gana Eguiguren(3)             |   | Director             |   | 52      |

----

| (1) | Between                1994 and 2002, Mr. Nicolás Ibáñez Scott served as our company’s CEO. |
|-----|------------------------------------------------------------------------------------------------------------------|

| (2) | Mr.                Fernando                Larraín Cruzat                is                the managing director of Larraín Vial, Corredora de Bolsa S.A., a stock                broker, investment bank, underwriter and financial services company                with                which we have regularly worked in the past and that presently renders                services to our company. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Mr.                Francisco Gana Eguiguren complies with the criteria for independence                according to Chilean law, having been elected without the votes of                controlling shareholders or related parties at the annual shareholders’                meeting held on April 24, 2007. Mr. Francisco Gana Eguiguren also                qualifies as an “independent director” as defined in Section 303A.02 of                the NYSE’s Listed Company Manual. In making this determination, we                considered Mr. Francisco Gana Eguiguren’s role as an external advisor to                one of our suppliers. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Audit      Committee **

| **Name**                                      |   | **Position** |   | **Age** |
|-----------------------------------------------|--------|--------------|--------|---------|
|                                          |   |         |   |    |
| Francisco                Gana Eguiguren(1)(2) |   | Director     |   | 52      |

----

| (1) | As                required under Chilean law, we also have a Directors’ Committee                (C*omité                de Directores*)                comprised of one independent director and two non-independent directors                to                perform the supervisory functions detailed under Chilean law. The                current                members of the Directors’ Committee are Mr. Fermando Larraín Cruzat, Mr.                Gerardo                Jofré Miranda                and Mr. Francisco Gana Eguiguren. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr.                Francisco Gana Eguiguren complies with the criteria for independence                according to Chilean law, having been elected without the votes of                controlling shareholders or related parties at the annual shareholders’                meeting held on April 24, 2007. Mr. Francisco Gana Eguiguren also                qualifies as an “independent director” as defined in Section 303A.02 of                the NYSE’s Listed Company Manual. In making this determination, we                considered Mr. Francisco Gana Eguiguren’s role as an external advisor to                one of our suppliers. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Examine                the reports of external auditors, our company’s annual report and other                financial statements presented by the management of our company to                its                shareholders, and issue an opinion in connection with the same prior                to                such presentation; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Propose                to our board of directors the external auditors and risk rating agencies                which names shall be taken up to the shareholders’ meeting for appointment                as external auditors and risk rating agencies of our                company; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Examine                all related-party transactions and issue a report to our board of                directors on each of such                transactions; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Examine                the compensation packages and plans of managers and key executives; |
|--------|--------|--------------------------------------------------------------------------------------------|

----

|   | · | The                audit committee is required to suggest to the board the names of                the                auditors and risk rating agencies of the company that will be suggested                to                the shareholders at the annual shareholder’s meeting for approval;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | All                other responsibilities assigned to it by the by-laws of our company                or an                agreement passed by the shareholders at a shareholders’ meeting or our                board of directors. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Talent      Committee **

**Executive      Officers**

| **Name**                                        |   | **Position**                                                           |   | **Age** |   | **Years withour company** |
|-------------------------------------------------|--------|------------------------------------------------------------------------|--------|---------|--------|-------------------------------------|
|                                            |   |                                                                   |   |    |   |                                |
| Enrique                Ostalé Cambiaso     |   | Chief                Executive Officer                                 |   | 47      |   | 13                                  |
| Alejandro                Droste Bertolo(1)      |   | Chief                Financial Officer                                 |   | 42      |   |   1                       |
| Gonzalo                Smith Ferrer             |   | General                Counsel                                         |   | 37      |   |   4                       |
| Tina                Rosenfeld Kreisselmeyer(2)  |   | Corporate                Controller                                    |   | 38      |   |   1                       |
| Marcelo                Gálvez Saldías |   | Development                Manager                                     |   | 44      |   | 20                                  |
| Claudio                Hohmann Barrientos       |   | Corporate                Affairs Manager                               |   | 54      |   |   2                       |
| Alfonso                Sierra Mujica            |   | Corporate                Operational Excellence and Innovation Manager |   | 42      |   |   1                       |

----

**Division      Managers**

| **Name**                                         |   | **Position**                                                                                        |   | **Age** |   | **Years                withour company** |
|--------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|--------|---------|--------|------------------------------------------|
|                                             |   |                                                                                                |   |    |   |                                     |
| Silvio                Rostagno Hayes(1)          |   | General                Manager D&S Retail Chile                                                 |   | 49      |   |   3                            |
| Elias                Ayub Uauy                   |   | General                Manager of Financial Services Division (*Presto*)                            |   | 55      |   |   4                            |
| Sebastián                Rozas Heusser      |   | General                Manager of the Real Estate Development Division (Saitec                S.A.) |   | 37      |   |   7                            |
| Manuel                López Barranco        |   | General                Manager of Hypermarkets                                                      |   | 38      |   | 13                                       |
| Andrés                Fernández Donoso |   | General                Manager of Supermarkets                                                      |   | 33      |   | 10                                       |

----

| (1) | In                March 2008, Mr. Silvio Rostagno Hayes left the position of Chief                Operating                Officer and was appointed general manager of D&S Retail Chile. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Biographical      Information **

*Directors*

*Felipe      Ibáñez Scott*
*Almac*
*Ekono*
*Ekono*
*Almac,      Ekono *
*summa*
*cum      laude *

*Hans      Eben Oyanedel*

*Nicolás      Ibáñez Scott*

*Jonny      Kulka Fraenkel*
*El      Mercurio*
*El      Mercurio*

*Fernando      Larraín Cruzat*
*Casa      de Acogida La Esperanza*

*Verónica      Edwards Guzmán*
*Woman      Community *

*Gerardo      Jofré Miranda*
*Saber      Más *
*** ***

----

*Felipe      Larraín Bascuñan*

*Francisco      Gana Eguiguren*

*Corporate      Executives *

*Enrique      Ostalé Cambiaso*
*Lider*
*El      Mercurio Online*

*Alejandro      Droste *
*Bertolo*
* *
*.*

*Gonzalo      Smith Ferrer*

*Tina      Rosenfeld *
*Kreisselmeyer*
*.*

*Marcelo      Gálvez Saldías*
*Lider*
*Almac-Ekono      *

----

*Claudio      Hohmann Barrientos*

*Alfonso      Sierra Mujica *

*Divisional      Executive Officers*

*Silvio      Rostagno Hayes *
* *
* *

*Elías      Ayub Uauy*
*Presto      *
*Banco      Hipotecario de Chile Holding*

*Sebastián      Rozas Heusser*

*Manuel      López Barranco *
*Almac*
*Ekono*
*Lider*

*Andrés      Fernández Donoso *
*Lider      Vecino*

----

**Director      and Executive Officer Compensation **

|                                                  |   | **Board of Directors**                     |        |
|-------------------------------------------------------|--------|------------------------------------------------------|-------------|
|                                                  |   | **Attendance Fees(D&S BoardMeetings)** |        | **Attendance Fees****(SubsidiariesBoard Meetingsand OtherCommittees)** |   | **Remuneration** |   |
|                                                  |   | **Ch$****(1)**                                       |        |
|                                                  |   |                                                 |        |   |   |   |   |
| Felipe                Ibáñez Scott          |   |                                                 | 96,000,000  |   |   | 24,869,000 |   |   | 28,480,000 |   |
| Hans                Eben Oyanedel                     |   |                                                 | 72,000,000  |   |   | 132,000,000 |   |   | — |   |
| Jonny                Kulka Fraenkel                   |   |                                                 | 27,130,000  |   |   | — |   |   | — |   |
| Enrique                Ostalé Cambiaso           |   |                                                 | —     |   |   | — |   |   | — |   |
| Gonzalo                Eguiguren Correa               |   |                                                 | 8,000,000   |   |   | 12,000,000 |   |   | — |   |
| Fernando                Larraín Cruzat           |   |                                                 | 24,000,000  |   |   | 26,230,000 |   |   | — |   |
| Nicolás                Ibáñez Scott    |   |                                                 | 24,000,000  |   |   | 84,000,000 |   |   | — |   |
| René                Cortázar Sanz           |   |                                                 | 4,000,000   |   |   | — |   |   | — |   |
| Verónica                Edwards Guzmán      |   |                                                 | 22,094,000  |   |   | — |   |   | — |   |
| Felipe                Larraín Bascuñán |   |                                                 | 16,536,000  |   |   | 4,601,000 |   |   | — |   |
| Gerardo                Jofré Miranda             |   |                                                 | 20,614,000  |   |   | — |   |   | — |   |
| Francisco                Gana Equiguren               |   |                                                 | 20,568,000  |   |   | — |   |   | — |   |
|                                                  |   |                                                 |        |   |   |   |   |   |   |   |
| Total                                                 |   |                                                 | 334,942,000 |   |   | 283,700,000 |   |   | 28,480,000 |   |

----

| (1) | The                amounts paid to each director for serving as member of the board                of                directors varies in accordance with the position held and the time                period                during which such position was                held. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | **Audit Committee****Attendance Fees** |       |
|------------------------------------------------|--------|--------------------------------------------------|------------|
|                                           |   |
|                                           |   |                                             |       |
| René                Cortázar Sanz(1) |   | Ch$                                              | 4,500,000  |   |
| Francisco                Gana Eguiguren (2)    |   | Ch$                                              | 6,114,000  |   |
|                                           |   | Ch$                                              | 10,614,000 |   |

----

| (1) | Due                to his appointment as Chilean Minister of State, effective March                27, 2007,                Mr. René Cortázar Sanz resigned from his position as director of the                Company in compliance with the second clause of Article 37 of Law                N°                18,046 on Corporations. Mr. Francisco Gana Eguiguren was elected                as his                replacement. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Mr.                Francisco Gana Eguiguren complies with the criteria for independence                according to Chilean law, having been elected without the votes of                controlling shareholders or related parties at the annual shareholders’                meeting held on April 24, 2007. Mr. Francisco Gana Eguiguren also                qualifies as an “independent director” as defined in Section 303A.02 of                the NYSE’s Listed Company Manual. In making this determination, we                considered Mr. Francisco Gana Eguiguren’s role as an external advisor to                one of our suppliers. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*** ***

**Employees**

*Farmalider*

|                                                                      |   | **At December 31,** |   |
|---------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                      |   | **2005**                      |   | **2006** |   | **2007** |   |
| Retail                                                                    |   |                          | 24,303 |   |   | 24,245 |   |   | 24,631 |   |
| Distribution                Facilities                                    |   |                          | 1,015  |   |   | 1,093 |   |   | 1,430 |   |
| Headquarters,                other support units and other business units |   |                          | 4,806  |   |   | 4,051 |   |   | 3,656 |   |
| Total                                                                     |   |                          | 30,124 |   |   | 29,389 |   |   | 29,717 |   |
|                                                                      |   |                          |   |   |   |   |   |   |   |   |
| Unskilled                Workers                                          |   |                          | 16,719 |   |   | 16,163 |   |   | 15,452 |   |
| Technicians                and Administrative Workers                     |   |                          | 13,073 |   |   | 12,638 |   |   | 14,057 |   |
| Executive                Positions                                        |   |                          | 332    |   |   | 588 |   |   | 208 |   |
| Total                                                                     |   |                          | 30,124 |   |   | 29,389 |   |   | 29,717 |   |

----

**Share      Ownership **

|                                                                                                                                                               |   | **At December 31, 2007**                      |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|-----------|
| **Directors**                                                                                                                                                      |   | **Number of Shares                Owned (1)** |      | **Ownership %** |   |
|                                                                                                                                                               |   |                                                         |      |   |   |   |   |
| Felipe                Ibáñez Scott                                                                                                                       |   |                                                         | —   |   |   | — |   |
| Hans                Eben Oyanedel                                                                                                                                  |   |                                                         | —   |   |   | — |   |
| Nicolás                Ibáñez Scott                                                                                                                 |   |                                                         | 2,010,476 |   |   | 0.031 |   |
| Jonny                Kulka Fraenkel                                                                                                                                |   |                                                         | 343,736   |   |   | 0.005 |   |
| Fernando                Larraín Cruzat                                                                                                                        |   |                                                         | —   |   |   | — |   |
| Verónica                Edwards Guzmán                                                                                                                   |   |                                                         | —   |   |   | — |   |
| René                Cortázar Sanz                                                                                                                        |   |                                                         | —   |   |   | — |   |
| Felipe                Larraín Bascuñan                                                                                                                   |   |                                                         | —   |   |   | — |   |
| Gerardo                Jofré Miranda                                                                                                                          |   |                                                         | —   |   |   | — |   |
| Francisco                Gana Eguiguren                                                                                                                            |   |                                                         | —   |   |   | — |   |
|                                                                                                                                                               |   |                                                         |      |   |   |   |   |
| **Executive                Officers**                                                                                                                              |   |                                                         |      |   |   |   |   |
| Enrique                Ostalé Cambiaso                                                                                                                        |   |                                                         | —   |   |   | — |   |
| Gonzalo                Smith Ferrer                                                                                                                                |   |                                                         | —   |   |   | — |   |
| Tina                Rosenfeld Kreisselmeyer                                                                                                                        |   |                                                         | —   |   |   | — |   |
| Alejandro                Droste Bertolo                                                                                                                            |   |                                                         | —   |   |   | — |   |
| Marcelo                Gálvez Saldías                                                                                                                    |   |                                                         | —   |   |   | — |   |
| Claudio                Hohmann Barrientos                                                                                                                          |   |                                                         | —   |   |   | — |   |
| Alfonso                Sierra Mujica                                                                                                                               |   |                                                         | —   |   |   | — |   |
|                                                                                                                                                               |   |                                                         |      |   |   |   |   |
| **Division                Managers**                                                                                                                               |   |                                                         |      |   |   |   |   |
| Silvio                Rostagno Hayes                                                                                                                               |   |                                                         | —   |   |   | — |   |
| Elias                Ayub Uauy                                                                                                                                     |   |                                                         | —   |   |   | — |   |
| Sebastián                Rozas Heusser                                                                                                                        |   |                                                         | —   |   |   | — |   |
| Manuel                López Barranco                                                                                                                          |   |                                                         | 30,124    |   |   | 0.0005 |   |
| Andrés                Fernández Donoso                                                                                                                   |   |                                                         | —   |   |   | — |   |
|                                                                                                                                                               |   |                                                         |      |   |   |   |   |
| Directors                and executive officers as a group                                                                                                         |   |                                                         | 2,384,336 |   |   | 0.037 |   |
|                                                                                                                                                               |   |                                                         |      |   |   |   |   |
| Directors                and executive officers as a group, excluding controlling shareholders                (Nicolás Ibáñez Scott’s shares) |   |                                                         | 373,860   |   |   | 0.006 |   |

----

----

**Item      7.**
**MAJOR      SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**
** **

**Principal      Shareholders**

|                                                                                                             |   | **At                May 31, 2008**  |          |
|------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|---------------|
| **Shareholders**                                                                                                 |   | **Number of SharesOwned** |          | **Ownership%** |   |
|                                                                                                             |   |                                |          |   |   |   |   |
| Retail                International S.A.(1)(2)                                                                   |   |                                | 1,873,096,796 |   |   | 28.73 | % |
| Servicios                Profesionales y de Comercialización Cinco Ltda.(3)(4).                             |   |                                | 1,347,008,630 |   |   | 20.66 | % |
| Servicios                e Inversiones Trucha S.A.(3)                                                            |   |                                | 480,195,104   |   |   | 7.36 | % |
| International                Supermarket Holdings S.A. (5)(6)                                               |   |                                | 203,410,544   |   |   | 3.12 | % |
| Servicios                Profesionales y de Comercialización Cuatro Ltda.(3)(4)                             |   |                                | 107,423,598   |   |   | 1.65 | % |
| Servicios                Profesionales y de Comercialización Dos Ltda.(1)(4)                                |   |                                | 107,303,248   |   |   | 1.65 | % |
| Inversiones                Triplevis Limitada(5)                                                                 |   |                                | 11,404,604    |   |   | 0.17 | % |
| Inversiones                Triplesis Limitada(5)                                                                 |   |                                | 7,603,072     |   |   | 0.12 | % |
| Nicolás                Ibáñez Scott                                                               |   |                                | 2,010,476     |   |   | 0.03 | % |
|                                                                                                             |   |                                |          |   |   |   |   |
| Controlling                group(7)                                                                              |   |                                | 4,139,456,072 |   |   | 63.49 | % |
|                                                                                                             |   |                                |          |   |   |   |   |
| TOTAL                                                                                                            |   |                                | 6,520,000,000 |   |   | 100.00 | % |
|                                                                                                             |   |                                |          |   |   |   |   |
| Related                parties(8)                                                                                |   |                                | 31,913,176    |   |   | 0.49 | % |
| Directors                and executive officers as a group, excluding controlling                shareholders(9) |   |                                | 373,860       |   |   | 0.01 | % |

----

----

| (1) | Retail                International S.A. and Servicios Profesionales y de Comercialización Dos                Ltda. are companies beneficially owned or controlled by Mr. Nicolás Ibáñez                Scott. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | On                December 10, 2007, the shareholders of Future Investments S.A. spun                off                Retail International S.A., which became the beneficial owner of                525,414,236 common shares issued by us (representing a 8.06% stake                in our                company). On January 22, 2008, Retail International S.A. merged with                and                absorbed Servicios Profesionales y de Comercialización Tres Limitada,                becoming the beneficial owner of an additional 1,347,128,980 common                shares                issued by us (representing a 20.66% stake in our company). On March                6, 7,                and 13, 2008, Retail International S.A. purchased 453,580 additional                common shares issued by us on the open market (representing a 0.01%                stake                in our company). Retail International S.A. is the beneficial owner                of an                additional 100,000 common shares issued by us, which were held through                accounts with Larraín Vial, Corredora de Bolsa S.A. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Servicios                Profesionales y de Comercialización Cinco Limitada, Servicios e                Inversiones Trucha S.A., and Servicios Profesionales y de Comercialización                Cuatro Limitada are companies beneficially owned or controlled by                Mr.                Felipe Ibáñez Scott. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | On                November 30, 2007, Empresas Almac S.A. merged with its parent, Inversiones                Miramar Limitada. As a result of the merger, Inversiones Miramar                Limitada                became the beneficial owner of 599,758,172 common shares issued by                us                (representing a 9.20% stake in our company). On December 14, 2007,                Inversiones Miramar Limitada merged with Inversiones Palomar Limitada,                transferring the 9.20% stake in our company to Inversiones Palomar                Limitada. On January 9, 2008, Servicios Profesionales y de                Comercialización Limitada (formerly operating as Servicios Profesionales y                de Comercialización S.A.) merged with and absorbed Inversiones Campeones                Limitada, becoming the beneficial owner of the 3,066,288 common shares                issued by us (representing a 0.05% stake in our company), which                Inversiones Campeones Limitada had historically held through accounts                with                Larraín Vial, Corredora de Bolsa S.A. On January 10, 2008, Servicios                Profesionales y de Comercialización Limitada merged with and absorbed                Inversiones Palomar Limitada, becoming the beneficial owner of the                599,758,172 common shares previously held by Inversiones Palomar                Limitada.                As of January 10, 2008, Servicios Profesionales y de Comercialización                Limitada was the beneficial owner of 2,908,864,456 common shares                issued by                us (representing a 44.61% stake in our company), which included                2,305,831,496 of our common shares that it held as of December 31,                2007,                along with the shares that it received from Inversiones Campeones                Limitada, from Inversiones Palomar Limitada, and the 208,500 common                shares                that it previously held through accounts with Larraín Vial, Corredora de                Bolsa S.A. On January 14, 2008, Servicios Profesionales y de                Comercialización Limitada spun-off Servicios Profesionales y de                Comercialización Dos Limitada, as a result of which Servicios                Profesionales y de Comercialización Dos Limitada became the beneficial                owner of 2,908,864,456 common shares issued by us (representing a                44.61%                stake in our company). On January 21, 2008, Servicios Profesionales                y de                Comercialización Dos Limitada spun-off Servicios Profesionales y de                Comercialización Tres Limitada, Servicios Profesionales y de                Comercialización Cuatro Limitada and Servicios Profesionales y de                Comercialización Cinco Limitada, as a result of which they became the                beneficial owners of 1,347,128,980, 107,423,598 and 1,347,008,630                common                shares issued by us, respectively (representing a 20.66%, 1.65% and                20.66%                stake in our company, respectively). Following this transaction,                Servicios                Profesionales y de Comercialización Dos Limitada retained beneficial                ownership of 107,303,248 common shares (representing a 1.65% stake                in our                company). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | International                Supermarket Holdings S.A., Inversiones Triplevis Limitada and Inversiones                Triplesis Limitada are companies beneficially owned or controlled                by                Messrs. Nicolás Ibáñez Scott and Felipe Ibáñez                Scott. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | This                number includes 8,047,316 shares held through accounts with Larraín Vial,                Corredora de Bolsa S.A. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | This                number includes shares held by the companies described above, which                are                beneficially owned or controlled by Messrs. Nicolás Ibáñez Scott and/or                Felipe Ibáñez Scott, and shares beneficially owned by Mr. Nicolás Ibáñez                Scott. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | This                number includes all of the shares beneficially owned or controlled                by the                parents and descendants of Messrs. Felipe Ibáñez Scott and Nicolás Ibáñez                Scott, which includes shares held by: Mrs. Sheila Scott Battiscombe,                the                mother of Messrs. Felipe Ibáñez Scott and Nicolás Ibáñez Scott; shares                held by Mr. José Manuel Ibáñez Ojeda, the father of Messrs. Felipe Ibáñez                Scott and Nicolás Ibáñez Scott; shares held by the children of Mr. Felipe                Ibáñez Scott, including Ms. Antonia Ibáñez Atkinson, Mr. Tomás James                Ibáñez Atkinson, Mr. Sebastián Eduardo Ibáñez Atkinson and Mr. Roberto                Felipe Ibáñez Atkinson; and shares held by Ibáñez y Compañía, Sociedad                Colectiva Civil, a company beneficially owned by the children of                Mr.                Nicolás Ibáñez Scott. The shares beneficially owned or controlled by such                related parties and the controlling group accounted for 63.98% of                our                outstanding capital stock |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | This                numbers sets forth the number of shares owned by directors and officers                as                a group, excluding the controlling                shareholders. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Purchase      of Shares by Controlling Shareholders*

----

**Related      Party Transactions **

*Loans      from Servicios Profesionales y de Comercialización S.A. *

*Relationship      with Larraín Vial, Corredora de Bolsa S.A.*

*Loans      to Related Parties*

**Item      8.**
**FINANCIAL      INFORMATION**

**Item      9.**
**THE      OFFER AND LISTING**

----

----

|                       |   | **Closing Prices on the Santiago Stock Exchange** |      | **Closing Prices on the NYSE** |   |
|----------------------------|--------|---------------------------------------------------------------------------------|-----------|----------------------------------------------------|--------|
|                       |   | **ShareVolume (2)**                                                        |      | **Ch$ per Share (1)(2)**            |   | **ADS Volume** |   | **US$ per ADS** |   |
|                       |   | **(In thousands)**                                                         |      | **High**                                           |   | **Low** |   | **(In thousands)** |   | **(High)** |   | **Low** |   |
| 2003                  |   |                                                                            | 963,016   |                                               |   | 222.00 |   |   | 99.50 |   |   | 21,458 |   |   | 20.75 |   |   | 8.28 |   |
| 2004                  |   |                                                                            | 3,071,010 |                                               |   | 160.23 |   |   | 156.47 |   |   | 22,044 |   |   | 18.74 |   |   | 15.27 |   |
| 2005                  |   |                                                                            | 3,259,896 |                                               |   | 201.90 |   |   | 157.00 |   |   | 11,809 |   |   | 22.58 |   |   | 16.35 |   |
| 2006                  |   |                                                                            | 4,163,939 |                                               |   | 184.56 |   |   | 138.05 |   |   | 7,445 |   |   | 21.22 |   |   | 14.96 |   |
| 1st                Quarter |   |                                                                            | 1,069,809 |                                               |   | 180.51 |   |   | 160.75 |   |   | 2,832 |   |   | 20.68 |   |   | 18.33 |   |
| 2nd                Quarter |   |                                                                            | 982,917   |                                               |   | 168.50 |   |   | 138.05 |   |   | 2,326 |   |   | 19.36 |   |   | 14.96 |   |
| 3rd                Quarter |   |                                                                            | 769,925   |                                               |   | 155.18 |   |   | 140.10 |   |   | 1,410 |   |   | 17.00 |   |   | 15.46 |   |
| 4th                Quarter |   |                                                                            | 1,341,288 |                                               |   | 184.56 |   |   | 154.75 |   |   | 877 |   |   | 21.22 |   |   | 17.31 |   |
|                       |   |                                                                            |      |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |   |                                                                            |      |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2007                  |   |                                                                            | 5,184,730 |                                               |   | 305.97 |   |   | 166.00 |   |   | 10,912 |   |   | 37.49 |   |   | 18.44 |   |
| 1st                Quarter |   |                                                                            | 1,128,145 |                                               |   | 207.70 |   |   | 166.00 |   |   | 1,584 |   |   | 23.21 |   |   | 18.44 |   |
| 2nd                Quarter |   |                                                                            | 1,911,282 |                                               |   | 286.00 |   |   | 189.00 |   |   | 4,494 |   |   | 33.22 |   |   | 20.82 |   |
| 3rd                Quarter |   |                                                                            | 1,031,919 |                                               |   | 292.00 |   |   | 235.26 |   |   | 3,137 |   |   | 33.00 |   |   | 26.80 |   |
| 4th                Quarter |        |                                                                                 | 1,113,384 |                                                    |        | 305.97 |  |   | 252.00 |   |   | 1,697 |   |   | 37.49 |   |   | 30.01 |   |

----

| (1) | Chilean                pesos per share reflect nominal price at trade date per share of                common                stock; the price has not been restated in constant Chilean                pesos. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Stock                split |
|-----|----------------------------|

|                         |   | **Closing Prices on the Santiago StockExchange** |         | **Closing Prices on the NYSE** |   |
|------------------------------|--------|---------------------------------------------------------------------------|--------------|----------------------------------------------------|--------|
|                         |   | **Ch$                per Share (1)**                                 |         | **US$                per ADS**                     |   |
|                         |   | **High**                                                                  |         | **Low**                                            |   | **(High)** |   | **Low** |   |
| November                2007 |   |                                                                      | 300.27       |                                               |   | 267.00 |   |   | 35.78 |   |   | 30.67 |   |
| December                2007 |   |                                                                      | 293.00       |                                               |   | 252.00 |   |   | 35.75 |   |   | 30.01 |   |
| January                2008  |   |                                                                      | 276.23       |                                               |   | 222.69 |   |   | 34.7 |   |   | 27.45 |   |
| February                2008 |   |                                                                      | 217.84       |                                               |   | 187.01 |   |   | 27.74 |   |   | 24.02 |   |
| March                2008    |   |                                                                      | 197.13       |                                               |   | 179.53 |   |   | 26.96 |   |   | 24.03 |   |
| April                2008    |   |                                                                      | 195.75       |                                               |   | 175.00 |   |   | 26.63 |   |   | 23.46 |   |
| May                2008      |   |                                                                      | 191.99       |                                               |   | 177.79 |   |   | 25.84 |   |   | 22.05 |   |
| June                2008     |   |                                                                      |  214.84 |                                               |   |  166.24 |   |   |  25.79 |   |   |  20.01 |   |

----

| (1) | Chilean                pesos per share reflect nominal price at trade date per share of                common                stock; the price has not been restated in constant Chilean                pesos. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Item      10.**
**ADDITIONAL      INFORMATION**

**Register      and Entry Number**

*Registro      de Comercio del Conservador de Bienes Raíces*

**Bylaws**

*General*

|   | · | maintain                and improve our leadership position in our core business area, as                well as                to be the best, most efficient and most profitable retailer in the                region; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | capture                and develop new business opportunities that will allow for sustained                growth in the future; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

|   | · | run                a profitable business that will create value for our shareholders                and                contribute to economic development in our country;                and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | implement                clear corporate governance rules and accountability to maintain                shareholders’ confidence and attract new investors for the continued                growth and long-term endurance of our                company. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Shareholders’      Meetings*

|   | · | changing                the corporate form, splitting or spinning-off our company or merging                it                with another legal entity; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changing                the duration term of our company, if any; |
|--------|--------|-------------------------------------------------------------------|

|   | · | the                early dissolution of our company; |
|--------|--------|------------------------------------------------------|

|   | · | changing                the corporate domicile; |
|--------|--------|-------------------------------------------------|

|   | · | reducing                the capital of our company; |
|--------|--------|-----------------------------------------------------|

|   | · | approving                and appraising of non-monetary equity contributions to the capital                of our                company; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | amending                the matters that are the competence of shareholders’ meetings and the                limitations of the competence of our board of                directors; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | decreasing                the number of members of the board of directors; |
|--------|--------|----------------------------------------------------------------------------|

----

|   | · | transferring                50% or more of our company’s assets, whether or not together with its                liabilities, as well as any business plan or amendment to a business                plan                that imply the transfer of 50% or more of our company’s                assets; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changing                the manner in which profits are paid-out; |
|--------|--------|-------------------------------------------------------------------|

|   | · | granting                of collateral or sureties relating third-party obligations, with                the                exception of subsidiaries for which the approval of the board of                directors                shall suffice; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | acquiring                shares issued by our company; and |
|--------|--------|------------------------------------------------------------|

|   | · | curing                of formal problems affecting the incorporation or amendment to the                bylaws                of our company that would otherwise cause it to be null and                void. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Share      Capital**

*Common      Shares*

**e      **

*Voting*

----

*American      Depositary Share*

**Material      Contracts**

**The      Deposit Agreement**

**Series      E Bonds**

*—“*
*—*
*–*
*—“*
*—*
*–*

**Syndicated      Credit Agreement**

*—“*
*—*
*–*

----

**Merger      Agreement with S.A.C.I Falabella**

**Exchange      Controls**

|   | · | cash                dividends; |
|--------|--------|--------------------------------|

|   | · | proceeds                from the sale in Chile of Withdrawn Shares, or from shares distributed                because of our liquidation, merger or consolidation, subject to receipt                by                the Central Bank of Chile of a certificate from the holder of the                Withdrawn Shares (or from an institution authorized by the Central                Bank of                Chile) that such holder’s residence and domicile are outside Chile and a                certificate from a Chilean stock exchange (or from a brokerage or                securities firm established in Chile) that such Withdrawn Shares                were sold                on a Chilean exchange; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | proceeds                from the sale in Chile of preemptive rights to subscribe for additional                shares; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | proceeds                from our liquidation, merger or consolidation; and |
|--------|--------|----------------------------------------------------------------------------|

|   | · | other                distributions, that result from holding shares represented by ADSs                or                Withdrawn Shares, including without limitation, those resulting from                any                recapitalization. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | receipt                by the Central Bank of Chile of a certificate from the Depositary                that                such deposit has been effected and that the related ADSs have been                issued;                and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | receipt                by the Custodian of a declaration from the person making such deposit                waiving the benefits of the Foreign Investment Contract with respect                to                the deposited Shares. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Other      Limitations**

***Dividends      Policy***

***Exchange      Rates***

***Share      Capital***

|   | · | any                direct or indirect acquisition or sale of shares or options to buy                or sell                shares, in any amount, if made by a holder of 10% or more of the                publicly-held corporation’s                capital; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | any                direct or indirect acquisition or sale of shares or options to buy                or sell                shares, in any amount, if made by a director, receiver, senior officer,                C.E.O. or manager of such corporation;                and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | any                direct or indirect acquisition of shares resulting in a person acquiring,                directly or indirectly, 10% or more of a publicly held corporation’s share                capital. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | send                a written communication to the target corporation, the entities controlled                by such corporation or the entities that control such corporation,                as well                as to the SVS and the Chilean stock exchanges,                and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | inform                the general public, in advance, through notice published in two Chilean                newspapers of national                distribution. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Dissenting      Shareholders***

|   | · | the                transformation of the issuer into an entity which is not a stock                corporation governed by the Chilean Companies                Act; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                merger of the issuer with and/or into another company; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | the                sale of 50% or more the assets of the issuer, whether or not its                liabilities are included, or the formulation of a business plan                contemplating a sale on those                terms; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | creation                of personal securities or asset-backed securities for the purpose                of                guaranteeing third-party obligations in excess of 50% of the company’s                assets; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                creation of preferential rights for a class of shares or an amendment                to                those already existing, in which case the right to withdraw only                accrues                to the dissenting shareholders of the class or classes of shares                adversely                affected; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                creation of preferential rights for a class of shares or an amendment                to                preferential rights already existing, in which case the right to                withdraw                only accrues to the dissenting shareholders of the class or classes                of                shares adversely affected; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | such                other resolutions as may be established by an issuer’s bylaws (no such                additional resolutions currently are specified in the bylaws of our                company). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Administradoras      de Fondos de Pensiones*

----

***Voting      Shares of Common Stock***

***Disclosure***

**Chilean      Tax Considerations**

----

***Cash      Dividends and Other Distributions***

| D&S                taxable income                                                                                                 |   |   | 100.0 |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------|--------|
| First                Category Tax (17.0% of Ch$100)                                                                                   |   |   | -17.0 |   |
| Net                distributable income                                                                                               |   |   | 83.0  |   |
| Dividend                distributed (30% of net distributable income)                                                                 |   |   | 24.9  |   |
| Withholding                Tax (35% of the sum of Ch$25.2 dividend plus Ch$4.8 First Category                Tax                paid) |   |   | -10.5 |   |
| Credit                for 17.0% of First Category Tax paid                                                                            |   |   | 5.1   |   |
| Net                additional tax withheld                                                                                            |   |   | 5.4   |   |
| Net                dividend received                                                                                                  |   |   | 19.5  |   |
| Effective                dividend withholding rate                                                                                    |   |   | 22.7  | %      |

| **Effective                dividend Withholding Tax Rate**                = | (Withholding                Tax Rate) - (First Category Tax Rate) |
|-----------------------------------------------------------------------------|-------------------------------------------------------------------|
| 1                -                (First Category Tax Rate)                 |

----

***Capital      Gains***

|   | · | the                foreign holder has held the shares for less than one year since exchanging                the ADSs for the common shares; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                foreign holder acquired and disposed of the shares in the ordinary                course                of its business or as a habitual trader of shares;                or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                foreign holder and the purchaser of the shares are “related parties.” |
|--------|--------|------------------------------------------------------------------------------------------------------|

|   | · | a                partner; |
|--------|--------|---------------------------|

|   | · | a                shareholder if the entity is a closed stock corporation; or |
|--------|--------|------------------------------------------------------------------------------|

|   | · | a                shareholder with more than 10% of the shares if the entity is an                open                stock corporation. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

***Other      Chilean Taxes***

----

***Withholding      Tax Certificates***

**United      States Tax Considerations**

|   | · | an                individual citizen or resident of the United States, |
|--------|--------|------------------------------------------------------------------------|

|   | · | a                corporation (or other entity treated as a corporation for United                States                federal income tax purposes) created or organized in or under the                laws of                the United States, any state thereof or the District of                Columbia, |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | an                estate the income of which is subject to United States federal income                taxation regardless of its source,                or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a                trust: |
|--------|--------|-------------------------|

|   | ○ | that                is subject to the primary supervision of a court within the United                States                and the control of one or more United States persons as described                in                Section 7701(a)(30) of the Code, or |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ○ | that                has a valid election in effect under applicable U.S. Treasury regulations                to be treated as a United States                person. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***ADSs***

***Taxation      of Dividends***

----

***Passive      Foreign Investment Companies***

***Capital      Gains***

***Estate      and Gift Taxation***

----

***Information      Reporting and Backup Withholding***

**Dividend      Policy and Dividends**

----

| **Year Declared** |   | **Dividend****Paid Ratio** |   | **Dividend per Share****(Ch$/share) (1)** |   | **Dividend per ADS****(Ch$/ADS) (1)** |   |
|------------------------|--------|---------------------------------|--------|----------------------------------------------------------|--------|------------------------------------------------------|--------|
|                   |   |                            |   |                                                     |   |                                                 |   |
| 2003                   |   |                            | 66.3   |                                                     |   | 2.5                                                  |   |   | 150 |   |
| 2004                   |   |                            | 194.9  |                                                     |   | 3.125                                                |   |   | 187.5 |   |
| 2005                   |   |                            | 34.3   |                                                     |   | 2.0                                                  |   |   | 120 |   |
| 2006                   |   |                            | 65.6   |                                                     |   | 4.0                                                  |   |   | 240 |   |
| 2007                   |   |                            | 51.0   |                                                     |   | 4.0                                                  |   |   | 240 |   |

----

| (1) | Adjusted                to the to the one-to-four stock split of December 6, 2004 on local                shares.                In order to maintain the same economic and corporate rights for the                ADSs                as the underlying common shares, the number of shares representing                each                ADS was increased from 15 common shares per ADS to 60 common shares                per                ADS. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Exchange      Rates**

**New      York Stock Exchange and Chilean Corporate Governance      Requirements**

| **ITEM**                                           |   | **NYSE REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                        |   | **CHILEAN LAW****REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|----------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                               |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Composition                of Board of Directors   |   | The                board of directors must consist of a majority of independent                directors.                                                                                                                                                                                                                                                         |   | No                similar obligation exists under Chilean law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                               |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Director’s                Independence       |   | A                director qualifies as independent only if the board of directors                affirmatively determines that the director has no material relationship                with the company, either directly of indirectly. The NYSE listing                standards enumerate a number of relationships that preclude                independence. |   | A                director qualifies as independent only if he or she has been elected                with                the votes of other than the controlling shareholders’, that is, with the                votes of the minority shareholders.                                                                                                                                                                                                                                                                                                                                                                            |
|                                               |   |                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Code                of Business Conduct and Ethics |   | A                company must adopt, and post on its website, a code of business conduct                and ethics for its directors, officers and employees and promptly                disclose                any waiver of its code of conduct that is granted to an officer or                director.                                                      |   | There                is no legal obligation to adopt a code of business conduct. Chilean                law                requires that a company have a set of internal regulations which                regulates                employee conduct. Such regulations may contain, among other things,                regulations related to ethics and good behavior. Notwithstanding                the                above, a company may create internal codes of conduct, provided that                they                do not require or prohibit behavior or impose sanctions that contravene                Chilean law. |

----

| **ITEM**                                            |   | **NYSE REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | **CHILEAN LAW****REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|-----------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Internal                Audit Function              |   | A                company must have in place an internal audit function to provide                management and its audit committee with ongoing assessments of such                company’s risk management processes and system of internal control. A                company may choose to outsource this function to a firm other than                its                independent auditors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | There                is no similar obligation under Chilean law. However, Chilean law                requires                that companies must have both external auditors and an audit                department.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Meetings                of Non-Management Directors |   | Non-management                directors must meet regularly without management of the                company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | No                similar legal obligation exists under Chilean law. Under Chilean                law, the                position of director of a corporation is incompatible with the position                of                manager, auditor, accountant or president of the company. Directors                must                meet in a properly convened meeting in order to agree on the matters                under                their competence.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Committees                                          |   | A                company must have a nominating/corporate governance committee and                an audit                committee. Each of these committees must have a written charter that                addresses certain matters specified in the NYSE listing standards.                All the                members of each of these committees must be independent directors.                A                company must have an audit committee with a minimum of three members.                At                least one member of the audit committee must have accounting or related                financial management expertise as a company’s board interprets such                qualification in its business judgment. While the NYSE does not require                that a listed company’s audit committee have an “audit committee financial                expert” as defined by the U.S. securities laws, a company’s board may                presume that such a person has accounting or related financial management                expertise sufficient to satisfy the NYSE requirement. |   | In                accordance with the Chilean Companies Law 18,046, listed companies                that                have a net worth of more than 1.5 million UF (approximately US$52,600,000                as of December 31, 2005) must have a committee of directors, formed                by                three board members. All directors deemed to be independent from                the                controller have the right to be members of the director’s committee. Under                Chilean law a director is deemed to be independent from the controller                if                after subtracting the votes of the controllers, such director would                still                be elected as director of the company. The committee’s compensation is set                by the annual shareholders meeting, and it performs the following                functions: (1) examine the reports of external auditors, our company’s                annual report and other financial statements presented by the management                of our company to its shareholders, and issue an opinion in connection                with the same prior to such presentation, (2) propose to our board                of                directors the external auditors and risk rating agencies which names                shall                be taken up to the shareholder’s meeting for appointment as external                auditors and risk rating agencies of our company, (3) examine all                related-party transactions and issue a report to our board of directors                on                each of such transactions, (4) examine the compensation package and                plans                of managers and key executives and (5) any other matters that the                bylaws,                the shareholders meeting or the board of directors                decide. |

----

| **ITEM**                                                                                                                |   | **NYSE REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   | **CHILEAN LAW****REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| CEO                Certifications                                                                                       |   | A                company’s CEO must certify annually that he or she is not aware of any                violations by such company of the NYSE’s corporate governance standards                (this certification is in addition to the certification required                by                Section 302 of the U.S. Sarbanes-Oxley Act of 2002).                                                                                                                                                                                                                                                               |   | No                similar obligation exists under Chilean law. However, in accordance                with                Chilean law, the directors of a company must annually submit for                approval                the company’s annual report and financial statements to its shareholders                at the company’s annual shareholders’ meeting. Similarly, public companies                must, from time to time, provide all relevant company information                by means                of the publications and notifications established by law, both to                the                public and to the SVS.                                                                                                                                                                                                                                                 |
|                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Notification                by the CEO to the NYSE of Non-Compliance with Corporate Governance                Standards |   | A                company’s CEO must promptly notify the NYSE in writing after any executive                officer of the company becomes aware of any material non-compliance                with                any applicable NYSE corporate governance standard.                                                                                                                                                                                                                                                                                                                                                     |   | No                similar obligation exists under Chilean law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Disclosure                of Significant Differences with Respect to Corporate Governance                Practices      |   | A                company must provide a summary description of significant differences                between its home country corporate governance practices and the corporate                governance requirements established by the NYSE and applicable to                U.S.                domestic listed companies.                                                                                                                                                                                                                                                                                                 |   | No                similar obligation exists under Chilean law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Shareholder                Approval of Equity Compensation Plans                                                        |   | Shareholders                must be given the opportunity to vote on all equity compensation                plans and                material revisions to the terms of such plans with certain limited                exceptions. An “equity-compensation plan” is a plan or other arrangement                that provides for the delivery of equity securities (either newly                issued                or treasury shares) of the listed company to any employee, director                or                other service provider as compensation for services.                                    |   | Under                Chilean law, 10% of any capital increase may be set aside by shareholders                for use in equity compensation plans. Additionally, shareholders                may also                set aside the company’s other unsubscribed shares with respect to which                preemptive rights were waived or not exercised for use in equity                compensation plans. Chilean corporations may also approve share repurchase                programs for purposes of implementing stock options compensation                plans for                their employees and those of its subsidiaries. If the company offers                shares in connection with shareholder approved equity compensation                plans,                such offerings are not subject to Chilean preemptive rights requirements                applicable to other offerings. |
|                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Adoption                and Disclosure of Corporate Governance Guidelines                                               |   | Listed                companies must adopt and disclose corporate governance guidelines,                encompassing such areas as director qualification standards, director                responsibilities, director access to management, director compensation,                director orientation and continuing education, management succession,                and                annual performance evaluations of the company’s board. Each listed                company’s website must include its corporate governance guidelines and the                charters of its most important committees. |   | No                similar obligation exists under Chilean                law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

----

**Documents      on Display**

**Item      11.**
**QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

***Policies      and Procedures***

----

***Foreign      Currency Exchange Rate Risk***

***Interest      Rate Risk***

*tasa      bancaria *

*** ***

----

| **Debt in UF**                                |   |
|---------------------------------------------------------|--------|
|                                                    |   |   |   |   |   | **As of** |   | **Effect in** |   |
|                                                    |   | **Capital** |   |   |   | **December 31, 2007** |   | **income statement** |   |
|                                                    |   |   |   | **Amount** |   | **CPI 3%** |   | **CPI 5%** |   | **CPI 3%** |   | **CPI 5%** |   |
|                                                    |   |   |   | **Ch$** |   | **Ch$** |   | **Ch$** |   | **Ch$** |   | **Ch$** |   |
|                                                    |   | **UF** |   | **(millions)** |   | **(millions)** |   | **(millions)** |   | **(millions)** |   | **(millions)** |   |
|                                                    |   |   |   |   |   |   |   |   |   | Negative |   | Negative |   |
| Bonds                  D&S                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Series                  C                               |   |   | 1,116,393 |   |   | 21,987 |   |   | 22,646 |   |   | 23,086 |   |   | 660 |   |   | 1,099 |   |
| Series                  D                               |   |   | 993,287 |   |   | 19,578 |   |   | 20,165 |   |   | 20,557 |   |   | 587 |   |   | 979 |   |
| Total                  bonds D&S                    |   |   | 2,109,681 |   |   | 41,564 |   |   | 42,811 |   |   | 43,642 |   |   | 1,247 |   |   | 2,078 |   |
| Bonds                  Saitec                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Series                  A                               |   |   | 82,105 |   |   | 1,637 |   |   | 1,686 |   |   | 1,719 |   |   | 49 |   |   | 82 |   |
| Series                  B                               |   |   | 4,500,000 |   |   | 89,215 |   |   | 91,891 |   |   | 93,675 |   |   | 2,676 |   |   | 4,461 |   |
| Total                  bonds Saitec                     |   |   | 4,582,105 |   |   | 90,851 |   |   | 93,577 |   |   | 95,394 |   |   | 2,726 |   |   | 4,543 |   |
| Total                  bonds                            |   |   | 6,691,786 |   |   | 132,415 |   |   | 136,388 |   |   | 139,036 |   |   | 3,972 |   |   | 6,621 |   |
| Lease                  obligations and accounts payable |   |   | 4,597,207 |   |   | 90,209 |   |   | 92,916 |   |   | 94,720 |   |   | 2,706 |   |   | 4,510 |   |
|                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  debt UF                          |   |   | 11,288,993 |   |   | 222,625 |   |   | 229,304 |   |   | 233,756 |   |   | 6,679 |   |   | 11,131 |   |

**Item      12.**
**DESCRIPTION      OF SECURITIES OTHER THAN EQUITY SECURITIES**

----

**PART      II**

**Item      13.**
**DEFAULTS,      DIVIDEND ARREARAGES AND DELINQUENCIES**

**Item      14.**
**MATERIAL      MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF      PROCEEDS**

**Item      15.**
**CONTROLS      AND PROCEDURES**
** **

**Disclosure      Controls and Procedures**
** **

**Management’s      Report on Internal Control over Financial Reporting**

----

**Attestation      Report of Independent Registered Public Accounting Firm**

*.,*

**Changes      in Internal Control over Financial Reporting **

|   | · | We                reorganized our internal audit functions and increased the size and                quality of our internal accounting                personnel; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We                introduced a new audit approach focused on financial controls along                with                operational controls; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We                improved the design of our controls so that all sub-ledger to general                ledger discrepancies are required to be reconciled and recorded in                a                timely manner; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We                reviewed controls over the stock integrity at our distribution center                as                well as documentation and processes at our distribution center, correcting                a design flaw in the recently-installed inventory tracking                software. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We                hired additional personnel with U.S. GAAP expertise as well as provided                more timely and advanced training on U.S. GAAP to our existing accounting                personnel; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We                developed the position of a Corporate Accounting Manager within our                accounting department, charged with the management and preparation                of our                financial statements reconciled to U.S. GAAP, along with supporting                management in establishing and maintaining an internal control structure,                along with corresponding internal procedures, necessary for the                preparation of such financial                statements; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | We                engaged an outside consultant with expertise in financial reporting                to                manage the preparation of our financial statements;                and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We                implemented more robust controls in order to better identify Chilean                GAAP                to U.S. GAAP adjustments and any noncompliance with applicable literature                regarding U.S. GAAP disclosure. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item      16.**
**[Reserved]**

**Item      16A.**
**AUDIT      COMMITTEE FINANCIAL EXPERT**

**Item      16B.**
**CODE      OF ETHICS**
** **

**Item      16C.**
**PRINCIPAL      ACCOUNTANT FEES AND SERVICES**
** **

**Audit      Fees**

**Audit-Related      Fees**

**Tax      Fees**

----

**All      Other Fees**

**Item      16D.**
**EXEMPTIONS      FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**
** **

**Item      16E.**
**PURCHASES      OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED      PURCHASERS**

| **Period**                                             |   | **(a) Total****Number of****       Common       ****Shares****Purchased(1)** |       | **(b) Average****Price Paid****per****Common****Share(1)** |   | **(c) Total****Number of****Common Shares****Purchased as****Part of Publicly****Announced****Plans or****Programs(1)** |   | **(d) Maximum****Number of****Common Shares****that May Yet Be****PurchasedUnder****the Plans or****Programs(1)(2)** |       |
|--------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
|                                                   |   |                                                                                                                                                         |       |                                                                 |   |                                                                                                                                                       |   |                                                                                                                                                         |       |
|                                                   |   |                                                                                                                                                         |       |                                                                 | Ch$    | 146.56                                                                                                                                                     |   |                                                                                                                                                         |       |   |   |   |   |
| As                of December 31, 2006                 |   |                                                                                                                                                         | 36,000,000 |                                                                 | US$    |  (0.28                                                                                                                                                | )      |                                                                                                                                                         | 36,000,000 |   |   | 29,200,000 |   |
| January                1, 2007 to January 31, 2007     |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| February                1, 2007 to February 28, 2007   |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| March                1, 2007 to March 31, 2007         |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| April                1, 2007 to April 30, 2007         |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| May                1, 2007 to May 31, 2007             |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| June                1, 2007 to June 30, 2007           |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| July                1, 2007 to July 31, 2007           |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
|                                                   |   |                                                                                                                                                         |       |                                                                 | Ch$    | 249.13                                                                                                                                                     |   |                                                                                                                                                         |       |   |   |   |   |
| August                1, 2007 to August 31, 2007       |   |                                                                                                                                                         | 29,200,000 |                                                                 | US$    |  (0.50                                                                                                                                                | )      |                                                                                                                                                         | 29,200,000 |   |   | 29,200,000 |   |
| September                1, 2007 to September 30, 2007 |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| October                1, 2007 to October 31, 2007     |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| November                1, 2007 to November 30, 2007   |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
| December                1, 2007 to December 31, 2007   |   |                                                                                                                                                         | —    |                                                                 |   | —                                                                                                                                                    |   |                                                                                                                                                         | —    |   |   | — |   |
|                                                   |   |                                                                                                                                                         |       |                                                                 | Ch$    | 249.13                                                                                                                                                     |   |                                                                                                                                                         |       |   |   |   |   |
| Total                2007                              |   |                                                                                                                                                         | 29,200,000 |                                                                 | US$    |  (0.50                                                                                                                                                | )      |                                                                                                                                                         | 29,200,000 |   |   | 29,200,000 |   |

----

| (1) | All                these treasury transactions were under our share repurchase program                announced on October 26, 2004 of up to 5% of our common shares                (326,000,000 common shares). These purchases were approved by our                shareholders on October 26, 2004, specifically for use in our stock                option                compensation plan. These common shares were purchased in the open                market                at an average price of Ch$249.13                (US$0.50)                per share. This share repurchase program expired October 26, 2007.                On                June 24, 2008, our shareholders approved a new share repurchase program,                authorizing us to repurchase up to 1.0% of our shares over a term                of three                years specifically for use in a future stock option compensation                plan                similar to the one we currently have in place. Our board of directors                has                currently not adopted a stock option compensation plan pursuant to                this                share repurchase program. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Pursuant                to the share repurchase program, single day purchases may not exceed                25%                of the average daily trading volume of our common shares for the                90-day                period preceding the purchase of the shares. In addition, purchases                may                not exceed 1% of our common shares (65,200,000) during any 12-month                period, subject to certain exceptions. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PART      III**

**Item      17.**
**FINANCIAL      STATEMENTS**

**Item      18.**
**FINANCIAL      STATEMENTS**

| Index                to Audited Consolidated Financial Statements                                                                                | F-1    |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                             |   |
| Reports                of Independent Registered Public Accounting Firm                                                                          | F-2    |
|                                                                                                                                             |   |
| Consolidated                Balance Sheets as of December 31, 2006 and 2007                                                                      | F-4    |
|                                                                                                                                             |   |
| Consolidated                Statements of Income for the years ended December 31, 2005, 2006                and                2007              | F-6    |
|                                                                                                                                             |   |
| Consolidated                Statements of Cash Flows for the years ended December 31, 2005, 2006                and                2007          | F-7    |
|                                                                                                                                             |   |
| Notes                to the Consolidated Financial Statements for the years ended December                31,                2005, 2006 and 2007 | F-9    |

**Item      19.**
**EXHIBITS**

----

**INDEX      TO EXHIBITS**

| **Exhibit Number** |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 1.1                     |   | English                  translation of our Amended Bylaws (filed                  with the U.S. Securities and Exchange Commission in our annual                  report on                  Form 20-F on July 15, 2005 and incorporated herein by                  reference)                                                                                                                                                                                                                                                                                                                                        |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.1                     |   | Amendment                  No. 1, dated as of December 3, 2004, to Deposit Agreement, dated                  as of                  October 7, 1997, between us and JPMorgan Chase Bank N.A. (formerly,                  Morgan                  Guaranty Trust Company of New York), as Depositary and the registered                  holders from time to time of American Depositary Receipts (filed                  with the                  U.S. Securities and Exchange Commission in our annual report on                  Form 20-F                  on July 15, 2005 and incorporated herein by reference) |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.2                     |   | English                  translation of Indenture Agreement, dated as of December 29, 2006,                  of UF                  6.0 million (approximately US$ 243.2 million) between us and Banco                  de                  Chile (filed herewith).                                                                                                                                                                                                                                                                                                                                                    |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.3                     |   | English                  translation of Amendment No. 1, dated as of February 9, 2007 to                  Indenture                  Agreement between us and Banco de Chile (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                                                                        |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.4                     |   | English                  translation of Amendment No. 2, dated as of April 3, 2008 to Indenture                  Agreement between us and Banco de Chile (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.5                     |   | Letter                  Agreement, dated May 14, 2008, to                  Deposit Agreement, dated as of October 7, 1997, between us and                  JPMorgan                  Chase Bank N.A. (formerly, Morgan Guaranty Trust Company of New                  York), as                  Depositary and the registered holders from time to time of American                  Depositary Receipts (filed herewith)                                                                                                                                                                                             |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.6                     |   | English                  translation of Syndicated                  Credit Agreement of Ch$ 61,200 million (approximately US$ 121.6                  million)* *between                  us and Banco de Chile, Banco Bilbao Vizcaya Argentaria Chile, Scotiabank                  Sud Americano, Banco Itaú Chile, Corpbanca and Banco Santander-Chile,                  dated May 22, 2008 (filed herewith).                                                                                                                                                                                               |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.1                     |   | English                  translation of Settlement Agreement between us and the National                  Economic Prosecutor                  dated December 15, 2006, including Addendum, dated December 26,                  2006, and                  Final Resolution from the Antitrust Court approving the Settlement                  Agreement, dated January 17, 2007 (filed                  with the U.S. Securities and Exchange Commission in our annual                  report on                  Form 20-F on July 13, 2007 and incorporated herein by                  reference).                 |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.2                     |   | English                  translation of Merger Agreement between our controlling shareholders                  and                  the controlling shareholders of S.A.C.I Falabella (filed with the                  U.S.                  Securities and Exchange Commission in our annual report on Form                  20-F on                  July 13, 2007 and incorporated herein by reference).                                                                                                                                                                                                            |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 8.1                     |   | List                  of our subsidiaries (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 11.1                    |   | Code                  of Ethics of the company, dated June 29, 2004 (filed with the U.S.                  Securities and Exchange Commission in our annual report on Form                  20-F on                  June 30, 2004 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                               |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 12.1                    |   | Certification                  of Mr. Enrique                  Ostalé Cambiaso pursuant                  to Section 302 of the Sarbanes-Oxley Act of 2002 (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 12.2                    |   | Certification                  of Mr. Alejandro Droste Bertolo pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 13.1                    |   | Certification                  of Mr. Enrique                  Ostalé Cambiaso pursuant                  to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes–                  Oxley Act of 2002 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                        |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 13.2                    |   | Certification                  of Mr. Alejandro Droste Bertolo pursuant to 18 U.S.C. 1350, as                  adopted                  pursuant to Section 906 of the Sarbanes – Oxley Act of 2002 (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                                           |

----

***SIGNATURE***

|   | DISTRIBUCION                Y SERVICIO D&S S.A. |
|--------|-----------------------------------------------------|
|   |                                                |
|   | /s/                Alejandro Droste Bertolo         |  |
|   | Alejandro                Droste Bertolo             |
|   | Chief                Financial Officer              |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**INDEX      TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS**

|                                                                                                                                             |   | **Page** |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|
| **Audited                Consolidated Financial Statements**                                                                                     |   |     |
| Reports                of Independent Registered Public Accounting Firm                                                                          |   | F-2      |
| Consolidated                Balance Sheets as of December 31, 2006 and 2007                                                                      |   | F-4      |
| Consolidated                Statements of Income for the years ended December 31, 2005, 2006                and                2007              |   | F-6      |
| Consolidated                Statements of Cash Flows for the years ended December 31, 2005, 2006                and                2007          |   | F-7      |
| Notes                to the Consolidated Financial Statements for the years ended December                31,                2005, 2006 and 2007 |   | F-9      |

----

|  | Deloitte                  Auditores                  y Consultores LimitadaRUT:                  80.276.200-3Av.                  Providencia 1760Pisos                  6, 7, 8, 9 y 13Providencia,                  SantiagoChileFono:                  (56-2) 729 7000Fax:                  (56-2) 374 9177e-mail:                  deloittechile@deloitte.comwww.deloitte.cl |
|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

----

|  | Deloitte                        Auditores                        y Consultores LimitadaRUT:                        80.276.200-3Av.                        Providencia 1760Pisos                        6, 7, 8, 9 y 13Providencia,                        SantiagoChileFono:                        (56-2) 729 7000Fax:                        (56-2) 374 9177e-mail:                        deloittechile@deloitte.comwww.deloitte.cl |
|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**REPORT        OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

----

| **DISTRIBUCION                Y SERVICIO D&S S.A. AND SUBSIDIARIES**                                                                                                                 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                     |
| CONSOLIDATED                BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2007                                                                                                              |
| (Restated                for general price-level changes and expressed in thousands of constant                Chilean pesos (ThCh$) and thousands of US dollars                (ThUS$)) |

|                                                                                                                                                                                                                          |   |         |   | **As                of December 31,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|---------------------------------------|--------|
|                                                                                                                                                                                                                          |   | **Notes**    |   | **2006**                              |   | **2007** |   | **2007** |   |
|                                                                                                                                                                                                                          |   |    |   |  ThCh$                           |   |  ThCh$ |   |  ThUS$ |   |
|                                                                                                                                                                                                                          |   |         |   |                                  |   |   |   |  **(note                2u)** |   |
| **ASSETS**                                                                                                                                                                                                                    |   |         |   |                                  |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                          |   |         |   |                                  |   |   |   |   |   |   |   |   |   |
| CURRENT                ASSETS:                                                                                                                                                                                                |   |         |   |                                  |   |   |   |   |   |   |   |   |   |
| Cash                                                                                                                                                                                                                          |   |         |   |                                  |   | 33,222,710 |   |   | 43,363,001 |   |   | 87,269 |   |
| Marketable                securities                                                                                                                                                                                          |   |         | 4      |                                  |   | 2,964,135 |   |   | 1,567,214 |   |   | 3,154 |   |
| Notes                  and accounts receivable (net of allowance for doubtful accounts                  of                  ThCh$24,631,685 and ThCh$31,387,770 at December 31, 2006 and 2007,                  respectively) |   |         | 5      |                                  |   | 132,168,475 |   |   | 147,738,389 |   |   | 297,326 |   |
| Due                from related companies                                                                                                                                                                                     |   |         | 19     |                                  |   | 1,678,343 |   |   | 2,958,662 |   |   | 5,954 |   |
| Inventories                                                                                                                                                                                                                   |   |         | 6      |                                  |   | 158,163,316 |   |   | 158,550,084 |   |   | 319,085 |   |
| Refundable                taxes                                                                                                                                                                                               |   |         | 14     |                                  |   | 8,958,929 |   |   | 36,710,545 |   |   | 73,881 |   |
| Prepaid                expenses                                                                                                                                                                                               |   |         |   |                                  |   | 856,474 |   |   | 2,631,071 |   |   | 5,295 |   |
| Other                current assets                                                                                                                                                                                           |   |         | 7      |                                  |   | 29,266,687 |   |   | 17,222,369 |   |   | 34,660 |   |
|                                                                                                                                                                                                                          |   |         |   |                                  |   |   |   |   |   |   |   |   |   |
| TOTAL                CURRENT ASSETS                                                                                                                                                                                           |   |         |   |                                  |   | 367,279,069 |   |   | 410,741,335 |   |   | 826,624 |   |
|                                                                                                                                                                                                                          |   |         |   |                                  |   |   |   |   |   |   |   |   |   |
| PROPERTY,                PLANT AND EQUIPMENT - NET                                                                                                                                                                       |   |         | 8      |                                  |   | 694,710,045 |   |   | 753,682,807 |   |   | 1,516,800 |   |
|                                                                                                                                                                                                                          |   |         |   |                                  |   |   |   |   |   |   |   |   |   |
| OTHER                ASSETS – NET                                                                                                                                                                                  |   |         | 9      |                                  |   | 232,615,999 |   |   | 267,124,071 |   |   | 537,592 |   |
|                                                                                                                                                                                                                          |   |         |   |                                  |   |   |   |   |   |   |   |   |   |
| TOTAL                ASSETS                                                                                                                                                                                                   |   |         |   |                                  |   | 1,294,605,113 |   |   | 1,431,548,213 |   |   | 2,881,016 |   |

----

| **DISTRIBUCION                Y SERVICIO D&S S.A. AND SUBSIDIARIES**                                                                                                                 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                     |
| CONSOLIDATED                BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2007                                                                                                              |
| (Restated                for general price-level changes and expressed in thousands of constant                Chilean pesos (ThCh$) and thousands of US dollars                (ThUS$)) |

|                                                                                                                                                                                                                           |   |      |   | **As of December 31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|---------------------------------------|--------|
|                                                                                                                                                                                                                           |   | **Notes** |   | **2006**                              |   | **2007** |   | **2007** |   |
|                                                                                                                                                                                                                           |   |      |   | ThCh$                                 |   | ThCh$ |   | ThUS$ |   |
|                                                                                                                                                                                                                           |   |      |   |                                  |   |   |   | **(note                2u)** |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                                                                                                                                                                        |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| CURRENT                LIABILITIES:                                                                                                                                                                                            |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| Banks                and financial institutions                                                                                                                                                                                |   |      | 12     |                                  |   | 63,656,562 |   |   | 193,485,370 |   |   | 389,393 |   |
| Current                portion of long-term liabilities                                                                                                                                                                        |   |      | 12     |                                  |   | 15,668,096 |   |   | 24,566,114 |   |   | 49,440 |   |
| Commercial                paper                                                                                                                                                                                                |   |      | 12     |                                  |   | 68,155,449 |   |   | 65,905,976 |   |   | 132,637 |   |
| Dividend                payable                                                                                                                                                                                                |   |      | 13     |                                  |   | - |   |   | 12,946,130 |   |   | 26,054 |   |
| Accounts                payable                                                                                                                                                                                                |   |      | 10     |                                  |   | 259,014,596 |   |   | 259,652,662 |   |   | 522,556 |   |
| Sundry                creditors                                                                                                                                                                                                |   |      | 12     |                                  |   | 5,884,147 |   |   | 8,595,641 |   |   | 17,299 |   |
| Accruals                and withholdings                                                                                                                                                                                       |   |      | 11     |                                  |   | 27,689,560 |   |   | 30,318,992 |   |   | 61,018 |   |
| Other                current liabilities                                                                                                                                                                                       |   |      |   |                                  |   | 1,566,203 |   |   | 7,234,459 |   |   | 14,558 |   |
|                                                                                                                                                                                                                           |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| Total                current liabilities                                                                                                                                                                                       |   |      |   |                                  |   | 441,634,613 |   |   | 602,705,344 |   |   | 1,212,955 |   |
|                                                                                                                                                                                                                           |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| LONG-TERM                LIABILITIES:                                                                                                                                                                                          |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| Banks                and financial institutions                                                                                                                                                                                |   |      | 12     |                                  |   | 128,652,823 |   |   | 137,341,580 |   |   | 276,402 |   |
| Bonds                                                                                                                                                                                                                          |   |      | 12     |                                  |   | 154,977,283 |   |   | 119,582,987 |   |   | 240,663 |   |
| Lease                obligations                                                                                                                                                                                               |   |      | 12     |                                  |   | 4,153,983 |   |   | 6,490,455 |   |   | 13,062 |   |
| Sundry                creditors                                                                                                                                                                                                |   |      | 12     |                                  |   | 707,775 |   |   | 705,238 |   |   | 1,419 |   |
| Accruals                                                                                                                                                                                                                       |   |      | 20     |                                  |   | 7,761,397 |   |   | 1,472,440 |   |   | 2,964 |   |
| Other                long-term liabilities                                                                                                                                                                                     |   |      |   |                                  |   | 480,164 |   |   | 612,956 |   |   | 1,234 |   |
|                                                                                                                                                                                                                           |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| Total                long-term liabilities                                                                                                                                                                                     |   |      |   |                                  |   | 296,733,425 |   |   | 266,205,656 |   |   | 535,744 |   |
|                                                                                                                                                                                                                           |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| MINORITY                INTEREST                                                                                                                                                                                               |   |      |   |                                  |   | 817 |   |   | (3,308 | ) |   | (7 | ) |
|                                                                                                                                                                                                                           |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| SHAREHOLDERS'                EQUITY:                                                                                                                                                                                           |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| Paid-in                      capital (Common stock, no par value; authorized, issued and                      outstanding                      6,520,000,000 at December 31, 2006 and 2007,                      respectively) |   |      |   |                                  |   | 430,345,355 |   |   | 430,345,355 |   |   | 866,078 |   |
| Technical                revaluation reserve and other reserves                                                                                                                                                                |   |      |   |                                  |   | (9,265,924 | ) |   | (13,539,130 | ) |   | (27,248 | ) |
| Retained                earnings                                                                                                                                                                                               |   |      |   |                                  |   | 135,156,827 |   |   | 145,834,296 |   |   | 293,494 |   |
|                                                                                                                                                                                                                           |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| Total                shareholders' equity                                                                                                                                                                                      |   |      | 13     |                                  |   | 556,236,258 |   |   | 562,640,521 |   |   | 1,132,324 |   |
|                                                                                                                                                                                                                           |   |      |   |                                  |   |   |   |   |   |   |   |   |   |
| TOTAL                LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                                                                                                      |   |      |   |                                  |   | 1,294,605,113 |   |   | 1,431,548,213 |   |   | 2,881,016 |   |

----

| **DISTRIBUCION                Y SERVICIO D&S S.A. AND SUBSIDIARIES**                                                             |
|--------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                 |
| CONSOLIDATED                STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2005, 2006                AND                2007  |
| (Restated                for general price-level changes and expressed in thousands of constant                Chilean pesos (ThCh$) |
| and                thousands of US dollars (ThUS$))                                                                                  |

|                                               |   |      |   | **For the year ended December 31,** |   |
|----------------------------------------------------|--------|-----------|--------|--------------------------------------------------------------|--------|
|                                               |   | **Notes** |   | **2005**                                                     |   | **2006** |   | **2007** |   | **2007** |   |
|                                               |   |      |   | ThCh$                                                        |   | ThCh$ |   | ThCh$ |   | ThUS$ |   |
|                                               |   |      |   |                                                         |   |   |   |   |   | **(note                2u)** |   |
| **OPERATING                RESULTS**               |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                revenue                         |   |      |   |                                                         |   | 1,753,134,072 |   |   | 1,822,218,045 |   |   | 1,905,780,467 |   |   | 3,835,417 |   |
| Cost                of sales                       |   |      |   |                                                         |   | (1,262,271,608 | ) |   | (1,320,395,327 | ) |   | (1,365,292,218 | ) |   | (2,747,675 | ) |
|                                               |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                profit                        |   |      |   |                                                         |   | 490,862,464 |   |   | 501,822,718 |   |   | 540,488,249 |   |   | 1,087,742 |   |
| Selling                and administrative expenses |   |      |   |                                                         |   | (416,221,155 | ) |   | (431,463,911 | ) |   | (443,392,654 | ) |   | (892,336 | ) |
|                                               |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                income                    |   |      |   |                                                         |   | 74,641,309 |   |   | 70,358,807 |   |   | 97,095,595 |   |   | 195,406 |   |
|                                               |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| **NON-OPERATING                RESULTS**           |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating                income                |   |      | 18     |                                                         |   | 4,501,449 |   |   | 5,392,460 |   |   | 2,719,169 |   |   | 5,472 |   |
| Non-operating                expenses              |   |      | 18     |                                                         |   | (25,570,557 | ) |   | (29,347,733 | ) |   | (37,719,868 | ) |   | (75,912 | ) |
| Foreign                exchange (loss) gain        |   |      | 16     |                                                         |   | (1,323,519 | ) |   | 382,480 |   |   | 946,757 |   |   | 1,905 |   |
| Price-level                restatement             |   |      | 16     |                                                         |   | (495,893 | ) |   | 978,143 |   |   | (1,430,282 | ) |   | (2,878 | ) |
|                                               |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating                loss                  |   |      |   |                                                         |   | (22,888,520 | ) |   | (22,594,650 | ) |   | (35,484,224 | ) |   | (71,413 | ) |
|                                               |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                BEFORE INCOME TAXES          |   |      |   |                                                         |   | 51,752,789 |   |   | 47,764,157 |   |   | 61,611,371 |   |   | 123,993 |   |
| INCOME                TAXES                        |   |      | 14     |                                                         |   | (5,294,953 | ) |   | (5,177,279 | ) |   | (8,930,448 | ) |   | (17,973 | ) |
|                                               |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                INCOME                          |   |      |   |                                                         |   | 46,457,836 |   |   | 42,586,878 |   |   | 52,680,923 |   |   | 106,020 |   |

----

| **DISTRIBUCION                Y SERVICIO D&S S.A. AND SUBSIDIARIES**                                                                                                                 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                     |   |   |   |   |   |   |   |   |   |
| CONSOLIDATED                STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2005, 2006                AND                2007                                                  |
| (Restated                for general price-level changes and expressed in thousands of constant                Chilean pesos (ThCh$) and thousands of US dollars                (ThUS$)) |

|                                                                        |   |      |   | **For the year ended December 31,** |   |
|-----------------------------------------------------------------------------|--------|-----------|--------|--------------------------------------------------------------|--------|
|                                                                        |   | **Notes** |   | **2005**                                                     |   | **2006** |   | **2007** |   | **2007** |   |
|                                                                        |   |      |   | ThCh$                                                        |   | ThCh$ |   | ThCh$ |   | ThUS$ |   |
|                                                                        |   |      |   |                                                         |   |   |   |   |   | **(note                2u)** |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                     |   |      |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                                                   |   |      |   |                                                         |   | 46,457,836 |   |   | 42,586,878 |   |   | 52,680,923 |   |   | 106,020 |   |
| Depreciation                and amortization expense                        |   |      |   |                                                         |   | 60,471,507 |   |   | 58,545,886 |   |   | 63,066,896 |   |   | 126,923 |   |
| Write                offs and accruals                                      |   |      |   |                                                         |   | 19,642,155 |   |   | 45,148,800 |   |   | 43,976,534 |   |   | 88,504 |   |
| Equity                in earnings of equity - method investees (gain - net) |   |      | 9      |                                                         |   | (773,079 | ) |   | (1,633,398 | ) |   | (1,049,202 | ) |   | (2,112 | ) |
| Loss                (gain) on sales of property, plant and equipment, net   |   |      |   |                                                         |   | 46,346 |   |   | (126,340 | ) |   | (73,316 | ) |   | (148 | ) |
| Minority                interest                                            |   |      | 18     |                                                         |   | (1,830 | ) |   | (33,205 | ) |   | 1,229 |   |   | 2 |   |
| Price-level                restatement                                      |   |      | 16     |                                                         |   | 495,894 |   |   | (978,143 | ) |   | 1,430,282 |   |   | 2,878 |   |
| Foreign                exchange                                             |   |      | 16     |                                                         |   | 1,323,519 |   |   | (382,480 | ) |   | (946,757 | ) |   | (1,905 | ) |
| Others                charges                                               |   |      | 23     |                                                         |   | 1,177,820 |   |   | 1,321,706 |   |   | 4,141,087 |   |   | 8,334 |   |
| Others                credits                                               |   |      |   |                                                         |   | (32,062 | ) |   | - |   |   | - |   |   | - |   |
|                                                                        |   |      |   |                                                         |   |   |   |   |   |   |   |  |   |   |   |   |
| Changes                in assets and liabilities:                           |   |      |   |                                                         |   |   |   |   |   |   |   |  |   |   |   |   |
| Increase                in accounts receivable                              |   |      |   |                                                         |   | (67,526,018 | ) |   | (94,007,446 | ) |   | (86,026,363 | ) |   | (173,130 | ) |
| Increase                in inventory                                        |   |      |   |                                                         |   | (10,425,653 | ) |   | (12,955,675 | ) |   | (386,768 | ) |   | (777 | ) |
| (Increase)                decrease in other assets                          |   |      |   |                                                         |   | (3,306,386 | ) |   | 11,147,967 |   |   | (13,758,659 | ) |   | (27,690 | ) |
| Increase                in accounts payable                                 |   |      |   |                                                         |   | 13,798,928 |   |   | 13,873,801 |   |   | 638,065 |   |   | 1,284 |   |
| (Decrease)                increase in income tax payable                    |   |      |   |                                                         |   | (2,726,620 | ) |   | 1,801,702 |   |   | 2,610,349 |   |   | 5,254 |   |
| Increase                (decrease) in other accounts payable                |   |      |   |                                                         |   | 8,996,324 |   |   | (1,374,907 | ) |   | (3,632,803 | ) |   | (7,311 | ) |
| Increase                (decrease) in interest payable                      |   |      |   |                                                         |   | 774,325 |   |   | (776,118 | ) |   | 2,374,633 |   |   | 4,779 |   |
| Increase                (decrease) in accruals and withholdings             |   |      |   |                                                         |   | 1,469,948 |   |   | (3,694,456 | ) |   | (29,680,410 | ) |   | (59,731 | ) |
| Net                cash provided by operating activities                    |   |      |   |                                                         |   | 69,862,954 |   |   | 58,464,572 |   |   | 35,365,720 |   |   | 71,174 |   |

----

| **DISTRIBUCION                Y SERVICIO D&S S.A. AND SUBSIDIARIES**                                                                                                                 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                     |
| CONSOLIDATED                STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2005, 2006                AND                2007                                                  |
| (Restated                for general price-level changes and expressed in thousands of constant                Chilean pesos (ThCh$) and thousands of US dollars                (ThUS$)) |

|                                                                                                                              |   |      |   | **For                the year ended December 31,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|-----------|--------|----------------------------------------------------|--------|
|                                                                                                                              |   | **Notes** |   | **2005**                                           |   | **2006** |   | **2007** |   | **2007** |   |
|                                                                                                                              |   |      |   | ThCh$                                              |   | ThCh$ |   | ThCh$ |   | ThUS$ |   |
|                                                                                                                              |   |      |   |                                               |   |   |   |   |   | **(note                2u)** |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                                           |   |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchases                of property, plant and equipment                                                                         |   |      |   |                                               |   | (55,204,661 | ) |   | (85,582,555 | ) |   | (122,833,780 | ) |   | (247,205 | ) |
| Proceeds                from sale of property, plant and equipment                                                                |   |      |   |                                               |   | 690,440 |   |   | 1,312,160 |   |   | 6,532,157 |   |   | 13,146 |   |
| Purchase                of permanent investments                                                                                  |   |      |   |                                               |   | (12,922,874 | ) |   | - |   |   | - |   |   | - |   |
| Collection                of loans to related companies                                                                           |   |      |   |                                               |   | 8,754 |   |   | 7,937 |   |   | - |   |   | - |   |
| Other                loans to related companies                                                                                   |   |      |   |                                               |   | - |   |   | - |   |   | (1,280,319 | ) |   | (2,577 | ) |
| Payment                of capitalized interest                                                                                    |   |      |   |                                               |   | (177,970 | ) |   | (537,832 | ) |   | (991,848 | ) |   | (1,996 | ) |
| Other                investment income                                                                                            |   |      |   |                                               |   | - |   |   | 915,352 |   |   | 871,333 |   |   | 1,754 |   |
| Other                investment disbursements                                                                                     |   |      | 23     |                                               |   | (1,092,856 | ) |   | (18,764,452 | ) |   | (6,504,375 | ) |   | (13,090 | ) |
| Net                cash used in investing activities                                                                              |   |      |   |                                               |   | (68,699,167 | ) |   | (102,649,390 | ) |   | (124,206,832 | ) |   | (249,968 | ) |
|                                                                                                                              |   |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                                           |   |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Bank                loans                                                                                                         |   |      |   |                                               |   | 79,245,179 |   |   | 142,253,527 |   |   | 292,805,762 |   |   | 589,277 |   |
| Paid                miscellaneous loans to related companies                                                                      |   |      |   |                                               |   | (8,381,211 | ) |   | (6,800,070 | ) |   | - |   |   | - |   |
| Repayment                of bank loans                                                                                            |   |      |   |                                               |   | (74,373,957 | ) |   | (92,330,868 | ) |   | (138,053,719 | ) |   | (277,836 | ) |
| Bonds                and commercial paper repayments                                                                              |   |      |   |                                               |   | (67,103,157 | ) |   | (149,399,597 | ) |   | (92,269,778 | ) |   | (185,695 | ) |
| Dividends                paid                                                                                                     |   |      | 13     |                                               |   | (14,613,643 | ) |   | (28,198,841 | ) |   | (26,851,932 | ) |   | (54,040 | ) |
| Proceeds                from issuance of bonds                                                                                    |   |      |   |                                               |   | 62,380,381 |   |   | 168,059,790 |   |   | 64,217,206 |   |   | 129,238 |   |
| Payment                of charges for issuance of bonds and commercial paper                                                      |   |      |   |                                               |   | (62,555 | ) |   | (1,669,265 | ) |   | (102,915 | ) |   | (207 | ) |
| Other                financing disbursements                                                                                      |   |      |   |                                               |   | - |   |   | (5,687,352 | ) |   | (7,514,721 | ) |   | (15,123 | ) |
| Net                cash (used in) provided by financing activities                                                                |   |      |   |                                               |   | (22,908,963 | ) |   | 26,227,324 |   |   | 92,229,903 |   |   | 185,614 |   |
|                                                                                                                              |   |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| NET                (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                                          |   |      |   |                                               |   | (21,745,176 | ) |   | (17,957,494 | ) |   | 3,388,791 |   |   | 6,820 |   |
|                                                                                                                              |   |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| EFFECT                  OF CHANGES IN THE PURCHASING POWER OF THE CHILEAN                  PESO ON CASH AND CASH EQUIVALENTS |   |      |   |                                               |   | (3,854,412 | ) |   | (2,192,147 | ) |   | (6,826,213 | ) |   | (13,737 | ) |
|                                                                                                                              |   |      |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| CASH                AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR                                                                 |   |      |   |                                               |   | 92,609,652 |   |   | 67,010,064 |   |   | 46,860,423 |   |   | 94,307 |   |
| CASH                AND CASH EQUIVALENTS AT END OF THE YEAR                                                                       |   |      |   |                                               |   | 67,010,064 |   |   | 46,860,423 |   |   | 43,423,001 |   |   | 87,390 |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS**

**(Restated        for general price-level changes)**

| **1.** | **THE                COMPANY** |
|--------|--------------------------------|

| **2.** | **SUMMARY                OF SIGNIFICANT ACCOUNTING                POLICIES** |
|--------|------------------------------------------------------------------------------|

**a.      Basis of Presentation**

**b.      Reporting Entity**

**c.      Basis of Consolidation**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

|                                                                                                     |   | **Total ownership percentage** |     |
|----------------------------------------------------------------------------------------------------------|--------|------------------------------------------|----------|
|                                                                                                     |   | **2005**                                 |     | **2006** |   | **2007** |   |
|                                                                                                     |   | %                                        |     | % |   | % |   |
|                                                                                                     |   |                                     |     |   |   |   |   |
| Sociedad                Anónima Inmobiliaria Terrenos y Establecimientos                Comerciales |   |                                     | 99.9944  |   |   | 99.9944 |   |   | 99.9944 |   |
| Administradora                de Concesiones Comerciales de Supermercados S.A.                           |   |                                     | 99.1693  |   |   | 99.1693 |   |   | 99.1693 |   |
| Administradora                de Concesiones Comerciales de Hipermercados S.A.                           |   |                                     | 99.5000  |   |   | 99.5000 |   |   | 99.5000 |   |
| Comercial                D&S S.A. (formerly Magallanes S.A.) (1)                                     |   |                                     | 100.0000 |   |   | 100.0000 |   |   | 100.0000 |   |
| Comercializadora                de Vestuario S.A. (2)                                                    |   |                                     | 100.0000 |   |   | - |   |   | - |   |
| Maquinsa                Equipamiento S.A.(3)                                                             |   |                                     | 100.0000 |   |   | 100.0000 |   |   | 100.0000 |   |
| Distribuidora                y Comercializadora Farmalider S.A. (4)                                      |   |                                     | 100.0000 |   |   | 100.0000 |   |   | 100.0000 |   |
| Grupo                de Restaurantes Chile S.A.                                                          |   |                                     | 100.0000 |   |   | 100.0000 |   |   | 100.0000 |   |
| Servicios                Financieros D&S S.A.                                                        |   |                                     | 100.0000 |   |   | 100.0000 |   |   | 100.0000 |   |
| Desarrollos                de la Patagonia S.A.                                                          |   |                                     | 100.0000 |   |   | 100.0000 |   |   | 100.0000 |   |
| Inversiones                D&S Chile Ltda.(5)                                                        |   |                                     | -        |   |   | 99.9999 |   |   | 99.9999 |   |
| Ekono                S.A.(6)                                                                             |   |                                     | -        |   |   | 100.0000 |   |   | 100.0000 |   |

|   | (1) | The                Extraordinary Shareholders’ Meeting, held on October 12, 2006 agreed to                change the entity name of Magallanes S.A. to Comercial D&S                S.A. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | On                December 26, 2006 Comercializadora de Vestuario S.A. was merged with                Comercial D&S S.A. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | The                Extraordinary Shareholders’ Meeting of Maquinsa S.A. held on January 25,                2005, agreed to increase the Company’s capital by ThCh$221,981,506                (historic) through the issuance of 36,099,895 no par value registered                shares. Distribución y Servicio D&S S.A. underwrote and paid for its                share of the above capital increase in full by transferring property,                plant and equipment, which had a book value of ThCh$221,981,506 (historic)                on the date of said capital                increase. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | On                January 26, 2005 Distribución y Servicio D&S S.A. became the Parent of                “Distribuidora y Comercializadora Farmalider Ltda.”, by subscribing to                100% of the capital increase of ThCh$3,900,000 (historic). Other                majority                owned subsidiaries of the Company, Administradora de Concesiones                Comerciales de Hipermercados S.A. and Administradora de Concesiones                Comerciales de Supermercados S.A. had previously held certain ownership                interests in Distribuidora y Comercializadora Farmalíder Ltda. The capital                increase was paid for by contributing the accounts receivable maintained                between Distribuidora y Comercializadora Farmalider Ltda. and Distribución                y Servicio D&S S.A. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

** **

|   | (5) | On                November 3, 2006 the Company Inversiones D&S Chile Ltda. was created,                with paid-in capital of ThCh$431,300,000 (historic), of which                ThCh$431,299,569 (historic) was subscribed to by Distribución y Servicio                D&S S.A. through surrender, transfer and contribution of shares for                an                amount of ThCh$485,017,871 (historic). The details of said shares                are the                following: |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Maquinsa                Equipamiento S.A.                                                                 |   |   | 11,999,887 |   | shares                       |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|------------------------------|--------|
| Comercial                D&S S.A.                                                                     |   |   | 1,701,403  |   | shares                       |   |
| Sociedad                Anónima Inmobiliaria, Terrenos y Establecimientos                Comerciales |   |   | 233,176    |   | shares                       |   |
| Rentas                e Inversiones La Dehesa S.A.                                                        |   |   | 1          |   | share                        |   |
| Servicios                Financieros D&S S.A.                                                         |   |   | 9,999      |   | shares                       |   |
| Rentas                e Inversiones Puente Alto Ltda.                                                     |   |   | 1          | %      | of                the Equity |   |
| Rentas                e Inversiones Gran Avenida Ltda.                                                    |   |   | 1          | %      | of                the Equity |   |
| Rentas                e Inversiones Viña el Mar Ltda.                                                |   |   | 1          | %      | of                the Equity |   |
| Rentas                e Inversiones Antofagasta Ltda.                                                     |   |   | 1          | %      | of                the Equity |   |
| Rentas                e Inversiones Linares Ltda.                                                         |   |   | 1          | %      | of                the Equity |   |
| Rentas                e Inversiones Quillota Ltda.                                                        |   |   | 1          | %      | of                the Equity |   |
| Comercializadora                de Vestuario S.A.                                                         |   |   | 999,900    |   | shares                       |   |
| Adm.                de Concesiones Comerciales de Hipermercados S.A.                                      |   |   | 199        |   | shares                       |   |
| Adm.                de Concesiones Comerciales de Supermercados S.A.                                      |   |   | 1,552      |   | shares                       |   |
| Grupo                de Restaurantes Chile S.A.                                                           |   |   | 89,900     |   | shares                       |   |
| EKONO                S.A.                                                                                 |   |   | 99         |   | shares                       |   |
| Desarrollo                de la Patagonia S.A.                                                            |   |   | 9,999      |   | shares                       |   |
| Distribuidora                y Comercializadora Farmalider S.A.                                           |   |   | 4,316,000  |   | shares                       |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| Maquinsa                Equipamiento S.A.                       |   |   | 11,999,887                shares |   |
|-----------------------------------------------------------------|--------|--------|----------------------------------|--------|
| Comercializadora                de Vestuario S.A.               |   |   | 999,900                shares    |   |
| Adm.                de Concesiones Comer. de Hipermercados S.A. |   |   | 199                shares        |   |
| Adm.                de Concesiones Comer. de Supermercados S.A. |   |   | 1,552                shares      |   |
| Grupo                de Restaurantes Chile S.A.                 |   |   | 89,900                shares     |   |
| EKONO                S.A.                                       |   |   | 99                shares         |   |
| Desarrollo                de la Patagonia S.A.                  |   |   | 9,999                shares      |   |
| Distribuidora                y Comercializadora Farmalider S.A. |   |   | 4,316,000                shares  |   |

|   | (6) | Comercial                Huelén S.A. was created on November 17, 2005 with paid-in capital of                ThCh$1,000. During 2006 the Company completed its incorporation through                completion of its bylaws. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**d.      Price-Level Restatement **

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

|                                        |   | **Index** |   | **Change over previous****December 31,** |   |
|---------------------------------------------|--------|-----------|--------|---------------------------------------------------------|--------|
|                                        |   |      |   |                                                    |   |
| Year                ended December 31, 2005 |   |      | 121.12 |                                                    |   | 3.7 | % |
| Year                ended December 31, 2006 |   |      | 124.23 |                                                    |   | 2.6 | % |
| Year                ended December 31, 2007 |   |      | 133.95 |                                                    |   | 7.8 | % |

|                             |   | **Index** |   | **Change over previous****November 30,** |   |
|----------------------------------|--------|-----------|--------|---------------------------------------------------------|--------|
|                             |   |      |   |                                                    |   |
| November                30, 2005 |   |      | 121.53 |                                                    |   | 3.6 | % |
| November                30, 2006 |   |      | 124.11 |                                                    |   | 2.1 | % |
| November                30, 2007 |   |      | 133.34 |                                                    |   | 7.4 | % |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**e.      Assets and Liabilities Denominated in Index-Linked Units of Account and in      Foreign Currencies**

|                       |   | **At December 31,** |      |
|----------------------------|--------|-------------------------------|-----------|
|                       |   | **2005**                      |      | **2006** |   | **2007** |   |
|                       |   | Ch$                           |      | Ch$ |   | Ch$ |   |
|                       |   |                          |      |   |   |   |   |
| U.S.                dollar |   |                          | 512.50    |   |   | 532.39 |   |   | 496.89 |   |
| UF                         |   |                          | 17,974.81 |   |   | 18,336.38 |   |   | 19,622.66 |   |

**f.      Cash and Cash equivalents **

**g.      Marketable Securities**

|  | · | **Mutual                Funds**are                stated at the year-end market                value. |
|--|--------|-------------------------------------------------------------------------------------------------------|

|  | · | **Fixed                income securities**are                stated at the year-end value of the units, which is considered market                value. These investments accrue interest at a fixed designated rate                on the                amount invested. The amount invested plus accrued interest, if applicable,                is the year-end unit value. |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**h.      Inventories - **

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**i.      Allowance for doubtful accounts**

**j.      Property, plant and equipment, and depreciation**
**-**

**k.      Investment in Affiliated Companies**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**l.      Goodwill and Negative Goodwill**

**m.      Bonds payable - **

**n.      Commercial paper**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

**o.      Income taxes and deferred taxes**

**p.      Vacation Expense**

**q.      Research and Development Expenses**

**r.      Severance Indemnities**

**s.      Revenue Recognition**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**t.      Use of Estimates**

**u.      Translation to U.S. Dollars**
** **

**v.      Derivative contracts **

**w.      Long-lived assets - **

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**x.      Cost of sales and Administrative and selling expenses**

**y.      Sales - lease back transactions -**

**z.      Instruments purchased under agreement to resell **

**aa.      Intangible**

**ab.      Software**

**ac.      Time deposits**

**ad.      Promotions**

**ae.      Sale of portfolio **

**af.      Accumulated deficit from subsidiary in development period**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**ag.      Investments in other companies –**

**ah.      Compensation plans **

| **3.** | **CHANGES                    IN ACCOUNTING                    PRINCIPLES** |
|--------|----------------------------------------------------------------------------|

| **4.** | **MARKETABLE                SECURITIES** |
|--------|------------------------------------------|

|                                                      |   | **At                December 31,** |      |
|-----------------------------------------------------------|--------|------------------------------------|-----------|
|                                                      |   | **2006**                           |      | **2007** |   |
|                                                      |   | %                                  |      | % |   |
|                                                      |   |                               |      |   |   |
| Mutual                funds (fixed income securities) (1) |   |                               | 1,321,653 |   |   | 60,000 |   |
| Mutual                funds (2)                           |   |                               | 1,642,482 |   |   | 1,507,214 |   |
| Total                                                     |   |                               | 2,964,135 |   |   | 1,567,214 |   |

|  | (1) | The                detail is as follows: |
|--|-----|------------------------------------------|

|                                      |   |                                |      |          |   | **Interest                rate**   |   |                                |   |   |   |   |   |   |   |
|-------------------------------------------|--------|-------------------------------------|-----------|---------------|--------|------------------------------------|--------|-------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| **Institutions**                          |   | **Principal                amount** |      | **(monthly)** |   | **Interest                income** |   | **Total                book value** |   |
|                                      |   | 2006                                |      | 2007          |   | 2006                               |   | 2007                                |   | 2006   |   | 2007   |   | 2006   |   | 2007 |   |
|                                      |   | ThCh$                               |      | ThCh$         |   | %                                  |   | %                                   |   | ThCh$  |   | ThCh$  |   | ThCh$  |   | ThCh$ |   |
|                                      |   |                                |      |          |   |                               |   |                                |   |   |   |   |   |   |   |   |   |
| Fondos                Mutuos Banco Estado |   |                                | -         |          |   | 60,000                             |   |                                | -      |   |   | 0.503  |   |   | -      |   |   | - |   |   | - |   |   | 60,000 |   |
| Fondos                Mutuos Scotiabank   |   |                                | 1,192,140 |          |   | -                                  |   |                                | 0.530  |   |   | -      |   |   | 633    |   |   | - |   |   | 1,192,773 |   |   | - |   |
| Fondos                Mutuos Santander    |   |                                | 107,400   |          |   | -                                  |   |                                | 0.440  |   |   | -      |   |   | -      |   |   | - |   |   | 107,400 |   |   | - |   |
| Fondos                Mutuos BBVA         |   |                                | 21,480    |          |   | -                                  |   |                                | 0.390  |   |   | -      |   |   | -      |   |   | - |   |   | 21,480 |   |   | - |   |
| Total                                     |   |                                | 1,321,020 |          |   | 60,000                             |   |                                |   |   |   |   |   |   | 633    |   |   |   |   |   | 1,321,653 |   |   | 60,000 |   |

|  | (2) | This                  amount represents an investment in a combined portfolio of fixed                  and                  variable rate instruments. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **5.** | **NOTES                      AND ACCOUNTS                      RECEIVABLE** |
|--------|-----------------------------------------------------------------------------|

|                                           |   | **At December 31,** |        |
|------------------------------------------------|--------|-------------------------------|-------------|
|                                           |   | **2006**                      |        | **2007** |   |
|                                           |   | ThCh$                         |        | ThCh$ |   |
|                                           |   |                          |        |   |   |
| Trade                accounts receivable (a)   |   |                          | 132.638.744 |   |   | 135,170,215 |   |
| Notes                receivable                |   |                          | 4,080,332   |   |   | 10,953,593 |   |
| Sundry                debtors (b)              |   |                          | 20,081,084  |   |   | 33,002,351 |   |
| Allowance                for doubtful accounts |   |                          | (24,631,685 | ) |   | (31,387,770 | ) |
|                                           |   |                          |        |   |   |   |   |
| Total                                          |   |                          | 132,168,475 |   |   | 147,738,389 |   |

|  | (a) | In                2007, this amount includes ThCh$ 107,645,536 (ThCh$105,285,975 in                2006) of                trade accounts receivable of Servicios y Administración de Créditos                Comerciales Presto S.A., the finance subsidiary of the                Company. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (b) | At                December 31, 2007, Sundry debtors include ThCh$26,005,418 (ThCh$13,008,959                in 2006) of accounts receivable from BCI Factoring S.A., for the                factoring                of certain accounts receivable of the indirect subsidiary Servicios                y                Administración de Créditos Comerciales Presto                S.A. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **6.** | **INVENTORIES** |
|--------|-----------------|

|                                              |   | **At December 31,** |        |
|---------------------------------------------------|--------|-------------------------------|-------------|
|                                              |   | **2006**                      |        | **2007** |   |
|                                              |   | ThCh$                         |        | ThCh$ |   |
|                                              |   |                          |        |   |   |
| Merchandise                for sale               |   |                          | 154,694,940 |   |   | 156,568,243 |   |
| Imports                in transit                 |   |                          | 2,262,890   |   |   | 2,981,990 |   |
| Supplies                                          |   |                          | 1,343,975   |   |   | 1,449,383 |   |
| Sub-total                                         |   |                          | 158,301,805 |   |   | 160,999,616 |   |
| Provision                for merchandise for sale |   |                          | (138,489    | ) |   | (2,449,532 | ) |
| Total                                             |   |                          | 158,163,316 |   |   | 158,550,084 |   |

| **7.** | **OTHER                CURRENT ASSETS** |
|--------|-----------------------------------------|

|                                                                |   | **At December 31,** |       |
|---------------------------------------------------------------------|--------|-------------------------------|------------|
|                                                                |   | **2006**                      |       | **2007** |   |
|                                                                |   | ThCh$                         |       | ThCh$ |   |
|                                                                |   |                          |       |   |   |
| Deferred                  taxes (Note 14.b)                         |   |                          | 4,246,847  |   |   | 5,262,097 |   |
| Repurchase                  agreements (Note 25.b.4.ii)             |   |                          | 12,316,060 |   |   | - |   |
| Guaranties                  for purchase of land                    |   |                          | 2,858,696  |   |   | 2,860,735 |   |
| Guaranties                  for sale of Portfolio                   |   |                          | 3,339,035  |   |   | 3,288,825 |   |
| Derivate                  contracts - Cross currency swap (Note 21) |   |                          | 1,248,135  |   |   | - |   |
| Deferred                  charges                                   |   |                          | 2,044,650  |   |   | 3,187,377 |   |
| Other                                                               |   |                          | 3,213,264  |   |   | 2,623,335 |   |
|                                                                |   |                          |       |   |   |   |   |
| Total                                                               |   |                          | 29,266,687 |   |   | 17,222,369 |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **8.** | **PROPERTY,                  PLANT AND EQUIPMENT -                  NET** |
|--------|---------------------------------------------------------------------------|

|                                                     |   | **At                December 31,** |          |
|----------------------------------------------------------|--------|------------------------------------|---------------|
|                                                     |   | **2006**                           |          | **2007** |   |
|                                                     |   | ThCh$                              |          | ThCh$ |   |
|                                                     |   |                               |          |   |   |
| Land                                                     |   |                               | 204,559,550   |   |   | 222,078,481 |   |
| Buildings                and infrastructure:             |   |                               |          |   |   |   |   |
| Buildings                                                |   |                               | 530,398,057   |   |   | 563,418,364 |   |
| Construction                in progress                  |   |                               | 9,611,797     |   |   | 54,591,748 |   |
| Machinery                and equipment                   |   |                               | 206,858,842   |   |   | 221,859,756 |   |
| Other:                                                   |   |                               |          |   |   |   |   |
| Leased                assets (1)                         |   |                               | 47,430,716    |   |   | 38,491,629 |   |
| Fixtures                                                 |   |                               | 73,047,628    |   |   | 86,383,967 |   |
|                                                     |   |                               |     |   |   |    |   |
| Subtotal                                                 |   |                               | 1,071,906,590 |   |   | 1,186,823,945 |   |
|                                                     |   |                               |          |   |   |   |   |
| Technical                revaluation (2):                |   |                               |          |   |   |   |   |
| Land                                                     |   |                               | 4,099,697     |   |   | 2,412,253 |   |
| Buildings                                                |   |                               | 550,116       |   |   | 550,115 |   |
|                                                     |   |                               |     |   |   |    |   |
| Subtotal                                                 |   |                               | 4,649,813     |   |   | 2,962,368 |   |
|                                                     |   |                               |          |   |   |   |   |
| Total                gross property, plant and equipment |   |                               | 1,076,556,403 |   |   | 1,189,786,313 |   |
|                                                     |   |                               |          |   |   |   |   |
| Accumulated                depreciation                  |   |                               | (381,846,358  | ) |   | (436,103,506 | ) |
|                                                     |   |                               |          |   |   |   |   |
| Total                net property, plant and equipment   |   |                               | 694,710,045   |   |   | 753,682,807 |   |

|  | (1) | Corresponds                to land, buildings and equipment leased under capital leases for                store                premises. The Company is a lessee in these                transactions. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | The                technical revaluation was determined based on a study by independent                consultants, in accordance with Circular No1529 of the                SVS. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION            Y SERVICIO D&S S.A.**

**NOTES            TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated            for general price-level changes)**

** **

**Useful      lives assigned to property, plant and equipment:**

| ·    Buildings                and infrastructure | 20                to 60 Years |
|---------------------------------------------------------------------------|-------------------------------|
| ·    Machinery                and equipment      | 4                to 7 Years   |
| ·    Leased                assets                | 5                to 7 Years   |
| ·    Fixtures                                    | 10                Years       |
| ·    Other                fixed assets           | 4                Years        |

| **9.** | **OTHER                ASSETS - NET** |
|--------|---------------------------------------|

|                                            |   | **At                December 31,** |        |
|-------------------------------------------------|--------|------------------------------------|-------------|
|                                            |   | **2006**                           |        | **2007** |   |
|                                            |   | ThCh$                              |        | ThCh$ |   |
|                                            |   |                               |        |   |   |
| Goodwill                (net) (Note 9a)         |   |                               | 40,008,595  |   |   | 37,296,092 |   |
| Other                long-term assets (Note 9b) |   |                               | 192,607,404 |   |   | 229,827,979 |   |
| Total                                           |   |                               | 232,615,999 |   |   | 267,124,071 |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

**a.      **
**Goodwill      **

|                                                             |   | **At                December 31,** |       |
|------------------------------------------------------------------|--------|------------------------------------|------------|
|                                                             |   | **2006**                           |       | **2007** |   |
|                                                             |   | ThCh$                              |       | ThCh$ |   |
|                                                             |   |                               |       |   |   |
| Maquinsa                S.A.                                     |   |                               | 8,600,220  |   |   | 7,725,621 |   |
| Comercial                D&S S.A. (formerly Magallanes S.A.) |   |                               | 23,749,337 |   |   | 22,352,317 |   |
| Alvi                Supermercados Mayoristas S.A.                |   |                               | 7,207,584  |   |   | 6,823,180 |   |
| Supermercados                La Frontera S.A.                    |   |                               | 193,179    |   |   | 176,134 |   |
| Alimentos                y Servicios Ltda.                       |   |                               | 149,645    |   |   | 121,142 |   |
| Astro                S.A.                                        |   |                               | 108,630    |   |   | 97,698 |   |
| Total                                                            |   |                               | 40,008,595 |   |   | 37,296,092 |   |

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

**Acquisition      of Maquinsa S.A. (formerly Fullmarket S.A.)**

**Acquisition      of Comercial D&S S.A. (formerly Magallanes S.A.)**

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated          for general price-level changes)**

**Acquisition      of Alvi Supermercados Mayorista S.A.**

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

**b.          **
**Other          long-term assets**

|                                                                  |   | **At                December 31,** |        |
|-----------------------------------------------------------------------|--------|------------------------------------|-------------|
|                                                                  |   | **2006**                           |        | **2007** |   |
|                                                                  |   | ThCh$                              |        | ThCh$ |   |
|                                                                  |   |                               |        |   |   |
| Electric                utility refundable advances                   |   |                               | 363,655     |   |   | 449,142 |   |
| Deferred                discount on bond issuance (Note 12.e)         |   |                               | 4,101,487   |   |   | 3,744,381 |   |
| Deferred                expenses of bond placement and issuance costs |   |                               | 2,768,244   |   |   | 2,564,869 |   |
| Investment                in related companies (3)                    |   |                               | 8,487,307   |   |   | 8,545,828 |   |
| Long                term trade accounts receivable (1)                |   |                               | 113,639,874 |   |   | 152,564,281 |   |
| Long                term sundry debtors (2)                           |   |                               | 27,463,365  |   |   | 24,644,529 |   |
| Deferred                tax (Note 14.b)                               |   |                               | 14,034,411  |   |   | 11,847,597 |   |
| Deferred                charges                                       |   |                               | 5,810,850   |   |   | 9,191,189 |   |
| Other                                                                 |   |                               | 15,938,211  |   |   | 16,276,163 |   |
|                                                                  |   |                               |             |   |   |  |   |
| Total                                                                 |   |                               | 192,607,404 |   |   | 229,827,979 |   |

|   | (1) | Long-term                trade debtors correspond to receivables with maturities over a year                (See                Note 25b.8). |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | As                of December 31, 2007, long-term sundry debtors include ThCh$23,713,921                (ThCh$ 27,288,351 as of December 31, 2006) equivalent to US$47,724,690.03                which corresponds to the amount unpaid by Disco S.A stemming from                the sale                of our former Argentine subsidiary, Ekono-Argentina, to Disco S.A.                in                December 1999. Under the terms of the sale, in May 2000 Disco S.A.                paid us                US$60 million of the US$150 million purchase price, with the balance                of                US$90 million coming due in May 2003. Of this US$90 million, US$80                million                was evidenced by ten promissory notes of US$8 million each and US$10                million was held by Disco S.A. as collateral for certain liabilities                of                Ekono-Argentina to be borne by our company. The deferred payment                amount                was guaranteed by Disco S.A.’s parent company, Disco-Ahold International                Holdings N.V., a Netherlands Antilles company and a subsidiary of                Royal                Ahold N.V., a Netherlands company. We were informed in December 2002                that                Disco S.A. did not intend to pay us the entire US$90 million amount                in                dollars, but would instead convert the US$90 million balance owed                to us                into Argentine pesos under then-prevailing Argentine dollar convertibility                regulations, or pesificación regulations. On May 2, 2003, Disco S.A. made                payment of A$126 million. After approval by the Central Bank of Argentina                in August of 2003, this amount plus accrued interest was remitted                to us                based on an effective exchange rate of A$3.0 to 1 U.S. dollar which                was                equivalent to US$42 million. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated          for general price-level changes)**

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated          for general price-level changes)**

|   | (3) | Investment                in related companies detail (all Chilean) is as                follows: |
|--------|-----|---------------------------------------------------------------------------------------------------|

|                                              |   | **Ownership**                   |   |                        |   |                               |   |     |      |     |   |     |   |
|---------------------------------------------------|--------|---------------------------------|--------|-----------------------------|--------|------------------------------------|--------|----------|-----------|----------|--------|----------|--------|
|                                              |   | **percentage**                  |   | **Book value of** |   | **Equity in income**     |   |
|                                              |   | (as of all year- |   | **investment**              |   | **(losses) of investee** |   |
|                                              |   | ends presented)            |   | **2006**                    |   | **2007**                           |   | **2005** |      | **2006** |   | **2007** |   |
|                                              |   | %                               |   | ThCh$                       |   | ThCh$                              |   | ThCh$    |      | ThCh$    |   | ThCh$    |   |
|                                              |   |                            |   |                        |   |                               |   |     |      |     |   |     |   |
| Alimentos                y Servicios Ltda.        |   |                            | 50.00  |                        |   | 1,354,873                          |   |     | 1,415,905 |     |   | 165,431  |   |   | 291,243 |   |   | 100,493 |   |
| Inversiones                Solpacific S.A.        |   |                            | 50.00  |                        |   | (22,289                            | )      |     | (57,596   | )        |   | (56,476  | )      |   | (2,832 | ) |   | (34,450 | ) |
| Alvi                Supermercados Mayoristas S.A. |   |                            | 35.00  |                        |   | 5,710,379                          |   |     | 5,363,967 |     |   | 216,832  |   |   | 727,270 |   |   | 211,213 |   |
| Inmobiliaria                Mall Calama S.A.      |   |                            | 25.00  |                        |   | 1,444,344                          |   |     | 1,823,552 |     |   | 447,292  |   |   | 617,717 |   |   | 771,946 |   |
|                                              |   |                            |   |                        |   |                               |   |     |      |     |   |     |   |   |   |   |   |   |   |
| Total                                             |   |                            |        |                        |   | 8,487,307                          |   |     | 8,545,828 |     |   | 773,079  |   |   | 1,633,398 |   |   | 1,049,202 |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **10.** | **ACCOUNTS                PAYABLE** |
|---------|-------------------------------------|

|                              |   | **At                December 31,** |        |
|-----------------------------------|--------|------------------------------------|-------------|
|                              |   | **2006**                           |        | **2007** |   |
|                              |   | ThCh$                              |        | ThCh$ |   |
|                              |   |                               |        |   |   |
| Domestic                suppliers |   |                               | 257,962,933 |   |   | 258,005,584 |   |
| Foreign                suppliers  |   |                               | 1,051,663   |   |   | 1,647,078 |   |
|                              |   |                               |             |   |   |  |   |
| Total                             |   |                               | 259,014,596 |   |   | 259,652,662 |   |

| **11.** | **ACCRUALS                AND WITHHOLDINGS** |
|---------|----------------------------------------------|

|                                        |   | **At                December 31,** |       |
|---------------------------------------------|--------|------------------------------------|------------|
|                                        |   | **2006**                           |       | **2007** |   |
|                                        |   | ThCh$                              |       | ThCh$ |   |
| Accruals:                                   |   |                               |       |   |   |
| Vacations                                   |   |                               | 5,683,244  |   |   | 4,446,185 |   |
| Bonuses                payable              |   |                               | 2,345,402  |   |   | 4,941,107 |   |
| Accrued                expenses (1)         |   |                               | 14,143,151 |   |   | 15,903,946 |   |
|                                        |   |                               |       |   |   |   |   |
| Subtotal                                    |   |                               | 22,171,797 |   |   | 25,291,238 |   |
|                                        |   |                               |       |   |   |   |   |
| Employee                withholdings/taxes: |   |                               |       |   |   |   |   |
| Other                                       |   |                               | 5,517,763  |   |   | 5,027,754 |   |
|                                        |   |                               |       |   |   |   |   |
| Total                                       |   |                               | 27,689,560 |   |   | 30,318,992 |   |

|   | (1) | In                2007, this amount includes ThCh$906,292 (ThCh$1,114,099 in 2006)                of                severance indemnities (See Note                20). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **12.** | **BANK                DEBT, SUNDRY CREDITORS AND OTHER                LIABILITIES** |
|---------|-------------------------------------------------------------------------------------|

**a.**
**Short-term      bank debt**

|                                                           |   | **At                December 31,** |       |
|----------------------------------------------------------------|--------|------------------------------------|------------|
|                                                           |   | **2006**                           |       | **2007** |   |
|                                                           |   | ThCh$                              |       | ThCh$ |   |
|                                                           |   |                               |       |   |   |
| Payable                in:                                     |   |                               |       |   |   |
| United                States dollars                           |   |                               | 32,306,606 |   |   | 22,570,594 |   |
| Chilean                pesos (not indexed)                     |   |                               | 31,069,816 |   |   | 169,752,412 |   |
| Inflation-linked                units (UFs)                    |   |                               | 280,140    |   |   | 1,162,364 |   |
|                                                           |   |                               |       |   |   |   |   |
| Total                                                          |   |                               | 63,656,562 |   |   | 193,485,370 |   |
|                                                           |   |                               |       |   |   |   |   |
| Weighted                average interest rates are as follows: |   |                               |       |   |   |   |   |
|                                                           |   |                               |       |   |   |   |   |
| Loans                in U.S. Dollars                           |   |                               | 5.50       | % |   | 5.02 | % |
| Loans                in Chilean pesos (not indexed)            |   |                               | 5.70       | % |   | 6.96 | % |
| Loans                in inflation-linked units (UFs)           |   |                               | 0.40       | % |   | 0.40 | % |

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

|                                               |   | **Ownership**         |       |         |   | **Ownership**         |   |                   |        |
|----------------------------------------------------|--------|-----------------------|------------|--------------|--------|-----------------------|--------|------------------------|-------------|
|                                               |   | **Balance**           |       |         |   | **Balance**           |   |                   |        |
| **Bank/Financial Institution**           |   | **December 31,** |       |         |   | **December 31,** |   | **Stated**             |        |
|                                               |   | **2006**              |       | **Currency** |   | **2007**              |   | **Interest Rate** |        |
|                                               |   | ThCh$                 |       |         |   | ThCh$                 |   |                   |        |
|                                               |   |                  |       |         |   |                  |   |                   |        |
| Santander                - Santiago                |   |                  | 6,860,199  |         |   | US$                   |   |                   | 5,470,586   |   |   | Libor                + 0.12 |   |
|                                               |   |                  | 280,140    |         |   | UF                    |   |                   | 1,162,364   |   |   | 0.40 | % |
|                                               |   |                  | 418,310    |         |   | Ch$                   |   |                   | 20,086,667  |   |   | 0.52 | % |
|                                               |   |                  | 696,871    |         |   | Ch$                   |   |                   | 8,007,253   |   |   | 0.68 | % |
|                                               |   |                  | -          |         |   | Ch$                   |   |                   | 487,361     |   |   | 0.30 | % |
|                                               |   |                  |  -    |         |   | Ch$                   |   |                   | 7,518,414   |   |   | 7.17 | % |
| Chile                                              |   |                  | 3,925,529  |         |   | US$                   |   |                   | 1,293,729   |   |   | Libor                + 0.17 |   |
|                                               |   |                  | 10,842,606 |         |   | Ch$                   |   |                   | 20,099,000  |   |   | 0.55 | % |
|                                               |   |                  | -          |         |   | Ch$                   |   |                   | 13,064,350  |   |   | 0.55 | % |
|                                               |   |                  | -          |         |   | Ch$                   |   |                   | 12,472,367  |   |   | 0.54 | % |
| Scotiabank                                         |   |                  | 1,723,756  |         |   | US$                   |   |                   | 338         |   |   | 0.40 | % |
| Citibank                                           |   |                  | 1,481,046  |         |   | Ch$                   |   |                   | 13          |   |   | 0.62 | % |
|                                               |   |                  | 3,942,689  |         |   | US$                   |   |                   | 671,754     |   |   | Libor                + 0.07 |   |
| Estado                                             |   |                  | 3,397,624  |         |   | US$                   |   |                   | -           |   |   |   |   |
| Banco                de Crédito e Inversiones |   |                  | 6,317,302  |         |   | US$                   |   |                   | 3,764,320   |   |   | Libor                + 0.20 |   |
|                                               |   |                  | 11,112,092 |         |   | Ch$                   |   |                   | 49,327,923  |   |   | 0.59 | % |
| Bank                Boston                         |   |                  | 182,211    |         |   | US$                   |   |                   | -           |   |   |   |   |
| Desarrollo                                         |   |                  | 5,378,794  |         |   | Ch$                   |   |                   | 118,327     |   |   | 0.54 | % |
| Security                                           |   |                  | 1,140,097  |         |   | Ch$                   |   |                   | 979,028     |   |   | Libor                + 0.07 |   |
|                                               |   |                  | -          |         |   | Ch$                   |   |                   | 20,099      |   |   | 0.62 | % |
| Banco                Bilbao Viscaya Argentaria     |   |                  | 5,957,296  |         |   | US$                   |   |                   | 10,391,177  |   |   | Libor                + 0.16 |   |
|                                               |   |                  |  -    |         |   | Ch$                   |   |                   | 8,237,720   |   |   | 0.55 | % |
|                                               |   |                  |  -    |         |   | Ch$                   |   |                   | 30,070,400  |   |   | 0.64 | % |
|                                               |   |                  | -          |         |   | Ch$                   |   |                   | 242,180     |   |   | 0.54 | % |
| Total                                              |   |                  | 63,656,562 |         |   |                  |   |                   | 193,485,370 |   |   |   |   |

**b.**
**Long-term      bank debt**

|                                                 |   | **At                December 31,** |        |
|------------------------------------------------------|--------|------------------------------------|-------------|
|                                                 |   | **2006**                           |        | **2007** |   |
|                                                 |   | ThCh$                              |        | ThCh$ |   |
|                                                 |   |                               |        |   |   |
| Payable                in:                           |   |                               |        |   |   |   |   |
| Inflation-linked                units (UFs)          |   |                               | -           |   |   | 24,141,471 |   |
| Chilean                pesos                         |   |                               | 130,843,066 |   |   | 122,090,543 |   |
|                                                 |   |                               |        |   |   |   |   |
| Total                                                |   |                               | 130,843,066 |   |   | 146,232,014 |   |
| Less:                Current portion (see Note 12.g) |   |                               | 2,190,243   |   |   | 8,890,434 |   |
|                                                 |   |                               |        |   |   |   |   |
| Long-term                portion                     |   |                               | 128,652,823 |   |   | 137,341,580 |   |

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

|                                |   |         |   | **Balance**           |   |         |   | **Balance**           |   |                   |   |
|-------------------------------------|--------|--------------|--------|-----------------------|--------|--------------|--------|-----------------------|--------|------------------------|--------|
|                                |   |         |   | **December 31,** |   |         |   | **December 31,** |   | **Stated**             |   |
| **Bank/Financial Institution** |   | **Currency** |   | **2006**              |   | **Currency** |   | **2007**              |   | **Interest Rate** |   |
|                                |   |         |   |                  |   |         |   |                  |   |                   |   |
| Estado                              |   |         | Ch$    |                  |   | 128,652,823  |   |                  | Ch$    |                   |   | 113,200,109 |   |   | TAB                + 0.40 | % |
| Citibank                            |   |         | -      |                  |   | -            |   |                  | UF     |                   |   | 24,141,471 |   |   | 3.28 | % |
|                                |   |         |   |                  |   |         |   |                  |   |                   |   |   |   |   |   |   |
| Total                               |   |         |   |                  |   | 128,652,823  |   |                  |   |                   |   | 137,341,580 |   |   |   |   |

| **Bank/Financial****Institution** |   | **Currency** |   | **2009** |   | **2010**   |   | **2011** |       | **2012** |   | **2013 and****thereafter ** |   | **Total** |       |
|-----------------------------------|--------|--------------|--------|----------|--------|------------|--------|----------|------------|----------|--------|---------------------------------------|--------|-----------|------------|
|                              |   |         |   | ThCh$    |   | ThCh$      |   | ThCh$    |       | ThCh$    |   | ThCh$                                 |   | ThCh$     |       |
|                              |   |         |   |     |   |       |   |     |       |     |   |                                  |   |      |       |
| Estado                            |   |         | Ch$    |     |   | 14,374,617 |   |     | 16,770,387 |     |   | 18,567,213                            |   |      | 21,561,926 |   |   | 41,925,966 |   |   | 113,200,109 |   |
| Citibank                          |   |         | UF     |     |   | 4,518,811  |   |     | 3,924,532  |     |   | 3,924,532                             |   |      | 3,924,532  |   |   | 7,849,064 |   |   | 24,141,471 |   |

| **Principal                Loan Covenants** |
|---------------------------------------------|

| Banco                Estado(agent)                andCitibank | 1. | Coverage                of financial expenses, understood as the ratio of EBITDA                (Operating income plus depreciation) to financial expenses which                must be                greater than 3.5 |
|---------------------------------------------------------------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                          | 2. | Leverage                understood as the ratio between current liabilities (which generate                interest) and net shareholders’ equity which must be less than                1.2                      |

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

**c.**
**Capital      lease and leaseback obligations**

|                                                           |   | **At                December 31,** |      |
|----------------------------------------------------------------|--------|------------------------------------|-----------|
|                                                           |   | **2006**                           |      | **2007** |   |
|                                                           |   | ThCh$                              |      | ThCh$ |   |
|                                                           |   |                               |      |   |   |
| Lease                obligations                               |   |                               | 7,585,465 |   |   | 7,991,208 |   |
| Less:                Current portion                           |   |                               | 3,431,482 |   |   | 2,837,902 |   |
|                                                           |   |                               |      |   |   |   |   |
| Long-term                portion                               |   |                               | 4,153,983 |   |   | 5,153,306 |   |
|                                                           |   |                               |      |   |   |   |   |
| Leaseback                obligations                           |   |                               | 229,339   |   |   | 1,343,319 |   |
| Less:                Current portion                           |   |                               | 229,339   |   |   | 6,170 |   |
|                                                           |   |                               |      |   |   |   |   |
| Long-term                portion                               |   |                               | -         |   |   | 1,337,149 |   |
|                                                           |   |                               |      |   |   |   |   |
| Total                long-term lease and leaseback obligations |   |                               | 4,153,983 |   |   | 6,490,455 |   |

| **Future                minimum lease payments** |   | **2008** |      | **2009** |   | **2010**  |   | **2011** |      | **more** |   | **Total** |   |
|--------------------------------------------------|--------|----------|-----------|----------|--------|-----------|--------|----------|-----------|----------|--------|-----------|--------|
|                                             |   | ThCh$    |      | ThCh$    |   | ThCh$     |   | ThCh$    |      | ThCh$    |   | ThCh$     |   |
|                                             |   |     |      |     |   |      |   |     |      |     |   |      |   |
| Total                                            |   |     | 2,844,072 |     |   | 1,915,699 |   |     | 1,305,268 |     |   | 617,251   |   |   | 2,652,237 |   |   | 9,334,527 |   |

|                                                                                             |   |         |   | **2006** |   | **2007**  |   |
|--------------------------------------------------------------------------------------------------|--------|--------------|--------|----------|--------|-----------|--------|
|                                                                                             |   | **Currency** |   | ThCh$    |   | ThCh$     |   |
|                                                                                             |   |         |   |     |   |      |   |
| **Short                - term lease and leaseback obligations**                                  |   |         | US$    |     |   | 2,909,033 |   |   | 2,121,162 |   |
|                                                                                             |   |         | UF     |     |   | 751,790   |   |   | 722,910 |   |
|                                                                                             |   |         |   |     |   |      |   |   |   |   |
| Total                short - term lease and leaseback obligations ( see Note                12g) |   |         |   |     |   | 3,660,823 |   |   | 2,844,072 |   |
|                                                                                             |   |         |   |     |   |      |   |   |   |   |
| **Long                - term lease and leaseback obligations**                                   |   |         | US$    |     |   | 3,672,389 |   |   | 3,321,396 |   |
|                                                                                             |   |         | UF     |     |   | 481,594   |   |   | 3,169,059 |   |
|                                                                                             |   |         |   |     |   |      |   |   |   |   |
| Total                long - term lease and leaseback obligations ( see Note                12g)  |   |         |   |     |   | 4,153,983 |   |   | 6,490,455 |   |
|                                                                                             |   |         |   |     |   |      |   |   |   |   |
| Total                lease and leaseback obligations                                             |   |         |   |     |   | 7,814,804 |   |   | 9,334,527 |   |

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

**Leaseback      agreements**

|                                                        |   |      |                              | **Sales price** |   | **Contractual** |   |                |   |               |   |             |   | **Income**           |   |
|-------------------------------------------------------------|--------|-----------|-----------------------------------|----------------------|--------|-----------------|--------|---------------------|--------|--------------------|--------|------------------|--------|----------------------|--------|
|                                                        |   |      |                              | **to buyer**    |   | **installment** |   | **No of** |   | **Interest ** |   | **Term of** |   | **(loss) from** |   |
| **Creditor**                                                |   | **Asset** |                              | **lesser**           |   | **payments**    |   | **installments**    |   | **rate**           |   | **contract**     |   | **transactions**     |   |
|                                                        |   |      |                              | UF                   |   | UF              |   |                |   | %                  |   |             |   | ThCh$                |   |
|                                                        |   |      |                              |                 |   |            |   |                |   |               |   |             |   |                 |   |
| Compañía                de Seguros Consorcio S.A. |   |      | Land                and buildings |                 |   | 25,809          |   |                | 32,873 |               |   | 240              |   |                 | 7      |   |   | 01.06.2027 |   |   | (134,763 | ) |

**d.**
**Short-term      sundry creditors**

|                                                           |   | **At                December 31,** |      |
|----------------------------------------------------------------|--------|------------------------------------|-----------|
|                                                           |   | **2006**                           |      | **2007** |   |
|                                                           |   | ThCh$                              |      | ThCh$ |   |
|                                                           |   |                               |      |   |   |
| Provision                for merchandise rebate obligation (1) |   |                               | 2,994,042 |   |   | 3,935,601 |   |
| Accrued                insurance expense                       |   |                               | 254,933   |   |   | 17,624 |   |
| Other                (in Chilean pesos) (2)                    |   |                               | 2,635,172 |   |   | 4,642,416 |   |
|                                                           |   |                               |      |   |   |   |   |
| Total                                                          |   |                               | 5,884,147 |   |   | 8,595,641 |   |

|   | (1) | The                provision relates to deferred revenue the Company has relating to                gift                certificates that it sells to customers at face value. The Company                debits                cash and credits deferred revenue when the vouchers are sold at the                equivalent to 100% of their retail value, recognizing revenue (with                a                corresponding decrease to deferred revenue) as the vouchers are redeemed                by the customers. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Consist                of obligations with less than one year in maturity classified as                non-operational. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

**e.**
**Commercial      paper**

|                          |   | **At                December 31,** |       |
|-------------------------------|--------|------------------------------------|------------|
| **Short                term** |   | **2006**                           |       | **2007** |   |
|                          |   | ThCh$                              |       | ThCh$ |   |
|                          |   |                               |       |   |   |
| Payable                in:    |   |                               |       |   |   |
| Chilean                pesos  |   |                               | 68,155,449 |   |   | 65,905,976 |   |

| **Series** |   | **Stated interest ** |   | **Par value** |   | **Carrying value** |   | **Maturity Date** |       |
|------------|--------|--------------------------------|--------|--------------------|--------|-------------------------|--------|------------------------|------------|
|       |   | **rate**                       |   | **2006**           |   | **2007**                |   | **2006**               |       | **2007** |   |   |   |
|       |   |                           |   | ThCh$              |   | ThCh$                   |   | ThCh$                  |       | ThCh$ |   |   |   |
|       |   |                           |   |               |   |                    |   |                   |       |   |   |   |   |
| 003-13     |   |                           | 6.00   | %                  |   | 14,000,000              |   |                   | -          |   |   | 15,329,202 |   |   | - |   |   | 09/06/2007 |   |
| 003-14     |   |                           | 6.60   | %                  |   | 13,200,000              |   |                   | -          |   |   | 14,387,089 |   |   | - |   |   | 10/10/2007 |   |
| 003-15     |   |                           | 6.00   | %                  |   | 12,300,000              |   |                   | -          |   |   | 13,280,654 |   |   | - |   |   | 12/12/2007 |   |
| 003-16     |   |                           | 6.60   | %                  |   | -                       |   |                   | 14,450,000 |   |   | - |   |   | 14,783,795 |   |   | 08/21/2008 |   |
| 003-17     |   |                           | 6.84   | %                  |   | -                       |   |                   | 13,700,000 |   |   | - |   |   | 13,949,888 |   |   | 09/24/2008 |   |
| 003-18     |   |                           | 7.20   | %                  |   | -                       |   |                   | 13,100,000 |   |   | - |   |   | 13,170,740 |   |   | 12/04/2008 |   |
| 011-7      |   |                           | 6.00   | %                  |   | 10,559,000              |   |                   | -          |   |   | 11,903,604 |   |   | - |   |   | 03/06/2007 |   |
| 011-8      |   |                           | 6.12   | %                  |   | 11,800,000              |   |                   | -          |   |   | 13,254,900 |   |   | - |   |   | 04/10/2007 |   |
| 011-9      |   |                           | 5.88   | %                  |   | -                       |   |                   | 10,800,000 |   |   | - |   |   | 11,352,132 |   |   | 01/23/2008 |   |
| 011-10     |   |                           | 5.88   | %                  |   | -                       |   |                   | 12,100,000 |   |   | - |   |   | 12,649,421 |   |   | 03/19/2008 |   |
| **Total**  |   |                           |   |               |   |                    |   |                   |       |   |   | **68,155,449** |   |   | **65,905,976** |   |   |   |   |

|   | a) | Accrued                interest on the promissory notes at year end is shown with the current                portion of long-term liabilities together with the current portion                of the                liability. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Long-term                principal is shown under bonds on the consolidated balance                sheets. |
|--------|----|------------------------------------------------------------------------------------------------------------|

|   | c) | The                promissory notes are not secured. |
|--------|----|------------------------------------------------------|

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

|   | d) | At                December 31, 2007, the premium from the placement of the promissory                notes                amounted to ThCh$ 5,950 (ThCh$45,378 in 2006). At December 31, 2007,                these                amounts are shown in other current                liabilities. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | e) | The                expenses incurred in the issue and placement of these promissory                notes                were capitalized and are being amortized over the issue term of the                securities. At December 31, 2007, ThCh$ 64,399 have been amortized                and                included in the financial expenses for 2007 (ThCh$69,187 in 2006                and                ThCh$67,875 in 2005). ThCh$ 35,068 is included in other current assets                (ThCh$37,789 in 2006). |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | f) | The                duration term for these issuances is ten years and the commercial                paper is                repaid and renewed every year. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Bonds:**

|                                                 |   | **At                December 31,** |        |
|------------------------------------------------------|--------|------------------------------------|-------------|
|                                                 |   | **2006**                           |        | **2007** |   |
|                                                 |   | ThCh$                              |        | ThCh$ |   |
|                                                 |   |                               |        |   |   |
| Payable                in:                           |   |                               |        |   |   |
| Inflation-linked                units (UFs)          |   |                               | 164,794,315 |   |   | 132,414,595 |   |
| Less:                current portion (See Note 12.g) |   |                               | 9,817,032   |   |   | 12,831,608 |   |
|                                                 |   |                               |        |   |   |   |   |
| Long                -Term Portion                    |   |                               | 154,977,283 |   |   | 119,582,987 |   |

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

| **Issuing** |         | **Bond****Issued**        |         | **Date of****Issuance** |         | **Indexation** |         | **Amount****issued** |         | **Series**               |         | **Maturity****date** |         | **Nominal****interest rate** |         | **Amortization****Terms**        |         | **Interest****Payment**               |
|-------------|--------------|---------------------------|--------------|------------------------------|--------------|----------------|--------------|----------------------|--------------|--------------------------|--------------|----------------------|--------------|-----------------------------------|--------------|----------------------------------|--------------|---------------------------------------|
| D&S     |         | SERIES                  B |         | 11.15.2001                   |         | U.F.           |         | 1,200,000            |         | B1                  U.F. |         | 200,000              |         | 2022                              |         | 6.5%                  compounded |         | 32                  semiannual        |   | Semiannually,                  due on April 1, |
|        |         |                      |         |                         |         |           |         |                 |         | B1                  U.F. |         | 1,000,000            |         | 2022                              |         | semiannually                     |         | Installments                  as from |   | and                  October 1, each year |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         |                             |         | April,                  2007          |   | As                  from April1, 2001 |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         |                             |         |                                  |   |   |
| D&S     |         | SERIES                  C |         | 11.25.2003                   |         | U.F.           |         | 2,000,000            |         | C1                  U.F. |         | 2,000,000            |         | 2009                              |         | 4.5%                  compounded |         | 10                  semiannual        |   | Semiannually,                  due on April 1, |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         | semiannually                     |         | Installments                  as from |   | and                  December 1, each year |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         |                             |         | June,                  2005           |   | As                  from December 1, 2003 |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         |                             |         |                                  |   |   |
| D&S     |         | SERIES                  D |         | 11.27.2003                   |         | U.F.           |         | 1,000,000            |         | D1                  U.F. |         | 1,000,000            |         | 2025                              |         | 5.5%                  compounded |         | 38                  semiannual        |   | Semiannually,                  due on April 1, |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         | semiannually                     |         | Installments                  as from |   | and                  December 1, each year |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         |                             |         | June,                  2007           |   | As                  from December 1, 2003 |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         |                             |         |                                  |   |   |
| SAITEC      |         | SERIES                  A |         | 01.04.1992                   |         | U.F.           |         | 350,000              |         | A1                  UF   |         | 350,000              |         | 2014                              |         | 6.5%                  compounded |         | 36                  semiannual        |   | Semiannually,                  due on April 1, |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         | semiannually                     |         | Installments                  as from |   | and                  October 1, each year |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         |                             |         | October                  1995         |   | As                  from April 1, 1992 |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         |                             |         |                                  |   |   |
| SAITEC      |         | SERIES                  B |         | 09.13.2007                   |         | U.F.           |         | 4,500,000            |         | B1                  UF   |         | 4,500,000            |         | 2028                              |         | 4.2%                  compounded |         | 42                  semiannual        |   | Semiannually,                  due on April 1, |
|        |         |                      |         |                         |         |           |         |                 |         |                     |         |                 |         |                              |         | semiannually                     |         | Installments                  as from |   | and                  October 1, each year |
|        |    |                      |    |                         |    |           |    |                 |    |                     |    |                 |    |                              |    |                             |    | April                  1, 2008        |    | As                  from October 1, 2006 |

** **
** **
** **

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

**Bonds        and Commercial Paper Covenants**

| Series                C and D bonds |   | Calculated                based on the consolidated financial statements of D&S                S.A.                                                                                                                                                                                                                                               |
|-------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |   |                                                                                                                                                                                                                                                                                                                                                  |
|                                | 1.     | Maintain                an indebtedness relationship lower than 1.2 times, defined as the                ratio                between current liabilities that accrue interest and                equity.                                                                                                                                             |
|                                | 2.     | Minimum                coverage of interest expense of 3.5 times (operating results plus                depreciation plus amortization of intangibles divided by interest                expenses).                                                                                                                                                   |
| Series                A and B bonds |   | Calculated                based on the financial statements of Sociedad Anónima Inmobiliaria                Terrenos y Establecimientos Comerciales.                                                                                                                                                                                             |
|                                |   |                                                                                                                                                                                                                                                                                                                                                  |
|                                | 1.     | Keeping                assets free from liens in a total amount equal to at least 1.3 times                the                outstanding balance of the total bonds issued for the Issuer, which                are in                force, calculated and measured each quarter over the consolidated                balance                sheet. |
|                                | 2.     | Keeping                consolidated total equity of an amount equal at least to UF12,000,000,                calculated and measured each quarter.                                                                                                                                                                                                    |
|                                | 3.     | Real                estate assets for an amount equal or greater than UF                12,000,000                                                                                                                                                                                                                                                    |
| Commercial                paper     | 1.     | Minimum                Coverage of financial expenses of 3.5 (operating income plus depreciation                divided by interest expenses) for March, June, September and                December.                                                                                                                                                 |
|                                | 2.     | Leverage                less than 1.2 (current liabilities divided by equity) for March,                June,                September and December.                                                                                                                                                                                                  |

**f.          **
**Long-term          sundry creditors**

|                                        |   | **At                December 31,** |    |
|---------------------------------------------|--------|------------------------------------|---------|
|                                        |   | **2006**                           |    | **2007** |   |
|                                        |   | ThCh$                              |    | ThCh$ |   |
|                                        |   |                               |    |   |   |
| Due                to Cesar Lahsen Rabi (1) |   |                               | 707,775 |   |   | 705,238 |   |

|   | (1) | This                amount corresponds to an obligation for the purchase of land, which                is                expressed in Chilean pesos at an annual interest rate of 6.68%. The                obligation expires in 2021. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

**g.**
**Analysis      of current debt and other obligations included in the current portion of long-      term liabilities for each period presented **

**As        of December 31, 2006**

|                                 |   |          |                             |               |   |                                   |   | **Amount of principal**         |   |                        |   |
|--------------------------------------|--------|---------------|----------------------------------|--------------------|--------|----------------------------------------|--------|-------------------------------------------|--------|-----------------------------|--------|
|                                 |   |          |                             |               |   |                                   |   | **payable within**                   |   | **Amount of**          |   |
|                                 |   |          |                             |               |   |                                   |   | **one year and**                |   | **Principal payable**  |   |
| **Bank or Other**          |   |          |                             | **Interest ** |   | **Date of**                       |   | **accrued interest as of** |   | **in more **      |   |
| **Institution Name**            |   | **Principal** |                             | **rate**           |   | **maturity**                           |   | **December 31, 2006**           |   | **than one year** |   |
|                                 |   |          |                             |               |   |                                   |   | ThCh$                                     |   | ThCh$                       |   |
|                                 |   |          |                             |               |   |                                   |   |                                      |   |                        |   |
| Estado                               |   |          | ThCh$                119,788,476 |               |   | TAB                +0.40               | %      |                                      | 2014   |                        |   | 2,190,243 |   |   | 128,652,823 |   |
| **Subtotal-Banks**                   |   |          |                             |               |   |                                   |   |                                      |   |                        |   | 2,190,243 |   |   | 128,652,823 |   |
| **Bonds**                            |   |          |                             |               |   |                                   |   |                                      |   |                        |   |   |   |   |   |   |
| SERIE                B               |   |          | UF1,200,000                      |               |   | UF                +                6.5 | %      |                                      | 2022   |                        |   | 815,778 |   |   | 23,194,117 |   |
| SERIE                C               |   |          | UF1,496,333                      |               |   | UF                +                4.5 | %      |                                      | 2009   |                        |   | 7,581,455 |   |   | 21,985,439 |   |
| SERIE                D               |   |          | UF1,000,000                      |               |   | UF                +                5.5 | %      |                                      | 2025   |                        |   | 220,267 |   |   | 19,561,079 |   |
| SERIE                A-162           |   |          | UF94,737                         |               |   | UF                +                6.5 | %      |                                      | 2014   |                        |   | 235,080 |   |   | 1,616,923 |   |
| SERIE                B-463           |   |          | UF4,500,000                      |               |   | UF                +                4.2 | %      |                                      | 2028   |                        |   | 964,452 |   |   | 88,619,725 |   |
| **Subtotal                Bonds**    |   |          |                             |               |   |                                   |   |                                      |   |                        |   | 9,817,032 |   |   | 154,977,283 |   |
| **Lease                Obligations** |   |          | ThCh$6,237,490                   |               |   | 7%                to 13.56             | %      |                                      | 2007   |                        |   | 3,660,821 |   |   | 4,153,983 |   |
| Total                                |   |          |                             |               |   |                                   |   |                                      |   |                        |   | 15,668,096 |   |   | 287,784,089 |   |

**As        of December 31, 2007**

|                                 |   |          |                             |               |   |                                    |   | **Amount of principal**         |   |                        |   |
|--------------------------------------|--------|---------------|----------------------------------|--------------------|--------|-----------------------------------------|--------|-------------------------------------------|--------|-----------------------------|--------|
|                                 |   |          |                             |               |   |                                    |   | **payable within**                   |   | **Amount of**          |   |
|                                 |   |          |                             |               |   |                                    |   | **one year and**                |   | **Principal payable**  |   |
| **Bank or Other**          |   |          |                             | **Interest ** |   | **Date of**                        |   | **accrued interest as of** |   | **in more **      |   |
| **Institution Name**            |   | **Principal** |                             | **rate**           |   | **maturity**                            |   | **December 31, 2007**           |   | **than one year** |   |
|                                 |   |          |                             |               |   |                                    |   | ThCh$                                     |   | ThCh$                       |   |
| Citibank                             |   |          | UF                1,200,000      |               |   | UF                +                3.28 | %      |                                      | 2014   |                        |   | - |   |   | 24,141,471 |   |
| Estado                               |   |          | ThCh$                119,788,476 |               |   | TAB                +0.40                | %      |                                      | 2014   |                        |   | 8,890,434 |   |   | 113,200,109 |   |
| **Subtotal-Banks**                   |   |          |                                  |               |   |                                    |   |                                      |   |                        |   | 8,890,434 |   |   | 137,341,580 |   |
| **Bonds**                            |   |          |                             |               |   |                                    |   |                                      |   |                        |   |   |   |   |   |   |
|                                 |   |          |                             |               |   |                                    |   |                                      |   |                        |   |   |   |   |   |   |
| SERIE                C               |   |          | UF                1,116,393      |               |   | UF                +                4.5  | %      |                                      | 2009   |                        |   | 9,702,788 |   |   | 12,283,734 |   |
| SERIE                D               |   |          | UF                993,287        |               |   | UF                +                5.5  | %      |                                      | 2025   |                        |   | 277,052 |   |   | 19,300,582 |   |
| SERIE                A-162           |   |          | UF                88,421         |               |   | UF                +                6.5  | %      |                                      | 2014   |                        |   | 272,589 |   |   | 1,363,259 |   |
| SERIE                B-463           |   |          | UF4,500,000                      |               |   | UF                +                4.2  | %      |                                      | 2028   |                        |   | 2,579,179 |   |   | 86,635,412 |   |
| **Subtotal                Bonds**    |   |          |                             |               |   |                                    |   |                                      |   |                        |   | 12,831.608 |   |   | 119,582,987 |   |
| **Lease                Obligations** |   |          | ThCh$                10,039,765  |               |   | 6.2%                to 8.5              | %      |                                      | 2008   |                        |   | 2,844,072 |   |   | 6,490,455 |   |
| **Total**                            |   |          |                             |               |   |                                    |   |                                      |   |                        |   | 24,566,114 |   |   | 263,415,022 |   |

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

----

**DISTRIBUCION          Y SERVICIO D&S S.A.**

**NOTES          TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated          for general price-level changes)**

| **13.** | **SHAREHOLDERS’                EQUITY** |
|---------|-----------------------------------------------|

|                                                    |   |        |        | **Technical**   |   |            |   |            |        | **Retained earnings** |   |                       |   |
|---------------------------------------------------------|--------|-------------|-------------|-----------------|--------|-----------------|--------|-----------------|-------------|----------------------------|--------|----------------------------|--------|
|                                                    |   | **Paid-in** |        | **revaluation** |   | **Other ** |   | **Development** |        | **Retained**               |   | **Net income**        |   | **Interim** |   |   |   |
|                                                    |   | **capital** |        | **reserve**     |   | **reserves**    |   | **Stage**       |        | **earnings**               |   | **for the year** |   | **dividends** |   | **Total** |   |
|                                                    |   | ThCh$       |        | ThCh$           |   | ThCh$           |   | ThCh$           |        | ThCh$                      |   | ThCh$                      |   | ThCh$ |   | ThCh$ |   |
| Balance,                  January 1, 2005               |   |        | 378,815,151 |            |   | 1,312,052       |   |            | (2,490,927  | )                          |   | -                          |   |   | 78,538,538 |   |   | 10,357,195 |   |   | (10,619,100 | ) |   | 455,912,909 |   |
| Transfers                                               |   |        | -           |            |   | -               |   |            | -           |                       |   | -                          |   |   | 10,357,195 |   |   | (10,357,195 | ) |   | - |   |   | - |   |
| Dividends                  paid                         |   |        | -           |            |   | -               |   |            | -           |                       |   | -                          |   |   | (10,619,100 | ) |   | - |   |   | 10,619,100 |   |   | - |   |
| Price                  level restatement                |   |        | 13,637,345  |            |   | 47,234          |   |            | (90,468     | )                          |   | -                          |   |   | 2,817,958 |   |   | - |   |   | (286,880 | ) |   | 16,125,189 |   |
| Recognition                  of equity value adjustment |   |        | -           |            |   | -               |   |            | (19,854     | )                          |   | -                          |   |   | - |   |   | - |   |   | - |   |   | (19,854 | ) |
| Net                  income for the year                |   |        | -           |            |   | -               |   |            | -           |                       |   | -                          |   |   | - |   |   | 42,367,120 |   |   | (26,080,000 | ) |   | 16,287,120 |   |
| Balances,                  December 31, 2005            |   |        | 392,452,496 |            |   | 1,359,286       |   |            | (2,601,249  | )                          |   | -                          |   |   | 81,094,591 |   |   | 42,367,120 |   |   | (26,366,880 | ) |   | 488,305,364 |   |
| Balance                  as of December 31, 2005 (1)    |   |        | 430,345,355 |            |   | 1,490,531       |   |            | (2,852,411  | )                          |   | -                          |   |   | 88,924,597 |   |   | 46,457,836 |   |   | (28,912,708 | ) |   | 535,453,199 |   |
| Balance,                  January 1, 2006               |   |        | 392,452,496 |            |   | 1,359,286       |   |            | (2,601,249  | )                          |   | -                          |   |   | 81,094,591 |   |   | 42,367,120 |   |   | (26,366,880 | ) |   | 488,305,364 |   |
| Transfers                                               |   |        | -           |            |   | -               |   |            | -           |                       |   |                       |   |   | 42,367,120 |   |   | (42,367,120 | ) |   | - |   |   | - |   |
| Dividends                  paid                         |   |        | -           |            |   | -               |   |            | -           |                       |   | -                          |   |   | (26,366,880 | ) |   | - |   |   | 26,366,880 |   |   | - |   |
| Development                  stage (g)                  |   |        | -           |            |   | -               |   |            | -           |                       |   | (2,053,438                 | )      |   | - |   |   | - |   |   | - |   |   | (2,053,438 | ) |
| Shares                  in treasury                     |   |        | -           |            |   | -               |   |            | (5,276,173  | )                          |   | -                          |   |   | - |   |   | - |   |   | - |   |   | (5,276,173 | ) |
| Recognition                  of equity value adjustment |   |        | -           |            |   | -               |   |            | (10,537     | )                          |   | -                          |   |   | - |   |   | - |   |   | - |   |   | (10,537 | ) |
| Price                  level restatement                |   |        | 8,241,503   |            |   | 28,545          |   |            | (73,924     | )                          |   | -                          |   |   | 2,038,992 |   |   | - |   |   | 25,936 |   |   | 10,261,052 |   |
| Net                  income for the year                |   |        | -           |            |   | -               |   |            | -           |                       |   | -                          |   |   | - |   |   | 39,652,587 |   |   | (12,968,000 | ) |   | 26,684,587 |   |
| Balances,                  December 31, 2006            |   |        | 400,693,999 |            |   | 1,387,831       |   |            | (7,961,883  | )                          |   | (2,053,438                 | )      |   | 99,133,823 |   |   | 39,652,587 |   |   | (12,942,064 | ) |   | 517,910,855 |   |
| Balance                  as of December 31, 2006 (1)    |   |        | 430,345,355 |            |   | 1,490,531       |   |            | (8,551,063  | )                          |   | (2,205,392                 | )      |   | 106,469,726 |   |   | 42,586,878 |   |   | (13,899,777 | ) |   | 556,236,258 |   |
| Balance,                  January 1, 2007               |   |        | 400,693,999 |            |   | 1,387,831       |   |            | (7,961,883  | )                          |   | (2,053,438                 | )      |   | 99,133,823 |   |   | 39,652,587 |   |   | (12,942,064 | ) |   | 517,910,855 |   |
| Transfers                                               |   |        | -           |            |   | -               |   |            | -           |                       |   | 2,053,438                  |   |   | 24,657,085 |   |   | (39,652,587 | ) |   | 12,942,064 |   |   | - |   |
| Dividends                  paid                         |   |        | -           |            |   | -               |   |            | -           |                       |   | -                          |   |   | (12,968,000 | ) |   | - |   |   | - |   |   | (12,968,000 | ) |
| Shares                  in treasury                     |   |        | -           |            |   | -               |   |            | (6,196,981  | )                          |   | -                          |   |   | - |   |   | - |   |   | - |   |   | (6,196,981 | ) |
| Recognition                  of equity value adjustment |   |        | -           |            |   | -               |   |            | (3,902      | )                          |   | -                          |   |   | - |   |   | - |   |   | - |   |   | (3,902 | ) |
| Cumulative                  Translation Adjustment      |   |        | -           |            |   | -               |   |            | (78,819     | )                          |   | -                          |   |   | - |   |   | - |   |   | - |   |   | (78,819 | ) |
| Price-level                  restatement                |   |        | 29,651,356  |            |   | 102,700         |   |            | (788,076    | )                          |   | -                          |   |   | 8,291,671 |   |   | - |   |   | (142,006 | ) |   | 37,115,645 |   |
| Net                  income for the year                |   |        | -           |            |   | -               |   |            | -           |                       |   | -                          |   |   | - |   |   | 52,680,923 |   |   | (25,819,200 | ) |   | 26,861,723 |   |
| Balances,                  December 31, 2007            |   |        | 430,345,355 |            |   | 1,490,531       |   |            | (15,029,661 | )                          |   | -                          |   |   | 119,114,579 |   |   | 52,680,923 |   |   | (25,961,206 | ) |   | 562,640,521 |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated        for general price-level changes)**

**a.**
**Paid-in      capital**

**b.**
**Capital      increases**

**c.**
**Income      distribution policy**

**d.**
**Reserve      for technical revaluation of property, plant and equipment**

**e.**
**Dividends      paid**

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated        for general price-level changes)**

**f.**
**Other      reserves**

|                                                      |   | **2006** |       | **2007** |   |
|-----------------------------------------------------------|--------|----------|------------|----------|--------|
|                                                      |   | ThCh$    |       | ThCh$    |   |
|                                                      |   |     |       |     |   |
| Capital                Increase Expenses Reserve (1)      |   |     | (2,869,069 | )        |   | (2,869,069 | ) |
| Recognition                of equity value adjustment (2) |   |     | (33,947    | )        |   | (36,936 | ) |
| Other                Reserves                             |   |     | 39,301     |     |   | 39,301 |   |
| Shares                in treasury reserve (3)             |   |     | (5,687,348 | )        |   | (13,202,069 | ) |
| Stock                option (4)                           |   |     | -          |     |   | 1,117,931 |   |
| Cumulative                Translation Adjustment (5)      |   |     | -          |     |   | (78,819 | ) |
|                                                      |   |     |       |     |   |   |   |
|                                                      |   |     | (8,551,063 | )        |   | (15,029,661 | ) |

|  | (1) | Corresponds                to expenses incurred in the placement of shares issued in accordance                with                the capital increase made in 2004 which was recorded in accordance                with                Circular No.1736 of the Superintendency of Securities and Insurance                (“SVS”). |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | The                Parent purchased shares, acquired ownership interests and subscribed                and                paid capital increases in various companies of the Consolidated Group.                The                net loss obtained from the above transactions has been charged to                Other                reserves. Expenses related to this process were recognized in the                Statement of Income for the period. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (3) | During                July and August 2006, the Company performed different purchase operations                related to shares issued by the Company for a total sum of 36,000,000                shares at an average par value of Ch$ 146.56 per share. During August                2007, the Company conducted share purchase operations issued by the                Company for a total sum of 29,200,000 shares at an average par price                of                Ch$ 249.13 per share. These purchases of shares issued by the Company                are                within the framework of a compensation plan for the Company and                subsidiaries’ managers and executives as agreed by the shareholders at the                Extraordinary Shareholders’ Meeting held on October 26, 2004 the plan of                which was approved by the Company's Board of Directors at the Ordinary                Meeting held on June 27, 2006. |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | Stock                options for compensation plans. |
|--|-----|------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   | Compensation                plans indicated in paragraph 3 above, which, in their majority, have                been                granted by the Company to its executives during 2007, have been recognized                in the financial statements in accordance with IFRS No. 2, Share-based                payments.  As                  provided in this standard, the Company has recognized in the financial                  statements the value of services which will be received as exchange                  for                  the options granted. Given that it is not possible to estimate,                  in a                  reliable manner, the fair value of services which will be received,                  this                  was determined as the equivalent of the fair value of options offered. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

|  |   | In                consideration that stock options will become irrevocable over a term                of                fourteen months from the date in which they are granted, services                will be                received by the Company during the same period and with the same                progression and therefore the payroll expense determined at the date                of                granting these options will be accrued in the same                period. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   |   | The              charge to income which was recognized in the period amounted to              ThCh$1,117,931 with a credit to Other              Reserves.  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (5) | Relates                to the recognition of the exchange difference adjustment by the affiliate                Alvi Supermercados Mayoristas S.A. from the subsidiary which this                company                has abroad. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**g.        **
**Deficit        during development stage of subsidiaries **

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **14.** | **INCOME                TAXES** |
|---------|---------------------------------|

**a.          **

|                                                                         |   | **2006** |       | **2007** |   |
|------------------------------------------------------------------------------|--------|----------|------------|----------|--------|
|                                                                         |   | ThCh$    |       | ThCh$    |   |
|                                                                         |   |     |       |     |   |
| First                category income taxes                                   |   |     | (9,682,512 | )        |   | (9,803,038 | ) |
| Monthly                payments                                              |   |     | 9,293,558  |     |   | 6,889,907 |   |
| Personnel                training credit and real estate tax credit          |   |     | 5,318,621  |     |   | 5,454,210 |   |
| Recovery                of first category income tax by applying tax losses: |   |     |       |     |   |   |   |
| To                the year                                                   |   |     | 2,494,530  |     |   | 1,859,409 |   |
| Benefit                from carryback of tax losses                          |   |     | 217,268    |     |   | 2,575,010 |   |
| Arica                Law tax credit                                          |   |     | 7,880      |     |   | 7,880 |   |
| Prior                year first category income tax to recover               |   |     | 1,132,631  |     |   | 178,233 |   |
|                                                                         |   |     |       |     |   |   |   |
| Net                income taxes refundable                                   |   |     | 8,781,976  |     |   | 7,161,611 |   |

|   |   | At                December 31, 2006 and 2007, “Refundable taxes” on the balance sheet is                shown together with other Value Added Taxes (VAT) receivable of                ThCh$176,953 and ThCh$29,548,934 respectively, within current                assets. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |
|--------|--------|--------|

|   |   | At                December 31, 2007, D&S and its subsidiaries have unremitted taxable                earnings of approximately ThCh$174,367,335 (ThCh$159,590,063 in 2006).                The                latter are entitled to a credit for first category tax when dividends                are                distributed to the shareholders. Certain subsidiaries have tax losses                for                tax purposes totaling ThCh$136,078,747 as of December 31, 2007                (ThCh$151,045,812 in 2006). |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | In                accordance with Chilean Tax regulation, tax losses do not have a                defined                maturity date. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated        for general price-level changes)**

|   | **b.** | **Deferred                taxes**                -                The detail of accumulated consolidated balances of deferred taxes                is as                follows: |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                         |   | **Balance, December 31,2006** |      | **Balance, December 31,2007** |   |
|--------------------------------------------------------------|--------|-----------------------------------------|-----------|-----------------------------------------|--------|
|                                                         |   | **Deferred tax asset**        |      | **Deferred tax liability**    |   | **Deferred tax asset** |   | **Deferred tax liability** |   |
|                                                         |   | **Short**                               |      | **Long**                                |   | **Short** |   | **Long** |   | **Short** |   | **Long** |   | **Short** |   | **Long** |   |
|                                                         |   | **term**                                |      | **term**                                |   | **term** |   | **term** |   | **term** |   | **term** |   | **term** |   | **term** |   |
|                                                         |   | ThCh$                                   |      | ThCh$                                   |   | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   |
| **Temporary                difference**                      |   |                                    |      |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                for doubtful accounts               |   |                                    | 696,248   |                                    |   | - |   |   | - |   |   | - |   |   | 1,169,454 |   |   | - |   |   | - |   |   | - |   |
| Vacation                accrual                              |   |                                    | 966,151   |                                    |   | - |   |   | - |   |   | - |   |   | 755,851 |   |   | - |   |   | - |   |   |   |   |
| Leased                assets                                 |   |                                    | -         |                                    |   | - |   |   | - |   |   | 1,228,990 |   |   | - |   |   | - |   |   | 730,352 |   |   | 943,645 |   |
| Depreciation                of property, plant and equipment |   |                                    | -         |                                    |   | - |   |   | - |   |   | 5,276,760 |   |   | - |   |   | - |   |   | - |   |   | 5,017,982 |   |
| Severance                indemnity                           |   |                                    | 189,397   |                                    |   | 1,319,437 |   |   | - |   |   | - |   |   | 154,070 |   |   | 250,315 |   |   | - |   |   | - |   |
| Other                events                                  |   |                                    | -         |                                    |   | - |   |   | - |   |   | - |   |   | - |   |   | 8,576 |   |   | - |   |   | - |   |
| Sundry                provisions                             |   |                                    | 109,086   |                                    |   | - |   |   | - |   |   | - |   |   | 458,019 |   |   | - |   |   | - |   |   | - |   |
| Realization                allowance on inventory            |   |                                    | 23,543    |                                    |   | - |   |   | - |   |   | - |   |   | 416,420 |   |   | - |   |   | - |   |   | - |   |
| Interest                income                               |   |                                    | 178,205   |                                    |   | - |   |   | - |   |   | - |   |   | 202,669 |   |   | - |   |   | - |   |   | - |   |
| Allowance                for uncollectible sundry debtors    |   |                                    | 201,709   |                                    |   | - |   |   | - |   |   | - |   |   | 191,125 |   |   | - |   |   | - |   |   | - |   |
| Capitalized                financial cost                    |   |                                    | -         |                                    |   | - |   |   | 12,533 |   |   | 703,430 |   |   | - |   |   | - |   |   | - |   |   | 593,491 |   |
| Deferred                charges                              |   |                                    | -         |                                    |   | - |   |   | 902,510 |   |   | 1,563,508 |   |   | - |   |   | - |   |   | 942,887 |   |   | 1,996,827 |   |
| Tax                loss                                      |   |                                    | 2,797,551 |                                    |   | 20,385,707 |   |   | - |   |   |   |   |   | 3,587,728 |   |   | 17,686,250 |   |   | - |   |   | - |   |
| Derivate                                                     |   |                                    | -         |                                    |   | - |   |   | - |   |   |   |   |   | - |   |   | 1,264,382 |   |   | - |   |   | - |   |
| Total                deferred taxes                          |   |                                    | 5,161,890 |                                    |   | 21,705,144 |   |   | 915,043 |   |   | 8,772,688 |   |   | 6,935,336 |   |   | 19,209,523 |   |   | 1,673,239 |   |   | 8,551,945 |   |
| Complementary                accounts balance                |   |                                    | -         |                                    |   | (348,513 | ) |   | - |   |   | (1,450,468 | ) |   | - |   |   | - |   |   | - |   |   | (1,190,019 | ) |
| Net                balances per balance sheet                |   |                                    | 5,161,890 |                                    |   | 21,356,631 |   |   | 915,043 |   |   | 7,322,220 |   |   | 6,935,336 |   |   | 19,209,523 |   |   | 1,673,239 |   |   | 7,361,926 |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

**c.**

|                                                                                                                      |   | **2005** |        | **2006** |   | **2007**   |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|----------|--------|------------|--------|
|                                                                                                                      |   | ThCh$    |        | ThCh$    |   | ThCh$      |   |
| **Current                tax expense**                                                                                    |   |     |        |     |   |       |   |   |   |   |
| For                the year                                                                                               |   |     | (10,308,352 | )        |   | (9,682,512 | )      |   | (9,803,038 | ) |
| Prior                year adjustment                                                                                      |   |     | 1,277,278   |     |   | (1,261,927 | )      |   | 188,243 |   |
| Benefit                from tax loss carry back                                                                           |   |     | 798,647     |     |   | 2,494,530  |   |   | 1,859,409 |   |
| **Deferred                taxes**                                                                                         |   |     |        |     |   |       |   |   |   |   |
| Change                in deferred taxes                                                                                   |   |     | 3,234,593   |     |   | 3,157,563  |   |   | (1,083,498 | ) |
| Effect                  of amortization of complementary accounts of deferred                  tax assets and liabilities |   |     | (297,119    | )        |   | 115,067    |   |   | (88,066 | ) |
| Other                                                                                                                     |   |     | -           |     |   | -          |   |   | (3,498 | ) |
| Total                tax expense                                                                                          |   |     | (5,294,953  | )        |   | (5,177,279 | )      |   | (8,930,448 | ) |

| **15.** | **FOREIGN                CURRENCIES** |
|---------|---------------------------------------|

|                                  |   | **At December 31,** |       |
|---------------------------------------|--------|-------------------------------|------------|
|                                  |   | **2006**                      |       | **2007** |   |
|                                  |   | ThCh$                         |       | ThCh$ |   |
| **ASSETS**                            |   |                          |       |   |   |   |   |
|                                  |   |                          |       |   |   |   |   |
| Current                assets         |   |                          | 29,575,535 |   |   | 25,782,779 |   |
|                                  |   |                          |       |   |   |   |   |
| **LIABILITIES**                       |   |                          |       |   |   |   |   |
|                                  |   |                          |       |   |   |   |   |
| Current                liabilities    |   |                          | 36,267,300 |   |   | 26,338,834 |   |
| Long-term                liabilities  |   |                          | 957,746    |   |   | 3,321,396 |   |
|                                  |   |                          | 37,225,046 |   |   | 29,660,230 |   |
| Total                liabilities      |   |                          |       |   |   |   |   |
|                                  |   |                          |       |   |   |   |   |
| Net                liability position |   |                          | (7,649,511 | ) |   | (3,877,451 | ) |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **16.** | **PRICE-LEVEL                RESTATEMENT AND FOREIGN                EXCHANGE** |
|---------|--------------------------------------------------------------------------------|

|                                                                                                        |   | **For                the year ended December 31,** |        |
|-------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|-------------|
|                                                                                                        |   | **2005**                                           |        | **2006** |   | **2007** |   |
|                                                                                                        |   | ThCh$                                              |        | ThCh$ |   | ThCh$ |   |
|                                                                                                        |   |                                               |        |   |   |   |   |
| Property,                plant and equipment - net                                                          |   |                                               | 24,444,673  |   |   | 14,489,468 |   |   | 52,711,878 |   |
| Non-monetary                liabilities - net of other long-term non-monetary assets                        |   |                                               | 4,499,789   |   |   | 2,351,518 |   |   | 8,290,003 |   |
| Shareholders’                equity                                                                   |   |                                               | (17,682,141 | ) |   | (11,020,370 | ) |   | (37,115,645 | ) |
| Liabilities                (UF’s)                                                                     |   |                                               | (8,168,434  | ) |   | (3,538,694 | ) |   | (21,319,095 | ) |
| Income                statement amounts                                                                     |   |                                               | (3,589,780  | ) |   | (1,303,779 | ) |   | (3,997,423 | ) |
|                                                                                                        |   |                                               |        |   |   |   |   |   |   |   |
| Price-level                restatements - net                                                               |   |                                               | (495,893    | ) |   | 978,143 |   |   | (1,430,282 | ) |
| Foreign                exchange gain (loss) (1)                                                             |   |                                               | (1,323,519  | ) |   | 382,480 |   |   | 946,757 |   |
|                                                                                                        |   |                                               |        |   |   |   |   |   |   |   |
| (Loss)                  gain from changes in the purchasing power                  of the Chilean peso |   |                                               | (1,819,412  | ) |   | 1,360,623 |   |   | (483,525 | ) |

|   | (1) | The                detail of foreign exchange gain (loss) is as                follows: |
|--------|-----|-----------------------------------------------------------------------------------------|

|                                                       |   |         |   | **At                December 31,** |   |
|------------------------------------------------------------|--------|--------------|--------|------------------------------------|--------|
|                                                       |   | **Currency** |   | **2005**                           |   | **2006** |   | **2007** |   |
|                                                       |   |         |   | ThCh$                              |   | ThCh$ |   | ThCh$ |   |
| **Assets**                                                 |   |         |   |                               |   |   |   |   |   |   |   |   |   |
| Marketable                securities                       |   |         | US$    |                               |   | (132,469 | ) |   | 58,252 |   |   | (101,847 | ) |
| Sundry                debtors                              |   |         | US$    |                               |   | (2,349,739 | ) |   | 1,019,488 |   |   | (1,694,226 | ) |
|                                                       |   |         |   |                               |   |   |   |   |   |   |   |   |   |
| Total                gain (loss)                           |   |         |   |                               |   | (2,482,208 | ) |   | 1,077,740 |   |   | (1,796,073 | ) |
|                                                       |   |         |   |                               |   |   |   |   |   |   |   |   |   |
| **Liabilities**                                            |   |         |   |                               |   |   |   |   |   |   |   |   |   |
| Debt                due to banks and financial institution |   |         | US$    |                               |   | 1,437,450 |   |   | (1,193,351 | ) |   | 2,617,723 |   |
| Current                portion of long-term liabilities    |   |         | US$    |                               |   | 42,820 |   |   | (67,304 | ) |   | (155,115 | ) |
| Accruals                                                   |   |         | US$    |                               |   | (321,581 | ) |   | 565,395 |   |   | 280,222 |   |
|                                                       |   |         |   |                               |   |   |   |   |   |   |   |   |   |
| Total                gain (loss)                           |   |         |   |                               |   | 1,158,689 |   |   | (695,260 | ) |   | 2,742,830 |   |
|                                                       |   |         |   |                               |   |   |   |   |   |   |   |   |   |
| Foreign                exchange gain (loss)                |   |         |   |                               |   | (1,323,519 | ) |   | 382,480 |   |   | 946,757 |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **17.** | **DIRECTORS’                REMUNERATION** |
|---------|--------------------------------------------------|

|                           |   | **For the year ended December 31,** |    |
|--------------------------------|--------|--------------------------------------------------------------|---------|
|                           |   | **2005**                                                     |    | **2006** |   | **2007** |   |
|                           |   | ThCh$                                                        |    | ThCh$ |   | ThCh$ |   |
|                           |   |                                                         |    |   |   |   |   |
| Attendance                fees |   |                                                         | 652,400 |   |   | 582.538 |   |   | 469,440 |   |

|                                 |   | **For                the year ended December 31,** |    |
|--------------------------------------|--------|----------------------------------------------------|---------|
|                                 |   | **2005**                                           |    | **2006** |   | **2007** |   |
|                                 |   | ThCh$                                              |    | ThCh$ |   | ThCh$ |   |
|                                 |   |                                               |    |   |   |   |   |
| Per –                diem |   |                                               | 188,619 |   |   | 186,339 |   |   | 205,655 |   |

| **18.** | **NON-OPERATING                INCOME AND EXPENSES** |
|---------|------------------------------------------------------|

|                                             |   | **For                the year ended December 31,** |      |
|--------------------------------------------------|--------|----------------------------------------------------|-----------|
|                                             |   | **2005**                                           |      | **2006** |   | **2007** |   |
|                                             |   | ThCh$                                              |      | ThCh$ |   | ThCh$ |   |
|                                             |   |                                               |      |   |   |   |   |
| Interest                income                   |   |                                               | 3,094,053 |   |   | 2,891,828 |   |   | 1,137,947 |   |
| Amortization                of negative goodwill |   |                                               | 402,854   |   |   | - |   |   | - |   |
| Equity                in income of investee      |   |                                               | 829,555   |   |   | 1,636,230 |   |   | 1,083,652 |   |
| Gain                from sale of fixed assets    |   |                                               | 41,569    |   |   | 126,340 |   |   | 226,185 |   |
| Minority                interest                 |   |                                               | 1,830     |   |   | 33,205 |   |   | - |   |
| Other                                            |   |                                               | 131,588   |   |   | 704,857 |   |   | 271,385 |   |
| Total                                            |   |                                               | 4,501,449 |   |   | 5,392,460 |   |   | 2,719,169 |   |

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

|                                                                    | **For                the year ended December 31,** |
|-------------------------------------------------------------------------|----------------------------------------------------|
|                                                                    | **2005**                                           |   | **2006** |   | **2007** |
|                                                                    | ThCh$                                              |   | ThCh$ |   | ThCh$ |
|                                                                    |                                               |   |   |   |   |
| Interest                expense                                         | 22,031,537                                         |   | 25,508,082 |   | 29,101,050 |
| Amortization                of goodwill                                 | 2,352,931                                          |   | 2,635,817 |   | 2,711,989 |
| Equity                in losses of investee                             | 56,476                                             |   | 2,832 |   | 34,450 |
| Donations                                                               | 743,284                                            |   | 628,722 |   | 490,026 |
| Deferred                charges written off                             | -                                                  |   | - |   | 1,312,118 |
| Restructuring                expenses (1)                               | -                                                  |   | - |   | 1,967,542 |
| Provision                for Farmalider S.A. written off                | -                                                  |   | - |   | 800,000 |
| Write-off                of expenses for the merger with Falabella S.A. | -                                                  |   | - |   | 205,835 |
| Minority                interest                                        | -                                                  |   | - |   | 1,229 |
| Loss                from sale of fixed assets                           | 87,914                                             |   | - |   | 152,869 |
| Other                                                                   | 298,415                                            |   | 572,280 |   | 942,760 |
|                                                                    |                                               |   |   |   |   |
| Total                                                                   | 25,570,557                                         |   | 29,347,733 |   | 37,719,868 |

|   | (1) | Relates                to an extraordinary charge because of a one time voluntary retirement                plan                offered by the Company to individuals with more than 20 years of                service                for the Company. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

| **19.** | **TRANSACTIONS                    WITH RELATED                    PARTIES** |
|---------|-----------------------------------------------------------------------------|

|  | **a.** | **Related                companies**                -                The Company has transactions with its equity - method investees and                other                related parties. Balances due from and due to these companies are                shown on                the consolidated balance sheets. The detail of accounts receivable                and                payable is the following: |
|--|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | **Receivable**                |      |
|-------------------------------------------------------|--------|-------------------------------|-----------|
|                                                  |   | **At December 31,** |      |
|                                                  |   | **2006**                      |      | **2007** |   |
|                                                  |   | ThCh$                         |      | ThCh$ |   |
| **Short-term:**                                       |   |                          |      |   |   |   |   |
| Aquapuro                S.A. (1)                      |   |                          | 224,302   |   |   | 572,185 |   |
| Inversiones                Solpacific S.A. (2)        |   |                          | 114,945   |   |   | 107,025 |   |
| Inmobiliaria                Mall Calama S.A. (3)      |   |                          | 1,339,096 |   |   | 1,335,427 |   |
| Aquanatura                S.A. (1)                    |   |                          | -         |   |   | 280,774 |   |
| Alvi                Supermercados Mayoristas S.A. (4) |   |                          | -         |   |   | 663,251 |   |
|                                                  |   |                          |      |   |   |   |   |
| Totals                                                |   |                          | 1,678,343 |   |   | 2,958,662 |   |

|  | (1) | The                balance receivable from Aquapuro S.A. and Aquanatura S.A. is expressed                in                UF and accrues a monthly interest rate of                0.33%. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (2) | The                balance receivable from Inversiones Solpacific S.A. is expressed                in                Chilean pesos and accrues no                interest. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (3) | The                balance receivable from Inmobiliaria Mall Calama S.A. is expressed                in UF,                accrues no interest. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (4) | The                balance receivable from Alvi Supermercados Mayoristas S.A. is expressed                in                UF and accrues annual interest of                7.67%. |
|--|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.      Transactions with related companies **

|                                                                           |   | **Relationship to**                             |                                       | **Description of****services or goods** |   | **Cash value of the transaction**        |   | **(Charged) to income**                            |      |
|--------------------------------------------------------------------------------|--------|------------------------------------------------------|--------------------------------------------|--------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------------------------------------------------------------|-----------|
| **Company**                                                                    |   | **Company**                                          |                                       | **received/disbursed**                                 |   | **for the year ended December 31,** |   | **for the year ended December 31,** |      |
|                                                                           |   |                                                 |                                       |                                                   |   | **2005**                                                     |   | **2006**                                                     |      | **2007** |   | **2005** |   | **2006** |   | **2007** |   |
|                                                                           |   |                                                 |                                       |                                                   |   | ThCh$                                                        |   | ThCh$                                                        |      | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   |
|                                                                           |   |                                                 |                                       |                                                   |   |                                                         |   |                                                         |      |   |   |   |   |   |   |   |   |
| Servicios                Profesionales y de Comercialización S.A.         |   |                                                 | Parent                company              |                                                   |   | Interest                on checking account                  |   |                                                         | 364,672   |   |   | 202,980 |   |   | 78,022 |   |   | (364,672 | ) |   | (202,980 | ) |   | (78,022 | ) |
|                                                                           |   |                                                 |                                       |                                                   |   | Readjustment                on current account          |   |                                                         | 302,923   |   |   | 114,020 |   |   | 24,074 |   |   | (302,923 | ) |   | (114,020 | ) |   | (24,074 | ) |
| Aquapuro                S.A.                                                   |   |                                                 | Member                of controlling group |                                                   |   | Purchase                of merchandise                       |   |                                                         | 6,306,074 |   |   | 6,743,101 |   |   | 6,531,258 |   |   | - |   |   | - |   |   | - |   |
|                                                                           |   | Readjustment                on current account  |                                       |                                                   | -      |                                                         |   | -                                                            |      |   | 16,766 |   |   | - |   |   | - |   |   | 16,766 |   |
|                                                                           |   |                                                 |                                       |                                                   |   | Interest                on checking account                  |   |                                                         | -         |   |   | - |   |   | 6,457 |   |   | - |   |   | - |   |   | 6,457 |   |
| Aquanatura                S.A.                                                 |   |                                                 | Member                of controlling group |                                                   |   | Readjustment                on current account               |   |                                                         | -         |   |   | - |   |   | 12,956 |   |   | - |   |   | - |   |   | 12,956 |   |
| Alimentos                y Servicios Ltda.                                     |   |                                                 | Member                of controlling group |                                                   |   | Purchase                of merchandise                       |   |                                                         | 4,166,901 |   |   | 4,107,816 |   |   | 5,484,757 |   |   | - |   |   | - |   |   | - |   |
| Larrain                Vial S.A. Corredora de Bolsa                            |   |                                                 | Member                of controlling group |                                                   |   | Professional                services                         |   |                                                         | 74,440    |   |   | 94,667 |   |   | 100,155 |   |   | (74,440 | ) |   | (94,667 | ) |   | (100,155 | ) |
| Kimberly                Clarke Chile S.A.                                      |   |                                                 | Common                management           |                                                   |   | Purchase                of merchandise                       |   |                                                         | 9,008,493 |   |   | 8,576,788 |   |   | 8,369,504 |   |   | - |   |   | - |   |   | - |   |
| BST                Consulting Group S.A.                                       |   |                                                 | Common                management           |                                                   |   | Services                                                     |   |                                                         | 2,800,108 |   |   | 4,015,951 |   |   | - |   |   | (2,800,108 | ) |   | (4,015,951 | ) |   | - |   |
| BST                Bancheque                                                   |   |                                                 | Common                management           |                                                   |   | Control                of checks                             |   |                                                         | 506,141   |   |   | 440,537 |   |   | 185,364 |   |   | (425,328 | ) |   | (370,199 | ) |   | 155,768 |   |
| BST                Procesadora Automatic                                       |   |                                                 | Common                management           |                                                   |   | Search                and recruitment                        |   |                                                         | 114,864   |   |   | 3,467 |   |   | - |   |   | (114,864 | ) |   | (3,467 | ) |   | - |   |
| BST                Seguros Ltda.                                               |   |                                                 | Common                management           |                                                   |   | Insurance                brokers                             |   |                                                         | 6,399     |   |   | - |   |   | - |   |   | (5,376 | ) |   | - |   |   | - |   |
| Promociones                Financieras Ltda.                                   |   |                                                 | Common                management           |                                                   |   | Commissions                paid                              |   |                                                         | 2,036,303 |   |   | 3,689,185 |   |   | 3,985,414 |   |   | (1,711,179 | ) |   | (3,100,155 | ) |   | (3,349,087 | ) |
| Investigación                y Medición de Calidad de Servicio Ltda. |   |                                                 | Common                management           |                                                   |   | Consultant’s                offices in marketing       |   |                                                         | 94,413    |   |   | 90,095 |   |   | 68,599 |   |   | (94,413 | ) |   | (90,095 | ) |   | 57,646 |   |
| Soc.                Agrícola Panquehue Ltda.                              |   |                                                 | Member                of controlling group |                                                   |   | Purchase                of merchandise                       |   |                                                         | 1,618,825 |   |   | 1,019,945 |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Agrícola                y Forestal Arcoiris S.A.                          |   |                                                 | Member                of controlling group |                                                   |   | Purchase                of merchandise                       |   |                                                         | 1,153,194 |   |   | 1,185,959 |   |   | 1,750,899 |   |   | - |   |   | - |   |   | - |   |
| Empresas                El Mercurio S.A.P.                                     |   |                                                 | Common                directors            |                                                   |   | Publicity                                                    |   |                                                         | 898,672   |   |   | 1,100,239 |   |   | 1,569,449 |   |   | (755,185 | ) |   | (1,100,239 | ) |   | (1,318,864 | ) |
| El                Mercurio Valparaíso                                     |   |                                                 | Common                directors            |                                                   |   | Publicity                                                    |   |                                                         | 96,926    |   |   | 80,408 |   |   | - |   |   | (81,451 | ) |   | (80,408 | ) |   | - |   |
| BBDO                Publicidad S.A.                                            |   |                                                 | Common                directors            |                                                   |   | Publicity                                                    |   |                                                         | 247,931   |   |   | 681,589 |   |   | - |   |   | (247,931 | ) |   | (681,589 | ) |   | - |   |
| Entel                PCS Telecomunicaciones S.A.                               |   |                                                 | Common                directors            |                                                   |   | Communications                                               |   |                                                         | 429,090   |   |   | 114 |   |   | - |   |   | (360,579 | ) |   | - |   |   | - |   |
| Entel                Telefonía Local S.A.                                 |   |                                                 | Common                directors            |                                                   |   | Communications                                               |   |                                                         | 12,033    |   |   | - |   |   | - |   |   | (10,113 | ) |   | - |   |   | - |   |
| Entel                Call Center S.A.                                          |   |                                                 | Common                directors            |                                                   |   | Communications                                               |   |                                                         | 417,740   |   |   | 11,236 |   |   | 798,906 |   |   | (351,042 | ) |   | - |   |   | 671,350 |   |
| Entel                S.A.                                                      |   |                                                 | Common                directors            |                                                   |   | Communications                                               |   |                                                         | 21,927    |   |   | 12,990 |   |   | - |   |   | (21,927 | ) |   | (12,990 | ) |   | - |   |
| Adimark                Inversiones de Mercado                                  |   |                                                 | Common                directors            |                                                   |   | Donations                                                    |   |                                                         | -         |   |   | - |   |   | 36,553 |   |   | - |   |   | - |   |   | 30,717 |   |
| Inmobiliaria                Mall Calama S.A.                                   |   |                                                 | Member                of controlling group |                                                   |   | Lease                of real estate                          |   |                                                         | 50,731    |   |   | 26,876 |   |   | 88,596 |   |   | (50,731 | ) |   | (26,876 | ) |   | 88,596 |   |
| Supermercados                Alvi Ltda.                                        |   |                                                 | Member                of controlling group |                                                   |   | Readjustment                on current account               |   |                                                         | -         |   |   | - |   |   | 15,678 |   |   | - |   |   | - |   |   | 15,678 |   |
| Sap                Agencia Chile                                               |   |                                                 | Common                directors            |                                                   |   | Advisories                                                   |   |                                                         | -         |   |   | - |   |   | 122,071 |   |   | - |   |   | - |   |   | (122,071 | ) |
| Deutsche                Inversiones Ltda.                                      |   |                                                 | Common                directors            |                                                   |   | Advisories                                                   |   |                                                         | -         |   |   | - |   |   | 180,057 |   |   | - |   |   | - |   |   | (180,057 | ) |
| Banco                de Chile                                                  |   |                                                 | Common                directors            |                                                   |   | Financial                lease                               |   |                                                         | -         |   |   | - |   |   | 236,722 |   |   | - |   |   | - |   |   | (236,722 | ) |
| Agricola                Alma Ltda.                                             |   |                                                 | Member                of controlling group |                                                   |   | Purchase                of inventory                         |   |                                                         | -         |   |   | 1,006,497 |   |   | 2,198,117 |   |   | - |   |   | - |   |   | - |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|   | **20.** | **SEVERANCE                INDEMNITIES** |
|--------|---------|------------------------------------------|

|                                                      |   | **At                December 31,** |       |
|-----------------------------------------------------------|--------|------------------------------------|------------|
|                                                      |   | **2006**                           |       | **2007** |   |
|                                                      |   | ThCh$                              |       | ThCh$ |   |
|                                                      |   |                               |       |   |   |
| Opening                balance as of January 1,           |   |                               | 6,607,509  |   |   | 8,875,496 |   |
| Increase                in accruals                       |   |                               | 9,905,522  |   |   | 8,981,227 |   |
| Payments                during the period                 |   |                               | (7,637,535 | ) |   | (10,995,113 | ) |
| Reverse                Provision of severance indemnities |   |                               | -          |   |   | (4,482,878 | ) |
| Total                Provision                            |   |                               | 8,875,496  |   |   | 2,378,732 |   |

|   | **21.** | **FINANCIAL                DERIVATIVES** |
|--------|---------|------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                      |   |                               |        |           |   | **Description                  of contracts** |   | **Value                  of** |                                     | **Accounts                  affected**           |   |
|-------------------------------------------|--------|------------------------------------|-------------|----------------|--------|-----------------------------------------------|--------|-------------------------------|------------------------------------------|--------------------------------------------------|--------|
| **Type                  of**              |   | **Contact                  value** |        | **Expiration** |   | **Specific**                                  |   | **Position**                  |                                     | **Item                  or transaction covered** |   | **item** |   | **Asset/Liability** |   | **Effect                  in income Statement** |   |
| **derivative**                            |   | **ThCh$**                          |        | **date**       |   | **item**                                      |   | **purchase/sell**             |                                     | **Name**                                         |   | **ThCh$** |   | **covered** |   | **Name** |   | **ThCh$** |   | **Realized** |   | **Not                  realized** |   |
|                                      |   |                               |        |           |   |                                          |   |                          |                                     |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cross Currency                  swap |   |                               | 119,788,476 |           |   | 1-2014                                        |   |                          | Interest                  rate/ currency |                                             |   | P |   |   | Syndicated                  Loan |   |   | 119,788,476 |   |   | 122,090,544 |   |   | Other                  current liabilities |   |   | 7,039,712 |   |   | - |   |   | (7,039,712 | )   |

|   | **22.** | **CONTINGENCIES                AND COMMITMENTS** |
|--------|---------|--------------------------------------------------|

**Parent      Company**

|   | **a.** | **Direct                commitments:** |
|--------|--------|----------------------------------------|

|   | **b.** | **Indirect                commitments:** |
|--------|--------|------------------------------------------|

|   | **c.** | **Management                restrictions and financial                covenants:** |
|--------|--------|------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|   | **d.** | **Legal                actions:** |
|--------|--------|-----------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|  | **e.** | **Other** |
|--|--------|-----------|

**Direct      guarantees:**

|                                    |   | **Indebted** |                                          | **Type of** |   | **Assets Committed** |   | **Outstanding payment balance in Ch$** |     |
|-----------------------------------------|--------|--------------|-----------------------------------------------|------------------|--------|---------------------------|--------|------------------------------------------------------------|----------|
| **Guaranty Creditor**              |   | **Entity**   |                                          | **Relation**     |   | **Guaranty**              |   | **Type**                                                   |     | **Book Value Ch$** |   | **31/12/2007** |   | **31/12/2006** |   |
|                                    |   |         |                                          |             |   |                      |   |                                                       |     |   |   |   |   |   |   |
| Banco                Santander Santiago |   |         | Distribución                  y Servicio |             |   | Parent                    |   |                                                       | Mortgage |   |   | Inmob.                  Puente Nuevo |   |   | 25,560,108 |   |   | 34,359,360 |   |   | 36,822,540 |   |

|   | **23.** | **SUPPLEMENTARY                CASH FLOW INFORMATION** |
|--------|---------|--------------------------------------------------------|

|                                                                                                                                   |   | **For                the year ended December 31,** |       |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                                                                                                   |   | **2005**                                           |       | **2006** |   | **2007** |   |
|                                                                                                                                   |   | ThCh$                                              |       | ThCh$ |   | ThCh$ |   |
|                                                                                                                                   |   |                                               |       |   |   |   |   |
| Interest                collected                                                                                                      |   |                                               | 2,675,390  |   |   | 2,577,805 |   |   | 921,278 |   |
|                                                                                                                                   |   |                                               |       |   |   |   |   |   |   |   |
| Interest                Paid                                                                                                           |   |                                               | 18,577,103 |   |   | 22,878,201 |   |   | 22,399,694 |   |
|                                                                                                                                   |   |                                               |       |   |   |   |   |   |   |   |
| Income                taxes paid                                                                                                       |   |                                               | 250,603    |   |   | 1,691,116 |   |   | 2,308,157 |   |
|                                                                                                                                   |   |                                               |       |   |   |   |   |   |   |   |
| Property,                plant and equipment acquired by assuming directly related debt (net                of                payment) |   |                                               | 1,031,855  |   |   | 8,377,734 |   |   | 5,895,731 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                                                          |   | **2005** |      | **2006** |   | **2007**  |   |
|-------------------------------------------------------------------------------|--------|----------|-----------|----------|--------|-----------|--------|
| **Description**                                                               |   | ThCh$    |      | ThCh$    |   | ThCh$     |   |
|                                                                          |   |     |      |     |   |      |   |
| Amortization                of debt issuance costs                            |   |     | 401,591   |     |   | 366,454   |   |   | 285.673 |   |
| Amortization                of premium/discount associated with bond issuance |   |     | 447,056   |     |   | 496,752   |   |   | 245,834 |   |
| Miscellaneous                adjustments to other investments                 |   |     | 27,935    |     |   | 25,486    |   |   | 40,527 |   |
| Stock                option                                                   |   |     |      |     |   |      |   |   | 1,117,931 |   |
| Amortization                leases Advance                                    |   |     | -         |     |   | -         |   |   | 2,451,122 |   |
| Others                                                                        |   |     | 301,238   |     |   | 433,014   |   |   | - |   |
|                                                                          |   |     |      |     |   |      |   |   |   |   |
| Total                                                                         |   |     | 1,177,820 |     |   | 1,321,706 |   |   | 4,141,087 |   |

|                                                   |   | **2005** |       | **2006** |   | **2007**    |   |
|--------------------------------------------------------|--------|----------|------------|----------|--------|-------------|--------|
| **Description**                                        |   | ThCh$    |       | ThCh$    |   | ThCh$       |   |
|                                                   |   |     |       |     |   |        |   |
| Lease                prepayment                        |   |     | (912,608   | )        |   | (12,381,916 | )      |   | - |   |
| Others                costs - investment in Astro S.A. |   |     | -          |     |   | (108,630    | )      |   | - |   |
| Deferred                charges, Presto cards          |   |     | -          |     |   | (5,411,427  | )      |   | (6,381,175 | ) |
| Other                                                  |   |     | (180,248   | )        |   | (862,479    | )      |   | (123,200 | ) |
|                                                   |   |     |       |     |   |        |   |   |   |   |
| Total                                                  |   |     | (1,092,856 | )        |   | (18,764,452 | )      |   | (6,504,375 | ) |

|                                 |   | **2007** |       | **2006** |   |
|--------------------------------------|--------|----------|------------|----------|--------|
| **Description**                      |   | ThCh$    |       | ThCh$    |   |
|                                 |   |     |       |     |   |
| Cash                and banks        |   |     | 43,363,001 |     |   | 33,222,710 |   |
| Mutual                fund units     |   |     | 60,000     |     |   | 1,321,653 |   |
| Repurchase                agreements |   |     | -          |     |   | 12,316,060 |   |
|                                 |   |     |       |     |   |   |   |
| Total                                |   |     | 43,423,001 |     |   | 46,860,423 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|  | **24.** | **SUBSEQUENT                EVENTS** |
|--|---------|--------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

| **25.** | **DIFFERENCES                BETWEEN CHILEAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING                PRINCIPLES** |
|---------|--------------------------------------------------------------------------------------------------------------------------|

**a.1.      Deferred income taxes**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|  | i. | A                deferred tax liability or asset is recognized for the estimated future                tax                effects attributable to temporary differences and tax loss                carryforwards. |
|--|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | ii. | The                measurement of deferred tax liabilities and assets is based on the                provisions of the enacted tax law. The effects of future changes                in tax                laws or rates are not anticipated. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | iii. | The                measurement of deferred tax assets are reduced by a valuation allowance,                if, based on the weight of available evidence, it is more likely                than not                that some portion of the deferred tax assets will not be                realized. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**a.2.      Mandatory dividends**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**a.3.      Marketable debt and equity securities**

|                                                                                                           |   | **Years ended December 31,** |          |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|---------------|
|                                                                                                           |   | **2005**                                    |          | **2006** |   | **2007** |   |
|                                                                                                           |   | **ThCh$**                                   |          | **ThCh$** |   | **ThCh$** |   |
| Proceeds                from sales of "available-for sale" securities generating realized                gains |   |                                        | 4,039,288,840 |   |   | 4,218,287,263 |   |   | - |   |
| Realized                gains                                                                                  |   |                                        | 2,597,482     |   |   | 3,134,235 |   |   | - |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                                             |   |     |       | **Gross**      |   |      |   |
|------------------------------------------------------------------|--------|----------|------------|----------------|--------|-----------|--------|
|                                                             |   |     |       | **unrealized** |   | **Fair**  |   |
| **Available-for-sale                investments**                |   | **Cost** |       | **gains**      |   | **value** |   |
|                                                             |   | ThCh$    |       | ThCh$          |   | ThCh$     |   |
|                                                             |   |     |       |           |   |      |   |
| Securities                available for sale at December 31,2005 |   |     | 43,825,533 |           |   | 559,148   |   |   | 44,384,681 |   |
| Securities                available for sale at December 31,2006 |   |     | 2,964,135  |           |   | -         |   |   | 2,964,135 |   |
| Securities                available for sale at December 31,2007 |   |     | 1,567,214  |           |   | -         |   |   | 1,567,214 |   |

**a.4.      Property, plant and equipment**

**a.5.      Purchase accounting and impairment of goodwill**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|   | (a) | Under                Chilean GAAP, at the acquisition date of the shares of Saitec S.A.,                El                Rodeo S.A. and Almac Internacional S.A. in 1995, the Company recorded                negative goodwill due to the excess of the carrying value of the                investment over the stated increase in the Company’s capital. Under U.S.                GAAP, such negative goodwill has been reversed against shareholders’                equity and the subsequent amortization recorded under Chilean GAAP                has                been eliminated. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Under                Chilean GAAP, the acquisition of Maquinsa, an unrelated company,                in 1997,                was recorded at cost with the assets acquired and liabilities assumed                stated at their book basis, with any excess up to the purchase price                being                recorded as goodwill. Under U.S. GAAP, the assets acquired and liabilities                assumed would be recorded at their respective fair value with any                excess                up to the purchase price being recorded as goodwill. In 1999, the                Company                settled an amount of ThCh$1,107,833 (historic) with the former owner                of                Maquinsa S.A. in arbitration. Under Chilean GAAP, this amount was                recorded                as goodwill. Under U.S. GAAP, this amount would have been expensed. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|   | (c) | On                January 7, 2004, a purchase agreement entered into on December 19,                2003                was consummated whereby Carrefour Nederland B.V. sold to the Company                1,701,403 shares of Carrefour Chile S.A., corresponding to 99.9999%                of the                shares of the latter, for a price of ThCh$74,732,116 (historic).                At that                same date, and based on the same agreement, Intercross Roads B.V.                (a                company related to Carrefour Nederland B.V.) sold to Administradora                de                Concesiones Comerciales de Hipermercados S.A. (a subsidiary of the                Company) one share of Carrefour Chile S.A., corresponding to 0.0001%                of                the shares of the latter, for a price of ThCh$45 (historic). With                these                purchases, the Company acquired the entirety of the issued shares                of                Carrefour Chile S.A. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | On                October 13, 2005, Distribución y Servicio D&S S.A. purchased 35% of                the shares issued by Alvi Supermercados Mayorista S.A., through a                capital                stock purchase agreement at the purchase price of ThCh$11,606,564                (historic). Under Chilean GAAP at December 31, 2005 the excess of                the                purchase price paid for the shares acquired from ALVI over the net                book                value of the assets acquired and liabilities assumed was designated                as                goodwill and amortized since the acquisition date. Under US GAAP                said                value would have been modified based on the fair value of the assets                acquired and liabilities assumed, which determination process was                concluded in May 2006. Due to the insignificant amount of the                modification, no effect has been included in the 2005 reconciliations                to                net income or shareholders equity other than to reverse the amortization                of goodwill recorded under Chile                GAAP. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|   | (e) | In                1996 the Company purchased a 100% interest in Supermercados Ekono                S.A.                (Argentina). The Company previously held a 49.99% non-controlling                interest, accounted for under the equity method for the period from                December 27, 1991 to December 31, 1995, when it sold this interest                to the                Company's shareholders and subsequently repurchased the 100% interest                from                such shareholders. Under Chilean GAAP, these transactions were accounted                for separately. Under U.S. GAAP, the sale and repurchase from shareholders                were treated as capital transactions. In December 1999, the Company                sold                its 100.0% interest in Supermercados Ekono S.A. (Argentina). The                effects                of such differences and their reversals upon the December, 1999 sale                are                recorded in the reconciliation. In 2005, management determined that,                unintentionally, certain basis differences originating in both                shareholders’ equity and net income related to the sale in 1999 had not                been appropriately reversed in the reconciliation to U.S. GAAP                shareholders’ and net income in 1999, as a result of which shareholders’                equity under U.S. GAAP for comparative periods was understated by                ThCh$3,049,098. Since this misstatement was deemed to have an immaterial                impact on the presentation of the financial statements for prior                periods,                corrections have been recorded in 2005 reconciliations to U.S. GAAP,                resulting in an increase of shareholders’ equity by ThCh$3,049,098 and an                increase in net income for 2005 by ThCh$1,572,831, under U.S.                GAAP. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**a.6.      Severance indemnities**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**a.7.      Derivative instruments -**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

|                                                                          |   |          |        |                   |   | **Total of** |   |
|-------------------------------------------------------------------------------|--------|---------------|-------------|------------------------|--------|-------------------|--------|
| **Forward exchange contract**                                       |   |          |        | **Exchange rate** |   | **payment**       |   |
| ("Assignment Agreement" signed on December 19,2003") |   | €  |        | Peso/Euro              |   | ThCh$ (1)    |   |
|                                                                          |   |          |        |                   |   |              |   |
| Euro                adopted on the agreement                                  |   |          | 100,000,000 |                   |   | 745.80            |   |   | 84,725,113 |   |
| Euro                day of payment on January 7, 2004                         |   |          | 100,000,000 |                   |   | 721.35            |   |   | 81,947,849 |   |
| The                Company realized a loss of                                 |   |          |        |                   |   |              |   |   | 2,777,264 |   |

**a.8.      Effects of minority interest on the U.S. GAAP adjustments**

**a.9.      Effects of Capitalization of rebate associated with unsold inventory on the      U.S.      GAAP adjustments**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

**a.10.      Deficit during development stage on the U.S. GAAP      adjustments**

**a.11.        Leaseback transactions – **

**a.12.        Capitalization of restructured loan expenses – **

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**a.13.      Sale of portfolio – **

**a.14.      Stock option plan**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

|                                                     |   | **Stock option plan**          |       |
|----------------------------------------------------------|--------|------------------------------------------|------------|
|                                                     |   | **with maturity date at** |       |
|                                                     |   | **June 30,2008**                    |       | **August 4, 2009** |   |
| The                detail of stock options is as follows |   |                                     |       |   |   |
|                                                     |   |                                     |       |   |   |
| Number                of shares                          |   |                                     | 36,000,000 |   |   | 29,200,000 |   |
| Share                price at date of acquisition        |   |                                     | 146.56     |   |   | 249.13 |   |
| Exercise                option price                     |   |                                     | 146.56     |   |   | 249.13 |   |
| Annual                expected volatility                |   |                                     | 30         | % |   | 30 | % |
| Option                life (months)                      |   |                                     | 14         |   |   | 20 |   |
| Expected                dividend                         |   |                                     | 1.98       | % |   | 1.98 | % |
| Risk                free rate                            |   |                                     | 6.85       | % |   | 6.85 | % |

|                                              |   | **For the years ended December 31,** |       |
|---------------------------------------------------|--------|---------------------------------------------------------------|------------|
|                                              |   | **Authorized options**                                   |       | **Granted Options (thereof)** |   |
|                                              |   | **2006**                                                      |       | **2007** |   | **2006** |   | **2007** |   |
| Balance                      as of January 1      |   |                                                          | -          |   |   | 65,200,000 |   |   | - |   |   | - |   |
| Authorized                      during the period |   |                                                          | 65,200,000 |   |   | - |   |   | - |   |   | - |   |
| Granted                      during the period    |   |                                                          | -          |   |   | - |   |   | - |   |   | 53,550,000 |   |
| Cancelled                      during the period  |   |                                                          | -          |   |   | - |   |   | - |   |   | - |   |
| Excersied                      during the period  |   |                                                          | -          |   |   | - |   |   | - |   |   | - |   |
| Balance                      as of December 31    |   |                                                          | 65,200,000 |   |   | 65,200,000 |   |   | - |   |   | 53,550,000 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

| **Options**                                        |   | **Shares** |       | **Weighted-****Average****exercise                  price****Ch$** |   | **Weighted-****Average****remaining****contractual****term                  (in****months)** |   | **Aggregate****intrinsic****value****ThCh$** |   |
|----------------------------------------------------|--------|------------|------------|--------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|----------------------------------------------|--------|
|                                               |   |       |       |                                                               |   |                                                                                         |   |                                         |   |
| Outstanding                  at January 1, 2007    |   |       | -          |                                                               |   | -                                                                                            |   |                                         | -      |   |   | - |   |
| Granted                                            |   |       | 53,550,000 |                                                               |   | 180.18                                                                                       |   |                                         | -      |   |   | - |   |
| Excercised                                         |   |       | -          |                                                               |   | -                                                                                            |   |                                         | -      |   |   | - |   |
| Forfeited                  or expired              |   |       | -          |                                                               |   | -                                                                                            |   |                                         | -      |   |   | - |   |
| Outstanding                  at December 31, 2007  |   |       | 53,550,000 |                                                               |   | 180.18                                                                                       |   |                                         | 10.3   |   |   | 13,920,071 |   |
| Excercisable                  at December 31, 2007 |   |       | -          |                                                               |   | -                                                                                            |   |                                         | -      |   |   | - |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**a.15.      Translation of Financial Statements of investments Outside of      Chile**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**a.16.      Effect of Conforming to U.S. GAAP**

|                                                                                                                                                         |   |      |                   | **Year ended December 31,** |   |           |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|------------------------|--------------------------------------------|--------|----------------|--------|
|                                                                                                                                                         |   |      |                   | **2005**                                   |   | **2006**       |   | **2007** |   | **2007** |   |
|                                                                                                                                                         |   | Paragraph |                   | **ThCh$**                                  |   | **ThCh$**      |   | **ThCh$** |   | **ThUS$** |   |
|                                                                                                                                                         |   |      |                   |                                       |   |           |   |   |   |   |   |
| **Net                income, in accordance with Chilean GAAP**                                                                                               |   |      |                   |                                       |   | **46,457,836** |   |   | **42,586,878** |   |   | **52,680,923** |   |   | **106,020** |   |
|                                                                                                                                                         |   |      |                   |                                       |   |           |   |   |   |   |   |   |   |   |   |   |
| Reversal                of depreciation of the technical revaluation of property, revaluation                of                property, plant and equipment |   |      | a.4                    |                                       |   | 33,719         |   |   | 33,719 |   |   | 33,719 |   |   | 68 |   |
| Adjustment                for deferred taxes                                                                                                                 |   |      | a.1                    |                                       |   | 297,119        |   |   | (115,067 | ) |   | (88,066 | ) |   | (177 | ) |
| Amortization                of severance indemnity prior service cost                                                                                        |   |      | a.6                    |                                       |   | (26,567        | )      |   | (504,799 | ) |   | - |   |   |   |   |
| Reversal                of amortization of negative goodwill                                                                                                 |   |      | a.5                (a) |                                       |   | (365,011       | )      |   | - |   |   | - |   |   |   |   |
| Reversal                amortization goodwill Maquinsa S.A.                                                                                                  |   |      | a.5                (b) |                                       |   | 874,599        |   |   | 874,599 |   |   | 874,599 |   |   | 1,760 |   |
| Reversal                amortization goodwill Carrefour S.A.                                                                                                 |   |      | a.5                (c) |                                       |   | 1,331,265      |   |   | 1,331,266 |   |   | 1,397,020 |   |   | 2,812 |   |
| Reversal                amortization goodwill Alvi S.A.                                                                                                      |   |      | a.5                (d) |                                       |   | 96,100         |   |   | 384,405 |   |   | 384,404 |   |   | 774 |   |
| Reversal                amortization others goodwill                                                                                                         |   |      | a.5                    |                                       |   | 50,967         |   |   | 45,548 |   |   | 55,966 |   |   | 113 |   |
|                                                                                                                                                         |   |      |                   |                                       |   |           |   |   |   |   |   |   |   |   |   |   |
| Deferred                tax from adjustments to U.S.GAAP                                                                                                     |   |      | a.1                    |                                       |   | 794,781        |   |   | 421,882 |   |   | 334,131 |   |   | 671 |   |
| Capitalization                of volume rebate on unsold inventory                                                                                           |   |      | a.9                    |                                       |   | (232,847       | )      |   | (333,014 | ) |   | (322,314 | ) |   | (649 | ) |
| Minority                interest                                                                                                                             |   |      | a.8                    |                                       |   | (2,073         | )      |   | (1,147 | ) |   | 25,723 |   |   | 52 |   |
| Adjustment                to net loss on sale of Supermercados Ekono Argentina S.A.                                                                          |   |      | a.5                (e) |                                       |   | 1,572,831      |   |   | - |   |   | - |   |   | - |   |
| Reversal                of capitalized expenses on restructured loans                                                                                        |   |      | a.12                   |                                       |   | -              |   |   | (84,576 | ) |   | 16,327 |   |   | 34 |   |
| Reversal                of capitalized interests on sale of portfolio                                                                                        |   |      | a.13                   |                                       |   | -              |   |   | (746,198 | ) |   | 726,590 |   |   | 1,462 |   |
| Severance                indemnity adjustment                                                                                                                |   |      | a.6                    |                                       |   | -              |   |   | (330,206 | ) |   | 672,058 |   |   | 1,353 |   |
| Deficit                during development stage                                                                                                              |   |      | a.10                   |                                       |   | -              |   |   | (2,205,392 | ) |   | - |   |   |   |   |
| Unrealized                loss on financial derivative                                                                                                       |   |      | a.7                    |                                       |   | -              |   |   | (181,545 | ) |   | (3,091,859 | ) |   | (6,222 | ) |
|                                                                                                                                                         |   |      |                   |                                       |   |      |   |   |    |   |   |    |   |   |    |   |
| **Net                income in accordance with US GAAP**                                                                                                     |   |      |                   |                                       |   | **50,882,719** |   |   | **41,176,353** |   |   | **53,699,221** |   |   | **108,071** |   |
|                                                                                                                                                         |   |      |                   |                                       |   |           |   |   |   |   |   |   |   |   |   |   |
| **Other                comprehensive income**                                                                                                                |   |      |                   |                                       |   |           |   |   |   |   |   |   |   |   |   |   |
| Unrealized                gain on marketable securities (net of tax)                                                                                         |   |      | a.3                    |                                       |   | 223,804        |   |   | (458,799 | ) |   | - |   |   | - |   |
| Cumulative                translation adjustment                                                                                                             |   |      | a.15                   |                                       |   | -              |   |   | - |   |   | (78,819 | ) |   | (159 | ) |
|                                                                                                                                                         |   |      |                   |                                       |   |           |   |   |   |   |   |   |   |   |   |   |
| **Comprehensive                income in accordance with U.S.GAAP**                                                                                          |   |      |                   |                                       |   | **51,106,523** |   |   | **40,717,554** |   |   | **53,620,402** |   |   | **107,912** |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                                                                                                                 |   |      |                   | **Year ended December 31,** |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|------------------------|--------------------------------------------|--------|
|                                                                                                                                 |   |      |                   | **2006**                                   |   | **2007** |   | **2007** |   |
|                                                                                                                                 |   | Paragraph |                   | **ThCh$**                                  |   | **ThCh$** |   | **ThUS$** |   |
|                                                                                                                                 |   |      |                   |                                       |   |   |   |   |   |
| **Shareholders'                equity, in accordance with Chilean GAAP**                                                             |   |      |                   |                                       |   | **556,236,258** |   |   | **562,640,521** |   |   | **1,132,324** |   |
|                                                                                                                                 |   |      |                   |                                       |   |   |   |   |   |   |   |   |   |
| Reversal                of the technical revaluation of property, plant and equipment                                                |   |      | a.4                    |                                       |   | (2,181,463 | ) |   | (2,181,463 | ) |   | (4,390 | ) |
| Reversal                of the accumulated depreciation of the technical revaluation of property,                plant and equipment |   |      | a.4                    |                                       |   | 889,519 |   |   | 923,238 |   |   | 1,858 |   |
| Deferred                tax on adjustments to U.S. GAAP                                                                              |   |      | a.1                    |                                       |   | 645,507 |   |   | 1,078,491 |   |   | 2,170 |   |
| Adjustments                for deferred tax                                                                                          |   |      | a.1                    |                                       |   | (1,101,955 | ) |   | (1,190,021 | ) |   | (2,395 | ) |
| Severance                indemnity adjustment                                                                                        |   |      | a.6                    |                                       |   | (330,206 | ) |   | (239,638 | ) |   | (482 | ) |
| Reversal                of goodwill Maquinsa S.A.                                                                                    |   |      | a.5                (b) |                                       |   | (1,929,750 | ) |   | (1,929,750 | ) |   | (3,884 | ) |
| Reversal                of amortization of goodwill Maquinsa S.A.                                                                    |   |      | a.5                (b) |                                       |   | 8,299,042 |   |   | 9,173,641 |   |   | 18,462 |   |
| Reversal                of amortization of goodwill Carrefour S.A.                                                                   |   |      | a.5                (c) |                                       |   | 3,984,231 |   |   | 5,381,251 |   |   | 10,830 |   |
| Reversal                amortization goodwill Alvi S.A.                                                                              |   |      | a.5                (d) |                                       |   | 480,504 |   |   | 864,908 |   |   | 1,741 |   |
| Reversal                amortization others goodwill                                                                                 |   |      | a.5                    |                                       |   | 320,156 |   |   | 376,122 |   |   | 757 |   |
| Adjustment                for difference for arbitration settlement for Maquinsa                S.A.                                 |   |      | a.5                (b) |                                       |   | (1,214,799 | ) |   | (1,214,799 | ) |   | (2,445 | ) |
| Loss                on forward exchange contract associated with purchase of Carrefour                Chile                S.A.      |   |      | a.7                    |                                       |   | (2,777,264 | ) |   | (2,777,264 | ) |   | (5,589 | ) |
| Capitalization                of volume rebate on unsold inventory                                                                   |   |      | a.9                    |                                       |   | (1,162,621 | ) |   | (1,484,935 | ) |   | (2,989 | ) |
| Reversal                of capitalized expenses on restructured loans                                                                |   |      | a.12                   |                                       |   | (84,576 | ) |   | (68,249 | ) |   | (137 | ) |
| Recognition                of loss on sale of portfolio                                                                              |   |      | a.13                   |                                       |   | (746,198 | ) |   | (19,608 | ) |   | (39 | ) |
| Unrealized                loss on financial derivative                                                                               |   |      | a.7                    |                                       |   | (181,545 | ) |   | (3,273,404 | ) |   | (6,589 | ) |
| One                time cumulative adjustment under SAB 108 (net of tax)                                                             |   |      | a.6                    |                                       |   | (482,637 | ) |   | - |   |   | (971 | ) |
| Minority                interest                                                                                                     |   |      | a.8                    |                                       |   | (4,738 | ) |   | 20,985 |   |   | 42 |   |
|                                                                                                                                 |   |      |                   |                                       |   |    |   |   |    |   |   |    |   |
| **Shareholders'                equity, in accordance with U.S. GAAP**                                                                |   |      |                   |                                       |   | **558,657,465** |   |   | **566,080,026** |   |   | **1,139,246** |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                                                                  |   | **ThCh$** |            |
|---------------------------------------------------------------------------------------|--------|-----------|-----------------|
|                                                                                  |   |      |            |
| **Balance                at January 1, 2005**                                         |   |      | **514,417,084** |   |
| Dividends                declared                                                     |   |      | (28,889,514     | ) |
| Comprehensive                income for the year                                      |   |      | 51,106,523      |   |
| Adjustment                to net loss on sale of Supermercados Ekono Argenitna S.A. * |   |      | 1,487,232       |   |
|                                                                                  |   |      |       |   |
| **Balance                at December 31, 2005**                                       |   |      | **538,121,325** |   |
|                                                                                  |   |      |            |   |
| Dividends                declared                                                     |   |      | (14,011,429     | ) |
| Shares                in treasury (1)                                                 |   |      | (5,687,348      | ) |
| Comprehensive                income for the year                                      |   |      | 40,717,554      |   |
| One                time cumulative adjustment under SAB 108 (net of tax)**            |   |      | (482,637        | ) |
|                                                                                  |   |      |       |   |
| **Balance                at December 31,2006**                                        |   |      | **558,657,465** |   |
|                                                                                  |   |      |            |   |
| Dividends                declared                                                     |   |      | (39,798,062     | ) |
| Shares                in treasury (1)                                                 |   |      | (7,514,721      | ) |
| Stock                option (Note 25 a.14)                                            |   |      | 1,117,931       |   |
| Comprehensive                income for the year                                      |   |      | 53,620,402      |   |
| Other                                                                                 |   |      | (2,989          | ) |
|                                                                                  |   |      |       |   |
| **Balance                at December 31,2007**                                        |   |      | **566,080,026** |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.          **
**Additional          Disclosure Requirements**

**b.1.      Basic and diluted earnings per share:**

|                                                                    |   | **For                the year ended December 31,** |          |
|-------------------------------------------------------------------------|--------|----------------------------------------------------|---------------|
|                                                                    |   | **2005**                                           |          | **2006** |   | **2007** |   |
|                                                                    |   | Ch$                                                |          | Ch$ |   | Ch$ |   |
| Chilean                GAAP earnings per share                          |   |                                               | 7.13          |   |   | 6.55 |   |   | 8.14 |   |
| U.S.                GAAP earnings per share                             |   |                                               | 7.80          |   |   | 6.33 |   |   | 8.30 |   |
| Weighted                average number of common shares outstanding (a) |   |                                               | 6,520,000,000 |   |   | 6,503,505,839 |   |   | 6,472,945,075 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.2.      Reporting Comprehensive Income**

|                                                            |   | **December 31, 2005**      |    |
|-----------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                            |   | **Unrealized gain (loss)** |    |   |   | **Accumulated Other** |   |
|                                                            |   | **on marketable**               |    | **Effect of** |   | **comprehensive** |   |
|                                                            |   | **Securities**                       |    | **Tax** |   | **Income (loss)** |   |
|                                                            |   | ThCh$                                |    | ThCh$ |   | ThCh$ |   |
|                                                            |   |                                 |    |   |   |   |   |
| Beginning                  Balance                              |   |                                 | 289,506 |   |   | (54,511 | ) |   | 234,995 |   |
|                                                            |   |                                 |         |   |   |  |   |   |  |   |
| Credit                  (Charge) forthe                  period |   |                                 | 269,643 |   |   | (45,839 | ) |   | 223,804 |   |
|                                                            |   |                                 |         |   |   |  |   |   |  |   |
| Ending                  balance                                 |   |                                 | 559,149 |   |   | (100,350 | ) |   | 458,799 |   |

|                                                                |   | **December 31, 2006**             |     |
|---------------------------------------------------------------------|--------|--------------------------------------------------|----------|
|                                                                |   |  **Unrealized gain (loss)**  |     |   |   |  **Accumulated Other** |   |
|                                                                |   |  **on marketable**                     |     |  **Effect of** |   |  **comprehensive** |   |
|                                                                |   |  **Securities**                             |     |  **Tax** |   |  **Income (loss)** |   |
|                                                                |   |  ThCh$                                      |     |  ThCh$ |   |  ThCh$ |   |
|                                                                |   |                                        |     |    |   |    |   |
| Beginning                  Balance                                  |   |                                             | 559,149  |   |   | (100,350 | ) |   | 458,799 |   |
|                                                                |   |                                             |          |   |   |  |   |   |  |   |
| Credit                  (Charge) forthe                  period (1) |   |                                             | (559,149 | ) |   | 100,350 |   |   | (458,799 | ) |
|                                                                |   |                                             |     |   |   |   |   |   |   |   |
| Ending                  balance                                     |   |                                             | -        |   |   | - |   |   | - |   |

|                                              |   | **For the year ended December 31, 2007** |    |
|---------------------------------------------------|--------|------------------------------------------------------------------------|---------|
|                                              |   | **Chilean GAAP****cumulative****translation****adjustment**       |    | **Effect of US****GAAP****adjustments****on cumulative****translation****adjustment** |   | **Accumulated****Other****Comprehensive****Income (Loss)** |   |
| Beginning                balance             |   | -                                                                      |    | - |   | - |   |
| Credit                (charge) for the period (2) |   |                                                                   | (78,819 | ) |   | - |   |   | (78,819 | ) |
| Ending                balance                     |   |                                                                   | (78,819 | ) |   | - |   |   | (78,819 | ) |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.3.      Income Taxes**

|                                                                                                                                       |   | **2005** |        | **2006** |   | **2007**   |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-------------|----------|--------|------------|--------|
|                                                                                                                                       |   | ThCh$    |        | ThCh$    |   | ThCh$      |   |
|                                                                                                                                       |   |     |        |     |   |       |   |
| Income                tax provision under Chilean GAAP:                                                                                    |   |     |        |     |   |       |   |
| **Current                tax expense**                                                                                                     |   |     |        |     |   |       |   |
| For                the year                                                                                                                |   |     | (10,308,352 | )        |   | (9,682,512 | )      |   | (9,803,038 | ) |
| Prior                year adjustment                                                                                                       |   |     | 1,277,278   |     |   | (1,261,927 | )      |   | 188,243 |   |
| Benefit                from tax loss carryback                                                                                             |   |     | 798,647     |     |   | 2,494,530  |   |   | 1,859,409 |   |
| **Deferred                taxes**                                                                                                          |   |     |        |     |   |       |   |   |   |   |
| Change                in deferred taxes                                                                                                    |   |     | 3,234,593   |     |   | 3,157,563  |   |   | (1,083,498 | ) |
| Effect                  of amortization of complementary accounts of deferred tax assets                  and                  liabilities |   |     | (297,119    | )        |   | 115,067    |   |   | (88,066 | ) |
| Other                                                                                                                                      |   |     | -           |     |   | -          |   |   | (3,498 | ) |
| Total                income tax under Chilean GAAP                                                                                         |   |     | (5,294,953  | )        |   | (5,177,279 | )      |   | (8,930,448 | ) |
|                                                                                                                                       |   |     |             |     |   |            |   |   |  |   |
| U.S.GAAP                Adjustments:                                                                                                       |   |     |             |     |   |            |   |   |  |   |
| Deferred                tax effect of applying SFAS No. 109                                                                                |   |     | 297,119     |     |   | (115,067   | )      |   | (88,066 | ) |
| Deferred                tax effect of adjustments to U.S. GAAP                                                                             |   |     | 794,781     |     |   | 421,882    |   |   | 334,131 |   |
|                                                                                                                                       |   |     |             |     |   |            |   |   |  |   |
| Total                US GAAP adjustments                                                                                                   |   |     | 1,091,900   |     |   | 306,815    |   |   | 246,065 |   |
|                                                                                                                                       |   |     |        |     |   |       |   |   |   |   |
| Total                income tax under US GAAP                                                                                              |   |     | (4,203,053  | )        |   | (4,870,464 | )      |   | (8,684,383 | ) |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                                               |   | **2006**                       |      |
|--------------------------------------------------------------------|--------|--------------------------------|-----------|
|                                                               |   | **Short-term**                 |      | **Long-term** |   |
|                                                               |   | **SFAS No 109** |      |   |   |   |   | **SFAS No 109** |   |   |   |   |   |
|                                                               |   | **applied to**            |      | **SFAS No 109** |   | **Total ** |   | **applied to** |   | **SFAS No 109** |   | **Total ** |   |
|                                                               |   | **Chilean**                    |      | **applied to** |   | **deferred** |   | **Chilean** |   | **applied to** |   | **deferred** |   |
|                                                               |   | **GAAP**                       |      | **U.S. GAAP** |   | **taxes under** |   | **GAAP** |   | **U.S. GAAP** |   | **taxes under** |   |
|                                                               |   | **Balances**                   |      | **adjustments** |   | **SFAS Na 109** |   | **Balances** |   | **adjustments** |   | **SFAS Na 109** |   |
|                                                               |   | ThCh$                          |      | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   |
|                                                               |   |                           |      |   |   |   |   |   |   |   |   |   |   |
| **Deferred                income tax assets:**                     |   |                           |      |   |   |   |   |   |   |   |   |   |   |
| Severance                indemnity                                 |   |                           | 189,397   |   |   | - |   |   | 189,397 |   |   | 1,.319,437 |   |   | 154,988 |   |   | 1,474,425 |   |
| Allowance                for doubtful accounts                     |   |                           | 696,248   |   |   | - |   |   | 696,248 |   |   | - |   |   | - |   |   | - |   |
| Allowance                for uncollectible sundry debtors          |   |                           | 310,795   |   |   | - |   |   | 310,795 |   |   | - |   |   | - |   |   | - |   |
| Vacation                accrual                                    |   |                           | 966,151   |   |   | - |   |   | 966,151 |   |   | - |   |   | - |   |   | - |   |
| Unrealized                loss on financial derivate               |   |                           | -         |   |   | 30,863 |   |   | 30,863 |   |   | - |   |   | - |   |   | - |   |
| Allowance                on inventory                              |   |                           | 23,543    |   |   | - |   |   | 23,543 |   |   | - |   |   | - |   |   | - |   |
| Capitalization                of volume rebate on unsold inventory |   |                           |      |   |   | 197,646 |   |   | 197,646 |   |   | - |   |   | - |   |   | - |   |
| Interest                yield                                      |   |                           | 178,205   |   |   | - |   |   | 178,205 |   |   | - |   |   | - |   |   | - |   |
| Tax                loss carryforwards (1)                          |   |                           | 2,797,551 |   |   | - |   |   | 2,797,551 |   |   | 20,385,707 |   |   | - |   |   | 20,385,707 |   |
|                                                               |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                deferred income tax assets                    |   |                           | 5,161,890 |   |   | 228,509 |   |   | 5,390,399 |   |   | 21,705,144 |   |   | 154,988 |   |   | 21,860,132 |   |
|                                                               |   |                           |      |   |   |   |   |   |   |   |   |  |   |   |   |   |   |   |   |
| **Deferred                income tax liabilities:**                |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property,                plant and equipment                       |   |                           | -         |   |   | - |   |   | - |   |   | 5,276,760 |   |   | (219,630 | ) |   | 5,057,129 |   |
| Deferred                charges                                    |   |                           | 902,510   |   |   | - |   |   | 902,510 |   |   | 1,563,508 |   |   | (141,232 | ) |   | 1,422,277 |   |
| Leased                assets                                       |   |                           | -         |   |   | - |   |   | - |   |   | 1,228,990 |   |   | - |   |   | 1,228,990 |   |
| Capitalized                interest                                |   |                           | 12,533    |   |   | - |   |   | 12,533 |   |   | 703,430 |   |   | - |   |   | 703,430 |   |
|                                                               |   |                           |           |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Total                deferred income tax liabilities               |   |                           | 915,043   |   |   | - |   |   | 915,043 |   |   | 8,772,688 |   |   | (360,862 | ) |   | 8,411,826 |   |
|                                                               |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                deferred assets (liabilities)                   |   |                           | 4,246,847 |   |   | 228,509 |   |   | 4,475,356 |   |   | 12,932,456 |   |   | 515,850 |   |   | 13,448,306 |   |
|                                                               |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Complementary                Account                               |   |                           | -         |   |   | - |   |   | - |   |   | 1.101,955 |   |   | (1.101,955 | ) |   | - |   |
|                                                               |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                deferred assets (liabilities)                   |   |                           | 4,246,847 |   |   | 228,509 |   |   | 4,475.356 |   |   | 14,,034,411 |   |   | (586,105 | ) |   | 13,448,306 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                                               |   | **2007**                       |         |
|--------------------------------------------------------------------|--------|--------------------------------|--------------|
|                                                               |   | **Short-term**                 |         | **Long-term** |   |
|                                                               |   | **SFAS No 109** |         |   |   |   |   | **SFAS No 109** |   |   |   |   |   |
|                                                               |   | **applied to**            |         | **SFAS No 109** |   | **Total ** |   | **applied to** |   | **SFAS No 109** |   | **Total ** |   |
|                                                               |   | **Chilean**                    |         | **applied to** |   | **deferred** |   | **Chilean** |   | **applied to** |   | **deferred** |   |
|                                                               |   | **GAAP**                       |         | **U.S. GAAP** |   | **taxes under** |   | **GAAP** |   | **U.S. GAAP** |   | **taxes under** |   |
|                                                               |   | **Balances**                   |         | **adjustments** |   | **SFAS Na 109** |   | **Balances** |   | **Adjustments** |   | **SFAS Na 109** |   |
|                                                               |   | ThCh$                          |         | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   |
|                                                               |   |                           |         |   |   |   |   |   |   |   |   |   |   |
| **Deferred                income tax assets:**                     |   |                           |         |   |   |   |   |   |   |   |   |   |   |
| Severance                indemnity                                 |   |                           | 154,070      |   |   | - |   |   | 154,070 |   |   | 250,315 |   |   | 40,738 |   |   | 291,053 |   |
| Allowance                for doubtful accounts                     |   |                           | 1,169,454    |   |   | - |   |   | 1,169,454 |   |   | - |   |   | - |   |   | - |   |
| Allowance                for uncollectible sundry debtors          |   |                           | 649,144      |   |   | - |   |   | 649,144 |   |   | 8,576 |   |   |   |   |   | 8,576 |   |
| Vacation                accrual                                    |   |                           | 755,851      |   |   |   |   |   | 755,851 |   |   | - |   |   | - |   |   | - |   |
| Unrealized                loss on financial derivate               |   |                           | -            |   |   | - |   |   | - |   |   | 1,264,382 |   |   | 556,479 |   |   | 1,820,861 |   |
| Allowance                on inventory                              |   |                           | 416,420      |   |   | - |   |   | 416,420 |   |   | - |   |   | - |   |   | - |   |
| Capitalization                of volume rebate on unsold inventory |   |                           | -            |   |   | 252,439 |   |   | 252,439 |   |   | - |   |   | - |   |   | - |   |
| Interest                yield                                      |   |                           | 202,669      |   |   | - |   |   | 202,669 |   |   | - |   |   | - |   |   | - |   |
| Tax                loss carryforwards (1)                          |   |                           | 3,587,728    |   |   | - |   |   | 3,587,728 |   |   | 17,686,250 |   |   | - |   |   | 17,686,250 |   |
|                                                               |   |                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                deferred income tax assets**                |   |                           | 6,935,336    |   |   | 252,439 |   |   | 7,187,775 |   |   | 19,209,523 |   |   | 597,217 |   |   | 19,806,740 |   |
|                                                               |   |                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Deferred                income tax liabilities:**                |   |                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Property,                plant and equipment                       |   |                           | -            |   |   | - |   |   | - |   |   | 5,017,984 |   |   | (213,898 | ) |   | 4,804,086 |   |
| Deferred                charges                                    |   |                           | 942,887      |   |   | - |   |   | 942,887 |   |   | 1,996,827 |   |   | (14,936 | ) |   | 1,981,891 |   |
| Leased                assets                                       |   |                           | 730,352      |   |   | - |   |   | 730,352 |   |   | 943,645 |   |   | - |   |   | 943,645 |   |
| Capitalized                interest                                |   |                           | -            |   |   | - |   |   | - |   |   | 593,491 |   |   | - |   |   | 593,491 |   |
|                                                               |   |                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                deferred income tax liabilities**           |   |                           | 1,673,239    |   |   | - |   |   | 1,673,239 |   |   | 8,551,947 |   |   | (228,834 | ) |   | 8,323,113 |   |
|                                                               |   |                           |    |   |   |    |   |   |    |   |   |    |   |   |    |   |   |    |   |
| **Net                deferred assets (liabilities)**               |   |                           | 5,262,097    |   |   | 252,439 |   |   | 5,514,536 |   |   | 10,657,576 |   |   | 826,051 |   |   | 11.483.627 |   |
|                                                               |   |                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Complementary                Account                               |   |                           | -            |   |   | - |   |   | - |   |   | 1,190,021 |   |   | (1,190,021 | ) |   | - |   |
|                                                               |   |                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                deferred assets (liabilities)**               |   |                           | 5,262,097    |   |   | 252,439 |   |   | 5,514,536 |   |   | 11,847,597 |   |   | (363,970 | ) |   | 11.483.627 |   |

|   | (1) | In                Chile tax loss carryforwards may be utilized                indefinitely. |
|--------|-----|---------------------------------------------------------------------------------------------|

----

**DISTRIBUCION        Y SERVICIO D&S S.A.**

**NOTES        TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated        for general price-level changes)**

|                                                               |   | **2005**  |           | **2006**  |   | **2007**       |   |
|--------------------------------------------------------------------|--------|-----------|----------------|-----------|--------|----------------|--------|
|                                                               |   | **ThCh$** |           | **ThCh$** |   | **ThCh$**      |   |
|                                                               |   |      |           |      |   |           |   |
| **Statutory                tax rate**                              |   |      | 17.00          | %         |   | 17.00          | %      |   | 17.00 | % |
|                                                               |   |      |           |      |   |           |   |   |   |   |
| **Pretax                US GAAP income**                           |   |      | **55,085,772** |      |   | **46,046,817** |   |   | **62,383,602** |   |
| Pretax                income multiplied by the applicable tax rate |   |      | (9,364,581     | )         |   | (7,827,959     | )      |   | (10,605,212 | ) |
| Differences                in price - level restatement            |   |      | (423,262       | )         |   | 1,887,539      |   |   | 224,422 |   |
| Non                - deductible items                              |   |      | (178,182       | )         |   | (886,205       | )      |   | 1,696,407 |   |
| Other                deductible items                              |   |      | 2,838,467      |      |   | 1,695,925      |   |   | - |   |
| Tax                credits                                         |   |      | 2,495,269      |      |   | -              |   |   | - |   |
| Other                                                              |   |      | 429,236        |      |   | 260,236        |   |   | - |   |
|                                                               |   |      |           |      |   |           |   |   |   |   |
| **Tax                expense**                                     |   |      | **(4,203,053** | **)**     |   | **(4,870,464** | **)**  |   | **(8,684,383** | **)** |

**b.4.      Cash flow information**

|   | i. | Management                has determined its cash and cash equivalents under Chilean GAAP are                equal                to those as defined under SFAS No.95, for the years ended December                31,                2005, 2006 and 2007. Additionally, as noted below, the Company's                cash flow                used in or provided by in Chilean GAAP for operating activities,                investing                activities, and financing activities is the                same. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                          |   | **Year                ended December 31.** |        |
|-------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-------------|
|                                                                                                                          |   | **2005**                                   |        | **2006** |   | **2007** |   |
|                                                                                                                          |   | ThCh$                                      |        | ThCh$ |   | ThCh$ |   |
| Cash                provided by (used in) operating activities under Chilean                GAAP                              |   |                                       | 69,862,954  |   |   | 58,464,572 |   |   | 35,365,720 |   |
| Reclassification                (a)                                                                                           |   |                                       | (912,608    | ) |   | (12,381,916 | ) |   | - |   |
| Cash                provided by (used in) operating activities under U.S. GAAP                                                |   |                                       | 68,950,346  |   |   | 46,082,656 |   |   | 35,365,720 |   |
| Cash                provided by (used in) financing activities under Chilean GAAP and                U.S.                GAAP |   |                                       | (22,908,963 | ) |   | 26,227,324 |   |   | 92,229,903 |   |
| Cash                used in investing activities under Chilean GAAP                                                           |   |                                       | (68,699,167 | ) |   | (102,649,390 | ) |   | (124,206,832 | ) |
| Reclassification                (a)                                                                                           |   |                                       | 912,608     |   |   | 12,381,916 |   |   | - |   |
| Cash                used in investing activities under U.S. GAAP                                                              |   |                                       | (67,786,559 | ) |   | (90,267,474 | ) |   | (124,206,832 | ) |

|   | (a) | The                Company prepaid a long-term operating lease which payment was presented                as                an investment activity in Chile GAAP while in U.S. GAAP, it would                be                classified as operational. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|   | ii. | Cash                equivalents includes all highly liquid debt instruments purchased                with an                original maturity of three months or                less: |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                           |   | **Year                ended December 31,** |       |
|------------------------------------------------------------------------------------------------|--------|--------------------------------------------|------------|
|                                                                                           |   | **2005**                                   |       | **2006** |   | **2007** |   |
|                                                                                           |   | ThCh$                                      |       | ThCh$ |   | ThCh$ |   |
|                                                                                           |   |                                       |       |   |   |   |   |
| Cash                                                                                           |   |                                       | 22,778,157 |   |   | 33,222,710 |   |   | 43,363,001 |   |
| Mutual                funds (fixed income securities)                                          |   |                                       | 41,488,951 |   |   | 1,321,653 |   |   | 60,000 |   |
| Other                current assets (1)                                                        |   |                                       | 2,742,956  |   |   | 12,316,060 |   |   | - |   |
| Total                cash and cash equivalents under Chilean GAAP and U.S.                GAAP |   |                                       | 67,010,064 |   |   | 46,860,423 |   |   | 43,423,001 |   |

|   | (1) | Correspond                  to repurchase agreements (see Note 7). The detail is as                  follows: |
|--------|-----|---------------------------------------------------------------------------------------------------------------|

|                                             |   | **Principal                    amount** |      | **Interest                    rate****(month)** |   | **Interest** |   | **Total** |   |
|--------------------------------------------------|--------|-----------------------------------------|-----------|-------------------------------------------------|--------|--------------|--------|-----------|--------|
|                                             |   | **2005**                                |      | **2006**                                        |   | **2007**     |   | **2005**  |   | **2006** |   | **2007** |   | **2005** |   | **2006** |   | **2007** |   | **2005** |   | **2006** |   | **2007** |   |
|                                             |   | ThCh$                                   |      | ThCh$                                           |   | ThCh$        |   | %         |   | % |   | % |   | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   | ThCh$ |   |
|                                             |   |                                    |      |                                            |   |         |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Banchile                    S.A.                 |   |                                    | -         |                                            |   | 3,436,800    |   |      | -      |   |   | - |   |   | 0.48 |   |   | - |   |   | - |   |   | 2,200 |   |   | - |   |   | - |   |   | 3,439,000 |   |   | - |   |
| Corp                    Corredores de Bolsa S.A. |   |                                    | -         |                                            |   | 5,370,000    |   |      | -      |   |   | - |   |   | 0.50 |   |   | - |   |   | - |   |   | 3,580 |   |   | - |   |   | - |   |   | 5,373,580 |   |   | - |   |
| BCI                    Corredores de Bolsa S.A.  |   |                                    | 2,741,385 |                                            |   | 3,501,240    |   |      | -      |   |   | 0.43 |   |   | 0.48 |   |   | - |   |   | 1,571 |   |   | 2,240 |   |   | - |   |   | 2,742,956 |   |   | 3,503,480 |   |   | - |   |
|                                             |   |                                    |           |                                            |   |              |   |      |        |   |   |  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   |                                    | 2,741,385 |                                            |   | 12,308,040   |   |      | -      |   |   |   |   |   |   |   |   |   |   |   | 1,571 |   |   | 8,020 |   |   | - |   |   | 2,742,956 |   |   | 12,316,060 |   |   | - |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.5.      Estimated Fair Value of Financial Instruments**

|  | **·** | **Cash**-** **The                fair value of the Company’s cash is equal to its carrying                value. |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Marketable                securities and cash equivalents**                -                The fair value of the investments was determined based on market                value. |
|--|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Notes                and accounts receivable and payable, sundry debtors and creditors**–                Short-term – The carrying amount of trade notes and accounts receivable                and payable, and short-term debtors and creditors approximate fair                value                because of the short-term maturity of these                instruments. |
|--|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Notes                and accounts receivable–**                Long-term – These correspond mainly to the long-term portion of the credit                card receivables recorded by the indirect subsidiary Presto. The                carrying                amounts of trade notes and accounts receivable approximate fair value                because of these instruments are valued at market interest                rates. |
|--|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Due                from and due to related companies –**                The carrying amounts of these accounts receivable and payable approximate                fair value due to the fact that they yield interest at market interest                rates. |
|--|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Sundry                debtors, long-term**                -                The fair value of the account receivable from Disco is impracticable                to                determine as it has no maturity date and it is currently in litigation.                For further details see note 9.b.2. |
|--|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Derivative                contracts**–                The fair value of the investments was determined based on market                value. |
|--|------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Long-term                debt and bonds**                -                The fair value of the Company’s long-term debt is estimated based on the                current interest rates offered to the Company for loans of the same                remaining maturities. |
|--|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Commercial                paper**                -                The fair value of commercial paper is estimated based on the current                interest rates offered to the Company for loans of the same remaining                maturities. |
|--|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **·** | **Short-term                debt**                -                Short-term debt has interest rates that vary with market conditions                and                accordingly, the carrying amount approximates fair value of our short-term                debt, the portion with fixed interest rates is                insignificant. |
|--|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                                                 |   | **As                of December 31,** |        |
|----------------------------------------------------------------------|--------|---------------------------------------|-------------|
|                                                                 |   | **2006**                              |        | **2007** |   |
|                                                                 |   | **Carrying**                          |        | **Fair** |   | **Carrying** |   | **Fair** |   |
|                                                                 |   | **amount**                            |        | **value** |   | **amount** |   | **value** |   |
|                                                                 |   | ThCh$                                 |        | ThCh$ |   | ThCh$ |   | ThCh$ |   |
|                                                                 |   |                                  |        |   |   |   |   |   |   |
| Cash                                                                 |   |                                  | 33,222,710  |   |   | 33,222,710 |   |   | 43,363,001 |   |   | 43,363,001 |   |
| Marketable                securities and cash equivalents            |   |                                  | 2,964,135   |   |   | 2,964,135 |   |   | 1,567,214 |   |   | 1,567,214 |   |
| Short-term                notes and accounts receivable, net         |   |                                  | 113,273,917 |   |   | 113,273,917 |   |   | 115,860,303 |   |   | 115,860,303 |   |
| Long-term                notes and accounts receivable               |   |                                  | 113,639,874 |   |   | 113,639,874 |   |   | 152,564,281 |   |   | 152,564,281 |   |
| Short-term                sundry debtors                             |   |                                  | 18,894,558  |   |   | 18,894,558 |   |   | 31,878,086 |   |   | 31,878,086 |   |
| Long-term                sundry debtors                              |   |                                  | 27,463,365  |   |   | 27,463,365 |   |   | 24,644,529 |   |   | 24,644,529 |   |
| Derivate                contracts- Cross currency swap               |   |                                  | 1,248,135   |   |   | 1,248,135 |   |   | 7,039,712 |   |   | 10,313,116 |   |
| Due                from related companies                            |   |                                  | 1,678,343   |   |   | 1,678,343 |   |   | 2,958,662 |   |   | 2,958,662 |   |
| Accounts                payable                                      |   |                                  | 259,014,596 |   |   | 259,014,596 |   |   | 259,652,662 |   |   | 259,652,662 |   |
| Bonds                                                                |   |                                  | 164,794,316 |   |   | 177,480,027 |   |   | 132,414,595 |   |   | 127,530,599 |   |
| Commercial                paper                                      |   |                                  | 68,155,449  |   |   | 68,155,449 |   |   | 65,905,976 |   |   | 65,905,976 |   |
| Long-                term debt with banks and financial institutions |   |                                  | 130,843,065 |   |   | 130,843,065 |   |   | 146,232,014 |   |   | 146,232,014 |   |
| Sundry                creditors                                      |   |                                  | 5,884,147   |   |   | 5,884,147 |   |   | 8,595,641 |   |   | 8,595,641 |   |

**b.6.      U.S. GAAP Presentation**

**i.)      Condensed Balance Sheet**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                                            |   | **2006**             |                 |
|-----------------------------------------------------------------|--------|----------------------|----------------------|
|                                                            |   | **ThCh$****Chilean** |                 | **ThCh$****Adjustment** |   | **ThCh$** |   | **ThCh$** |   |
|                                                            |   | **GAAP**             |                 | **U.S.                GAAP** |   | **Reclassification** |   | **U.S.                GAAP** |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |
| Current                assets (1) (2)                           |   |                 | 367,279,069          |   |   | (1,908,818 | ) |   | 20,153,475 |   |   | 385,523,726 |   |
| Property,                plant aid equipment, net               |   |                 | 694,710,045          |   |   | (1,291,944 | ) |   |   |   |   | 693,418,101 |   |
| Other                assets (1) (3)                             |   |                 | 232,615,999          |   |   | 7,809,553 |   |   | (4,736,077 | ) |   | 235,689,475 |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |   |   |   |   |
| Total                assets                                     |   |                 | 1,294,605,113        |   |   | 4,608,791 |   |   | 15,417,398 |   |   | 1,314,631,302 |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |   |   |   |   |
| Current                liabilities (2)                          |   |                 | 441,634,613          |   |   | 40,314 |   |   | 9,415,688 |   |   | 451,090,615 |   |
| Long-term                liabilities (3)                        |   |                 | 296,733,425          |   |   | 2,142,532 |   |   | 6,001,710 |   |   | 304,877,667 |   |
| Minority                interest                                |   |                 | 817                  |   |   | 4,738 |   |   |   |   |   | 5,555 |   |
| Shareholders'                equity (4)                         |   |                 | 556,236,258          |   |   | 2,421,207 |   |   |   |   |   | 558,657,465 |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |   |   |   |   |
| Total                liabilities and shareholders' equity       |   |                 | 1,294,605,113        |   |   | 4,608,791 |   |   | 15,417,398 |   |   | 1,314,631,302 |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |   |   |   |   |
|                                                            |   | **2007**             |
|                                                            |   |                 | **ThCh$****Chilean** |   |   | **ThCh$****Adjustment** |   |   | **ThCh$** |   |   | **ThCh$** |   |
|                                                            |   |                 | ** GAAP**  |   |   | **U.S.                GAAP** |   |   | **Reclassification** |   |   | **U.S.                GAAP** |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |   |   |   |   |
| Current                assets (1) (2)                           |   |                 | 410,741,335          |   |   | (1,480,612 | ) |   | 25,363,385 |   |   | 434,624,108 |   |
| Property,                plant aid equipment, net               |   |                 | 753,682,807          |   |   | (1,258,225 | ) |   | - |   |   | 752,424,582 |   |
| Other                assets (1) (3)                             |   |                 | 267,124,071          |   |   | 9,670,397 |   |   | (20,329,913 | ) |   | 256,464,555 |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |   |   |   |   |
| Total                assets                                     |   |                 | 1,431,548,213        |   |   | 6,931,560 |   |   | 5,033,472 |   |   | 1,443,513,245 |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |   |   |   |   |
| Current                liabilities (2) (5)                      |   |                 | 602,705,344          |   |   | 3,273,404 |   |   | (169,397,240 | ) |   | 436,581,508 |   |
| Long-term                liabilities (3) (5)                    |   |                 | 266,205,656          |   |   | 239,636 |   |   | 174,430,712 |   |   | 440,876,004 |   |
| Minority                interest                                |   |                 | (3,308               | ) |   | (20,985 | ) |   | - |   |   | (24,293 | ) |
| Shareholders'                equity (4)                         |   |                 | 562,640,521          |   |   | 3,439,505 |   |   | - |   |   | 566,080,026 |   |
|                                                            |   |                 |                 |   |   |   |   |   |   |   |   |   |   |
| Total                liabilities and shareholders’ equity |   |                 | 1,431,548,213        |   |   | 6,931,560 |   |   | 5,033,472 |   |   | 1,443,513,245 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**ii.      Income statement (certain line items presentation)**

|                                        |   | **2005**            |                      |
|---------------------------------------------|--------|---------------------|---------------------------|
|                                        |   | **Chilean****GAAP** |                      | **Adjustment****U.S.                GAAP** |   | **Reclassification** |   | **U.S.                GAAP** |   |
|                                        |   | **ThCh$**           |                      | **ThCh$** |   | **ThCh$** |   | **ThCh$** |   |
|                                        |   |                |                      |   |   |   |   |   |   |
| Operating                income             |   |                | 74,641,309                |   |   | (225,697 | ) |   | (3,650,436 | ) |   | 70,765,176 |   |
| Non                operating expense, net   |   |                | (22,888,520               | ) |   | 3,558,679 |   |   | 2,879,430 |   |   | (16,450,411 | ) |
| Equity                in income of investee |   |                |                      |   |   |   |   |   | 773,079 |   |   | 773,079 |   |
| Minority              Interest              |   |                |  -                   |   |   |  - |   |   |  (2,073 | )  |   |  (2,073 | )  |
| Income                taxes                 |   |                | (5,294,953                | ) |   | 1,091,900 |   |   | - |   |   | (4,203,053 | ) |
|                                        |   |                |                 |   |   |    |   |   |    |   |   |   |   |
| Net                income                   |   |                | 46,457,836                |   |   | 4,424,882 |   |   | - |   |   | 50,882,718 |   |
|                                        |   |                |                      |   |   |   |   |   |   |   |   |   |   |
|                                        |   | **2006**            |
|                                        |   |                | **Chilean****GAAP**  |   |   | **Adjustment****U.S.                GAAP** |   |   | **Reclassification** |   |   | **U.S.                GAAP** |   |
|                                             |   |                | **ThCh$**            |   |   | **ThCh$** |   |   | **ThCh$** |   |   | **ThCh$** |   |
|                                        |   |                |                      |   |   |   |   |   |   |   |   |   |   |
| Operating                income             |   |                | 70,358,807                |   |   | (4,085,889 | ) |   | (8,244,108 | ) |   | 58,028,810 |   |
| Non                operating expense, net   |   |                | (22,594,650               | ) |   | 2,368,549 |   |   | 6,611,858 |   |   | (13,614,243 | ) |
| Equity                in income of investee |   |                |                      |   |   |   |   |   | 1,633,398 |   |   | 1,633,398 |   |
| Minority              Interest              |   |                |  -                   |   |   |  - |   |   |  (1,148 | ) |   |  (1,148 | )  |
| Income                taxes                 |   |                | (5,177,279                | ) |   | 306,815 |   |   | - |   |   | (4,870,464 | ) |
|                                        |   |                |                 |   |   |    |   |   |    |   |   |   |   |
| Net                income                   |   |                | 42,586,878                |   |   | (1,410,525 | ) |   | - |   |   | 41,176,353 |   |
|                                        |   |                |                      |   |   |   |   |   |   |   |   |   |   |
|                                        |   | **2007**            |
|                                        |   |                | **Chilean****GAAP**  |   |   | **Adjustment****U.S.                GAAP** |   |   | **Reclassification** |   |   | **U.S.                GAAP** |   |
|                                        |   |                | **ThCh$**            |   |   | **ThCh$** |   |   | **ThCh$** |   |   | **ThCh$** |   |
|                                        |   |                |                      |   |   |   |   |   |   |   |   |   |   |
| Operating                income             |   |                | 97,095,595                |   |   | 1,110,053 |   |   | (13,776,538 | ) |   | 84,429,110 |   |
| Non                operating expense, net   |   |                | (35,484,224               | ) |   | (337,822 | ) |   | 12,701,613 |   |   | (23,120,433 | ) |
| Equity                in income of investee |   |                |                      |   |   |   |   |   | 1,049,202 |   |   | 1,049,202 |   |
| Minority              Interest              |   |                |  -                   |   |   |  - |   |   |  25,723 |   |   |  25,723 |   |
| Income                taxes                 |   |                | (8,930,448                | ) |   | 246,067 |   |   | - |   |   | (8,684,381 | ) |
|                                        |   |                |                 |   |   |    |   |   |    |   |   |   |   |
| Net                income                   |   |                | 52,680,923                |   |   | 1,018,298 |   |   | - |   |   | 53,699,221 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

**,      **
** **

**b.7.      Lease Commitments**

|                                                    |   | ThCh$  |        |
|---------------------------------------------------------|--------|--------|-------------|
|                                                    |   |   |        |
| 2008                                                    |   |   | 12,191,840  |   |
| 2009                                                    |   |   | 10,727,513  |   |
| 2010                                                    |   |   | 9,175,282   |   |
| 2011                                                    |   |   | 8,069,306   |   |
| 2012                                                    |   |   | 6,721,189   |   |
| Thereafter                                              |   |   | 59,173,124  |   |
|                                                    |   |   |        |   |
| Present                value net minimum lease payments |   |   | 106,058,254 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.8.      Segment Information**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                           |   | **Hypermarket and****Supermarket format** |          | **Credit card** |   | **Real estate** |   | **Pharmacies** |        | **Other** |   | **Total**  |   |
|------------------------------------------------|--------|-----------------------------------------------------|---------------|----------------------|--------|----------------------|--------|----------------|-------------|-----------|--------|------------|--------|
|                                           |   | **ThCh$**                                           |          | **ThCh$**            |   | **ThCh$**            |   | **ThCh$**      |        | **ThCh$** |   | **ThCh$**  |   |
| **2005                  (2)**                  |   |                                                |          |                 |   |                 |   |           |        |      |   |       |   |
| Revenues                                       |   |                                                | 1,604,424,400 |                 |   | 63,637,351           |   |           | -           |      |   | -          |   |   | 85,072,321 |   |   | 1,753,134,072 |   |
| Segment                  gross profit          |   |                                                | 374,242,191   |                 |   | 63,637,351           |   |           | -           |      |   | -          |   |   | 52,982,922 |   |   | 490,862,464 |   |
| Identifiable                  assets           |   |                                                | 850,724,589   |                 |   | 201,235,598          |   |           | -           |      |   | -          |   |   | 142,543,962 |   |   | 1,194,504,149 |   |
| Goodwill                  (1)                  |   |                                                | 41,417,960    |                 |   | -                    |   |           | -           |      |   | -          |   |   | - |   |   | 41,417,960 |   |
| Operating                  income              |   |                                                | 56,980,127    |                 |   | 10,254,064           |   |           | -           |      |   | -          |   |   | 7,407,118 |   |   | 74,641,309 |   |
| Depreciation                  and amortization |   |                                                | 49,414,971    |                 |   | 259,404              |   |           | -           |      |   | -          |   |   | 10,797,132 |   |   | 60,471,507 |   |
| Capital                  expenditures          |   |                                                | 32,482,251    |                 |   | 3,918,880            |   |           | -           |      |   | -          |   |   | 18,803,530 |   |   | 55,204,661 |   |
| **Old                  basis**                 |   |                                                |          |                 |   |                 |   |           |        |      |   |       |   |   |   |   |   |   |   |
| **2006**                                       |   |                                                |          |                 |   |                 |   |           |        |      |   |       |   |   |   |   |   |   |   |
| Revenues                                       |   |                                                | 1,641,547,060 |                 |   | 88,139,867           |   |           | -           |      |   | -          |   |   | 92,531,118 |   |   | 1,822,218,045 |   |
| Segment                  gross profit          |   |                                                | 352,760,080   |                 |   | 88,139,867           |   |           | -           |      |   | -          |   |   | 60,922,771 |   |   | 501,822,718 |   |
| Identifiable                  assets           |   |                                                | 806,880,106   |                 |   | 249,912,502          |   |           | -           |      |   | -          |   |   | 221,348,705 |   |   | 1,278,141,313 |   |
| Goodwill                  (1)                  |   |                                                | 40,008,595    |                 |   | -                    |   |           | -           |      |   | -          |   |   | - |   |   | 40,008,595 |   |
| Operating                  income              |   |                                                | 29,944,176    |                 |   | 25,244,776           |   |           | -           |      |   | -          |   |   | 15,169,855 |   |   | 70,358,807 |   |
| Depreciation                  and amortization |   |                                                | 45,899,797    |                 |   | 377,687              |   |           | -           |      |   | -          |   |   | 12,268,402 |   |   | 58,545,886 |   |
| Capital                  expenditures          |   |                                                | 50,967,567    |                 |   | 6,487,916            |   |           | -           |      |   | -          |   |   | 28,127,072 |   |   | 85,582,555 |   |
| **New                  basis**                 |   |                                                |          |                 |   |                 |   |           |        |      |   |       |   |   |   |   |   |   |   |
| **2006**                                       |   |                                                |          |                 |   |                 |   |           |        |      |   |       |   |   |   |   |   |   |   |
| Revenues                                       |   |                                                | 1,641,547,060 |                 |   | 88,139,867           |   |           | 19,897,835  |      |   | 41,573,887 |   |   | 31,059,396 |   |   | 1,822,218,045 |   |
| Segment                  gross profit          |   |                                                | 352,760,080   |                 |   | 88,139,867           |   |           | 19,897,835  |      |   | 10,345,261 |   |   | 30,679,675 |   |   | 501,822,718 |   |
| Identifiable                  assets           |   |                                                | 806,880,106   |                 |   | 249,912,502          |   |           | 136,763,208 |      |   | 1,899,183  |   |   | 82,686,314 |   |   | 1,278,141,313 |   |
| Goodwill                  (1)                  |   |                                                | 40,008,595    |                 |   | -                    |   |           | -           |      |   | -          |   |   |   |   |   | 40,008,595 |   |
| Operating                  income              |   |                                                | 29,944,176    |                 |   | 25,244,776           |   |           | 4,496,369   |      |   | (1,119,528 | )      |   | 11,793,014 |   |   | 70,358,807 |   |
| Depreciation                  and amortization |   |                                                | 45,899,797    |                 |   | 377,687              |   |           | -           |      |   | -          |   |   | 12,268,402 |   |   | 58,545,886 |   |
| Capital                  expenditures          |   |                                                | 50,967,567    |                 |   | 6,487,916            |   |           | -           |      |   | -          |   |   | 28,127,072 |   |   | 85,582,555 |   |
| **2007**                                       |   |                                                |          |                 |   |                 |   |           |        |      |   |       |   |   |   |   |   |   |   |
| Revenues                                       |   |                                                | 1,732,497,268 |                 |   | 108,818,920          |   |           | 24,409,819  |      |   | 1,638,518  |   |   | 38,415,942 |   |   | 1,905,780,467 |   |
| Segment                  gross profit          |   |                                                | 373,214,783   |                 |   | 108,818,920          |   |           | 24,409,819  |      |   | 285,275    |   |   | 33,759,452 |   |   | 540,488,249 |   |
| Identifiable                  assets           |   |                                                | 921,055,830   |                 |   | 309,313,983          |   |           | 133,008,602 |      |   | 1,929,055  |   |   | 52,936,683 |   |   | 1,418,244,153 |   |
| Goodwill                  (1)                  |   |                                                | 37,296,092    |                 |   | -                    |   |           | -           |      |   | -          |   |   | - |   |   | 37,296,092 |   |
| Operating                  income              |   |                                                | 39,709,595    |                 |   | 32,196,214           |   |           | 4,298,129   |      |   | (147,560   | )      |   | 21,039,217 |   |   | 97,095,595 |   |
| Depreciation                  and amortization |   |                                                | 48,509,820    |                 |   | 2,215,377            |   |           | 3,510,983   |      |   | 345,082    |   |   | 8,485,634 |   |   | 63,066,896 |   |
| Capital                  expenditures          |   |                                                | 68,824,677    |                 |   | 3,377,247            |   |           | 39,535,054  |      |   | 85,990     |   |   | 11,010,812 |   |   | 122,833,780 |   |

|   | (1) | The                only change in goodwill from year to year is related to the amortization                under Chilean GAAP. Information in this footnote is presented under                Chilean GAAP as it represents the basis upon which the CODM evaluate                the                business. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

|   | (2) | Management                of the Company has determined that it is impracticable to disclose                its                segment information on the same basis as defined in 2006                retroactively. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                  |   | **2006** |          | **2007** |   |
|---------------------------------------|--------|----------|---------------|----------|--------|
|                                  |   | ThCh$    |          | ThCh$    |   |
|                                  |   |     |          |     |   |
| Identifiable                assets    |   |     | 1,278,141,313 |     |   | 1,418,244,153 |   |
| Corporate                headquarters |   |     | 16,463,800    |     |   | 13,304,060 |   |
|                                  |   |     |               |     |   |  |   |
| Total                assets           |   |     | 1,294,605,113 |     |   | 1,431,548,213 |   |

**Supermarkets/Hypermarkets**

**Credit      card operations**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**Allowance      for credit risk associated to accounts receivable **

**Interest      **

|       |   | **2005** |        | **2006** |   | **2007**    |   |
|------------|--------|----------|-------------|----------|--------|-------------|--------|
|       |   | ThCh$    |        | ThCh$    |   | ThCh$       |   |
|       |   |     |        |     |   |        |   |
| Short-term |   |     | 131,123,867 |     |   | 84,599,759  |   |   | 80,655,383 |   |
| Long-term  |   |     | 54,186,613  |     |   | 113,639,874 |   |   | 152,564,281 |   |
|       |   |     |             |     |   |             |   |   |  |   |
| Total      |   |     | 185,310,480 |     |   | 198,239,633 |   |   | 233,219,664 |   |

|   |   | ThCh$  |       |
|--------|--------|--------|------------|
|   |   |   |       |
| 2005   |   |   | 11,332,886 |   |
| 2006   |   |   | 20,324,376 |   |
| 2007   |   |   | 23,384,361 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

|                                    |   | **2005**  |           | **2006**  |   | **2007**       |   |
|-----------------------------------------|--------|-----------|----------------|-----------|--------|----------------|--------|
|                                    |   | **ThCh$** |           | **ThCh$** |   | **ThCh$**      |   |
|                                    |   |      |           |      |   |           |   |
| **January                1, balance**   |   |      | **14,442,305** |      |   | **20,341,114** |   |   | **21,047,624** |   |
| Additional                provisions    |   |      | 36,073,263     |      |   | 44,655,943     |   |   | 41,200,003 |   |
| Write-offs,                net          |   |      | (30,174,454    | )         |   | (43,949,433    | )      |   | (35,257,474 | ) |
|                                    |   |      |           |      |   |           |   |   |   |   |
| **December                31, balance** |   |      | **20,341,114** |      |   | **21,047,624** |   |   | **26,990,153** |   |

| **Description**                                    |   | **2005** |                     | **2006** |   | **2007**                       |   |
|----------------------------------------------------|--------|----------|--------------------------|----------|--------|--------------------------------|--------|
|                                               |   |     |                     |     |   |                           |   |
| Average                interest rate annual (%)    |   |     | 41.23                    |     |   | 44.90                          |   |   | 48.17 |   |
| Interest                income (ThCh$)             |   |     | 48,240,848               |     |   | 67,766,435                     |   |   | 82,096,483 |   |
| Range                of interest rates monthly (%) |   |     | 3.2                - 3.6 |     |   | 3.6                – 3.8 |   |   | 3.9                – 4.1 |   |

**b.9.      Concentration of risk**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.10.      Schedule of long-term debt and bond maturity:**

|                                        |   | ThCh$  |        |
|---------------------------------------------|--------|--------|-------------|
|                                        |   |   |        |
| 2008                                        |   |   | 283,957,460 |   |
| 2009                                        |   |   | 32,740,658  |   |
| 2010                                        |   |   | 24,381,780  |   |
| 2011                                        |   |   | 25,642,637  |   |
| 2012                                        |   |   | 24,537,457  |   |
| Thereafter                                  |   |   | 156,817,727 |   |
|                                        |   |   |        |   |
| Balance                at December 31, 2007 |   |   | 548,077,720 |   |

**b.11.      Disclosure regarding interest capitalization:**

|                                                   |   | **Year                ended December 31,** |       |
|--------------------------------------------------------|--------|--------------------------------------------|------------|
|                                                   |   | **2005**                                   |       | **2006** |   | **2007** |   |
|                                                   |   | **ThCh$**                                  |       | **ThCh$** |   | **ThCh$** |   |
|                                                   |   |                                       |       |   |   |   |   |
| Interest                expense incurred               |   |                                       | 18,577,103 |   |   | 22,878.201 |   |   | 22,399,694 |   |
| Interest                capitalized under Chilean GAAP |   |                                       | 177,970    |   |   | 537,832 |   |   | 991,848 |   |
| Interest                capitalized under U.S. GAAP    |   |                                       | 177,970    |   |   | 537,832 |   |   | 991,848 |   |

**b.12.      Advertising Costs**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.13.      Vendor allowances**

|                             |   | **2005**                   |         | **2006**                   |   | **2007**                   |   |
|----------------------------------|--------|----------------------------|--------------|----------------------------|--------|----------------------------|--------|
|                             |   | **ThCh$**                  |         | **ThCh$**                  |   | **ThCh$**                  |   |
|                             |   | **Dr                (Cr)** |         | **Dr                (Cr)** |   | **Dr                (Cr)** |   |
|                             |   |                       |         |                       |   |                       |   |
| OPERATING                RESULTS |   |                       |         |                       |   |                       |   |
| Net                revenue       |   |                       | 163,262,365  |                       |   | 174,697,895                |   |   | 179,104,814 |   |
| Cost                of sales     |   |                       | (163,262,365 | )                          |   | (174,697,895               | )      |   | (179,104,814 | ) |

|                                                          |   | **2005**  |        | **2006**  |   | **2007**    |   |
|---------------------------------------------------------------|--------|-----------|-------------|-----------|--------|-------------|--------|
| **Description**                                               |   | **ThCh$** |        | **ThCh$** |   | **ThCh$**   |   |
|                                                          |   |      |        |      |   |        |   |
| Volume                rebates                                 |   |      | 115,688,508 |      |   | 115,784,466 |   |   | 128,097,102 |   |
| Slotting                fees                                  |   |      | 17,861,325  |      |   | 23,237,848  |   |   | 15,620,892 |   |
| Allowances                for store opening and remodeling    |   |      | 1,441,412   |      |   | 2,360,208   |   |   | 3,746,876 |   |
| Reimbursements                for use of distribution network |   |      | 28,271,120  |      |   | 33,315,373  |   |   | 31,639,944 |   |
|                                                          |   |      |        |      |   |        |   |   |   |   |
| Total                                                         |   |      | 163,262,365 |      |   | 174,697,895 |   |   | 179,104,814 |   |

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**b.14.      Valuation and Qualifying Accounts**

|                                                 |   |                           |       | **Additions**                   |   |           |   |      |        |                           |   |
|------------------------------------------------------|--------|--------------------------------|------------|---------------------------------|--------|----------------|--------|-----------|-------------|--------------------------------|--------|
|                                                 |   | **Balance**                    |       | **charged                  to** |   |           |   |      |        | **Balance**                    |   |
|                                                 |   | **Beginning**                  |       | **costs                  and**  |   |           |   |      |        | **at                  end of** |   |
|                                                 |   | **of                  period** |       | **expenses**                    |   | **Deductions** |   | **Other** |        | **period**                     |   |
|                                                 |   | ThCh$                          |       | ThCh$                           |   | ThCh$          |   | ThCh$     |        | ThCh$                          |   |
| **December                  31,2005**                |   |                           |       |                            |   |           |   |      |        |                           |   |
| Allowance                  for doubtful accounts     |   |                           | 24,769,135 |                            |   | 19,642,157     |   |      | (19,772,262 | ) (a)                     |   | - |   |   | 24,639,030 |   |
| Allowance                  for inventory realization |   |                           | -          |                            |   | 139,645        |   |      | -           |                           |   | - |   |   | 139,645 |   |
|                                                 |   |                           |       |                            |   |           |   |      |        |                           |   |   |   |   |   |   |
| **December                  31,2006**                |   |                           |       |                            |   |           |   |      |        |                           |   |   |   |   |   |   |
| Allowance                  for doubtful accounts     |   |                           | 24,639,030 |                            |   | 45,148,800     |   |      | (45,156,145 | ) (a)                     |   | - |   |   | 24,631,685 |   |
| Allowance                  for inventory realization |   |                           | 139,645    |                            |   | 138,489        |   |      | (139,645    | ) (b)                     |   | - |   |   | 138,489 |   |
|                                                 |   |                           |       |                            |   |           |   |      |        |                           |   |   |   |   |   |   |
| **December                  31,2007**                |   |                           |       |                            |   |           |   |      |        |                           |   |   |   |   |   |   |
| Allowance                  for doubtful accounts     |   |                           | 24,631,685 |                            |   | 43,976,534     |   |      | (37,220,449 | ) (a)                     |   | - |   |   | 31,387,770 |   |
| Allowance                  for inventory realization |   |                           | 138,489    |                            |   | 2,449,532      |   |      | (138,489    | ) (b)                     |   | - |   |   | 2,449,532 |   |

|   | (a) | Relates                to write-offs of accounts                receivable. |
|--------|-----|-----------------------------------------------------------------------------|

|   | (b) | Relates                to lower of cost or market adjustment taken on                inventory. |
|--------|-----|-------------------------------------------------------------------------------------------------|

**b.15      **
**Accounting      for Uncertainly in Income Taxes**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS –(Continued)**

**(Restated      for general price-level changes)**

**b.16      Recent accounting pronouncements**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)**

**(Restated      for general price-level changes)**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

----

**DISTRIBUCION      Y SERVICIO D&S S.A.**

**NOTES      TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)**

**(Restated      for general price-level changes)**

**IFRS      Adoption **

----

**INDEX      TO EXHIBITS**

| **Exhibit Number** |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 1.1                     |   | English                  translation of our Amended Bylaws (filed with the U.S. Securities                  and                  Exchange Commission in our annual report on Form 20-F on July 15,                  2005 and                  incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                       |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.1                     |   | Amendment                  No. 1, dated as of December 3, 2004, to Deposit Agreement, dated                  as of                  October 7, 1997, between us and JPMorgan Chase Bank N.A. (formerly,                  Morgan                  Guaranty Trust Company of New York), as Depositary and the registered                  holders from time to time of American Depositary Receipts (filed                  with the                  U.S. Securities and Exchange Commission in our annual report on                  Form 20-F                  on July 15, 2005 and incorporated herein by reference) |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.2                     |   | English                  translation of Indenture Agreement, dated as of December 29, 2006,                  of UF                  6.0 million (approximately US$ 243.2 million) between us and Banco                  de                  Chile (filed herewith).                                                                                                                                                                                                                                                                                                                                                    |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.3                     |   | English                  translation of Amendment No. 1, dated as of February 9, 2007 to                  Indenture                  Agreement between us and Banco de Chile (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                                                                        |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.4                     |   | English                  translation of Amendment No. 2, dated as of April 3, 2008 to Indenture                  Agreement between us and Banco de Chile (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.5                     |   | Letter                  Agreement, dated May 14, 2008, to                  Deposit Agreement, dated as of October 7, 1997, between us and                  JPMorgan                  Chase Bank N.A. (formerly, Morgan Guaranty Trust Company of New                  York), as                  Depositary and the registered holders from time to time of American                  Depositary Receipts (filed herewith)                                                                                                                                                                                             |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.6                     |   | English                  translation of Syndicated                  Credit Agreement of Ch$ 61,200 million (approximately US$ 121.6                  million)* *between                  us and Banco de Chile, Banco Bilbao Vizcaya Argentaria Chile, Scotiabank                  Sud Americano, Banco Itaú Chile, Corpbanca and Banco Santander-Chile,                  dated May 22, 2008 (filed herewith).                                                                                                                                                                                               |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.1                     |   | English                  translation of Settlement Agreement between us and the National                  Economic Prosecutor dated                  December 15, 2006, including Addendum, dated December 26, 2006,                  and Final                  Resolution from the Antitrust Court approving the Settlement Agreement,                  dated January 17, 2007 (filed                  with the U.S. Securities and Exchange Commission in our annual                  report on                  Form 20-F on July 13, 2007 and incorporated herein by                  reference).                 |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.2                     |   | English                  translation of Merger Agreement between our controlling shareholders                  and                  the controlling shareholders of S.A.C.I Falabella (filed with the                  U.S.                  Securities and Exchange Commission in our annual report on Form                  20-F on                  July 13, 2007 and incorporated herein by reference).                                                                                                                                                                                                            |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 8.1                     |   | List                  of our subsidiaries (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 11.1                    |   | Code                  of Ethics of the company, dated June 29, 2004 (filed with the U.S.                  Securities and Exchange Commission in our annual report on Form                  20-F on                  June 30, 2004 and incorporated herein by reference).                                                                                                                                                                                                                                                                                                                                               |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 12.1                    |   | Certification                  of Mr. Enrique Ostalé Cambiaso pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 12.2                    |   | Certification                  of Mr. Alejandro                  Droste Bertolo pursuant                  to Section 302 of the Sarbanes-Oxley Act of 2002 (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 13.1                    |   | Certification                  of Mr. Enrique Ostalé Cambiaso pursuant to 18 U.S.C. 1350, as adopted                  pursuant to Section 906 of the Sarbanes – Oxley Act of 2002 (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                                                        |
|                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 13.2                    |   | Certification                  of Mr. Alejandro                  Droste Bertolo pursuant                  to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes–                  Oxley Act of 2002 (filed                  herewith).                                                                                                                                                                                                                                                                                                                                                           |

----