##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 33-80138
 Embotelladora Andina S.A.
  Andina Bottling Company
  Republic of Chile
 
  Title of each class
    
    Name of each exchange on which registeredSeries A Shares, Series B Shares of Registrant
    
    New York Stock Exchangerepresented by American Depositary Shares
   7.000% Notes due October 1, 2007
7.625% Notes due October 1, 2027
7.875% Notes due October 1, 2097
 
  380,137,271 Series A Shares
 380,137,271 Series B Shares
  þ o
  o þ
  þ o
  þ o o
  o þ
  o þ




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##### 



TABLE OF CONTENTS
 PagePART I
    
    
    
    
    1ITEM 1.
    
    IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
    
    
    1ITEM 2.
    
    OFFER STATISTICS AND EXPECTED TIMETABLE
    
    
    1ITEM 3.
    
    KEY INFORMATION
    
    
    1ITEM 4.
    
    INFORMATION ON THE COMPANY
    
    
    14ITEM 4A.
    
    UNRESOLVED STAFF COMMENTS
    
    
    38ITEM 5.
    
    OPERATING AND FINANCIAL REVIEW AND PROSPECTS
    
    
    39ITEM 6.
    
    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
    
    
    57ITEM 7.
    
    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
    
    
    67ITEM 8.
    
    FINANCIAL INFORMATION
    
    
    74ITEM 9.
    
    THE OFFER AND LISTING
    
    
    76ITEM 10.
    
    ADDITIONAL INFORMATION
    
    
    80ITEM 11.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    97ITEM 12.
    
    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
    
    
    99PART II
    
    
    
    
    100ITEM 13.
    
    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
    
    
    100ITEM 14.
    
    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
    
    
    100ITEM 15.
    
    CONTROLS AND PROCEDURES
    
    
    100ITEM 16A.
    
    AUDIT COMMITTEE FINANCIAL EXPERT
    
    
    100ITEM 16B.
    
    CODE OF ETHICS
    
    
    101ITEM 16C.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    101ITEM 16D.
    
    EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
    
    
    102ITEM 16E.
    
    PURCHASERS OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
    
    
    102PART III
    
    
    
    
    103ITEM 17.
    
    FINANCIAL STATEMENTS
    
    
    103ITEM 18.
    
    FINANCIAL STATEMENTS
    
    
    103ITEM 19.
    
    EXHIBITS
    
    
    103EX-8.1: LIST OF OUR SUBSIDIARIESEX-12.1: CERTIFICATIONEX-12.2: CERTIFICATIONEX-13.1: CERTIFICATIONEX-13.2: CERTIFICATION




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INTRODUCTION
 References
  
    
    the Company and we means Andina and its consolidated subsidiaries;
    
    Andina means Embotelladora Andina S.A.;
    
    Refrescos means the Companys subsidiary, Río de Janeiro Refrescos Ltda. and its subsidiaries;
    
    Edasa means the Companys subsidiary, Embotelladora del Atlántico S.A.;
    
    Envases CMF means the Companys affiliate, Envases CMF S.A.;
    
    Vital means the Companys subsidiary, Vital S.A.;
    
    Vasa means the Companys subsidiary, Vital Aguas S.A.; and
    
    Multipack means the Companys subsidiary, Envases Multipack S.A.
   
    
    the Chilean territory means the Metropolitan Region of Santiago, Chile and the
neighboring provinces of Cachapoal and San Antonio;
    
    the Brazilian territory means the municipality of Río de Janeiro, the state of
Espírito Santo, and portions of the neighboring areas of Itaguaí, Mangaratiba, Duque de
Caixas and São João de Meriti, Niteroi, Itambi, Campos, Friburgo and Região dos Lagos
and Nova Iguaçú; and
    
    the Argentine territory means the provinces of Córdoba, Mendoza, San Juan, San
Luis, Entre Ríos, Buenos Aires (San Nicolás and Ramallo, but excluding the federal
capital) and most of Santa Fe.
 i




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PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION
 Unidades de Fomento
 Banco Central de Chile
 Forward-looking information
  Market Data
  ii




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PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 Not Applicable
 
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
 Not Applicable
 
 ITEM 3. KEY INFORMATION
 Selected Financial Data
     1




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Year ended December 31,2005
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(in millions of constant Ch$ as of December 31, 2005 and millions of US$, except ratios, per share and per ADS data, and sales volume)Income Statement Data:Chilean GAAP:Net sales
    
    US$
    934
    
    
Ch$    478,472
    
    
Ch$    428,649
    
    
Ch$    410,803
    
    
Ch$    427,122
    
    
Ch$    532,382Cost of sales
    
    
    (561
    )
    
    
    (287,395
    )
    
    
    (262,784
    )
    
    
    (262,515
    )
    
    
    (281,719
    )
    
    
    (334,744
    )Administrative and selling
expenses
    
    
    (221
    )
    
    
    (113,169
    )
    
    
    (100,715
    )
    
    
    (97,636
    )
    
    
    (101,411
    )
    
    
    (135,967
    )Operating income
    
    
    152
    
    
    
    77,908
    
    
    
    65,150
    
    
    
    50,652
    
    
    
    44,532
    
    
    
    61,671Non-operating (expense) income,
net
    
    
    (14
    )
    
    
    (7,103
    )
    
    
    (12,270
    )
    
    
    (25,819
    )
    
    
    8,582
    
    
    
    (5,317
    )Income taxes and minority interest
    
    
    (17
    )
    
    
    (8,537
    )
    
    
    (4,090
    )
    
    
    (1,075
    )
    
    
    (9,125
    )
    
    
    (7,990
    )Amortization of goodwill
    
    
    (12
    )
    
    
    (6,229
    )
    
    
    (7,186
    )
    
    
    (7,028
    )
    
    
    (8,574
    )
    
    
    (11,835
    )Net income
    
    US$
    109
    
    
Ch$    56,039
    
    
Ch$    41,604
    
    
Ch$    16,730
    
    
Ch$    35,415
    
    
Ch$    36,529Basic and diluted earning per shareSeries A
    
    US$
    0.14
    
    
    
    70.20
    
    
    
    52.12
    
    
    
    20.96
    
    
    
    44.37
    
    
    
    45.76Series B
    
    
    0.15
    
    
    
    77.22
    
    
    
    57.33
    
    
    
    23.05
    
    
    
    48.80
    
    
    
    50.33Basic and diluted earning per ADS(3).Series A
    
    US$
    0.82
    
    
    
    421.20
    
    
    
    312.71
    
    
    
    125.74
    
    
    
    266.19
    
    
    
    274.56Series B
    
    
    0.90
    
    
    
    463.31
    
    
    
    343.97
    
    
    
    138.31
    
    
    
    292.80
    
    
    
    302.00U.S.GAAP:Net income
    
    US$
    147
    
    
Ch$    75,184
    
    
Ch$    53,425
    
    
Ch$    18,391
    
    
Ch$    45,009
    
    
Ch$    11,289Total number of shares:Series A
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271Series B
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271Dividends declared per share:Series A
    
    US$
    66
    
    
Ch$    33,908
    
    
Ch$    22,504
    
    
Ch$    24,405
    
    
Ch$    27,446
    
    
Ch$    27,446Series B
    
    
    73
    
    
    
    37,299
    
    
    
    24,755
    
    
    
    26,845
    
    
    
    30,191
    
    
    
    30,191Basic and diluted earning per shareSeries A
    
    US$
    0.18
    
    
    
    94.18
    
    
    
    66.93
    
    
    
    23.04
    
    
    
    56.38
    
    
    
    14.14Series B
    
    
    0.20
    
    
    
    103.60
    
    
    
    73.62
    
    
    
    25.34
    
    
    
    62.02
    
    
    
    15.56Basic and diluted earning per ADS(3).Series A
    
    US$
    1.10
    
    
    
    565.10
    
    
    
    401.56
    
    
    
    138.23
    
    
    
    338.29
    
    
    
    84.85Series B
    
    
    1.21
    
    
    
    621.59
    
    
    
    441.70
    
    
    
    152.05
    
    
    
    372.11
    
    
    
    93.33Balance Sheet Data:Chilean GAAP:Total assets
    
    US$
    1,026
    
    
Ch$    526,050
    
    
Ch$    600,602
    
    
Ch$    621,664
    
    
Ch$    719,262
    
    
Ch$    761,924Short-term debt (1)
    
    
    82
    
    
    
    42,104
    
    
    
    34,705
    
    
    
    21,524
    
    
    
    18,271
    
    
    
    24,771Long-term debt
    
    
    200
    
    
    
    102,257
    
    
    
    163,011
    
    
    
    182,105
    
    
    
    210,502
    
    
    
    223,503Total shareholders equity
    
    
    524
    
    
    
    268,437
    
    
    
    301,319
    
    
    
    321,686
    
    
    
    395,893
    
    
    
    411,048U.S.GAAP:Total shareholders equity
    
    
    565
    
    
    
    289,577
    
    
    
    311,755
    
    
    
    319,993
    
    
    
    383,095
    
    
    
    393,961Other Financial Information:Chilean GAAP:Cash flows from operating
activities
    
    US$
    189
    
    
Ch$    96,823
    
    
Ch$    72,819
    
    
Ch$    76,763
    
    
Ch$    105,435
    
    
Ch$    98,923Cash flows from investing
activities
    
    
    21
    
    
    
    10,908
    
    
    
    (38,945
    )
    
    
    (18,913
    )
    
    
    (41,040
    )
    
    
    (36,895
    )Cash flows from financing
activities
    
    
    (223
    )
    
    
    (114,122
    )
    
    
    (45,376
    )
    
    
    (63,008
    )
    
    
    (68,377
    )
    
    
    (98,662
    )Depreciation
    
    
    57
    
    
    
    29,037
    
    
    
    32,581
    
    
    
    35,004
    
    
    
    43,188
    
    
    
    44,968Capital expenditures
    
    
    53
    
    
    
    27,395
    
    
    
    26,150
    
    
    
    26,912
    
    
    
    25,569
    
    
    
    24,984Ratio of total debt to total
capitalization (2)
    
    
    0.35
    
    
    
    0.35
    
    
    
    0.40
    
    
    
    0.39
    
    
    
    0.37
    
    
    
    0.38Other Operating Data:Sales volume of Coca-Cola Soft
Drinks (UCs in millions)(5)
    
    
    
    
    
    
    360.6
    
    
    
    336.3
    
    
    
    315.5
    
    
    
    301.8
    
    
    
    311.1Sales volume of Other Beverages
(UCs in millions) (4)(5)
    
    
    
    
    
    
    29.3
    
    
    
    27.8
    
    
    
    27.0
    
    
    
    26.0
    
    
    
    27.9
 2




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(1)
    
    Includes short-term bank liabilities and the portion of long-term bank liabilities and bonds
payable within 12 months.(2)
    
    Total debt is calculated as the sum of short-term and long-term financial debt. Total
capitalization is calculated as the sum of total financial debt, minority interest and total
shareholders equity. Shareholders equity under U.S. GAAP differs from Chilean GAAP in
certain important respects. For a summary of the principal differences between U.S. GAAP and
Chilean GAAP as they relate to us, see Item 5  Operating and Financial Review and Prospects
- U.S. GAAP Reconciliation and Note 28 to our Consolidated Financial Statements.(3)
    
    Each ADS represents six shares of common stock.(4)
    
    Includes juices and mineral water (in Chile and Argentina) and beer, juices and mineral water
(in Brazil).(5)
    
    Unit cases (UCs) refer to 192 ounces of finished beverage product (24 eight-ounce
servings). Exchange Rates
  Daily Observed Exchange Rate Ch$ per US$(1)Year
    
    Low(2)
    
    
    High(2)
    
    
    Average(3)
    
    
    Period End2001
    
    
    557.13
    
    
    
    716.62
    
    
    
    634.76
    
    
    
    654.792002
    
    
    641.75
    
    
    
    756.56
    
    
    
    689.50
    
    
    
    718.612003
    
    
    593.10
    
    
    
    758.21
    
    
    
    691.04
    
    
    
    593.802004
    
    
    557.40
    
    
    
    649.45
    
    
    
    609.41
    
    
    
    557.402005
    
    
    509.70
    
    
    
    592.75
    
    
    
    559.68
    
    
    
    512.50MonthDecember 2005
    
    
    509.70
    
    
    
    518.38
    
    
    
    514.04
    
    
    
    512.50January 2006
    
    
    513.18
    
    
    
    535.36
    
    
    
    525.02
    
    
    
    524.37February 2006
    
    
    516.91
    
    
    
    532.35
    
    
    
    525.35
    
    
    
    517.33March 2006
    
    
    516.75
    
    
    
    536.16
    
    
    
    529.16
    
    
    
    526.18April 2006
    
    
    511.44
    
    
    
    525.40
    
    
    
    516.74
    
    
    
    514.97May 2006
    
    
    512.76
    
    
    
    532.92
    
    
    
    521.56
    
    
    
    531.87
 
 Source: Central Bank.(1)
    
    Nominal Figures.(2)
    
    Exchange rates are the actual low and high, on a day-by-day basis for each period.(3)
    
    With respect to annual periods, the average of the exchange rates on the last day of each
month during the year and, with respect to monthly periods, the actual daily exchange rates.  Risk Factors
  3




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Risks Related to our Company
 We rely heavily on our relationship with The Coca-Cola Company which has substantial influence over
our business and operations
    We are engaged in a highly competitive business that is subject to price competition and that may
impact our net profits and margins
  4




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Raw material prices may be subject to U.S. dollar/local currency exchange risk which could increase
our costs of operations
  Instability in the supply of utility services may adversely impact our results of operations
  Perception of risk in emerging economies may impede our access to international capital markets,
hinder our ability to finance our operations and adversely affect the market price of our common
shares and American Depositary Shares or ADSs
   5




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It may be difficult to enforce civil liabilities against us or our directors, executive officers or
controlling persons
 sociedad anónima
 We are currently reviewing our internal controls pursuant to the Sarbanes-Oxley Act of 2002, and if
we identify any material weaknesses or significant deficiencies in our internal controls, the price
of our ADSs could be adversely affected.
     6




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Risks Relating to Chile
 Our growth and profitability depend on economic conditions in Chile
  
    
    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 and governmental policies to combat inflation;
    
    currency exchange movements; and
    
    global and regional economic conditions.
 Inflation in Chile may disrupt our business and have an adverse effect on our financial condition
and results of operations
  The Chilean peso is subject to depreciation and volatility which could adversely affect the value
of an investment in our securities
   7




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Exchange controls and withholding taxes in Chile may limit repatriation of your investment
   Compendio de
Normas de Cambios Internacionales
 Risks Relating to Brazil
 The Brazilian government has exercised and continues to exercise significant influence over the
Brazilian economy. This influence, as well as potentially volatile Brazilian political and economic
conditions, could adversely affect our business and the market price of our shares and ADSs
   8




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Inflation in Brazil may adversely affect the operations of Refrescos which could adversely impact
our net income and results of operations
  Índice Nacional de Preços au Consumidor
 The Brazilian real is subject to depreciation and volatility which could adversely affect our
financial condition and results of operations
   9




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The Brazilian government imposes certain restrictions on currency conversions and remittances
abroad which could affect the timing and amount of any dividend or other payment we receive
 Banco Central do Brazil
 Risks Relating to Argentina
 Our business is dependent on economic conditions in Argentina
  Recent political and economic instability may recur which could have a material adverse effect on
our Argentine operations
   
    
    increased inflation during 2005;
    
    high nominal exchange rates;
 10




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
    
    primary fiscal surplus and commercial surplus;
    
    negative real interest rates;
    
    expansive monetary policy; and
    
    institutional stability.
     Argentinas default on its public sector debt has deteriorated its financing and coverage capacity
should a new crisis arise.
    11




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The Argentine government imposes certain restrictions on currency conversions and remittances
abroad which could affect the timing and amount of any dividends or other payment we receive from
our Argentine franchise
    Inflation in Argentina may adversely affect our operations which could adversely impact our
financial condition and results of operations
  The Argentine peso is subject to depreciation and volatility which could adversely affect our
financial condition and results of operations
    12




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Argentina continues to face political and economic uncertainty
  Risk Factors Relating to the ADSs and the Shares
 Preemptive rights may be unavailable to holders of our ADSs
 Ley de Sociedades Anónimas Reglamento de Sociedades
Anónimas
   Shareholders rights are less well defined in Chile than in other jurisdictions, including the
United States
  13




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estatutos
  The market for our shares may be volatile and illiquid
 Bolsa de Comercio de Santiago
  
 ITEM 4. INFORMATION ON THE COMPANY
 A. History and development of the Company
 sociedad anónima Registro de Comercio de Santiago
 Bolsa de Comercio de Santiago Bolsa de Comercio de Valparaiso Bolsa Electrónica de Chile
 14




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History
       15




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Vital de
Chanqueahue
    PET Joint Venture
 Cristalerías Joint Venture
 Reclassification of Capital Stock
 16




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Superintendencia de
Administradores de Fondos de Pensiones
    
    
    the franchise swap agreement entered into in August 2004 by Refrescos with Recofarma
Industria do Amazonas Ltda., pursuant to which Refrescos exchange its franchising
rights in the territory of Governador Valadares for Recofarmas franchising rights in
the territory of Nova Iguaçú in Rio de Janeiro;
    
    the merger of Cipet with and into Edasa with Cipet becoming Edasas packaging
division;
    
    the acquisition by Andina Bottling Investments S.A. and Andina Inversiones
Societarias S.A. of Mercury Equity Corp S.A., a company incorporated in the British
Virgin Islands; the transfer, by way of liquidation, of all of the assets and
liabilities of The Sterling Pacific Corp S.A. to such company; and its subsequent name
change to Abisa Corp S.A.;
    
    the merger of Edasa into IASA, which in turn was merged into Inti and the
simultaneous change in corporate name to Embotelladora del Atlantico S.A.;
    
    the assignment to Andina Bottling Investments S.A., Abisa (formerly known as EASA
Chile S.A.) of all of Andinas interests in its subsidiaries and related companies in
Argentina and Uruguay;
    
    the liquidation of certain related companies which were no longer required, e.g.,
the Brazilian subsidiary Brazilian Copa Participações Ltda. was merged into Refrescos;
and
    
    the formation of Andina Bottling Investments Dos S.A. on November 22, 2001, which
subsequently consolidated all of Andinas interests in related companies in Brazil.
 17




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Capital Expenditures
  Chile
 
    
    Investments in bottles returnable (glass and PET bottles) and bottle cases;
    
    Investment in cooling equipments, freezers, post mix and other point of sale
equipments; and
    
    Investments in new equipment to increase efficiency and production capacity.
 Brazil
 
    
    Investments in glass bottles and bottle cases;
    
    Investment in coolers, freezers, post-mix and other point-of-sale equipment; and
    
    Investment in adjacent property to the Jacarepaguá plant (Rio de Janeiro) for the
expansion of inventories, under the distribution and logistics new design project.
 Argentina
 
    
    Investments in bottles (glass and PET bottles) and bottle cases; and
    
    Investments in new equipment to increase efficiency and production capacity.
 Juices and mineral water
 Juice
 
    
    Increasing useful life and operating improvements of production lines;
    
    First stage of RILES treatment plant;
    
    Increasing capacity; and
    
    Extending fire extinguishing net.
 Water
 
    
    Increasing useful life and operating improvements of production lines; and
    
    Increasing capacity.
 PET Packaging
   18




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Capital Expenditures by Territory and by Line of Business
 Year ended December 31,2005
    
    
    2004
    
    
    2003(millions of Ch$)Soft Drinks:Chilean territory
    
    Ch$
    14,159
    
    
    Ch$
    15,240
    
        Ch$
    15,037Brazilian territory
    
    
    7,540
    
    
    
    7,827
    
    
    
    9,183Argentine territory
    
    
    4,743
    
    
    
    1,716
    
    
    
    1,585Other Beverages:Vital
    
    
    666
    
    
    
    875
    
    
    
    970PET Packaging:Argentine territory
    
    
    287
    
    
    
    492
    
    
    
    137Total
    
    Ch$
    27,395
    
    
    Ch$
    26,150
    
    
    Ch$
    26,912
  Divestitures
   B. Business Overview
   19




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Our Products
  Chile
    
    Brazil
    
    ArgentinaCoca-Cola
    
    x
    
    x
    
    xCoca-Cola Light
    
    x
    
    x
    
    xCoca-Cola Light Limón
    
    x
    
    xFanta Naranja
    
    x
    
    x
    
    xFanta Naranja Light
    
    x
    
    x
    
    xFanta Mandarina
    
    xFanta Limón
    
    
    
    
    
    xFanta Uva
    
    
    
    xFanta Uva Light
    
    
    
    xFanta Mix
    
    
    
    xSprite
    
    x
    
    x
    
    xSprite Ice
    
    xSprite Zero
    
    x
    
    x
    
    xQuatro Balance
    
    xQuatro Pomelo
    
    
    
    
    
    xQuatro Limonada
    
    
    
    
    
    xNordic Mist Ginger Ale
    
    xNordic Mist Tónica
    
    xTaí
    
    xInka Cola
    
    xGuaraná Kuat
    
    
    
    xGuaraná Kuat Light
    
    
    
    xGuaraná Kuat Light com Laranja
    
    
    
    xSchweppes Club Soda
    
    
    
    xSchweppes Tónica
    
    
    
    x
    
    xSchweppes Citrus
    
    
    
    x
    
    xCrush Lima-Limón
    
    
    
    
    
    xCrush Naranja
    
    
    
    
    
    xCrush Pomelo Rosado
    
    
    
    
    
    xCepita Naranja
    
    
    
    
    
    xCepita Manzana
    
    
    
    
    
    xCepita Pomelo Rosado
    
    
    
    
    
    xCepita Multifruta
    
    
    
    
    
    xCepita Saborizada Pomelo
    
    
    
    
    
    xCepita Saborizada Limonada
    
    
    
    
    
    xCepita Saborizada Pomelo Rosado
    
    
    
    
    
    xVital
    
    xDasani
    
    x
    
    
    
    xDasani Citrus
    
    x
    
    
    
    xKin
    
    
    
    
    
    xSoda Kin
    
    
    
    
    
    xBonaqua
    
    
    
    xCaxambu
    
    
    
    xAndina Frut
    
    xAndina Nectar
    
    xAndina Hi-C
    
    x
    
    
    
    xKapo
    
    x
    
    xMontefiore
    
    
    
    
    
    xCarioca
    
    
    
    
    
    xBurn
    
    
    
    xNestea
    
    
    
    x
 20




---



##### Table of Contents



Chile
    
    Brazil
    
    ArgentinaKaiser
    
    
    
    xBavaria
    
    
    
    xSanta Cerva
    
    
    
    xHeineken
    
    
    
    xChopp
    
    
    
    xXingu
    
    
    
    x
   1. Soft Drink Business
    Year ended December 31, 2005Chile
    
    
    Brazil
    
    
    Argentina(in millions of Ch$ and UCs)Colas
    
    Ch$
    147,663
    
    
    91.3UCs
    
    Ch$
    118,306
    
    
    116.9UCs
    
    Ch$
    71,928
    
    
    74.4UCsFlavored soft drinks
    
    
    37,455
    
    
    

22.3
    
    
    
    30,507
    
    
    
    30.8
    
    
    
    11,304
    
    
    
    24.9Total
    
    Ch$
    185,118
    
    
    113.6UCs
    
    Ch$
    148,813
    
    
    147.7UCs
    
    Ch$
    83,232
    
    
    99.3UCs
 Year ended December 31, 2004Chile
    
    
    Brazil
    
    
    Argentina(in millions of Ch$ and UCs)Colas
    
    Ch$
    142,503
    
    
    88.7UCs
    
    Ch$
    98,122
    
    
    105.7UCs
    
    Ch$
    58,561
    
    
    70.2UCsFlavored soft drinks
    
    
    35,010
    
    
    
    20.8
    
    
    
    22,976
    
    
    
    27.8
    
    
    
    17,198
    
    
    
    23.1Total
    
    Ch$
    177,513
    
    
    109.5UCs
    
    Ch$
    121,098
    
    
    133.5UCs
    
    Ch$
    75,759
    
    
    93.3UCs
 Year ended December 31, 2003Chile
    
    
    Brazil
    
    
    Argentina(in millions of Ch$ and UCs)Colas
    
    Ch$
    140,115
    
    
    84.9UCs
    
    Ch$
    90,768
    
    
    99.2UCs
    
    Ch$
    48,857
    
    
    61.1UCsFlavored soft drinks
    
    
    34,945
    
    
    
    21.1
    
    
    
    24,037
    
    
    
    28.6
    
    
    
    16,996
    
    
    
    20.6Total
    
    Ch$
    175,060
    
    
    106.0UCs
    
    Ch$
    114,805
    
    
    127.8UCs
    
    Ch$
    65,853
    
    
    81.7UCs
 21




---



##### Table of Contents



Soft Drink Sales by Packaging Type
 Year Ended December 31,2005
    
    2004
    
    2003Chile
    
    Brazil
    
    Argentina
    
    Chile
    
    Brazil
    
    Argentina
    
    Chile
    
    Brazil
    
    Argentina% Total
    
    % Total
    
    % Total
    
    % Total
    
    % Total
    
    % Total
    
    % Total
    
    % Total
    
    % TotalMix
    
    Mix
    
    Mix
    
    Mix
    
    Mix
    
    Mix
    
    Mix
    
    Mix
    
    MixReturnable
    
    
    61.7
    
    
    
    13.4
    
    
    
    48.1
    
    
    
    62.5
    
    
    
    11.1
    
    
    
    44.6
    
    
    
    61.7
    
    
    
    10.2
    
    
    
    40.9Non-returnable
    
    
    34.1
    
    
    
    83.8
    
    
    
    51.0
    
    
    
    33.3
    
    
    
    85.9
    
    
    
    54.4
    
    
    
    33.9
    
    
    
    86.6
    
    
    
    58.2Post Mix
    
    
    4.2
    
    
    
    2.8
    
    
    
    0.9
    
    
    
    4.2
    
    
    
    3.0
    
    
    
    1.0
    
    
    
    4.4
    
    
    
    3.2
    
    
    
    0.9Total
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
 Sales Overview
  Soft Drink Sales Volumes
 Year ended December 31,2005
    
    2004
    
    2003(millions of UCs)Chile
    
    
    113.6
    
    
    
    109.5
    
    
    
    106.0Brazil
    
    
    147.7
    
    
    
    133.5
    
    
    
    127.8Argentina
    
    
    99.3
    
    
    
    93.3
    
    
    
    81.7
 Customers and Distribution
  22




---



##### Table of Contents



Soft Drink Sales by Type of Customer
 Year ended December 31,2005
    
    2004
    
    2003Chile
    
    Brazil
    
    Argentina
    
    Chile
    
    Brazil
    
    Argentina
    
    Chile
    
    Brazil
    
    Argentina(%)Small- and medium-sized
retail establishments for
takeout
    
    
    46
    
    
    
    22
    
    
    
    17
    
    
    
    45
    
    
    
    19
    
    
    
    15
    
    
    
    46
    
    
    
    16
    
    
    
    17Wholesale distributors
    
    
    7
    
    
    
    23
    
    
    
    30
    
    
    
    7
    
    
    
    24
    
    
    
    29
    
    
    
    7
    
    
    
    29
    
    
    
    26Supermarkets
    
    
    25
    
    
    
    31
    
    
    
    15
    
    
    
    26
    
    
    
    36
    
    
    
    16
    
    
    
    26
    
    
    
    35
    
    
    
    19Restaurants, hotels and bars
    
    
    6
    
    
    
    19
    
    
    
    4
    
    
    
    6
    
    
    
    16
    
    
    
    4
    
    
    
    6
    
    
    
    15
    
    
    
    2Fast food outlets
    
    
    3
    
    
    
    2
    
    
    
    1
    
    
    
    3
    
    
    
    2
    
    
    
    1
    
    
    
    3
    
    
    
    2
    
    
    
    1Convenience stores
    
    
    7
    
    
    
    1
    
    
    
    31
    
    
    
    8
    
    
    
    1
    
    
    
    32
    
    
    
    7
    
    
    
    1
    
    
    
    33Other
    
    
    6
    
    
    
    2
    
    
    
    2
    
    
    
    5
    
    
    
    2
    
    
    
    3
    
    
    
    5
    
    
    
    2
    
    
    
    2Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Chile
 Brazil
 23




---



##### Table of Contents



Argentina
 Competition
  Chile.
 Brazil.
 Argentina.
   24




---



##### Table of Contents



Market Share
 Year ended December 31,2005
    
    2004
    
    2003Chile
    
    Brazil
    
    Argentina
    
    Chile
    
    Brazil
    
    Argentina
    
    Chile
    
    Brazil
    
    Argentina(%)Coca-Cola soft drinks
    
    
    68
    
    
    
    56
    
    
    
    51
    
    
    
    68
    
    
    
    53
    
    
    
    51
    
    
    
    67
    
    
    
    52
    
    
    
    33ECUSA soft drinks
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    19
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    26Pepsi-Cola and 7 Up
products
    
    
    3
    
    
    
    5
    
    
    
    17
    
    
    
    4
    
    
    
    6
    
    
    
    17
    
    
    
    4
    
    
    
    17
    
    
    
    19Pritty products
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    11
    
    
    
    2Antarctica products
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Brahma products
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17Other
    
    
    10
    
    
    
    29
    
    
    
    22
    
    
    
    9
    
    
    
    32
    
    
    
    22
    
    
    
    9
    
    
    
    20
    
    
    
    2Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 
 Source: A.C. Nielsen Seasonality
  Raw Materials and Supplies
   Chile  Raw Materials.
 25




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##### Table of Contents



Brazil  Raw Materials .
  Argentina  Raw Materials
  PET Packaging  Raw Materials
 Marketing
  26




---



##### Table of Contents



Channel Marketing
  Marketing Expenditure.
 Retailer Incentive Programs
  Advertising
  2. Other Beverages
 Chile
 Brazil
 Argentina
 27




---



##### Table of Contents



Juices and Waters in Chile
  Sales
  Juices and Mineral Water Sales by Net Sales and Volume (1)
 Year-ended December 31,2005
    
    
    2004
    
    
    2003(in millions of Ch$ and UCs)Andina Frut
    
    Ch$
    7,039
    
    
    
    4.1
    UCs
    
    Ch$
    6,993
    
    
    
    4.0
    UCs
    
    Ch$
    6,933
    
    
    
    3.7
    UCsAndina Néctar
    
    
    5,836
    
    
    
    3.6
    
    
    
    5,418
    
    
    
    3.2
    
    
    
    5,293
    
    
    
    3.0Kapo
    
    
    3,573
    
    
    
    2.8
    
    
    
    3,862
    
    
    
    3.0
    
    
    
    4,205
    
    
    
    3.2Andina HI-C
    
    
    581
    
    
    
    0.3
    
    
    
    683
    
    
    
    0.4
    
    
    
    844
    
    
    
    0.4Dasani (Purified Water ).
    
    
    1,979
    
    
    
    1.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Vital (mineral water)
    
    
    8,945
    
    
    
    9.5
    
    
    
    8,995
    
    
    
    9.4
    
    
    
    8,687
    
    
    
    8.6Total(2)
    
    Ch$
    27,953
    
    
    
    21.9
    UCs
    
    Ch$
    25,951
    
    
    
    20.0
    UCs
    
    Ch$
    25,962
    
    
    
    18.9
    UCs
 
 (1)
    
    Reflects the sale of Vital to bottlers of The Coca-Cola Company.(2)
    
    Includes sales to related companies which is eliminated upon consolidation. Marketing.
 Customers and Distribution
 28




---



##### Table of Contents



Competition
  Raw materials
 Beer, Juices and Mineral Water in Brazil
 Sales
   Competition
 The Distribution Agreements
 29




---



##### Table of Contents



3. PET Packaging
 Overview and Background
   Sales
 30




---



##### Table of Contents



Competition
    4. Patents and Licenses
  5. Regulation
 General
  Chile Servicio Sanitario Metropolitano del Ambiente
 31




---



##### Table of Contents



Servicio de Salud Metropolitano del
Ambiente
 Brazil
 Argentina
 Environmental Matters
  Chile.
  32




---



##### Table of Contents



Codex
Alimentarius
  Brazil
  Ministério do Meio Ambiente Conselho Nacional do
Meio-Ambiente Instituto Brasileiro do
Meio Ambiente e dos Recursos Naturais Renováveis Fundação Estadual de
Engenharia do Meio-Ambiente Instituto Estatal del Medio Ambiente y Recursos Hídricos
 33




---



##### Table of Contents



Argentina
 Gestión Integral de
Residuos Industriales y de Actividades de Servicios ( ) (
   34




---



##### Table of Contents



C. Organizational Structure
  Operating
    
    
    
    Country of
    
    PercentageSubsidiaries
    
    Activity
    
    Incorporation
    
    OwnershipVital S.A.
    
    Operation of
industrial
facilities engaged
in the manufacture,
production,
processing,
distribution and
marketing in
general of all food
products and
particularly of all
kinds of juices.
    
    Chile
    
    
    99.99Vital Aguas S.A.
    
    Operation of
industrial
facilities engaged
in the manufacture,
production,
processing,
distribution and
marketing in
general of all food
products and
particularly of all
kinds of mineral
and purified water.
    
    Chile
    
    
    56.50Servicios Multivending Ltda.
    
    Retail sale of
consumer products
through automatic
vending machines.
    
    Chile
    
    
    99.99Transportes Andina Refrescos
Ltda.
    
    Provision and
exploitation of and
management of
national and
international land
transportation
    
    Chile
    
    
    99.99Río de Janeiro Refrescos Ltda.
    
    Production and sale
of alcoholic and
non-alcoholic
beverages, mineral
water, nectars,
syrups, powdered
juices and other
related semi
processed products
as well as any
related operations.
    
    Brazil
    
    
    99.99Embotelladora del Atlántico S.A.
    
    Production,
bottling,
distribution and
sale of
non-alcoholic
beverages, design,
production and sale
of plastic products
derived from the
plastic industry,
mainly in the
packaging area.
    
    Argentina
    
    
    99.99Abisa Corp. S.A.
    
    Investment company.
    
    British Virgin
Islands
    
    
    99.99
 35




---



##### Table of Contents



36




---



##### Table of Contents



D. Property, Plants and Equipment
  SizeLocation
    
    Principal Use
    
    (m2)Chile:Santiago
    
    Offices; Coca-Cola soft
drinks production; Warehouse
    
    
    99,512Renca
    
    Warehouse
    
    
    265,988Rancagua
    
    Warehouse; Storage
    
    
    24,061San Antonio
    
    Warehouse; Storage
    
    
    19,842Renca
    
    Offices; Juice production
    
    
    40,000Rengo
    
    Mineral water production
    
    
    12,375Brazil:Itaoca
    
    Warehouse
    
    
    76,866Bangú
    
    Warehouse
    
    
    44,614Jacarepaguá
    
    Offices; Coca-Cola soft
drinks production; Warehouse; Land
    
    
    248,375Cachoeiro do Itapemirim
    
    Warehouse
    
    
    8,000Vitória
    
    Warehouse; Coca-Cola soft
drinks production
    
    
    93,320Itambi
    
    Warehouse
    
    
    131,420Cabo Frio
    
    Warehouse
    
    
    1,985Campos
    
    Warehouse
    
    
    24,200Nova Iguaçú
    
    Warehouse
    
    
    79,958Argentina:Mendoza
    
    Offices; Warehouse
    
    
    41,579San Juan
    
    Warehouse; Offices
    
    
    48,036San Luis
    
    Warehouse; Offices
    
    
    6,069Rosario (Santa Fe)
    
    Offices; Warehouse
    
    
    28,070Santo Tomé (Santa Fe)
    
    Offices; Warehouse
    
    
    89,774Córdoba
    
    Offices; Coca-Cola soft
drinks production; Warehouse
    
    
    923,360Río IV
    
    Warehouse; Offices
    
    
    7,482Buenos Aires
    
    Offices; PET bottle production
    
    
    27,043
  Capacity by Line of Business
  37




---



##### Table of Contents



Year Ended December 31,2005
    
    2004Capacity
    
    
    
    
    
    
    
    
    
    CapacityUtilization
    
    
    
    
    
    
    
    
    
    UtilizationAnnual
    
    Average
    
    During
    
    Annual
    
    Average
    
    DuringTotal
    
    Capacity
    
    Peak
    
    Total
    
    Capacity
    
    PeakInstalled
    
    Utilization
    
    Month
    
    Installed
    
    Utilization
    
    MonthCapacity
    
    (%)
    
    (%)
    
    Capacity
    
    (%)
    
    (%)Coca-Cola soft
drinks (millions of
UCs):Chile
    
    
    151
    
    
    
    67
    
    
    
    86
    
    
    
    151
    
    
    
    65
    
    
    
    86Brazil
    
    
    204
    
    
    
    72
    
    
    
    86
    
    
    
    204
    
    
    
    66
    
    
    
    83Argentina
    
    
    129
    
    
    
    79
    
    
    
    92
    
    
    
    129
    
    
    
    73
    
    
    
    90Other Beverages
(millions of UCs)
    
    
    45
    
    
    
    48
    
    
    
    69
    
    
    
    45
    
    
    
    44
    
    
    
    63PET packaging
(millions of
bottles)
    
    
    639
    
    
    
    93
    
    
    
    100
    
    
    
    639
    
    
    
    93
    
    
    
    100
   
    
    one soft drink production facility with eight production lines in the Chilean
territory, with total installed annual capacity of 151 million unit cases (29% of our
total installed annual capacity);
    
    through Vital in the Chilean territory, one fruit juice production facility, with
six production lines and one mineral water production facility with four production
lines, with total installed annual capacity of 45 million unit cases (8% of our total
installed annual capacity);
    
    two soft drink production facilities with eleven production lines in the Brazilian
territory with total installed annual capacity of 204 million unit cases (39% of our
total installed annual capacity); and
    
    one soft drink production facility with seven production lines in the Argentine
territory with a total installed annual capacity of 129 million unit cases (24% of our
total installed annual capacity).
 
 ITEM 4A. UNRESOLVED STAFF COMMENTS
 Not Applicable
 38




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##### Table of Contents



ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 Basis of Presentation
    Factors Affecting Comparability
  Critical Accounting Estimates
 Discussion of critical accounting estimates
  39




---



##### Table of Contents



Allowance for doubtful accounts
  Property, plant and equipment
  Goodwill and other intangible assets
  40




---



##### Table of Contents



Deferred tax assets
  Liability for deposits for bottles and cases
   A. Operating Results
 Summary of Operations
   41




---



##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003(amounts in millions of Ch$)Net sales:Chile
    
    Ch$
    219,881
    
    
    
    46.0
    %
    
    Ch$
    208,928
    
    
    
    48.7
    %
    
    Ch$
    206,186
    
    
    
    50.2
    %Brazil
    
    
    162,510
    
    
    
    34.0
    
    
    
    132,565
    
    
    
    30.9
    
    
    
    125,978
    
    
    
    30.7Argentina
    
    
    100,937
    
    
    
    21.1
    
    
    
    91,121
    
    
    
    21.3
    
    
    
    80,895
    
    
    
    19.7Intercountry eliminations(1)
    
    
    (4,856
    )
    
    
    (1.1
    )
    
    
    (3,965
    )
    
    
    (0.9
    )
    
    
    (2,256
    )
    
    
    (0.5
    )Total
    
    Ch$
    478,742
    
    
    
    100.0
    %
    
    Ch$
    428,649
    
    
    
    100.0
    %
    
    Ch$
    410,803
    
    
    
    100.0
    %Operating income:Chile
    
    Ch$
    46,495
    
    
    
    59.7
    %
    
    Ch$
    41,960
    
    
    
    64.4
    %
    
    Ch$
    39,507
    
    
    
    78.0
    %Brazil
    
    
    20,480
    
    
    
    26.3
    
    
    
    13,737
    
    
    
    21.1
    
    
    
    7,424
    
    
    
    14.7Argentina
    
    
    10,933
    
    
    
    14.0
    
    
    
    9,453
    
    
    
    14.5
    
    
    
    3,721
    
    
    
    7.3Total
    
    Ch$
    77,908
    
    
    
    100.0
    %
    
    Ch$
    65,150
    
    
    
    100.0
    %
    
    Ch$
    50,652
    
    
    
    100.0
    %
 
 (1)
    
    Eliminations represent intercompany sales and unrealized profits.  Year ended December 31,2005
    
    
    2004
    
    
    2003(amounts in millions of Ch$)Net sales:Soft drinks
    
    Ch$
    417,163
    
    
    
    87.2
    %
    
    Ch$
    374,369
    
    
    
    87.3
    %
    
    Ch$
    355,721
    
    
    
    86.6
    %Other beverages(1)
    
    
    49,272
    
    
    
    10.3
    
    
    
    43,956
    
    
    
    10.3
    
    
    
    43,123
    
    
    
    10.5Packaging
    
    
    12,037
    
    
    
    2.5
    
    
    
    10,324
    
    
    
    2.4
    
    
    
    11,959
    
    
    
    2.9Total
    
    Ch$
    478,472
    
    
    
    100.0
    %
    
    Ch$
    428,649
    
    
    
    100.0
    %
    
    Ch$
    410,803
    
    
    
    100.0
    %Operating income:Soft drinks
    
    Ch$
    68,845
    
    
    
    88.4
    %
    
    Ch$
    57,558
    
    
    
    88.4
    %
    
    Ch$
    45,974
    
    
    
    90.8
    %Other beverages(1)
    
    
    6,958
    
    
    
    8.9
    
    
    
    5,616
    
    
    
    8.6
    
    
    
    3,926
    
    
    
    7.7Packaging
    
    
    2,105
    
    
    
    2.7
    
    
    
    1,976
    
    
    
    3.0
    
    
    
    752
    
    
    
    1.5Total
    
    Ch$
    77,908
    
    
    
    100.0
    %
    
    Ch$
    65,150
    
    
    
    100.0
    %
    
    Ch$
    50,652
    
    
    
    100.0
    %
 
 (1)
    
    Includes, in Chile, juices and mineral water; in Brazil, beer, water, energy drinks,
Nestea products and fruit flavored juices; and in Argentina fruit flavored juices and water.  42




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##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003(amounts in millions of Ch$)Net sales
    
    Ch$
    478,472
    
    
    
    100.0
    %
    
    Ch$
    428,649
    
    
    
    100.0
    %
    
    Ch$
    410,803
    
    
    
    100.0
    %Cost of sales
    
    
    (287,395
    )
    
    
    (60.1
    )
    
    
    (262,784
    )
    
    
    (61.3
    )
    
    
    (262,515
    )
    
    
    (63.9
    )Gross profit
    
    
    191,077
    
    
    
    39.9
    
    
    
    165,866
    
    
    
    38.7
    
    
    
    148,288
    
    
    
    36.1Administrative and
selling expenses
    
    
    (113,169
    )
    
    
    (23.7
    )
    
    
    (100,716
    )
    
    
    (23.5
    )
    
    
    (97,636
    )
    
    
    (23.8
    )Operating income
    
    
    77,908
    
    
    
    16.3
    
    
    
    65,150
    
    
    
    15.2
    
    
    
    50,652
    
    
    
    12.3Non-operating
income (expenses),
net
    
    
    (13,332
    )
    
    
    (2.8
    )
    
    
    (19,456
    )
    
    
    (4.5
    )
    
    
    (32,847
    )
    
    
    (8,0
    )Income taxes,
minority interest
(net)
    
    
    (8,537
    )
    
    
    (1.8
    )
    
    
    (4,090
    )
    
    
    (1.0
    )
    
    
    (1,075
    )
    
    
    (0.3
    )Net income
    
    Ch$
    56,039
    
    
    
    11.7
    %
    
    Ch$
    41,604
    
    
    
    9.7
    %
    
    Ch$
    16,730
    
    
    
    4.1
    %
 Results of Operations for the Years Ended December 31, 2005 and 2004
 Chile
    
    
    Brazil
    
    
    Argentina
    
    
    Total(1)2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004(in millions of Ch$)Net sales
    
    Ch$
    219,881
    
    
    Ch$
    208,928
    
    
    Ch$
    162,510
    
    
    Ch$
    132,565
    
    
    Ch$
    100,937
    
    
    Ch$
    91,121
    
    
    Ch$
    478,472
    
    
    Ch$
    428,649Cost of sales
    
    
    (128,426
    )
    
    
    (123,738
    )
    
    
    (97,091
    )
    
    
    (82,231
    )
    
    
    (66,735
    )
    
    
    (60,779
    )
    
    
    (287,395
    )
    
    
    (262,784
    )Gross profit
    
    
    91,455
    
    
    
    85,190
    
    
    
    65,419
    
    
    
    50,334
    
    
    
    34,203
    
    
    
    30,342
    
    
    
    191,077
    
    
    
    165,866Administrative and
selling expenses
    
    
    (44,961
    )
    
    
    (43,230
    )
    
    
    (44,939
    )
    
    
    (36,597
    )
    
    
    (23,269
    )
    
    
    (20,888
    )
    
    
    (113,169
    )
    
    
    (100,716
    )Operating income
    
    Ch$
    46,494
    
    
    Ch$
    41,960
    
    
    Ch$
    20,480
    
    
    Ch$
    13,737
    
    
    Ch$
    10,933
    
    
    Ch$
    9,453
    
    
    Ch$
    77,908
    
    
    Ch$
    65,150
 
 (1)
    
    The total does not equal the sum of all the franchise territories due to intercountry
eliminations. Net Sales
     43




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##### Table of Contents



Cost of Sales
   Gross Profit
  Administrative and Selling Expenses
  44




---



##### Table of Contents



Operating Income
  Non-operating Income (Expense), Net
  45




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##### Table of Contents



As of December 31,2005
    
    
    2004(millions of Ch$)Financial income
    
    Ch$
    28,522
    
    
    Ch$
    24,156Share of income from affiliated companies
    
    
    769
    
    
    
    1,024Other non-operating income
    
    
    7,313
    
    
    
    848Amortization of goodwill
    
    
    (6,229
    )
    
    
    (7,186
    )Financial expenses
    
    
    (21,112
    )
    
    
    (19,830
    )Other non-operating expenses
    
    
    (7,738
    )
    
    
    (6,395
    )Price-level restatement and exchange gain (loss)
    
    
    (14,857
    )
    
    
    (12,073
    )Non-operating income (expense), net
    
    Ch$
    (13,332
    )
    
    Ch$
    (19,456
    )
  
    
    A greater financial income explained by an extraordinary profit from bond sales out of
our investment portfolio, which was carried out at the beginning of 2005, in addition to
the positive results obtained in cross currency swap agreements that are in effect since
2003 and 2004.
    
    A greater non-financial income, reflected in Other Non-Operating Income. This was a
result of a one time profit obtained through shares sales.
 Income Taxes
  
    
    Increase in revenues in Brazil which resulted in higher taxable income.
    
    Increase in revenues in Chile which resulted in higher taxable income.
    
    Lower credits to results due differed taxes in Argentina, resulting from provisions
constituted in 2004, coupled with a difference in income tax affecting Cipet that arose
from litigation.
 Net Income
  Results of Operations for the Years Ended December 31, 2004 and 2003
 Chile
    
    
    Brazil
    
    
    Argentina
    
    
    Total(1)2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003
    
    
    2004
    
    
    2003(in millions of Ch$)Net sales
    
    Ch$
    208,928
    
    
    Ch$
    206,186
    
    
    Ch$
    132,565
    
    
    Ch$
    125,978
    
    
    Ch$
    91,121
    
    
    Ch$
    80,895
    
    
    Ch$
    428,649
    
    
    Ch$
    410,803Cost of sales
    
    
    (123,738
    )
    
    
    (124,036
    )
    
    
    (82,231
    )
    
    
    (83,040
    )
    
    
    (60,779
    )
    
    
    (57,695
    )
    
    
    (262,784
    )
    
    
    (262,515
    )Gross profit
    
    
    85,190
    
    
    
    82,150
    
    
    
    50,334
    
    
    
    42,938
    
    
    
    30,342
    
    
    
    23,200
    
    
    
    165,866
    
    
    
    148,288Administrative and
selling expenses
    
    
    (43,230
    )
    
    
    (42,643
    )
    
    
    (36,597
    )
    
    
    (35,514
    )
    
    
    (20,888
    )
    
    
    (19,479
    )
    
    
    (100,716
    )
    
    
    (97,636
    )Operating income
    
    Ch$
    41,960
    
    
    Ch$
    39,507
    
    
    Ch$
    13,737
    
    
    Ch$
    7,424
    
    
    Ch$
    9,453
    
    
    Ch$
    3,721
    
    
    Ch$
    65,150
    
    
    Ch$
    50,652
 
 (1)
    
    The total does not equal the sum of all the franchise territories due to intercountry
eliminations. 46




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##### Table of Contents



Net Sales
        47




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##### Table of Contents



Cost of Sales
   Gross Profit
  Administrative and Selling Expenses
   Operating Income
  Non-operating Income (Expense), Net
  48




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##### Table of Contents



As of December 31,2004
    
    
    2003(millions of Ch$)Financial income
    
    Ch$
    24,156
    
    
    Ch$
    32,772Share of income from affiliated companies
    
    
    1,024
    
    
    
    1,936Other non-operating income
    
    
    848
    
    
    
    9,674Amortization of goodwill
    
    
    (7,186
    )
    
    
    (7,028
    )Financial expenses
    
    
    (19,830
    )
    
    
    (21,216
    )Other non-operating expenses
    
    
    (6,395
    )
    
    
    (7,943
    )Price-level restatement and exchange gain (loss)
    
    
    (12,073
    )
    
    
    (41,042
    )Non-operating income (expense), net
    
    Ch$
    (19,456
    )
    
    Ch$
    (32,847
    )
  
    
    Financial income: Lower financial income in 2004 was mainly due to: lower profits
arising from cross currency swaps agreements as a consequence of appreciation of the
Chilean peso, lower average interest rates affecting the reinvestment of our bond
portfolio and profit on bond sales and forward agreements in 2003 that did not occur in
2004.
    
    Other non-operating income: In 2003, the Company received a capital distribution
from Embotelladora del Atlantico S.A., which triggered a proportional one-time
recognition of income in respect to the cumulative translation reserve. Additionally,
in 2003 the effect of the translation of local currency to U.S. dollars of the
financial statements, in accordance with Technical Bulletin No. 64 issued by the
Chilean Institute of Accountants, resulted in strong positive result, which was not as
relevant for 2004. Also in 2003, parts of our contingencies were favorably resolved and
the proportion of the corresponding provision was reversed with a one-time positive
result in non-operating income. These results did not take place in 2004.
    
    Price-level restatement and exchange gain (loss):During 2003, the Chilean peso
appreciated against the U.S. dollar, which represented a decrease of Ch$124.81 in the
exchange rate, negatively affecting our positive U.S. dollar net asset position. In
2004, the Chilean peso against the U.S. dollar decreased by only Ch$36.40 which
resulted in a decline of this negative effect.
 Income Taxes
  
    
    Better results in Brazil which resulted in higher taxable profits. In 2004, our
Brazilian subsidiaries applied tax loss carryforwards available from prior periods
which, as provided by Brazilian tax laws, were applied up to a maximum of 30% of 2004
taxable profits, whereas in 2003 tax loss carryforwards were applied without limit,
also pursuant to Brazilian tax law;
    
    Higher deferred taxes in Chile as consequence of higher accrued interest income from
foreign sources which are taxable on a cash basis according to Chilean law; and
    
    improved results in Argentina, although these were offset by accumulated tax losses
carry forward available from prior years.
 49




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##### Table of Contents



Net Income
  Impact of Inflation
      Year ended December 31,2005
    
    2004
    
    2003Consumer price index variation
    
    
    3.6
    %
    
    
    2.5
    %
    
    
    1.0
    %UF variation
    
    
    3.8
    %
    
    
    2.3
    %
    
    
    1.1
    %U.S. dollar variation
    
    
    (8.1
    )%
    
    
    (6.1
    )%
    
    
    (17.4
    )%
  Year ended December 31,2005
    
    
    2004
    
    
    2003(millions of Ch$)Shareholders equity
    
    Ch$
    (8,056
    )
    
    Ch$
    (6,791
    )
    
    Ch$
    (4,236
    )Liabilities
    
    
    (5,855
    )
    
    
    (3,737
    )
    
    
    (2,171
    )
 50




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##### Table of Contents



Year ended December 31,2005
    
    
    2004
    
    
    2003(millions of Ch$)Property, plant and equipment
    
    
    2,699
    
    
    
    2,021
    
    
    
    777Other assets
    
    
    12,255
    
    
    
    9,952
    
    
    
    6,895Balance sheet adjustments
    
    
    1,043
    
    
    
    1,445
    
    
    
    1,265Income statement adjustments
    
    
    (1,613
    )
    
    
    (497
    )
    
    
    139Foreign exchange (loss) gain
    
    
    (14,287
    )
    
    
    (13,022
    )
    
    
    (42,446
    )Price-level restatement and exchange (loss) gain
    
    Ch$
    (14,857
    )
    
    Ch$
    (12,073
    )
    
    Ch$
    (41,042
    )
 Impact of Foreign Currency Fluctuations
    Impact of Governmental Policies
   51




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##### Table of Contents



B. Liquidity and Capital Resources
 Capital Resources
    Treasury and Funding Policies
     52




---



##### Table of Contents



Investing Activities
    Financing Activities
    Liabilities
    53




---



##### Table of Contents



Summary of Significant Debt Instruments
  Unsecured Notes
  
    
    US$150 million of 7.00% Unsecured Notes due 2007;
    
    US$100 million of 7.625% Unsecured Notes due 2027; and
    
    US$100 million of 7.875% Unsecured Notes due 2097.
  
    
    US$118 million of the 7.00% Unsecured Notes due 2007;
    
    US$96 million of the 7.625% Unsecured Notes due 2027; and
    
    US$100 million of the 7.875% Notes due 2097.
  
    
    UF 3.3 million series of bonds due 2008 with annual interest rate over
inflation of 6.20% of which, UF 1.65 million was outstanding at December 31, 2005;
and
    
    UF 3.7 million series of bonds due 2026, with annual interest rate over
inflation of 6.50%, being outstanding at December 31, 2005.
  
    
    Andina must maintain a leverage ratio, defined as total debt/consolidated
equity, of less than 1.20%. For purposes of calculating the leverage ratio, total
debt includes (i) short-term bank liabilities, (ii) the current portion of
long-term bank liabilities, (iii) short-term liabilities and promissory notes,
(iv) the current portion of bonds payable, (v) long-term bank liabilities, and
(vi) long-term bonds payable. Consolidated equity means total shareholders equity
plus minority interest.
    
    Andina must maintain consolidated assets free of any pledge, mortgage or other
encumbrances for an amount equal to at least 1.30 times the consolidated
liabilities that are not guaranteed by the investee.
    
    Andina may not lease, sell, assign or dispose of the franchise territory in
Chile.
 54




---



##### Table of Contents




    
    Andina may not lease, sell, deliver or dispose of its franchise territory in
Argentina or Brazil, as long as either territory represents more than 40% of
Andinas consolidated operating cash flows.
 C. Research and development, patents and licenses
  D. Trend Information
     E. Off-Balance Sheet Arrangements
  55




---



##### Table of Contents



F. Contractual Obligations
  Payments Due by PeriodYearsLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(in millions of constant Ch$ as of December 31, 2005)Long-term bank debt(1)
    
    Ch$
    939
    
    
    Ch$
    484
    
    
    Ch$
    455
    
    
    Ch$
    
    
    
    Ch$
    Short-term bank debt
    
    
    27,935
    
    
    
    27,935
    
    
    
    
    
    
    
    
    
    
    
    Bonds payable(2)
    
    
    115,486
    
    
    
    13,684
    
    
    
    33,245
    
    
    
    5,868
    
    
    
    62,689Purchase obligations
    
    
    287
    
    
    
    79
    
    
    
    139
    
    
    
    69
    
    
    
    Subtotal-included in our
balance sheet
    
    
    144,647
    
    
    
    42,182
    
    
    
    33,839
    
    
    
    5,937
    
    
    
    62,689Operating lease obligations
    
    
    1,404
    
    
    
    1,229
    
    
    
    175
    
    
    
    
    
    
    
    Purchase obligations
    
    
    4,712
    
    
    
    4,712
    
    
    
    
    
    
    
    
    
    
    
    Subtotal-not included in our
balance sheet
    
    
    6,116
    
    
    
    5,941
    
    
    
    175
    
    
    
    
    
    
    
    Total contractual obligations
    
    Ch$
    150,763
    
    
    Ch$
    48,123
    
    
    Ch$
    34,014
    
    
    Ch$
    5,937
    
    
    Ch$
    62,689
 
 (1)
    
    See Notes 14(b) and 15 to the Consolidated Financial Statements for additional
information.(2)
    
    See Note 16 to the Consolidated Financial Statements for additional information.  MaturityYearsMore thanTotal
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(in millions of constant Ch$ as of December 31, 2005)Provisions
    
    Ch$
    21,116
    
    
    Ch$
    16,786
    
    
    Ch$
    
    
    
    Ch$
    4,330Other long-term liabilities
    
    
    8,153
    
    
    
    1,327
    
    
    
    182
    
    
    
    6,644Total long-term liabilities
not included in contractual
obligations
    
    Ch$
    29,269
    
    
    Ch$
    18,113
    
    
    Ch$
    182
    
    
    Ch$
    10,974
 U.S. GAAP Reconciliation
  56




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##### Table of Contents



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 Management and Board of Directors
    Juan Claro G.
    
    Chairman of the
Board of Directors
    
    Has been a member of the board of directors since April 2004.
Principal occupation: Entrepreneur
Other directorships: Josefa S.A.; Inmobiliaria Josema S.A.;
Volcan Tolhuaca S.A.; Laguna Icalma S.A.; El Magnolio S.A;
Inmobiliaria Cauquenes S.A.; Algeciras S.A.; Cauquenes S.A.;
Clarial S.A.; Inmobiliaria Volcan Tolhuaca Ltda.; Inmobiliaria
Laguna Icalma Ltda.; Soc. Inmobiliaria Crucero; Telefónica
Chile CTC Chile S.A.; Emel S.A.; Empresas Melón S.A.; Pesquera
Friosur S.A.; Viña Manquehue S.A.
Date of birth: November 7, 1950José Antonio Garcés S., Jr.
    
    Director
    
    Has been a member of the board of directors since May 1991.
Principal occupation: General manager of Inversiones San
Andrés Ltda.
Other directorships: Banvida S.A.; Inversiones San Andrés LT
S.A.; Inmobiliaria Fray León S.A.
Date of birth: March 1, 1966
 57




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##### Table of Contents



Gonzalo Said H. (1)
    
    Director
    
    Has been a member of the board of directors since May 1993.
Principal occupation: General manager and director of
Inversiones Santa Virginia Ltda.
Other directorships: Director of BBVA Administradora de Fondos
Mutuos BHIF S.A., Embotelladora Andina S.A., and of
Inmobiliaria Don Aurelio Ltda.
Date of birth: October 16, 1964Salvador Said S. (1)
    
    Director
    
    Has been a member of the board of directors since April 1992.
Principal occupation: Executive director of Said Holding Group
Other directorships: Edelpa S.A., Parque Arauco S.A., BBVA
Administradora de Fondos Mutuos BHIF S.A. and BHIF
Administradora de Fondos de Inversión S.A., Inversiones
Caburga S.A; Inversiones Delfín S.A.; Grupo Eulen Chile S.A.
Date of birth: September 16, 1964Glenn Jordan S.
    
    Director
    
    Has been a member of the board of directors since April 2001.
Principal occupation: Executive vice president and operations
director of Coca-Cola Latin America
Other directorships: Coca-Cola Embonor
Date of birth: January 10, 1957Arturo Majlis A.
    
    Director
    
    Has been a member of the board of directors since April 1997.
Principal occupation: Principal partner of the law offices of
Grasty, Quintana, Majlis Compañía
Other directorships: Asesorías e Inversiones Til Til S.A.;
Banchile Seguros de Vida and HNS Banco
Date of birth: April 7, 1962Albert Cussen M. (2)
    
    Director
    
    Has been a member of the board of directors since April 2004.
Principal occupation: Company directorships
Other directorships: Viña Concha y Toro S.A.; Fundación
Educacional y Cultural La Fuente
Date of birth: November 1, 1950Ernesto Bertelsen R.
    
    Alternate Director
to Juan Claro
González
    
    Has been a member of the board of directors since April 2005.
Principal occupation:Director Banco BBVA.
Other directorships: Director Factorline S.A. since November
1993.
Date of birth: March 18, 1945Patricio Parodi Gil
    
    Alternate Director
to Juan Antonio
Garcés Silva
    
    Has been a member of the board of directors since April 2005.
Principal occupation: General manager Consorcio Financiero
S.A. and subsidiaries
Other directorships: Director of Banmédica S.A.; Isapre Vida
Tres S.A.; Help S.A.; Clínica Dávila S.A.; Sociedad Punta del
Cobre S.A.; Pacífico V Región S.A.; and Empresas Moletto S.A.
Date of birth: April 28, 1963
 58




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##### Table of Contents



Manuel Bezanilla U.
    
    Alternate Director
to Gonzalo Said H.
    
    Has been a member of the board of directors since April 2004.
Principal occupation: Lawyer at Portaluppi, Guzmán y Bezanilla
Asesorías Ltda.
Other directorships: Celulosa Arauco S.A., Forestal Arauco
S.A., Pesquera Iquique-Guanaye S.A., Inversiones Siemel S.A.,
Wilisn Corporation, Inversiones Freire Limitada (alternate
director), Inversiones Freire Dos Limitada (alternate
director)
Date of birth: March 17, 1945José Domingo Eluchans
    
    Alternate Director
to Salvador Said S.
    
    Has been a member of the board of directors since April 2005.
Principal occupation: Partner at José Domingo Eluchans
Asesorías Limitada
Other directorships: Director BBVA, Envases del Pacífico S.A.
and advisor to the Board of Directors of Parque Arauco S.A.
Date of birth: August 6, 1953Jorge Hurtado G.
    
    Alternate Director
to Glenn Jordan S.
    
    Has been a member of the board of directors since January 1998.
Principal occupation: Partner of Agricola y Comercial Yerbas
Buenas S.A.
Other directorships: CMPC Tissue S.A.; Vendomática S.A.;
Tecnomix S.A. and Proemsa S.A.
Date of birth: March 25, 1946José Miguel Barros
Van Hövel tot Westerflier
    
    Alternate Director to Arturo Majlis A.
    
    Has been a member of the board of directors since April 2005. Principal occupation: Director of Corporate Finance of Larrain
Vial since 1993.
Other directorships: Director of Bata Chile S.A., Cerámica
Santiago S.A., Viña Santa Carolina S.A., Senegocia.com and
Blanco y Negro S.A.
Date of birth: March 1, 1964Pedro Vicente M.(2)
    
    Alternate Director
to Albert Cussen M.
    
    Has been a member of the board of directors since April 2004.
Principal occupation: Director of Capital Consulting Services
S.A.
Other directorship: Colbún S.A; Campos Chilenos S.A.
Date of birth: August 11, 1951
 
 (1)
    
    Salvador Said S. is the cousin of Gonzalo Said H.(2)
    
    Independent from controlling shareholder pursuant to Article 50 bis, paragraph 6 of the Chilean Public Company Law N° 18,045. Senior Executives
 Jaime García R.
    
    Chief Executive Officer
    
    Mr. Jaime García has been
employed by the Company since
1977, as head of the
research-studies department. In
1978, he was appointed general
manager of Embotelladora Talca
(today part of Embonor S.A.).
In 1979, Mr. García was
appointed general manager of
Embotelladora Concepción (part
of Embonor S.A.). In 1983, he
became financial manager of
Andina, a position he held
until 1987, when he was
appointed general manager of
ISASA (a subsidiary of Andina).
In 1990, Mr. García was
appointed general manager of
Andina, a position he held
until 1993, when he became our
chief executive officer.
Date of birth: November 24, 1953
 59




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##### Table of Contents



Michael Cooper A.
    
    Chief Operating Officer
    
    Mr. Michael Cooper has been
employed by the Company since
May 2000, as chief operating
officer. In 1989, Mr. Cooper
was the chief executive officer
of Inchcape Coca-Cola bottling
operations, with businesses in
Chile, Peru and Russia. In
1999, Embonor S.A. bought
Inchcape Chilean and Peruvian
bottling operations and Mr.
Cooper became chief executive
officer of the consolidated
entity.
Date of birth: May 15, 1948Osvaldo Garay A.
    
    Chief Financial Officer
    
    Mr. Osvaldo Garay has been
employed by the Company since
1997, as controller of Andina.
Mr. Garay was appointed as our
chief financial officer on
October 31, 2002. Prior to
joining Andina, he held a
similar position with Grupo
Claro.
Date of birth: April 20, 1948Pedro Pellegrini R.
    
    Chief Legal &
Communications Officer
    
    Mr. Pedro Pellegrini has been
employed by the Company since
June 1995, as chief legal &
communications officer of
Andina. From 1986 to 1992, Mr.
Pellegrini worked at Carey &
Cia., the largest law firm in
Chile. From 1992 to 1995, Mr.
Pellegrini served as a vice
president of Citibank, N.A.,
and Citicorp-Chile and was in
charge of legal corporate
matters.
Date of birth: January 13, 1965Raúl Ramírez V.
    
    Chief Technical Officer
    
    Mr. Raúl Ramirez has held the
position of chief technical
officer, reporting directly to
the chief operating officer
since 1996. Mr. Ramirez held
the position of deputy manager
of operations from August 1969
until August 1995. In 1995, Mr.
Ramirez was promoted to
corporate manager of
engineering, a position he held
until December 1996. In January
1997, Mr. Ramirez was
transferred to our operations
in Argentina, Cordoba, Edasa,
as technical manager until July
2000.
Date of birth: July 24, 1944German Garib N.
    
    Chief Information Officer
    
    Mr. Germán Garib has been
employed with the Company since
1998, as chief information
officer. Prior to Andina, he
was the marketing manager of
IBM Chile.
Date of birth: August 28, 1961Renato Ramírez F.
    
    General Manager of
Chilean Soft Drink
Operation
    
    Mr. Renato Ramírez has been
employed with the Company since
1979, as general manager of
Chilean soft drink operations.
Mr. Ramírez began working as
head of the budget and costs
department and, in 1980, was
appointed planning assistant
manager. From January 1988 to
August 1990, he was the
commercial manager of
Embotelladora Williamson
Balfour. From September 1990 to
October 1992, Mr. Ramírez
served as marketing manager for
Telephone Company of Chile. In
August 1993, he returned to
Andina as commercial manager, a
position he held until 1997.
Date of birth: July 27, 1952Carlos A. Lohmann
    
    General Manager of Río
de Janeiro Refrescos
Ltda.
    
    Mr. Carlos Lohmann has been
employed with the Company since
August 1997, as general manager
of Refrescos, our Brazilian
subsidiary. He began his
professional career in 1970 at
IBM Brazil and throughout his
approximately 25-year career at
IBM, served in different
positions, including human
resources manager, commercial
operations support manager,
branch office operations
manager, director of customer
 60




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services in Brazil and in New
York, director of customer
financing and general manager
of IBM Leasing. In 1992, he was
appointed general manager of
the PC Company, a joint venture
between IBM and Machline Group,
in Sáo Paulo, Brazil, and in
1995 he was appointed general
manager of the PC Company in
Florida, United States.
Date of birth: October 20, 1945Alejandro A. Feuereisen
    
    General Manager of Edasa
    
    Mr. Alejandro Feuereisen has
been employed as general
manager of Embotelladora del
Atlántico S.A. From September
1995 to July 1998, Mr.
Feuereisen was a commercial
manager of Embotelladora del
Atlántico S.A. From 1993 to
1995, he was a sales manager at
Andina and, from 1981 to 1992,
an officer at Citibank,
Santiago de Chile. During the
last three years, Mr.
Feuereisen was vice president
of the International Financial
Institutions Group. From 1977
to 1980, he served as financial
analyst at Leasing Andino S.A.,
a subsidiary of Banco de Chile.
Date of birth: May 19, 1953Cesar Vargas P.
    
    General Manager of Vital
S.A. and Vital Aguas
S.A.
    
    Mr. César Vargas has been
employed with the Company since
1978 as general manager of
Vital S.A. Mr. Vargas began
working as project engineer and
head of electric maintenance.
In 1985, he was appointed head
of the juice division plant of
Industrial Sud Andina S.A. in
Santiago, a former subsidiary
of Andina, where he was
subsequently promoted to deputy
production manager of the juice
and mineral water division. In
1992, Vital S.A. was created
and Mr. Vargas was appointed
operations manager, a position
that he held until 1998, when
he was appointed general
manager.
Date of birth: May 26, 1957
   61




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##### Table of Contents



Compensation(millions of Ch$)(1)Juan Claro G.
    
    
    82Gonzalo Said H.
    
    
    73Salvador Said S.
    
    
    63Arturo Majlis A.
    
    
    63José Antonio Garcés S. Jr.
    
    
    64Alberto Hurtado F. (2)
    
    
    20José Antonio Garcés S. Sr. (2)
    
    
    20José Said S. (2)
    
    
    20Glenn Jordan S.
    
    
    40Albert J. Cussen M.
    
    
    43Pedro A. Vicente M.
    
    
    16Manuel E. Bezanilla U.
    
    
    16Jorge Hurtado G.
    
    
    16Ernesto Bertelsen R.
    
    
    12José D. Eluchans U.
    
    
    12José M. Barros V.
    
    
    12Patricio Parodi G.
    
    
    12
 
 (1)
    
    The amounts paid to each director and directors alternate for attendance at
board meetings varies in accordance with the position held and the time period during
which such position was held.(2)
    
    Member of the board of directors until April 2005.  Board Practices
  1. Executive Committee
  62




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2. Directors Committee
    
    
    to examine the reports of external auditors and account inspectors of the
balance sheets and other financial statements presented by the administrators or
our liquidators of the Company to the shareholders and to take a position on such
reports before they are presented to shareholders for their approval;
    
    to propose the external auditors and the private risk rating agencies to the
board, which are suggested at the shareholders meeting. In the event of
disagreements with the directors committee, the board may make its own suggestion
and both shall be submitted to consideration of the shareholders;
    
    to review information regarding operations as referred to by articles 44 and 89
of law 18,046 or the Chilean Public Company Law and to create a report concerning
those operations to be sent to the chairman of the board;
    
    to examine the remuneration and compensation plans of senior managers and
executives; and
    
    any other matter specified in the Companys bylaws or required by a regular
shareholders meeting or by the board of directors.
  3. Audit Committee
   63




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Employees
    2005Chile
    
    Brazil
    
    ArgentinaNon-
    
    
    
    
    
    
    
    
    
    Non-
    
    
    
    
    
    
    
    
    
    Non-Total
    
    Union
    
    Union
    
    Total
    
    Union
    
    Union
    
    Total
    
    Union
    
    UnionExecutives
    
    
    23
    
    
    
    
    
    
    
    23
    
    
    
    74
    
    
    
    2
    
    
    
    72
    
    
    
    40
    
    
    
    
    
    
    
    40Technicians and
professionals
    
    
    407
    
    
    
    154
    
    
    
    253
    
    
    
    1,008
    
    
    
    89
    
    
    
    919
    
    
    
    241
    
    
    
    
    
    
    
    241Workers
    
    
    469
    
    
    
    370
    
    
    
    99
    
    
    
    1,018
    
    
    
    128
    
    
    
    890
    
    
    
    894
    
    
    
    734
    
    
    
    160Temporary workers
    
    
    153
    
    
    
    
    
    
    
    153
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    279
    
    
    
    216
    
    
    
    63Total
    
    
    1,052
    
    
    
    524
    
    
    
    528
    
    
    
    2,100
    
    
    
    219
    
    
    
    1,881
    
    
    
    1,454
    
    
    
    950
    
    
    
    504
 64




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##### Table of Contents



2004Chile
    
    Brazil
    
    ArgentinaNon-
    
    
    
    
    
    
    
    
    
    Non-
    
    
    
    
    
    
    
    
    
    Non-Total
    
    Union
    
    Union
    
    Total
    
    Union
    
    Union
    
    Total
    
    Union
    
    UnionExecutives
    
    
    21
    
    
    
    
    
    
    
    21
    
    
    
    70
    
    
    
    2
    
    
    
    68
    
    
    
    38
    
    
    
    
    
    
    
    38Technicians and
professionals
    
    
    387
    
    
    
    155
    
    
    
    232
    
    
    
    947
    
    
    
    85
    
    
    
    862
    
    
    
    217
    
    
    
    
    
    
    
    217Workers
    
    
    482
    
    
    
    338
    
    
    
    144
    
    
    
    994
    
    
    
    125
    
    
    
    869
    
    
    
    845
    
    
    
    675
    
    
    
    170Temporary workers
    
    
    126
    
    
    
    
    
    
    
    126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300
    
    
    
    279
    
    
    
    21Total
    
    
    1,016
    
    
    
    493
    
    
    
    523
    
    
    
    2,011
    
    
    
    212
    
    
    
    1,799
    
    
    
    1,400
    
    
    
    954
    
    
    
    446
 2003Chile
    
    Brazil
    
    ArgentinaNon-
    
    
    
    
    
    
    
    
    
    Non-
    
    
    
    
    
    
    
    
    
    Non-Total
    
    Union
    
    Union
    
    Total
    
    Union
    
    Union
    
    Total
    
    Union
    
    UnionExecutives
    
    
    21
    
    
    
    
    
    
    
    21
    
    
    
    66
    
    
    
    1
    
    
    
    65
    
    
    
    38
    
    
    
    
    
    
    
    38Technicians
and professionals
    
    
    382
    
    
    
    156
    
    
    
    226
    
    
    
    835
    
    
    
    60
    
    
    
    775
    
    
    
    188
    
    
    
    
    
    
    
    188Workers
    
    
    483
    
    
    
    331
    
    
    
    152
    
    
    
    541
    
    
    
    118
    
    
    
    423
    
    
    
    780
    
    
    
    608
    
    
    
    172Temporary workers
    
    
    124
    
    
    
    
    
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    341
    
    
    
    326
    
    
    
    15Total
    
    
    1,010
    
    
    
    487
    
    
    
    523
    
    
    
    1,442
    
    
    
    179
    
    
    
    1,263
    
    
    
    1,347
    
    
    
    934
    
    
    
    413
 Chile Quality
   65




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Cámara Argentina de
Industria de Bebidas sin Alcohol de la República Argentina Federación Argentina de Trabajadores de Aguas Gaseosas)
      66




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##### Table of Contents



Share Ownership of Directors, Members of the Directors Committee and Senior Executives
  Series A
    
    Series BBeneficial
    
    %
    
    Direct
    
    %
    
    Indirect
    
    %
    
    Beneficial
    
    %
    
    Direct
    
    %
    
    Indirect
    
    %Shareholder
    
    Owner
    
    Class
    
    Owner
    
    Class
    
    Owner
    
    Class
    
    Owner
    
    Class
    
    Owner
    
    Class
    
    Owner
    
    ClassJosé Antonio Garcés Silva (junior)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,894,183
    
    
    
    0.4983Arturo Majlis Albalá
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,150
    
    
    
    0.0006
    
    
    
    
    
    
    
    
    
    
    
    5,220
    
    
    
    0.0014
    
    
    
    
    
    
    
    Salvador Said Somavía
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,150
    
    
    
    0.0003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,539,295
    
    
    
    0.9311Gonzalo Said Handal
    
    
    50,001,651
    
    
    
    13.1536
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,488,863
    
    
    
    4.0745
    
    
    
    
    
    
    
    
    
    
    
    5,585,787
    
    
    
    1.4694
 
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 Major Shareholders
  Series A
    
    Series BShareholder
    
    Shares
    
    % Class
    
    Shares
    
    % ClassFreire(1)(2)
    
    
    200,006,603
    
    
    
    52.61
    %
    
    
    181,469,184
    
    
    
    47.74
    %The Bank of New York(3)
    
    
    29,738,064
    
    
    
    7.82
    
    
    
    49,546,596
    
    
    
    13.03The Coca-Cola Company, directly or
through subsidiaries
    
    
    41,962,864
    
    
    
    11.04
    
    
    
    41,962,864
    
    
    
    11.04AFPs as a group (Chilean pension funds)
    
    
    69,588,778
    
    
    
    18.31
    
    
    
    15,970,135
    
    
    
    4.20Principal foreign mutual funds as a group
    
    
    3,185,103
    
    
    
    0.84
    
    
    
    7,473,089
    
    
    
    1.97Executive officers as a group
    
    
    175,474
    
    
    
    0.05
    
    
    
    215,327
    
    
    
    0.06Directors as a group(4)
    
    
    50,004,951
    
    
    
    13.15
    
    
    
    26,513,348
    
    
    
    6.97
 
 (1)
    
    The ownership percentages listed above reflect the voting and economic interests of Andinas
shareholders.(2)
    
    Freire does not hold either directly or indirectly any Series B shares. The amounts set forth
correspond to Series B shares held by other companies, members of the controlling shareholder
group, including: Inversiones Newport Ltda., Inversiones HB S.A, Inversiones Mar Adentro
Ltda., Inversiones Caburga S.A., Inversiones San Andrés Limitada, and Inversiones Ledimor
Chile Ltda.(3)
    
    Acting as depositary for the ADRs.(4)
    
    Represents shares to which Gonzalo Said Handal, José Antonio Garcés Silva (junior) , Salvador
Said Somavía and Arturo Majlis Albalá would claim direct and indirect.  67




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Related Party Transactions
 Ley de Sociedades
Anónimas
  68




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Bottler Agreements
 1
  
 1
    
    VASA was incorporated by means of a public deed dated June 14, 2005, before
the Notary Public of Santiago, Mr. Cosme Gomila Gatica and through this instrument Embotelladora
Andina S.A.s water business category was restructured. Accordingly, VASA which later modified its
legal name to Vital Aguas S.A., currently has the following shareholders: Andina, Embonor and
Polar, directly or through their respective subsidiaries, each respectively holding a 56.5%, 26.4%
and 17.1% ownership interest. This company will develop the business of processing, producing and
bottling Vital Chanqueahue Mineral Water and other waters and products, of whatever nature in
accordance with the terms of the agreements that VASA opportunely convenes with TCCC. 69




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70




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PET Contracts
    71




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72




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Transactions with related companies
  For the year ended December 31,2005
    
    2004
    
    2003Effect on
    
    
    
    
    
    Effect on
    
    
    
    
    
    Effect onincome
    
    
    
    
    
    income
    
    
    
    
    
    income(charge)
    
    
    
    
    
    (charge)
    
    
    
    
    
    (charge)Company
    
    Relationship
    
    Transaction
    
    Amount
    
    credit
    
    Amount
    
    credit
    
    Amount
    
    credit(millions of Ch$)Envases Central S.A.
    
    Equity
    
    Sales of raw
materials and
supplies
    
    Ch$
    1,003
    
    
    Ch$
    
    
    
    Ch$
    722
    
    
    Ch$
    29
    
    
    Ch$
    1,235
    
    
    Ch$
    117Investee
    
    Finished product
purchases
    
    
    13,791
    
    
    
    
    
    
    
    12,998
    
    
    
    
    
    
    
    14,743
    
    
    Coca-Cola de Chile S.A.
    
    Shareholder Related
    
    Concentrate purchases
    
    
    40,838
    
    
    
    
    
    
    
    38,072
    
    
    
    
    
    
    
    36,390
    
    
    Collection of
advertising
participation
    
    
    2,846
    
    
    
    (2,846
    )
    
    
    1,784
    
    
    
    (1,784
    )
    
    
    2,963
    
    
    
    (2,963
    )Water source rental
    
    
    1,506
    
    
    
    (1,506
    )
    
    
    1,415
    
    
    
    (1,415
    )
    
    
    1,369
    
    
    
    (1,369
    )Sales of advertisement
    
    
    3,191
    
    
    
    
    
    
    
    2,412
    
    
    
    
    
    
    
    2,419
    
    
    Others
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    586
    
    
    Coca-Cola de Argentina
S.A.
    
    Shareholder Related
    
    Concentrate purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,599
    
    
    SPBR S.R.L.
    
    Shareholder Related
    
    Concentrate purchases
    
    
    20,094
    
    
    
    
    
    
    
    17,561
    
    
    
    
    
    
    
    
    
    
    Envases del Pacífico S.A.
    
    Director in common
    
    Purchase of raw
materials
    
    
    780
    
    
    
    
    
    
    
    876
    
    
    
    
    
    
    
    998
    
    
    Recofarma Industrias do
Amazonas Ltda.
    
    Shareholder Related
    
    Concentrate purchases
    
    
    29,537
    
    
    
    
    
    
    
    26,542
    
    
    
    
    
    
    
    18,326
    
    
    Payment of
advertising
participation
    
    
    3,128
    
    
    
    (3,128
    )
    
    
    3,796
    
    
    
    (3,485
    )
    
    
    4,179
    
    
    
    (4,179
    )Other
    
    
    426
    
    
    
    
    
    
    
    276
    
    
    
    
    
    
    
    780
    
    
    Envases CMF S.A.
    
    Equity
    
    Container purchases
    
    
    15,904
    
    
    
    
    
    
    
    13,898
    
    
    
    
    
    
    
    13,959
    
    
    Investee
    
    Sale of raw materials
    
    
    
    
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    1,347
    
    
    Services rendered
    
    
    
    
    
    
    
    
    
    
    130
    
    
    
    
    
    
    
    295
    
    
    Centralli Refrigerantes
S.A.
    
    Equity investee
    
    Finished product
purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    900
    
    
    Envases Italprint S.A.
    
    Director in common
    
    Raw material purchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    Embonor S.A.
    
    Shareholder related
    
    Sale of shares
    
    
    3,039
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Embotelladora Coca Cola
Polar S.A.
    
    Shareholder related
    
    Sale of shares
    
    
    1,964
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Inmobiliaria y
Constructora el Golf
S.A.
    
    Shareholder in
common
    
    Real estate purchase
    
    
    16
    
    
    
    1,811
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Inversiones Caburga S.A.
    
    Shareholder
    
    Real estate sale
    
    
    1,024
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Iansagro S.A.
    
    Director in common
    
    Sugar purchase
    
    
    12,182
    
    
    
    
    
    
    
    10,432
    
    
    
    
    
    
    
    
    
    
    
 73




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##### Table of Contents



ITEM 8. FINANCIAL INFORMATION
  Legal Proceedings
  Embotelladora Andina S.A. (Chile)
  Vital S.A. (Chile)
  Rio Janeiro Refrescos Ltda. (Brazil)
   Embotelladora del Atlántico S.A. (Argentina)
  74




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Provisions
  Dividend Policy
    75




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##### Table of Contents



Fiscal Year with
    
    Series A
    
    Series BDate
    
    Respect to which
    
    Ch$ per
    
    
    
    
    
    Ch$ perDividend
    
    Dividend was
    
    Share
    
    US$ per
    
    Share
    
    US$ perYear
    
    Paid
    
    Declared
    
    (nominal)
    
    share
    
    (nominal)
    
    share2006
    
    
    January 26
    
    
    2005
    
    
    
    4.80
    
    
    
    0.00907
    
    
    
    5.28
    
    
    
    0.00998April 27
    
    
    2005
    
    
    
    6.48
    
    
    
    0.01249
    
    
    
    7.13
    
    
    
    0.01374June 01
    
    Retained earnings
    
    
    70.00
    
    
    
    0.13158
    
    
    
    77.00
    
    
    
    0.144742005
    
    
    January 27
    
    
    2004
    
    
    
    4.80
    
    
    
    0.00819
    
    
    
    5.28
    
    
    
    0.00901April 28
    
    
    2004
    
    
    
    4.80
    
    
    
    0.00824
    
    
    
    5.28
    
    
    
    0.00906May 19
    
    Retained earnings
    
    
    70.00
    
    
    
    0.12079
    
    
    
    77.00
    
    
    
    0.13287July 28
    
    
    2005
    
    
    
    4.80
    
    
    
    0.00852
    
    
    
    5.28
    
    
    
    0.00937October 26
    
    
    2005
    
    
    
    4.80
    
    
    
    0.00878
    
    
    
    5.28
    
    
    
    0.009662004
    
    
    January 29
    
    
    2003
    
    
    
    4.80
    
    
    
    0.00804
    
    
    
    5.28
    
    
    
    0.00885April 29
    
    
    2003
    
    
    
    4.80
    
    
    
    0.00768
    
    
    
    5.28
    
    
    
    0.00845May 13
    
    Retained earnings
    
    
    40.00
    
    
    
    0.06225
    
    
    
    44.00
    
    
    
    0.06847July 28
    
    
    2004
    
    
    
    4.80
    
    
    
    0.00747
    
    
    
    5.28
    
    
    
    0.00821October 28
    
    
    2004
    
    
    
    4.80
    
    
    
    0.00780
    
    
    
    5.28
    
    
    
    0.008582003
    
    
    January 30
    
    
    2002
    
    
    
    4.80
    
    
    
    0.00654
    
    
    
    5.28
    
    
    
    0.00719April 30
    
    
    2002
    
    
    
    4.80
    
    
    
    0.00681
    
    
    
    5.28
    
    
    
    0.00750May 15
    
    Retained earnings
    
    
    45.00
    
    
    
    0.06365
    
    
    
    49.50
    
    
    
    0.07001July 29
    
    
    2003
    
    
    
    4.80
    
    
    
    0.00684
    
    
    
    5.28
    
    
    
    0.00752October 29
    
    
    2003
    
    
    
    4.80
    
    
    
    0.00756
    
    
    
    5.28
    
    
    
    0.00832
 
 ITEM 9. THE OFFER AND LISTING
 Bolsa de Comercio de
Santiago Bolsa de Valores Electrónica Bolsa de Valores de Valparaíso
  Share Volume
    
    Ch$ per Share(in thousands)
    
    Series A
    
    Series BSeries A
    
    Series B
    
    High
    
    Low
    
    High
    
    Low2001
    
    
    15,890
    
    
    
    56,229
    
    
    Ch$
    1,650
    
    
    Ch$
    980
    
    
    Ch$
    1,220
    
    
    Ch$
    9202002
    
    
    43,783
    
    
    
    74,233
    
    
    
    1,100
    
    
    
    600
    
    
    
    900
    
    
    
    5692003
    
    
    28,270
    
    
    
    47,568
    
    
    
    1,220
    
    
    
    810
    
    
    
    1,220
    
    
    
    7702004:1st Quarter
    
    
    7,986
    
    
    
    13,831
    
    
    
    1,250
    
    
    
    1,045
    
    
    
    1,240
    
    
    
    1,0402nd Quarter
    
    
    8,066
    
    
    
    22,171
    
    
    
    1,300
    
    
    
    1,110
    
    
    
    1,260
    
    
    
    1,1203rd Quarter
    
    
    7,510
    
    
    
    20,380
    
    
    
    1,390
    
    
    
    1,160
    
    
    
    1,245
    
    
    
    1,1354th Quarter
    
    
    9,958
    
    
    
    38,203
    
    
    
    1,300
    
    
    
    1,181
    
    
    
    1,300
    
    
    
    1,1752005:1st Quarter
    
    
    14,979
    
    
    
    18,829
    
    
    Ch$
    1,300
    
    
    Ch$
    1,135
    
    
    Ch$
    1,370
    
    
    Ch$
    1,166
 76




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Share Volume
    
    Ch$ per Share(in thousands)
    
    Series A
    
    Series BSeries A
    
    Series B
    
    High
    
    Low
    
    High
    
    Low2nd Quarter
    
    
    14,372
    
    
    
    43,505
    
    
    
    1,260
    
    
    
    1,125
    
    
    
    1,395
    
    
    
    1,2353rd Quarter
    
    
    5,696
    
    
    
    17,605
    
    
    
    1,400
    
    
    
    1,188
    
    
    
    1,505
    
    
    
    1,3004th Quarter
    
    
    5,591
    
    
    
    19,795
    
    
    
    1,384
    
    
    
    1,050
    
    
    
    1,455
    
    
    
    1,140Last six months:December 2005
    
    
    3,292
    
    
    
    8,498
    
    
    
    1,220
    
    
    
    1,050
    
    
    
    1,280
    
    
    
    1,140January 2006
    
    
    5,207
    
    
    
    6,819
    
    
    
    1,170
    
    
    
    1,110
    
    
    
    1,265
    
    
    
    1,180February 2006
    
    
    1,991
    
    
    
    6,146
    
    
    
    1,191
    
    
    
    1,130
    
    
    
    1,320
    
    
    
    1,202March 2006
    
    
    1,466
    
    
    
    6,188
    
    
    
    1,240
    
    
    
    1,160
    
    
    
    1,330
    
    
    
    1,245April 2006
    
    
    4,337
    
    
    
    17,709
    
    
    
    1,240
    
    
    
    1,170
    
    
    
    1,324
    
    
    
    1,280May 2006
    
    
    7,264
    
    
    
    27,575
    
    
    
    1,275
    
    
    
    1,150
    
    
    
    1,380
    
    
    
    1,225
 ADS Volume(in thousands)
    
    US$ per ADSSeries A
    
    Series A
    
    Series A
    
    Series BHigh
    
    Low
    
    High
    
    Low2001
    
    
    51,083
    
    
    
    47,046
    
    
    US$
    16.50
    
    
    US$
    8.19
    
    
    US$
    12.88
    
    
    US$
    7.102002
    
    
    29,960
    
    
    
    51,386
    
    
    
    9.90
    
    
    
    4.72
    
    
    
    8.25
    
    
    
    4.812003
    
    
    19,690
    
    
    
    54,887
    
    
    
    11.07
    
    
    
    6.10
    
    
    
    11.40
    
    
    
    6.052004:1st Quarter
    
    
    5,588
    
    
    
    11,005
    
    
    
    12.55
    
    
    
    10.40
    
    
    
    12.55
    
    
    
    10.352nd Quarter
    
    
    7,918
    
    
    
    5,651
    
    
    
    12.50
    
    
    
    10.50
    
    
    
    12.30
    
    
    
    10.653rd Quarter
    
    
    7,009
    
    
    
    4,671
    
    
    
    13.24
    
    
    
    11.41
    
    
    
    12.14
    
    
    
    10.854th Quarter
    
    
    15,063
    
    
    
    17,523
    
    
    
    13.20
    
    
    
    11.96
    
    
    
    13.59
    
    
    
    11.502005:1st Quarter
    
    
    5,577
    
    
    
    15,944
    
    
    
    13.29
    
    
    
    11.80
    
    
    
    14.14
    
    
    
    12.152nd Quarter
    
    
    1,732
    
    
    
    11,858
    
    
    
    13.00
    
    
    
    11.50
    
    
    
    14.65
    
    
    
    12.473rd Quarter
    
    
    1,429
    
    
    
    4,743
    
    
    
    15.62
    
    
    
    12.25
    
    
    
    17.00
    
    
    
    13.504th Quarter
    
    
    2,665
    
    
    
    4,535
    
    
    
    15.70
    
    
    
    12.15
    
    
    
    16.94
    
    
    
    13.27Last six months:December 2005
    
    
    1,201
    
    
    
    1,862
    
    
    
    13.92
    
    
    
    12.15
    
    
    
    15.10
    
    
    
    13.27January 2006
    
    
    1,002
    
    
    
    2,063
    
    
    
    13.79
    
    
    
    12.35
    
    
    
    14.85
    
    
    
    13.35February 2006
    
    
    1,015
    
    
    
    3,841
    
    
    
    13.80
    
    
    
    12.90
    
    
    
    15.01
    
    
    
    13.67March 2006
    
    
    1,520
    
    
    
    1,638
    
    
    
    14.18
    
    
    
    12.75
    
    
    
    15.04
    
    
    
    13.90April 2006
    
    
    1,045
    
    
    
    495
    
    
    
    14.47
    
    
    
    13.35
    
    
    
    15.49
    
    
    
    14.37May 2006
    
    
    648
    
    
    
    1,232
    
    
    
    14.65
    
    
    
    12.61
    
    
    
    16.10
    
    
    
    13.75
 
 Sources: Santiago Stock Exchange Official Quotations Bulletin and New York Stock Exchange.   77




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
    
    Transfers to wholly-owned subsidiaries of any Freire Shareholder, provided that any shares transferred to such entities remain subject to the provisions of the Agreement;
    
    Acceptance by a Freire Shareholder party to the Agreement of a bona fide offer from
a third party to purchase some or all of the shares held by such shareholder, so long
as the Freire Shareholder first offers such shares for sale, on the same terms and
conditions as those proposed to be sold to the third-party purchaser and to the other
shareholder party to the Agreement; and
    
    A proposal by a shareholder party to the Agreement to sell its shares in a public
offering or in a brokers transaction, so long as it first offers such shares to the
other shareholders party to the Agreement at the price proposed in the public sale
notice.
  The Yankee Bonds
 5 8 7 8
 Debt Securities
 inter alia
  78




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79




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ITEM 10. ADDITIONAL INFORMATION
 Memorandum and Articles of Association
 Register and Entry Number
 Registro de Comercio del Conservador de Bienes Raíces
 Material Contracts
  
 Vital de Chanqueahue
   Kapo, Andina Nectar, Andina H-C, Andina Frut,
   80




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81




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Foreign Investment and Exchange Controls in Chile
 Compendio de Normas de Cambios Internacionales
     82




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83




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Exchange Rates
  84




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Tax Considerations Relating to Equity Securities
 Chilean Tax Considerations
 Servicio de Impuestos
Internos
  Cash Dividends and Other Distributions
  Company taxable income
    
    $
    100.0First Category Tax (17.0% of Ch$100)
    
    
    (17.0
    )Net distributable income
    
    
    83.0Dividend distributed
    
    
    83.0Withholding Tax (35% of the sum of Ch$83.0 dividend plus Ch$17.0 First Category Tax paid)
    
    
    (35.0
    )Credit for First Category Tax
    
    
    17.0Net additional tax withheld
    
    
    (18.0
    )Net dividend received
    
    
    65.0Effective dividend withholding rate (18.0/83.0)
    
    
    21.7
    %
   85




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Capital Gains
     Other Chilean Taxes
  Withholding Tax Certificates
  86




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United States Tax Considerations
 Prospective purchasers should consult their tax advisors about
the federal, state, local and foreign tax consequences to them of the purchase, ownership and
disposition of ADSs or shares of common stock.
  ADSs
  87




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Cash Dividends and Other Distributions
     88




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Capital Gains
  Estate and Gift Taxation
  Information Reporting and Backup Withholding
  89




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Tax Considerations Relating to Debt Securities
 General
    Chilean Tax Considerations
    90




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United States Tax Considerations
  Persons considering the purchase, ownership or disposition of the Debt Securities should
consult their own tax advisors concerning the federal income tax consequences in light of their
particular situations as well as any consequences arising under the laws of any other taxing
jurisdiction.
  Payments of Interest
  91




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Sale, Exchange and Retirement of Debt Securities
  92




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Information Reporting and Backup Withholding
   Special Tax Considerations Relating to 2097 Debentures
  Persons considering the purchase, ownership
or disposition of the 2097 Debentures should consult their own tax advisors concerning additional
potential tax consequences, including those arising upon a sale, exchange or redemption of the 2097
Debentures, which could result from the treatment of the 2097 Debentures as equity for U.S. federal
income tax purposes.
 93




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##### Table of Contents



Documents on Display
   http://www.svs.cl
 NYSE and Chilean Corporate Governance Requirements
  ITEM
    
    NYSE REQUIREMENTS
    
    CHILEAN LAW REQUIREMENTS303A.01
Independence
    
    Members of the
Board of Directors
must be independent
in their majority.
    
    There is no legal
obligation to have a
Board of Directors
composed mainly of
independent members. In
addition, according to
section 303A regarding
Controlled Companies,
the requirements of
303A do not apply to
our Company.303A.02
Test of Independence
    
    Members of the
Board of Directors
must meet the Test
of Independence.
    
    No similar legal
obligation exists under
Chilean law. However,
Chilean law defines a
director as independent
if he is elected by
votes of shareholders
who are not controlling
shareholders or
otherwise related to
controlling
shareholders.303A.03
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. The
Non-
 94




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ITEM
    
    NYSE REQUIREMENTS
    
    CHILEAN LAW REQUIREMENTSManagement Director
does not exist under
Chilean law. Directors,
however, are required
to convene in legally
established meetings to
resolve matters
required by Chilean
Corporation Law.303A.04
Corporate Governance
Committee
    
    Listed companies
must have a
Nominating/Corporate
Governance
Committee composed
entirely of
independent
directors and must
have a written
charter addressing
certain matters.
    
    There is no similar
legal obligation under
Chilean law. In
addition, section 303 A
regarding Controlled
Companies does not
apply to our Company.
Chilean Andina has a
Directors Committee
whose functions are set
by Chilean Corporation
Law.303A.05
Compensation Committee
    
    Listed companies
must have a
Compensation
Committee composed
entirely of
independent
directors, and must
have a written
charter addressing
certain matters.
    
    There is no similar
legal obligation under
Chilean law. In
accordance with Chilean
law, the
above-mentioned
Directors Committee is
in charge of reviewing
management
compensation. In
addition, section 303 A
regarding Controlled
Companies does not
apply to our Company.303A.06
Audit Committee
    
         Listed
companies must have
an Audit Committee
that satisfies the
requirements of
Rule 10A-3 under
the Exchange Act.     The Audit
Committee must have
a minimum of three
members.     
In addition to any
requirement of Rule
10A-3(b)(1), all
Audit Committee
members must
satisfy the
requirements for
independence set
out in Section 303
A.02.      The
Audit Committee must
have a written charter
addressing certain
matters.      An
Audit Committee was
appointed in
accordance with the
characteristics,
composition and
faculties
established under
Item 16-A of this
document.
    
    No similar legal
obligation exists under
Chilean law. However,
in accordance with the
Chilean Public
Companies Law 18,046,
public companies that
have a net worth of
more than 1.5 million
UFs must have a
Committee of Directors,
formed by three
independent board
members and the
controller. The
Committees
compensation is set by
the ordinary
shareholders meeting,
and it performs the
following functions: (1) examines
reports of
account inspectors and
external auditors,
financial statements
and issues an opinion
on these reports and
statements; (2)
proposes external
auditors and rating
agencies to the Board
of Directors; (3)
examines conflicts of
interest and informs
the Board regarding
such conflicts; (4)
examines compensation
systems and plans for
directors and executive
officers; and (5) any
other matters that the
bylaws, the
shareholders meeting
or the Board of
Directors decides.303A.07
Internal Audit Function
    
    Listed companies
must maintain an
Internal Audit
Function to
    
    There is no similar
obligation under
Chilean law. Chilean
law requires that
 95




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ITEM
    
    NYSE REQUIREMENTS
    
    CHILEAN LAW REQUIREMENTSprovide management
and the Audit
Committee with ongoing
assessments of the
companys risk
management
processes and
systems of internal
control. A listed
company may choose
to outsource this
function to a third
party service
provider other than
its independent
auditor.
    
    companies must have
both external auditors
and an audit
department.
However, Andina will
designate an Audit
Committee in accordance
with Rule 10 A.3 before
July 31, 2005.303A.08
Voting on Compensation
Plans
    
    Shareholders must
have the
opportunity to vote
on compensation
plans regarding
board members,
executives and
employees.
    
    Directors compensation
is annually approved
during the Companys
General Shareholders
Meeting.303A.09
Corporate Governance
    
    Listed companies
must adopt and
disclose Corporate
Governance
Practices.
    
    Chilean Law does not
require the adoption of
Corporate Governance
Practices because they
have been established
by Chilean Corporate
Law.303A.10
Code of Business Conduct
    
    A company must
adopt a Code of
Business Conduct
for its directors,
officers and
employees. Such
company must
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
regulate the company
and its relations with
personnel. Such
regulations must
contain, among other
things, regulations
related to ethics and
good behavior.
Notwithstanding the
above, a company may
create internal codes
of conduct, provided
they do not require or
prohibit behavior that
contravenes Chilean
law. In 1996, Andina
created a Code of
Business Conduct that
applies to the entire
Company, which does not
require or prohibit
behavior that
contravenes Chilean
Law. This Code of
Business Conduct is
available on our
website at
http://www.koandina.com/
        .303A.11
Summary of Differences
    
    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 as applicable
to U.S. domestic
listed companies.
    
    No similar obligation
exists under Chilean
law.
 96




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ITEM
    
    NYSE REQUIREMENTS
    
    CHILEAN LAW REQUIREMENTS303A.12
CEO Certification
    
         Each
listed company CEO must
certify to the NYSE
each year that he
or she is not aware
of any violation by
the company of NYSE
corporate
governance listing
standards.
      Each
listed company CEO must
promptly notify the
NYSE in writing
after any executive
officer of the
listed company
becomes aware of
any material
non-compliance with
any of the
applicable
provisions of
Section 303 A.
    

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.      Each
listed company must
submit an executed
Written Affirmation
annually to the
NYSE. In addition,
each listed company
must submit an
interim Written
Affirmation each
time a change
occurs to the Board
of Directors or any
of the committees
subject to Section
303 A. The annual
and interim Written
Affirmations must
be in the form
specified by the
NYSE.303A.13
Public Reprimand
    
    The NYSE may issue
a Public Reprimand
letter to any
listed company,
regardless of the
type of security
listed or country
of incorporation if
it determines the
company has
violated a NYSE
listing standard.
    
    No similar obligation
exists under Chilean
law, with the exception
of sanctions imposed by
the Chilean
Superintendence of
Securities (SVS).
 
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
  97




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##### Table of Contents



EstimatedFair MarketExpected Maturity Date
    
    Value2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    Total(in millions of Ch$)Interest Earning
AssetsBonds
    
    Ch$
    2,565
    
    
    Ch$
    5,412
    
    
    Ch$
    11,662
    
    
    
    
    
    
    
    
    
    
    Ch$
    65,563
    
    
    Ch$
    85,202
    
    
    Ch$
    84,967Weighted average
interest rate
    
    
    8.25
    %
    
    
    7.86
    %
    
    
    6.20
    %
    
    
    
    
    
    
    
    
    
    
    6.10
    %
    
    
    6.29
    %Time deposits and
credit link
    
    Ch$
    34,278
    
    
    Ch$
    3,198
    
    
    Ch$
    5,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    42,601
    
    
    Ch$
    43,315Weighted average
interest rate
    
    
    7.55
    %
    
    
    3.96
    %
    
    
    6.94
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.21
    %Interest Bearing
LiabilitiesLong-term debtFixed RateBonds
    
    Ch$
    12,852
    
    
    Ch$
    28,302
    
    
    Ch$
    4,943
    
    
    Ch$
    1,956
    
    
    Ch$
    3,912
    
    
    Ch$
    62,689
    
    
    Ch$
    114,654
    
    
    Ch$
    127,259Weighted average
interest rate
    
    
    6.20
    %
    
    
    6.66
    %
    
    
    6.20
    %
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    6.54
    %
    
    
    6.51
    %Bank liabilities
    
    Ch$
    26,997
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    26,997
    
    
    Ch$
    26,997Weighted average
interest rate
    
    
    6.62
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.62
    %
    
    
    Variable RateBank liabilities
    
    Ch$
    478
    
    
    Ch$
    455
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    933
    
    
    Ch$
    933Weighted average
interest rate
    
    
    13.26
    %
    
    
    13.28
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.26
    %
 Foreign Currency Risk
 .
 98




---



##### Table of Contents



Expected Maturity Date
    
    EstimatedThere-
    
    
    
    
    
    Fair Market2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    after
    
    Total
    
    Value(in millions of Ch$)AssetsUS$ denominated:Cash
    
    Ch$
    2,847
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    2,847
    
    
    Ch$
    2,847Money market
mutual funds
    
    
    2,278
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,278
    
    
    
    2,278Time deposit and
credit link
    
    
    29,847
    
    
    
    3,198
    
    
    
    5,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,170
    
    
    
    38,884Bonds
    
    
    2,565
    
    
    
    5,412
    
    
    
    11,662
    
    
    
    
    
    
    
    
    
    
    
    65,563
    
    
    
    85,202
    
    
    
    84,967Foreign currency
contracts
    
    
    719
    
    
    
    13,743
    
    
    
    15,206
    
    
    
    
    
    
    
    
    
    
    
    3,053
    
    
    
    32,721
    
    
    
    32,721LiabilitiesUS$ denominated:Long-term
liabilities:Bonds
    
    
    
    
    
    Ch$
    16,439
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    2,050
    
    
    Ch$
    18,489
    
    
    Ch$
    19,353Weighted
average
interest rate
    
    
    
    
    
    
    7.00
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.63
    %
    
    
    7.07
    %Bank
liabilities
    
    Ch$
    20,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ch$
    20,500
    
    
    Ch$
    20,500Weighted
average
interest rate
    
    
    6.51
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.51
    %
 
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  99




---



##### Table of Contents



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
  Item 3Key InformationRisk FactorsWe are currently reviewing our
internal controls for the first time pursuant to the Sarbanes-Oxley Act of 2002, and if we identify
any material weaknesses or significant deficiencies in our internal controls, the price of our
ordinary shares and ADSs could be adversely affected
 
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  100




---



##### Table of Contents



ITEM 16B. CODE OF ETHICS
  
 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Fees Paid To Independent Public Accountants
  Year Ended December 31,2005
    
    
    2004% of TotalServices rendered
    
    Fees
    
    
    % of Total Fees
    
    
    Fees
    
    
    Fees(amounts in millions of Ch$)Audit fees (1)
    
    
    245
    
    
    
    89
    
    
    
    236
    
    
    
    77
    %Audit-related fees (2)
    
    
    16
    
    
    
    6
    
    
    
    30
    
    
    
    10Tax fees (3)
    
    
    16
    
    
    
    5
    
    
    
    40
    
    
    
    13Total
    
    Ch$
    277
    
    
    
    100
    %
    
    Ch$
    306
    
    
    
    100
    %
 
 (1)
    
    Audit fees consist of services that would normally be provided in connection with
statutory and regulatory filings or engagements, including services that generally only the
independent accountant can reasonably provide.(2)
    
    Audit-related fees relate to assurance and associated services that traditionally are
performed by the independent accountant, including: attest services that are not required by
statute or regulation; accounting consultation and audits in connection with mergers,
acquisitions and divestitures; employee benefit plans audits; and consultation concerning
financial accounting and reporting standards.(3)
    
    Tax fees relate to services performed by the tax division for tax compliance, planning, and
advice. Directors Committee and Audit Committee Pre-Approval Policies and Procedures
  101




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##### Table of Contents



ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  
 ITEM 16E. PURCHASERS OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  102




---



##### Table of Contents



PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
  PageIndex to Consolidated Financial Statements
    
    
    F-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at December 31,
2005 and 2004
    
    
    F-3Consolidated Statements of Income for the years ended December 31,
2005, 2004 and 2003
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31,
2005, 2004 and 2003
    
    
    F-6Notes to the Consolidated Financial Statements at December 31, 2005
and 2004 and for the years ended December 31, 2005, 2004 and 2003
    
    
    F-8
 
 ITEM 19. EXHIBITS
  EXHIBIT INDEX
 Item
    
    Description1.1
    
    English translation of our Bylaws (filed with the U.S. Securities and
Exchange Commission in our annual report on Form 20-F for the fiscal
year ended December 31, 1996 and incorporated herein by reference)8.1
    
    List of our subsidiaries (filed herewith).12.1
    
    Certification of Jaime Garcia pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).12.2
    
    Certification of Osvaldo Garay pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).13.1
    
    Certification of Jaime Garcia pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith).13.2
    
    Certification of Osvaldo Garay pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith).
 103




---



##### Table of Contents



SIGNATURE
  EMBOTELLADORA ANDINA S.A.(ANDINA BOTTLING COMPANY)/s/ Osvaldo GarayOsvaldo GarayChief Financial Officer
  104




---



##### Table of Contents



EMBOTELLADORA
ANDINA S.A.
(ANDINA BOTLING COMPANY)
 INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
 PageIndex to Consolidated Financial Statements
    
    
    F-1Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at December 31,
2005 and 2004
    
    
    F-3Consolidated Statements of Income for the years ended December 31,
2005, 2004 and 2003
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31,
2005, 2004 and 2003
    
    
    F-6Notes to the Consolidated Financial Statements at December 31, 2005
and 2004 and for the years ended December 31, 2005, 2004 and 2003
    
    
    F-8
 F-1




---



##### 



Report of Independent Registered Public Accounting FirmConsolidated Balance SheetsConsolidated Statements of IncomeConsolidated Statements of Cash FlowsNotes to the Consolidated Financial Statements
  Ch$
    
    -
    
    Chilean pesosThCh$
    
    -
    
    Thousands of Chilean pesosUS$
    
    -
    
    United States dollarsThUS$
    
    -
    
    Thousands of United States dollarsUF
    
    -
    
    Unidades de Fomento (Chilean government inflation-indexed monetary units)A$
    
    -
    
    Argentine pesosThA$
    
    -
    
    Thousands of Argentine pesosR$
    
    -
    
    Brazilian realsThR$
    
    -
    
    Thousands of Brazilian reals
    
    -
    
    EuroTh
    
    -
    
    Thousands of Euro




---



##### Table of Contents



F-2




---



##### Table of Contents



EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 
 At December 31,ASSETS
    
    Note
    
    2005
    
    2004ThCh$
    
    ThCh$CURRENT ASSETSCash
    
    
    
    
    
    
    14,412,531
    
    
    
    14,324,761Time deposits
    
    
    3
    
    
    
    25,700,571
    
    
    
    7,833,816Marketable securities
    
    
    4
    
    
    
    14,003,282
    
    
    
    16,660,657Trade accounts receivable (net)
    
    
    5
    
    
    
    34,207,081
    
    
    
    32,341,391Notes receivable (net)
    
    
    5
    
    
    
    11,142,844
    
    
    
    10,361,590Other receivables (net)
    
    
    5
    
    
    
    19,777,487
    
    
    
    16,860,558Accounts receivable from related companies
    
    
    6a
    )
    
    
    5,587,160
    
    
    
    85,029Inventories (net)
    
    
    7
    
    
    
    17,425,364
    
    
    
    21,463,406Recoverable taxes
    
    
    
    
    
    
    9,780,175
    
    
    
    5,773,594Prepaid expenses
    
    
    
    
    
    
    1,607,654
    
    
    
    1,960,736Other current assets
    
    
    9
    
    
    
    8,371,365
    
    
    
    9,420,072Total current assets
    
    
    
    
    
    
    162,015,514
    
    
    
    137,085,610PROPERTY, PLANT AND EQUIPMENT
    
    
    10Land
    
    
    
    
    
    
    12,687,024
    
    
    
    14,791,171Buildings and improvements
    
    
    
    
    
    
    79,542,528
    
    
    
    94,749,077Machinery and equipment
    
    
    
    
    
    
    204,303,414
    
    
    
    213,495,853Other property, plant and equipment
    
    
    
    
    
    
    196,549,926
    
    
    
    199,205,825Technical reappraisal of property, plant and equipment
    
    
    
    
    
    
    2,014,038
    
    
    
    2,014,038Less: Accumulated depreciation
    
    
    
    
    
    
    (355,790,873
    )
    
    
    (365,098,691
    )Total property, plant and equipment
    
    
    
    
    
    
    139,306,057
    
    
    
    159,157,273OTHER ASSETSInvestments in unconsolidated affiliates
    
    
    11
    
    
    
    21,386,070
    
    
    
    20,733,308Investments in other companies
    
    
    
    
    
    
    54,570
    
    
    
    56,202Goodwill (net)
    
    
    12
    
    
    
    71,393,139
    
    
    
    86,832,454Long-term receivables
    
    
    
    
    
    
    110,473
    
    
    
    48,638Accounts receivable from related companies
    
    
    6a
    )
    
    
    22,492
    
    
    
    34,863Intangibles (net)
    
    
    
    
    
    
    175,850
    
    
    
    222,639Deferred income taxes
    
    
    8b
    )
    
    
    676,498
    
    
    
    Long-term investments and other long-term assets
    
    
    13
    
    
    
    130,908,934
    
    
    
    196,430,537Total other assets
    
    
    
    
    
    
    224,728,026
    
    
    
    304,358,641Total assets
    
    
    
    
    
    
    526,049,597
    
    
    
    600,601,524
  F-3




---



##### Table of Contents



EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 
 LIABILITIES, MINORITY INTEREST
    
    
    
    
    
    At December 31,AND SHAREHOLDERS' EQUITY
    
    Note
    
    2005
    
    2004ThCh$
    
    ThCh$CURRENT LIABILITIESShort-term bank borrowings
    
    
    14a
    )
    
    
    27,935,329
    
    
    
    18,954,510Current portion of long-term bank borrowings
    
    
    14b
    )
    
    
    484,101
    
    
    
    1,990,097Current portion of bonds payable
    
    
    16
    
    
    
    13,684,254
    
    
    
    13,760,409Dividends payable
    
    
    
    
    
    
    3,978,869
    
    
    
    4,600,639Trade accounts payable
    
    
    
    
    
    
    37,876,730
    
    
    
    35,152,154Notes payable
    
    
    
    
    
    
    
    
    
    
    5,180Other creditors
    
    
    
    
    
    
    2,825,697
    
    
    
    3,011,134Amounts payable to related companies
    
    
    6b
    )
    
    
    8,330,817
    
    
    
    10,370,232Other accrued liabilities
    
    
    17
    
    
    
    631,543
    
    
    
    330,627Withholdings
    
    
    
    
    
    
    16,345,028
    
    
    
    14,118,908Income taxes payable
    
    
    
    
    
    
    8,691,404
    
    
    
    5,094,059Unearned income
    
    
    
    
    
    
    249,206
    
    
    
    Deferred income taxes
    
    
    8b
    )
    
    
    711,623
    
    
    
    140,643Other current liabilities
    
    
    
    
    
    
    3,017,376
    
    
    
    2,697,431Total current liabilities
    
    
    
    
    
    
    124,761,977
    
    
    
    110,226,023LONG-TERM LIABILITIESLong-term bank borrowings
    
    
    15
    
    
    
    454,501
    
    
    
    47,183,445Bonds payable
    
    
    16
    
    
    
    101,802,194
    
    
    
    115,827,434Other creditors
    
    
    
    
    
    
    146,581
    
    
    
    170,455Other accrued liabilities
    
    
    17
    
    
    
    21,115,867
    
    
    
    17,559,882Deferred income taxes
    
    
    8b
    )
    
    
    
    
    
    
    393,113Other long-term liabilities
    
    
    
    
    
    
    8,214,357
    
    
    
    7,868,242Total long-term liabilities
    
    
    
    
    
    
    131,733,500
    
    
    
    189,002,571MINORITY INTEREST
    
    
    19
    
    
    
    1,117,529
    
    
    
    53,749COMMITMENTS AND CONTINGENCIES
    
    
    25SHAREHOLDERS EQUITY
    
    
    20Paid-in capital
    
    
    
    
    
    
    197,904,994
    
    
    
    197,904,994Other reserves
    
    
    
    
    
    
    (201,145
    )
    
    
    15,098,813Retained earnings from previous years
    
    
    
    
    
    
    26,334,355
    
    
    
    58,711,421Net income for the year
    
    
    
    
    
    
    56,039,346
    
    
    
    41,604,440Interim dividends
    
    
    
    
    
    
    (11,640,959
    )
    
    
    (12,000,487
    )Total shareholders equity
    
    
    
    
    
    
    268,436,591
    
    
    
    301,319,181Total liabilities and shareholders equity
    
    
    
    
    
    
    526,049,597
    
    
    
    600,601,524
  F-4




---



##### Table of Contents



EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME
 
 For the years ended December 31,2005
    
    2004
    
    2003Note
    
    ThCh$
    
    ThCh$
    
    ThCh$OPERATING INCOMENet sales
    
    
    
    
    
    
    478,471,736
    
    
    
    428,649,371
    
    
    
    410,802,664Cost of sales
    
    
    
    
    
    
    (287,394,842
    )
    
    
    (262,783,809
    )
    
    
    (262,514,754
    )Gross profit
    
    
    
    
    
    
    191,076,894
    
    
    
    165,865,562
    
    
    
    148,287,910Administrative and selling expenses
    
    
    
    
    
    
    (113,168,847
    )
    
    
    (100,715,605
    )
    
    
    (97,635,809
    )Operating income
    
    
    
    
    
    
    77,908,047
    
    
    
    65,149,957
    
    
    
    50,652,101NON-OPERATING INCOME AND EXPENSEFinancial income
    
    
    
    
    
    
    28,522,013
    
    
    
    24,156,197
    
    
    
    32,772,480Share of gain from unconsolidated affiliates
    
    
    11
    
    
    
    769,536
    
    
    
    1,023,865
    
    
    
    1,936,370Other non-operating income
    
    
    21
    
    
    
    7,312,986
    
    
    
    847,771
    
    
    
    9,674,156Amortization of goodwill
    
    
    12
    
    
    
    (6,228,916
    )
    
    
    (7,186,162
    )
    
    
    (7,028,030
    )Financial expense
    
    
    
    
    
    
    (21,112,171
    )
    
    
    (19,829,540
    )
    
    
    (21,216,995
    )Other non-operating expense
    
    
    21
    
    
    
    (7,738,132
    )
    
    
    (6,394,577
    )
    
    
    (7,943,459
    )Price-level restatement
    
    
    
    
    
    
    (570,051
    )
    
    
    948,173
    
    
    
    1,404,036Exchange (losses) gains, net
    
    
    
    
    
    
    (14,287,093
    )
    
    
    (13,021,656
    )
    
    
    (42,445,558
    )Non-operating (expense) income
    
    
    
    
    
    
    (13,331,828
    )
    
    
    (19,455,929
    )
    
    
    (32,847,000
    )Income before income tax expense and minority interest
    
    
    
    
    
    
    64,576,219
    
    
    
    45,694,028
    
    
    
    17,805,101Income tax expense
    
    
    8c
    )
    
    
    (8,549,042
    )
    
    
    (4,086,815
    )
    
    
    (1,072,084
    )Income before minority interest
    
    
    
    
    
    
    56,027,177
    
    
    
    41,607,213
    
    
    
    16,733,017Income attributable to minority interest
    
    
    19
    
    
    
    12,169
    
    
    
    (2,773
    )
    
    
    (3,261
    )Net income
    
    
    
    
    
    
    56,039,346
    
    
    
    41,604,440
    
    
    
    16,729,756
  F-5




---



##### Table of Contents



EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 For the years ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$CASH FLOWS FROM OPERATING ACTIVITIESCollection of trade receivables
    
    
    677,672,086
    
    
    
    581,976,500
    
    
    
    568,688,151Financial income received
    
    
    21,228,508
    
    
    
    10,506,732
    
    
    
    21,392,619Dividends and other distributions received
    
    
    1,402,429
    
    
    
    3,562,217
    
    
    
    Collection of other receivables
    
    
    24,757
    
    
    
    25,135
    
    
    
    32,920Payments to suppliers and personnel
    
    
    (497,206,835
    )
    
    
    (427,883,620
    )
    
    
    (426,460,054
    )Interest paid
    
    
    (20,010,363
    )
    
    
    (17,663,990
    )
    
    
    (18,285,439
    )Income tax payments
    
    
    (4,984,176
    )
    
    
    (4,385,628
    )
    
    
    (5,053,311
    )Other expenses
    
    
    
    
    
    
    (20,145
    )
    
    
    (24,652
    )VAT and other similar items paid
    
    
    (81,303,169
    )
    
    
    (73,298,118
    )
    
    
    (63,526,744
    )Net cash provided by operating activities
    
    
    96,823,237
    
    
    
    72,819,083
    
    
    
    76,763,490CASH FLOWS FROM FINANCING ACTIVITIESBorrowings from banks
    
    
    54,681,343
    
    
    
    62,253,664
    
    
    
    54,825,339Other financing activities
    
    
    
    
    
    
    8,507
    
    
    
    Dividends paid
    
    
    (72,551,644
    )
    
    
    (47,403,265
    )
    
    
    (54,166,706
    )Payments of loans
    
    
    (84,572,010
    )
    
    
    (48,567,022
    )
    
    
    (57,801,839
    )Repayments of bonds
    
    
    (11,679,407
    )
    
    
    (11,667,557
    )
    
    
    (5,945,053
    )Net cash used in financing activities
    
    
    (114,121,718
    )
    
    
    (45,375,673
    )
    
    
    (63,088,259
    )CASH FLOWS FROM INVESTMENT ACTIVITIESProceeds from sales of property, plant and equipment
    
    
    3,390,445
    
    
    
    886,586
    
    
    
    986,263Proceeds from sales of other investments
    
    
    60,198,268
    
    
    
    23,243,235
    
    
    
    158,658,437Additions to property, plant and equipment
    
    
    (27,395,137
    )
    
    
    (26,149,665
    )
    
    
    (26,911,695
    )Purchases of territory
    
    
    
    
    
    
    (8,148,051
    )
    
    
    Permanent investments
    
    
    (319,501
    )
    
    
    (936,440
    )
    
    
    Purchases of other investments
    
    
    (24,966,211
    )
    
    
    (27,840,655
    )
    
    
    (151,645,523
    )Net cash used in investing activities
    
    
    10,907,864
    
    
    
    (38,944,990
    )
    
    
    (18,912,518
    )Net cash flows from operating, financing and investing
activities
    
    
    (6,390,617
    )
    
    
    (11,501,580
    )
    
    
    (5,237,287
    )PRICE  LEVEL RESTATEMENT OF CASH
AND CASH EQUIVALENTS
    
    
    (576,499
    )
    
    
    (3,964,578
    )
    
    
    (4,404,158
    )NET DECREASE IN CASH AND
CASH EQUIVALENTS
    
    
    (6,967,116
    )
    
    
    (15,466,158
    )
    
    
    (9,641,445
    )CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR
    
    
    28,116,023
    
    
    
    43,582,181
    
    
    
    53,223,626CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    
    21,148,907
    
    
    
    28,116,023
    
    
    
    43,582,181
  F-6




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##### Table of Contents



EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 For the years ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$RECONCILIATION BETWEEN NET INCOME AND NET
CASH FLOWS PROVIDED BY OPERATING ACTIVITIESNet income
    
    
    56,039,346
    
    
    
    41,604,440
    
    
    
    16,729,756Income on sales of assets:Loss (gain) on sale of property, plant and equipment
    
    
    (249,185
    )
    
    
    291,511
    
    
    
    (206,822
    )Gain on divesture of Vital S.A.
    
    
    (3,890,351
    )
    
    
    
    
    
    
    Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    (2,033
    )(Gain) loss on sale of other assets
    
    
    (2,161
    )
    
    
    (5,444
    )
    
    
    (17,845
    )Adjustments to reconcile net income to net
cash provided by operating activitiesDepreciation
    
    
    29,037,017
    
    
    
    32,581,390
    
    
    
    35,003,748Amortization of intangibles
    
    
    324,396
    
    
    
    275,711
    
    
    
    543,881Write-offs and provisions
    
    
    1,629,259
    
    
    
    5,031,834
    
    
    
    2,490,677Share of income from unconsolidated affiliates
    
    
    (769,536
    )
    
    
    (1,023,865
    )
    
    
    (1,936,370
    )Amortization of goodwill
    
    
    6,228,916
    
    
    
    7,186,162
    
    
    
    7,028,030Price-level restatement
    
    
    570,051
    
    
    
    (948,173
    )
    
    
    (1,404,036
    )Exchange gains (losses), net
    
    
    14,287,093
    
    
    
    13,021,656
    
    
    
    42,445,558Other credits to income that do not represent cash flows.
    
    
    (2,908,703
    )
    
    
    (455,849
    )
    
    
    (4,089,224
    )Changes in operating assetsIncrease in trade accounts receivable
    
    
    (2,427,314
    )
    
    
    (3,234,204
    )
    
    
    (6,079,337
    )Decrease (increase) in inventories
    
    
    2,420,870
    
    
    
    (2,186,232
    )
    
    
    (3,803,992
    )Increase in other assets
    
    
    (28,560,132
    )
    
    
    (19,181,828
    )
    
    
    (24,518,057
    )Changes in operating liabilities(Decrease) increase in accounts payable related to
operating income
    
    
    (5,698,674
    )
    
    
    (7,119,751
    )
    
    
    2,258,673Increase (decrease) in interest payable
    
    
    12,690,895
    
    
    
    7,507,714
    
    
    
    (5,350,218
    )Increase (decrease) increase in income taxes payable
    
    
    5,645,867
    
    
    
    740,066
    
    
    
    (3,958,985
    )Increase in other accounts payable related
to non-operating income
    
    
    5,397,433
    
    
    
    3,186,888
    
    
    
    15,784,250Increase (decrease) in VAT and other similar items
    
    
    7,070,319
    
    
    
    (4,455,716
    )
    
    
    5,842,575Income attributable to minority interest
    
    
    (12,169
    )
    
    
    2,773
    
    
    
    3,261Net cash provided by operating activities
    
    
    96,823,237
    
    
    
    72,819,083
    
    
    
    76,763,490
  F-7




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##### Table of Contents



EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 AT DECEMBER 31, 2005 AND 2004
 NOTE 1  NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Legal reorganizations and joint ventures:
   F-8




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##### Table of Contents



a) Presentation
     b) Consolidation
  c) Price-level restatement
  F-10




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##### Table of Contents



December 31,2005
    
    2004
    
    2003Ch$
    
    Ch$
    
    Ch$Unidades de Fomento (UF)
    
    
    17,974.81
    
    
    
    17,317.05
    
    
    
    16,920.00
  d) Assets and liabilities denominated in foreign currencies
  December 31,2005
    
    2004
    
    2003Ch$
    
    Ch$
    
    Ch$United States dollars (US$)
    
    
    512.50
    
    
    
    557.40
    
    
    
    593.80Argentine pesos (A$)
    
    
    169.03
    
    
    
    187.11
    
    
    
    202.66Brazilian Real (R$)
    
    
    222.37
    
    
    
    209.99
    
    
    
    205.52Euros ($)
    
    
    606.08
    
    
    
    760.13
    
    
    
    744.95
 e) Time deposits and marketable securities
  F-9




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##### Table of Contents



f) Allowance for doubtful accounts
  g) Inventories
  h) Recoverable taxes
  i) Income taxes and deferred income taxes
   j) Property, plant and equipment and depreciation
    F-11




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##### Table of Contents



YearsBuildings and improvements
    
    
    25-60Machinery and equipment
    
    
    10Containers
    
    
    2-5Other
    
    
    1-10
 k) Deposits for containers
    l) Investments in unconsolidated affiliates
   F-12




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##### Table of Contents



m) Long-term investments
  n) Goodwill
  o) Bonds payable
   p) Staff severance indemnities
  q) Sales recognition
  F-13




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##### Table of Contents



r) Franchise incentives
  s) Derivative transactions
   Hedges of forecasted transaction-Foreign currency forward exchange contracts:The derivative instrument is stated at its fair value on the consolidated balance sheets and
any change in the fair value is recognized on the balance sheets as an unrealized gain or loss
in other liabilities or in other assets. When the contract is settled, the unrealized gain or
loss on the instrument is recognized in earnings in financial income or expense in the
consolidated statements of income.Hedge accounting-Cross-currency swap agreements:The hedged item and derivative instrument are measured at fair value on the consolidated
balance sheets. Unrealized gains and losses are recorded in earnings in financial income or
expense in the consolidated statements of income if the net effect is a loss and deferred and
recognized when the contract is settled if it is a net gain.
 t) Translation of financial statements in foreign currencies
  
    monetary assets and liabilities are translated at the closing exchange rate for the period;
 
    all other assets and liabilities and shareholders equity are translated at historical rates of exchange;
 
    income and expense accounts are translated at average rates during the period; and
 
    the resulting exchange adjustments are included in the results of statements of income.
 F-14




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##### Table of Contents



u) Cash flows
   NOTE 2  CHANGES IN ACCOUNTING PRINCIPLES
  NOTE 3  TIME DEPOSITS
  At December 31,2005
    
    2004ThCh$
    
    ThCh$Foreign currency deposits
    
    
    25,700,571
    
    
    
    7,833,816Total
    
    
    25,700,571
    
    
    
    7,833,816
 F-15




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##### Table of Contents



NOTE 4  MARKETABLE SECURITIES
  At December 31,2005
    
    2004ThCh$
    
    ThCh$Bonds Teléfonos de México S.A.
    
    
    2,565,151
    
    
    
    Bonds Compañía Manufacturera de Papeles y Cartones S.A.
    
    
    
    
    
    
    5,779,606Credit link Enersis
    
    
    9,160,293
    
    
    
    Credit link Cemex
    
    
    
    
    
    
    4,923,605Money market funds
    
    
    2,277,838
    
    
    
    5,957,446Total
    
    
    14,003,282
    
    
    
    16,660,657
 NOTE 5  RECEIVABLES
  At December 31,2005
    
    2004ThCh$
    
    ThCh$Trade accounts receivable
    
    
    35,603,368
    
    
    
    34,352,379Allowance for doubtful accounts
    
    
    (1,396,287
    )
    
    
    (2,010,988
    )Subtotal trade accounts receivable (net)
    
    
    34,207,081
    
    
    
    32,341,391Notes receivable
    
    
    11,531,991
    
    
    
    11,828,526Allowance for doubtful accounts
    
    
    (389,147
    )
    
    
    (1,466,936
    )Subtotal notes receivable (net)
    
    
    11,142,844
    
    
    
    10,361,590Other receivables
    
    
    19,853,437
    
    
    
    16,937,972Allowance for doubtful accounts
    
    
    (75,950
    )
    
    
    (77,414
    )Subtotal other receivables
    
    
    19,777,487
    
    
    
    16,860,558Total receivables
    
    
    66,988,796
    
    
    
    63,118,877Total allowance for doubtful accounts
    
    
    (1,861,384
    )
    
    
    (3,555,338
    )Total net receivables
    
    
    65,127,412
    
    
    
    59,563,539
  F-16




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##### Table of Contents



NOTE 6  AMOUNTS AND TRANSACTIONS WITH RELATED COMPANIES
  a)
    
    Amounts receivable
 At December 31,Short - term
    
    Long - termCompany
    
    2005
    
    2004
    
    2005
    
    2004ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Embonor S.A.
    
    
    3,039,414
    
    
    
    
    
    
    
    
    
    
    
    Embotelladora Coca Cola Polar S.A.
    
    
    1,964,473
    
    
    
    
    
    
    
    
    
    
    
    Coca Cola de Chile S.A.
    
    
    559,825
    
    
    
    
    
    
    
    22,492
    
    
    
    34,863Centralli Refrigerantes S.A.
    
    
    23,448
    
    
    
    85,029
    
    
    
    
    
    
    
    Total
    
    
    5,587,160
    
    
    
    85,029
    
    
    
    22,492
    
    
    
    34,863
 b)
    
    Amounts payable
 At December 31,Short - term
    
    Long - termCompany
    
    2005
    
    2004
    
    2005
    
    2004ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Envases CMF S.A.
    
    
    3,834,888
    
    
    
    4,159,172
    
    
    
    
    
    
    
    Recofarma Industrias do Amazonas Ltda.
    
    
    2,422,475
    
    
    
    3,739,389
    
    
    
    
    
    
    
    SPBR S.R.L
    
    
    895,299
    
    
    
    
    
    
    
    
    
    
    
    Envases Central S.A.
    
    
    843,981
    
    
    
    1,102,213
    
    
    
    
    
    
    
    Envases del Pacífico S.A.
    
    
    289,970
    
    
    
    233,562
    
    
    
    
    
    
    
    Cican S.A.
    
    
    44,204
    
    
    
    
    
    
    
    
    
    
    
    Coca Cola de Chile S.A.
    
    
    
    
    
    
    582,513
    
    
    
    
    
    
    
    Coca Cola de Argentina S.A.
    
    
    
    
    
    
    553,383
    
    
    
    
    
    
    
    Total
    
    
    8,330,817
    
    
    
    10,370,232
    
    
    
    
    
    
    
    
 F-17




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##### Table of Contents



c)
    
    Transactions with related companies were as follows:
 Company
    
    Relation
    
    Transaction
    

2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Envases Central S.A.
    
    Equity investee
    
    Sales of raw materials andSupplies
    
    
    1,002,743
    
    
    
    722,331
    
    
    
    1,234,686Finished product purchases
    
    
    13,791,158
    
    
    
    12,997,297
    
    
    
    14,742,909Coca-Cola de Chile S.A.
    
    Related  shareholder
    
    Concentrate purchases
    
    
    40,837,885
    
    
    
    38,072,035
    
    
    
    36,389,788Collection of advertisingparticipation
    
    
    2,846,149
    
    
    
    1,783,636
    
    
    
    2,962,970Water source rental
    
    
    1,505,662
    
    
    
    1,415,233
    
    
    
    1,369,182Sales of advertisement
    
    
    3,190,898
    
    
    
    2,412,111
    
    
    
    2,419,096Others
    
    
    
    
    
    
    
    
    
    
    585,656SPBR S.R.L.
    
    Related  shareholder
    
    Concentrate purchases
    
    
    20,094,330
    
    
    
    17,560,546
    
    
    
    Coca-Cola de Argentina
S.A.
    
    Related shareholder
    
    Concentrate purchases
    
    
    
    
    
    
    
    
    
    
    14,599,770Envases del Pacífico S.A.
    
    Director in common
    
    Purchase of raw materials
    
    
    780,356
    
    
    
    875,698
    
    
    
    997,876Recofarma Industrias do
Amazonas Ltda.
    
    Related shareholder
    
    Concentrate purchases
    
    
    29,537,358
    
    
    
    26,541,703
    
    
    
    18,325,765Payment of advertisingparticipation
    
    
    3,128,398
    
    
    
    3,796,172
    
    
    
    4,179,414Others
    
    
    426,210
    
    
    
    275,557
    
    
    
    780,577Envases CMF S.A.
    
    Equity investee
    
    Container purchases
    
    
    15,903,837
    
    
    
    13,897,947
    
    
    
    13,958,606Sale of raw materials
    
    
    
    
    
    
    51,654
    
    
    
    1,347,061Services rendered
    
    
    
    
    
    
    130,390
    
    
    
    295,236Embonor S.A.
    
    Shareholder related
    
    Sale of shares
    
    
    3,039,414
    
    
    
    
    
    
    
    Embotelladora Coca Cola
Polar S.A.
    
    Shareholder related
    
    Sale of shares
    
    
    1,964,473
    
    
    
    
    
    
    
    Inmobiliaria y
Constructora
    
    Shareholder inEl Golf S.A.
    
    common
    
    Real estate purchase
    
    
    16,106
    
    
    
    1,811,106
    
    
    
    Inversiones Caburga S.A.
    
    Shareholder
    
    Real estate sale
    
    
    1,023,777
    
    
    
    
    
    
    
    Iansagro S.A.
    
    Director in common
    
    Sugar purchase
    
    
    12,181,560
    
    
    
    10,432,092
    
    
    
    Centralli Refrigerantes
S.A.
    
    Equity investee
    
    Finished product purchases
    
    
    
    
    
    
    
    
    
    
    900,294
    
    
    
    
    
    
    
    Envases Italprint S.A.
    
    Director in common
    
    Raw material purchases
    
    
    
    
    
    
    
    
    
    
    9,526
 F-18




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##### Table of Contents



NOTE 7  INVENTORIES
  At December 31,2005
    
    
    
    
    
    2004Gross
    
    Obsolescence
    
    Net
    
    Gross
    
    Obsolescence
    
    Netvalue
    
    provision
    
    value
    
    value
    
    provision
    
    valueThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Finished products
    
    
    8,268,640
    
    
    
    (54,725
    )
    
    
    8,213,915
    
    
    
    7,524,649
    
    
    
    (51,694
    )
    
    
    7,472,955Products in process
    
    
    139,105
    
    
    
    
    
    
    
    139,105
    
    
    
    76,907
    
    
    
    
    
    
    
    76,907Raw materials
    
    
    8,262,378
    
    
    
    (95,890
    )
    
    
    8,166,488
    
    
    
    12,178,562
    
    
    
    (179,125
    )
    
    
    11,999,437Raw materials in transit
    
    
    905,856
    
    
    
    
    
    
    
    905,856
    
    
    
    1,914,107
    
    
    
    
    
    
    
    1,914,107Total
    
    
    17,575,979
    
    
    
    (150,615
    )
    
    
    17,425,364
    
    
    
    21,694,225
    
    
    
    (230,819
    )
    
    
    21,463,406
 NOTE 8
 INCOME TAXES AND DEFERRED INCOME TAXES
 a)
    
    General:
  b)
    
    Deferred income taxes at each year-end were as follows:
 December 31, 2005
    
    December 31, 2004Assets
    
    Liabilities
    
    Assets
    
    LiabilitiesShort-term
    
    Long-term
    
    Short-term
    
    Long-term
    
    Short-term
    
    Long-term
    
    Short-term
    
    Long-termThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Temporary
DifferencesAllowance for doubtful accounts
    
    
    235,152
    
    
    
    93,456
    
    
    
    
    
    
    
    
    
    
    
    447,052
    
    
    
    116,192
    
    
    
    
    
    
    
    Vacation accrual
    
    
    156,036
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,377
    
    
    
    
    
    
    
    
    
    
    
    Depreciation of property, plant
and equipment
    
    
    
    
    
    
    
    
    
    
    120,438
    
    
    
    4,121,979
    
    
    
    
    
    
    
    
    
    
    
    126,440
    
    
    
    5,082,176Staff severance indemnities
    
    
    39,552
    
    
    
    
    
    
    
    38,426
    
    
    
    265,873
    
    
    
    
    
    
    
    
    
    
    
    5,397
    
    
    
    580,917Provision
for assets written-off
    
    
    134,082
    
    
    
    828,958
    
    
    
    
    
    
    
    
    
    
    
    166,631
    
    
    
    1,030,617
    
    
    
    
    
    
    
    Provision for labor and
commercial lawsuits
    
    
    
    
    
    
    4,209,886
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,455,073
    
    
    
    
    
    
    
    Tax loss carryforwards
    
    
    987,782
    
    
    
    8,850,783
    
    
    
    
    
    
    
    
    
    
    
    393,556
    
    
    
    14,526,290
    
    
    
    
    
    
    
    Deposits in guarantee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,618,328
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,753,820Local bond issue expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207,378
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    206,143Production expenses
    
    
    5,496
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    896,563
    
    
    
    1,718,798
    
    
    
    
    
    
    
    82,990
    
    
    
    831,659
    
    
    
    2,597,267
    
    
    
    
    
    
    
    260,602Contingency allowance
    
    
    
    
    
    
    1,716,221
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,576,542
    
    
    
    
    
    
    
    Social contributions
    
    
    355,601
    
    
    
    2,123,386
    
    
    
    
    
    
    
    
    
    
    
    141,681
    
    
    
    2,646,227
    
    
    
    
    
    
    
    Development of containers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accrued interest foreign
Companies
    
    
    
    
    
    
    
    
    
    
    3,363,023
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,112,762
    
    
    
    OthersComplementary accounts, net of
Amortization
    
    
    
    
    
    
    (3,914,861
    )
    
    
    
    
    
    
    (3,093,270
    )
    
    
    
    
    
    
    (3,889,811
    )
    
    
    
    
    
    
    (3,748,210
    )Valuation allowance (*)
    
    
    
    
    
    
    (10,746,851
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,316,062
    )
    
    
    
    
    
    
    Total
    
    
    2,810,264
    
    
    
    4,879,776
    
    
    
    3,521,887
    
    
    
    4,203,278
    
    
    
    2,103,956
    
    
    
    4,742,335
    
    
    
    2,244,599
    
    
    
    5,135,448
  F-19




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##### Table of Contents



c)
    
    Income tax expense for each year was as follows:
 For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Current income tax expense
    
    
    (8,960,706
    )
    
    
    (4,082,771
    )
    
    
    (3,214,132
    )Tax expense adjustment (previous period)
    
    
    (156,763
    )
    
    
    562,404
    
    
    
    675,766Deferred income tax (expense) benefit over assets
or liabilities
    
    
    (2,955,521
    )
    
    
    (1,398,271
    )
    
    
    721,375Amortization of deferred income tax asset and liability
complementary accounts
    
    
    (940,921
    )
    
    
    (997,810
    )
    
    
    (638,337
    )Recoverable tax losses
    
    
    
    
    
    
    Change in valuation allowance
    
    
    4,621,111
    
    
    
    2,072,188
    
    
    
    1,527,126Other charges or credits
    
    
    (156,242
    )
    
    
    (242,555
    )
    
    
    (143,882
    )Total
    
    
    (8,549,042
    )
    
    
    (4,086,815
    )
    
    
    (1,072,084
    )
 d)
    
    Total income (loss) before income taxes and minority interest arising from different
geographic sources is as follows:
 Year ended
    
    Chilean
    
    
    
    
    
    
    
    
    
    The CompanyDecember 31,
    
    and others
    
    Brazil
    
    Argentina
    
    (consolidated)ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$2005
    
    
    51,568,019
    
    
    
    8,499,768
    
    
    
    4,508,432
    
    
    
    64,576,2192004
    
    
    39,317,944
    
    
    
    6,233,658
    
    
    
    142,426
    
    
    
    45,694,0282003
    
    
    26,249,366
    
    
    
    (5,760,138
    )
    
    
    (2,684,127
    )
    
    
    17,805,101
 NOTE 9  OTHER CURRENT ASSETS
  At December 31,2005
    
    2004ThCh$
    
    ThCh$Supplies
    
    
    4,589,683
    
    
    
    3,762,081Cross currency swap current portion
    
    
    1,627,431
    
    
    
    3,151,427Other
    
    
    2,154,251
    
    
    
    2,506,564Total
    
    
    8,371,365
    
    
    
    9,420,072
 F-20




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##### Table of Contents



NOTE 10  PROPERTY, PLANT AND EQUIPMENT
  Chile
    
    : Santiago, Renca, Rancagua, San Antonio and RengoArgentina
    
    : Buenos Aires, Mendoza, Córdoba, and RosarioBrazil
    
    : Río de Janeiro, Niteroi, Campos, Cabo Frio, Nova Iguazú, Espíritu Santo and Vitoria
 a)
    
    Principal components of property, plant and equipment at each year-end are as follows:
 Balances at December 31, 2005
    
    Balances at December 31, 2004Net property,
    
    
    
    
    
    
    
    
    
    Net property,Accumulated
    
    plant and
    
    
    
    
    
    Accumulated
    
    plant andAssets
    
    depreciation
    
    equipment
    
    Assets
    
    depreciation
    
    equipmentThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Land
    
    
    12,687,024
    
    
    
    
    
    
    
    12,687,024
    
    
    
    14,791,171
    
    
    
    
    
    
    
    14,791,171Buildings and improvements
    
    
    79,542,528
    
    
    
    (31,459,675
    )
    
    
    48,082,853
    
    
    
    94,749,077
    
    
    
    (35,248,640
    )
    
    
    59,500,437Machinery and equipment
    
    
    204,303,414
    
    
    
    (156,447,928
    )
    
    
    47,855,486
    
    
    
    213,495,853
    
    
    
    (169,349,661
    )
    
    
    44,146,192Other property, plant and equipment
    
    
    196,549,926
    
    
    
    (167,277,950
    )
    
    
    29,271,976
    
    
    
    199,205,825
    
    
    
    (159,905,126
    )
    
    
    39,300,699Technical reappraisal of property,
plant and equipment
    
    
    2,014,038
    
    
    
    (605,320
    )
    
    
    1,408,718
    
    
    
    2,014,038
    
    
    
    (595,264
    )
    
    
    1,418,774Total
    
    
    495,096,930
    
    
    
    (355,790,873
    )
    
    
    139,306,057
    
    
    
    524,255,964
    
    
    
    (365,098,691
    )
    
    
    159,157,273
 b)
    
    Other property, plant and equipment at each year-end are as follows:
 At December 31,2005
    
    2004ThCh$
    
    ThCh$Containers
    
    
    109,020,038
    
    
    
    109,680,495Refrigeration equipment and other assets
    
    
    54,015,575
    
    
    
    56,006,300Furniture and tools
    
    
    3,938,744
    
    
    
    4,460,639Other
    
    
    29,575,569
    
    
    
    29,058,391Total other property, plant and equipment
    
    
    196,549,926
    
    
    
    199,205,825
 F-21




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##### Table of Contents



c)
    
    Technical reappraisal of property, plant and equipment at each year end was as follows:
 Balances at December 31, 2005
    
    Balances at December 31, 2004Net property,
    
    
    
    
    
    
    
    
    
    Net property,Accumulated
    
    plant and
    
    
    
    
    
    Accumulated
    
    plant andAssets
    
    depreciation
    
    equipment
    
    Assets
    
    Depreciation
    
    equipmentThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Land
    
    
    1,344,922
    
    
    
    
    
    
    
    1,344,922
    
    
    
    1,346,144
    
    
    
    
    
    
    
    1,346,144Buildings and improvements
    
    
    188,348
    
    
    
    (127,185
    )
    
    
    61,163
    
    
    
    186,651
    
    
    
    (122,796
    )
    
    
    63,855Machinery and equipment
    
    
    480,768
    
    
    
    (478,135
    )
    
    
    2,633
    
    
    
    481,243
    
    
    
    (472,468
    )
    
    
    8,775Total
    
    
    2,014,038
    
    
    
    (605,320
    )
    
    
    1,408,718
    
    
    
    2,014,038
    
    
    
    (595,264
    )
    
    
    1,418,774
 d)
    
    Depreciation for the period amounted to ThCh$29,037,017 and ThCh$22,879,079 are
included, under operating costs and ThCh$6,157,938 under sales and administrative
expenses in the income statement.
 F-22




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##### Table of Contents



NOTE
11  INVESTMENT IN UNCONSOLIDATED AFFILIATES
  Functional
    
    Ownership(*)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Book value ofCompany
    
    Country
    
    Currency
    
    interest
    
    Accrued income
    
    Participation in Equity
    
    Unrealized losses
    
    investment2005
    
    2004
    
    2005
    
    2004
    
    2003
    
    2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004%
    
    %
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Envases CMF S.A.
    
    Chile
    
    Chilean pesos
    
    
    50.00
    
    
    
    50.00
    
    
    
    272,980
    
    
    
    226,903
    
    
    
    (517,226
    )
    
    
    18,161,213
    
    
    
    17,963,768
    
    
    
    1,104,547
    
    
    
    1,175,808
    
    
    
    17,056,666
    
    
    
    16,787,960Envases Central S.A.
    
    Chile
    
    Chilean pesos
    
    
    49.91
    
    
    
    49.91
    
    
    
    (366,805
    )
    
    
    84,251
    
    
    
    111,331
    
    
    
    2,193,935
    
    
    
    2,469,140
    
    
    
    220,369
    
    
    
    220,369
    
    
    
    1,973,566
    
    
    
    2,248,771Kaik Participacoes
Ltda.
    
    Brazil
    
    US dollars
    
    
    11.32
    
    
    
    11.32
    
    
    
    483,945
    
    
    
    587,566
    
    
    
    2,404,299
    
    
    
    1,301,522
    
    
    
    936,124
    
    
    
    
    
    
    
    
    
    
    
    1,301,522
    
    
    
    936,124Cican S.A.
    
    Argentina
    
    US dollars
    
    
    15.20
    
    
    
    15.20
    
    
    
    379,416
    
    
    
    125,145
    
    
    
    (62,034
    )
    
    
    1,054,316
    
    
    
    760,453
    
    
    
    
    
    
    
    
    
    
    
    1,054,316
    
    
    
    760,453Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    769,536
    
    
    
    1,023,865
    
    
    
    1,936,370
    
    
    
    22,710,986
    
    
    
    22,129,485
    
    
    
    1,324,916
    
    
    
    1,396,177
    
    
    
    21,386,070
    
    
    
    20,733,308
 (*) Corresponds to the number of shares and rights of Andina over the total shares and rights
in each of the companies. This percentage equals the voting right in each of entity, where there
are no preferential shares.
 1
    
    The main changes that occurred in the reported periods are the following:
 
    
    On December 22, 2005 the production and packaging business of waters, juices and
non-carbonated beverages licensed by The Coca-Cola Company (TCCC) in Chile was
restructured. Vital Aguas S.A. was created with the purpose of developing the
process, production and packaging business of Vital de Chanqueahue Mineral Water
and other water and products according to the terms of the contracts and
authorizations agreed upon by Vital Aguas S.A. and TCCC. Consequently, Vital S.A.
will focus on juices and non-carbonated beverages.Accordingly, the Company, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. have
taken an interest of 56.5%, 26.4% and 17.1%, respectively, in Vital Aguas S.A.,
which will conduct the business of the processing, production and bottling of the
Vital de ChanqueahueMineral Water and other water and products, according to the
terms of the contracts and authorizations agreed upon by Vital Aguas S.A. and TCCC.The equity interests of Embonor and Polar in the newly created Vital Aguas S.A. were
purchased from the Company, through its subsidiary, Andina Inversiones Societarias
S.A., for 169,306 UF  ́s and 109,428 UF  ́s, respectively. This sale by the Company of
a portion of its ownership in Vital Aguas S.A generated earnings of ThCh$3,890,351
(215,919 UF  ́s), which is presented in Other Non-Operating Income in 2005.
    
    The equity investee Centralli Refrigerante S.A., Brazil, has negative
shareholders  ́ equity, which is provisioned in the corresponding proportion on the
Companys records. Ownership is 25%.
    
    At the Extraordinary Shareholders Meeting of the closed stock corporation,
Envases Central S.A., which took place on March 30, 2004, the shareholders approved
a resolution to increase the companys capital to ThCh$4,606,133 (historical
Chilean pesos), through an issue of an additional 1,743,555 shares, with no nominal
value and of the same previously existing series. Andina subscribed and paid for
929,838 shares for a total contribution of ThCh$879,945 (historical Chilean pesos)
holding an ownership interest in Envases Central 49.91%.
    
    The investment in Envases Central S.A. is presented net of unrealized income
generated in December 1996 related to the sale of property located in Renca. The
unrealized income amounted to ThCh$220,339 and will be recognized upon sale of the
land to a third party.
    
    The investment in Envases CMF S.A. is presented with a 50% reduction in earnings
generated from the sale of machinery and equipment of the Company  ́s subsidiary
Envases Multipack
 F-23




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##### Table of Contents



S.A. which took place in June, 2001, and will be recognized in earnings during the
remaining useful life of the assets sold to Envases CMF S.A. The realized amount is
ThCh$71,261 for this year.
    
    The results recognized by the investment in Envases CMF S.A., are decreased
(unrealized) by earnings generated from the sale of bottles that Envases CMF S.A.
sells to Andina and that as of the date of closing of the financial statements are
considered assets. The amount for this concept as of December 31, 2005 totals
ThCh$1,172,465 (ThCh$893,951 and ThCh$1,267,752 as of December 31, 2004 and 2003,
respectively).
    
    During 2005, Envases CMF S.A. distributed dividends to Andina amounting to
ThCh$1,248,000 (ThCh$372,753 during 2004).
    
    During 2005, Kaik Participacoes Ltda. distributed dividends to Refrescos
amounting to ThCh$150,829.
    
    The Company, through its subsidiary Refrescos, has an indirect equity investment
(11.32%) in Kaik Participacoes Ltda. (Kaik). Kaik, in turn, had a 33.5% equity
investment in Cervejarias Kaiser S.A., which on March 19, 2002 was sold for
US$484.5 million to Molson Inc. a Canadian company. As a result of this
transaction, Refrescos recognized a gain of US$15 million. Refrescos received a
US$15 million dividend as a result of the payment in cash for this sale. The
remaining amount of US$5.7 million, was accrued until May 2003, due to certain
unresolved contingencies related to the sale of Cervejarias Kaiser S.A. In June
2003, these contingencies were resolved and the provision was reversed. As a
result of the resolution of these contingencies, a gain of US$3.22 million was
recognized by Refrescos in 2003.
 2
    
    Income available to be remitted by subsidiaries abroad which have not been taxed in
Chile amount to US$186.3 million. The Company does not have any current plans to remit
such income to Chile.3
    
    The investment in Kaik Partipacoes Ltda. (Brazil) and in Cican S.A. (Argentina),
where The Company holds an indirect ownership of 11.32% and 15.2%, respectively, have
been accounted for under the equity method, as described in Note 1 l), because we
have the right to designate a director at each company.
 F-24




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##### Table of Contents



NOTE 12  GOODWILL
  At December 31,2005
    
    2004
    
    2003Amortization
    
    Goodwill
    
    Amortization
    
    Goodwill
    
    Amortization
    
    Goodwillduring the year
    
    balance
    
    during the year
    
    balance
    
    during the year
    
    balanceThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Rio de Janeiro Refrescos Ltda.
    
    
    3,414,723
    
    
    
    43,183,996
    
    
    
    3,569,011
    
    
    
    51,974,728
    
    
    
    3,724,500
    
    
    
    51,612,811Embotelladora del Atlántico S.A.
    
    
    2,685,025
    
    
    
    27,563,299
    
    
    
    3,025,388
    
    
    
    34,082,714
    
    
    
    3,303,530
    
    
    
    40,519,665Vital S.A.
    
    
    129,168
    
    
    
    645,844
    
    
    
    516,675
    
    
    
    775,012
    
    
    
    
    
    
    
    1,292,709Envases Central S.A.
    
    
    
    
    
    
    
    
    
    
    75,088
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    6,228,916
    
    
    
    71,393,139
    
    
    
    7,186,162
    
    
    
    86,832,454
    
    
    
    7,028,030
    
    
    
    93,425,185
  F-25




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##### Table of Contents



NOTE 13  OTHER LONG-TERM ASSETS
  At December 31,2005
    
    2004ThCh$
    
    ThCh$Long-term investmentsBonds:Celulosa Arauco S.A.
    
    
    11,667,149
    
    
    
    13,128,102Enap S.A.
    
    
    9,168,967
    
    
    
    10,447,993Endesa S.A.
    
    
    7,806,071
    
    
    
    8,858,910Soberano Chile
    
    
    7,374,607
    
    
    
    8,341,357Petróleos Mexicanos
    
    
    7,281,238
    
    
    
    13,480,595Compañía Manufacturera de Papeles y Cartones S.A.
    
    
    7,085,623
    
    
    
    5,090,039Teléfonos de México S.A.
    
    
    6,852,357
    
    
    
    8,450,532Codelco
    
    
    5,265,521
    
    
    
    5,972,364Soberano México
    
    
    4,794,416
    
    
    
    11,254,319Scotiabank Sud Americano
    
    
    4,305,747
    
    
    
    2,940,937Federal Home Loan Bank (FHLB)
    
    
    2,569,144
    
    
    
    Brasil Telecom S.A.
    
    
    2,097,851
    
    
    
    Raytheon Company
    
    
    2,085,723
    
    
    
    International Paper Company
    
    
    2,050,000
    
    
    
    Altria Group
    
    
    1,185,225
    
    
    
    Alcoa Inc.
    
    
    1,047,797
    
    
    
    Banco Santander Santiago S.A.
    
    
    
    
    
    
    8,143,208Time deposits-Deutsche Bank AG
    
    
    
    
    
    
    47,574,012Credit link Enersis
    
    
    
    
    
    
    11,902,195Credit link Endesa
    
    
    5,125,000
    
    
    
    5,958,347Credit link GMAC
    
    
    1,660,500
    
    
    
    1,870,991Credit link Ford
    
    
    1,537,500
    
    
    
    1,732,399Cross currency swap receivable
    
    
    27,315,999
    
    
    
    18,580,627Subtotal long-term investments
    
    
    118,276,435
    
    
    
    183,726,927OthersJudicial deposits (Brazil)
    
    
    4,150,826
    
    
    
    3,796,170Bond issuance expense and par value difference
    
    
    3,276,948
    
    
    
    3,639,114Prepaid expenses
    
    
    1,697,462
    
    
    
    1,620,514Non-operating assets
    
    
    910,783
    
    
    
    947,556Recoverable taxes
    
    
    44,212
    
    
    
    50,703Others
    
    
    2,552,268
    
    
    
    2,649,553Subtotal others
    
    
    12,632,499
    
    
    
    12,703,610Total
    
    
    130,908,934
    
    
    
    196,430,537
 F-26




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##### Table of Contents



NOTE 14  SHORT-TERM BANK BORROWINGS
 a)
    
    Short-term bank borrowings were as follows:
 At December 31,Currency or indexation adjustmentDollars
    
    Other foreign currencies
    
    Non-Indexed Ch$
    
    Total2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Dexia Bank Belgium
    
    
    21,011,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,011,358
    
    
    
    Banco Rio
    
    
    
    
    
    
    
    
    
    
    2,751,805
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,751,805
    
    
    
    Banco BBVA Francés
    
    
    
    
    
    
    
    
    
    
    1,834,122
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,834,122
    
    
    
    Banco Chile
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,426,355
    
    
    
    12,310,682
    
    
    
    1,426,355
    
    
    
    12,310,682Banco HSBC Roberts
    
    
    
    
    
    
    
    
    
    
    911,689
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    911,689
    
    
    
    Banco Estado
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,643,772
    
    
    
    
    
    
    
    6,643,772Banco Itaú
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56Total
    
    
    21,011,358
    
    
    
    
    
    
    
    5,497,616
    
    
    
    56
    
    
    
    1,426,355
    
    
    
    18,954,454
    
    
    
    27,935,329
    
    
    
    18,954,510Principal due
    
    
    20,500,000
    
    
    
    
    
    
    
    5,070,910
    
    
    
    56
    
    
    
    1,426,355
    
    
    
    18,917,360
    
    
    
    26,997,265
    
    
    
    18,917,416Weighted average
annual interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.62
    
    
    
    3.28
  b)
    
    Current portion long-term bank borrowings:
 At December 31,Currency or indexation adjustmentUS dollars
    
    Other foreign currencies
    
    TotalBank
    
    2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Banco Santander
    
    
    
    
    
    
    
    
    
    
    323,419
    
    
    
    309,717
    
    
    
    323,419
    
    
    
    309,717BankBoston
    
    
    
    
    
    
    
    
    
    
    160,682
    
    
    
    168,078
    
    
    
    160,682
    
    
    
    168,078Banco Itaú
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    359,944
    
    
    
    
    
    
    
    359,944Dexia Bank Belgium
    
    
    
    
    
    
    1,152,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,152,358Total
    
    
    
    
    
    
    1,152,358
    
    
    
    484,101
    
    
    
    837,739
    
    
    
    484,101
    
    
    
    1,990,097Principal due
    
    
    
    
    
    
    46,197,312
    
    
    
    478,275
    
    
    
    741,063
    
    
    
    478,275
    
    
    
    46,938,375Weighted average
annual interest rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.26
    %
    
    
    9.95
    %
 F-27




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##### Table of Contents



NOTE 15  LONG-TERM BANK BORROWINGS
  At December 31,Current year end
    
    Prior year endAverage
    
    
    
    
    
    AverageYears to maturity
    
    Total long
    
    annual
    
    Total long
    
    annualterm at
    
    interest
    
    term at
    
    interestBank
    
    Currency
    
    2007
    
    year end
    
    rate
    
    year end
    
    rateThCh$
    
    ThCh$
    
    %
    
    ThCh$
    
    %Banco Itaú
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,935
    
    
    
    13.50Banco Boston
    
    Other
    
    
    13,112
    
    
    
    13,112
    
    
    
    13.68
    
    
    
    167,596
    
    
    
    15.56Banco Santander
    
    Other
    
    
    441,389
    
    
    
    441,389
    
    
    
    13.27
    
    
    
    803,602
    
    
    
    15.60Dexia Bank Belgium
    
    US dollars
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,197,312
    
    
    
    6.51Total
    
    
    
    
    
    
    454,501
    
    
    
    454,501
    
    
    
    13.28
    
    
    
    47,183,445
    
    
    
    6.70
  NOTE
16 -BONDS PAYABLE
 1
    
    Details of bonds payable are as follows:
 Next
    
    
    
    
    
    
    
    
    
    PlacementInstrument subscription or
    
    
    
    Nominal
    
    
    
    Interest
    
    
    
    Interest
    
    Amortization
    
    Par value
    
    in Chileidentification number
    
    Series
    
    value
    
    Currency
    
    rate
    
    Maturity date
    
    paid
    
    period of capital
    
    2005
    
    2004
    
    or abroad%
    
    
    
    
    
    
    
    
    
    
    
    
    ThCh$
    
    ThCh$Current portion of bonds payableYankee bonds
    
    A
    
    
    32,076,000
    
    
    US$
    
    
    7.000
    
    
    October 1, 2007
    
    Half yearly
    
    Oct. 2007
    
    
    287,682
    
    
    
    324,149
    
    
    ForeignYankee bonds
    
    B
    
    
    4,000,000
    
    
    US$
    
    
    7.625
    
    
    October 1, 2027
    
    Half yearly
    
    Oct. 2027
    
    
    39,078
    
    
    
    44,032
    
    
    ForeignRegister 254 SVS June 13, 2001
    
    A
    
    
    1,650,000
    
    
    UF
    
    
    6.200
    
    
    June 1, 2008
    
    Half yearly
    
    June 2006
    
    
    13,002,920
    
    
    
    13,038,331
    
    
    ChileRegister 254 SVS June 13, 2001
    
    B
    
    
    3,700,000
    
    
    UF
    
    
    6.500
    
    
    June 1, 2026
    
    Half yearly
    
    Dec. 2009
    
    
    354,574
    
    
    
    353,897
    
    
    ChileTotal current maturities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,684,254
    
    
    
    13,760,409Long  term portion of bonds payableYankee bonds
    
    A
    
    
    32,076,000
    
    
    US$
    
    
    7.000
    
    
    October 1, 2007
    
    Half yearly
    
    Oct. 2007
    
    
    16,438,950
    
    
    
    18,522,812
    
    
    ForeignYankee bonds
    
    B
    
    
    4,000,000
    
    
    US$
    
    
    7.625
    
    
    October 1, 2027
    
    Half yearly
    
    Oct. 2027
    
    
    2,050,000
    
    
    
    2,309,866
    
    
    ForeignRegister 254 SVS June 13, 2001
    
    A
    
    
    1,650,000
    
    
    UF
    
    
    6.200
    
    
    June 1, 2008
    
    Half yearly
    
    June 2007
    
    
    16,806,447
    
    
    
    28,615,040
    
    
    ChileRegister 254 SVS June 13, 2001
    
    B
    
    
    3,700,000
    
    
    UF
    
    
    6.500
    
    
    June 1, 2026
    
    Half yearly
    
    Dec. 2009
    
    
    66,506,797
    
    
    
    66,379,716
    
    
    ChileTotal long term
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,802,194
    
    
    
    115,827,434
  2
    
    Scheduled maturities of the long-term bonds payable at December 31, 2005 were as follows:
 Total longYears to maturity
    
    term atSeries
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    year endThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Yankee Bonds
    
    
    A
    
    
    
    16,438,950
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,438,950Yankee Bonds
    
    
    B
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,050,000
    
    
    
    2,050,000Register 254 SVS June 13, 2001
    
    
    A
    
    
    
    11,863,375
    
    
    
    4,943,072
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,806,447Register 254 SVS June 13, 2001
    
    
    B
    
    
    
    
    
    
    
    
    
    
    
    1,956,083
    
    
    
    3,912,166
    
    
    
    60,638,548
    
    
    
    66,506,797Total
    
    
    
    
    
    
    28,302,325
    
    
    
    4,943,072
    
    
    
    1,956,083
    
    
    
    3,912,166
    
    
    
    62,688,548
    
    
    
    101,802,194
 F-28




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##### Table of Contents



NOTE 17  OTHER ACCRUED LIABILITIES
  At December 31,Short-term
    
    
    Long-term2005
    
    
    2004
    
    
    2005
    
    
    2004ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Staff severance indemnities
    
    
    557,061
    
    
    
    187,893
    
    
    
    4,912,572
    
    
    
    2,627,145Contingency provisions
    
    
    74,347
    
    
    
    79,652
    
    
    
    8,218,899
    
    
    
    7,835,125Contingency provision-Brazilian
banking taxes
    
    
    
    
    
    
    
    
    
    
    7,984,396
    
    
    
    5,836,432Others
    
    
    135
    
    
    
    63,082
    
    
    
    
    
    
    
    1,261,180Total
    
    
    631,543
    
    
    
    330,627
    
    
    
    21,115,867
    
    
    
    17,559,882
 F-29




---



##### Table of Contents



NOTE 18  STAFF SEVERANCE INDEMNITIES
  2005
    
    
    2004
    
    
    2003ThCh$
    
    
    ThCh$
    
    
    ThCh$Beginning balance
    
    
    2,717,423
    
    
    
    2,561,084
    
    
    
    2,885,442Provision for the period
    
    
    2,988,269
    
    
    
    491,204
    
    
    
    548,480Payments
    
    
    (236,059
    )
    
    
    (237,250
    )
    
    
    (808,811
    )Ending balance
    
    
    5,469,633
    
    
    
    2,815,038
    
    
    
    2,625,111
 NOTE 19  MINORITY INTEREST
 For the period ended December 31,2005
    
    
    2004
    
    
    2003ThCh$
    
    
    ThCh$
    
    
    ThCh$Equity of minority shareholders ofVital Aguas S.A.
    
    
    1,099,917
    
    
    
    
    
    
    
    Embotelladora del Atlántico S.A.
    
    
    17,555
    
    
    
    
    
    
    
    Andina Inversiones Societarias S.A.
    
    
    57
    
    
    
    53,749
    
    
    
    51,093Total
    
    
    1,117,529
    
    
    
    53,749
    
    
    
    51,093Proportional participation included
in consolidated statements of income
ofVital Aguas S.A.
    
    
    13,629
    
    
    
    
    
    
    
    Embotelladora del Atlántico S.A.
    
    
    (1,458
    )
    
    
    
    
    
    
    Andina Inversiones Societarias S.A.
    
    
    (2
    )
    
    
    (2,773
    )
    
    
    (3,261
    )Total
    
    
    12,169
    
    
    
    (2,773
    )
    
    
    (3,261
    )
 F-30




---



##### Table of Contents



NOTE 20  SHAREHOLDERS EQUITY
  Retainedearnings
    
    
    Net incomePaid-in
    
    
    Other
    
    
    from
    
    
    for the
    
    
    Interimcapital
    
    
    Reserves
    
    
    prior years
    
    
    year
    
    
    Dividends
    
    
    TotalThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$At January 1, 2003
    
    
    184,523,532
    
    
    
    59,566,086
    
    
    
    103,658,528
    
    
    
    33,021,268
    
    
    
    (11,644,791
    )
    
    
    369,124,623Prior year income allocation
    
    
    
    
    
    
    
    
    
    
    21,376,477
    
    
    
    (33,021,268
    )
    
    
    11,644,791
    
    
    
    Dividends paid
    
    
    
    
    
    
    
    
    
    
    (39,754,756
    )
    
    
    
    
    
    
    (11,495,351
    )
    
    
    (51,250,107
    )Price-level restatement of equity
    
    
    1,845,235
    
    
    
    595,661
    
    
    
    1,528,631
    
    
    
    
    
    
    
    19,159
    
    
    
    3,988,686Cumulative translation adjustment
of foreign investments
    
    
    
    
    
    
    (34,683,152
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,683,152
    )Net income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,754,549
    
    
    
    
    
    
    
    15,754,549At December 31, 2003
    
    
    186,368,767
    
    
    
    25,478,595
    
    
    
    86,808,880
    
    
    
    15,754,549
    
    
    
    (11,476,192
    )
    
    
    302,934,599Balance at December 31, 2003
restated in constant Chilean pesos
of December 31, 2005
    
    
    197,904,994
    
    
    
    27,055,720
    
    
    
    92,182,350
    
    
    
    16,729,756
    
    
    
    (12,186,568
    )
    
    
    321,686,252At January 1, 2004
    
    
    186,368,767
    
    
    
    25,478,595
    
    
    
    86,808,880
    
    
    
    15,754,549
    
    
    
    (11,476,192
    )
    
    
    302,934,599Prior year income allocation
    
    
    
    
    
    
    
    
    
    
    4,278,357
    
    
    
    (15,754,549
    )
    
    
    11,476,192
    
    
    
    Dividends paid
    
    
    
    
    
    
    
    
    
    
    (35,763,316
    )
    
    
    
    
    
    
    (11,495,351
    )
    
    
    (47,258,667
    )Price-level restatement of equity
    
    
    4,659,219
    
    
    
    636,965
    
    
    
    1,347,335
    
    
    
    
    
    
    
    (88,131
    )
    
    
    6,555,388Cumulative translation adjustment
of foreign investments
    
    
    
    
    
    
    (11,541,416
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,541,416
    )Net income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,158,726
    
    
    
    
    
    
    
    40,158,726At December 31, 2004
    
    
    191,027,986
    
    
    
    14,574,144
    
    
    
    56,671,256
    
    
    
    40,158,726
    
    
    
    (11,583,482
    )
    
    
    290,848,630Balance at December 31, 2004
restated in constant Chilean pesos
of December 31, 2005
    
    
    197,904,994
    
    
    
    15,098,813
    
    
    
    58,711,421
    
    
    
    41,604,440
    
    
    
    (12,000,487
    )
    
    
    301,319,181At January 1, 2005
    
    
    191,027,986
    
    
    
    14,574,144
    
    
    
    56,671,256
    
    
    
    40,158,726
    
    
    
    (11,583,482
    )
    
    
    290,848,630Prior year income allocation
    
    
    
    
    
    
    
    
    
    
    28,575,244
    
    
    
    (40,158,726
    )
    
    
    11,583,482
    
    
    
    Dividends paid
    
    
    
    
    
    
    
    
    
    
    (59,711,964
    )
    
    
    
    
    
    
    (11,495,351
    )
    
    
    (71,207,315
    )Price-level restatement of equity
    
    
    6,877,008
    
    
    
    524,669
    
    
    
    799,819
    
    
    
    
    
    
    
    (145,608
    )
    
    
    8,055,888Cumulative translation adjustment
of foreign investments
    
    
    
    
    
    
    (15,299,958
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,299,958
    )Net income for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,039,346
    
    
    
    
    
    
    
    56,039,346At December 31, 2005
    
    
    197,904,994
    
    
    
    (201,145
    )
    
    
    26,334,355
    
    
    
    56,039,346
    
    
    
    (11,640,959
    )
    
    
    268,436,591
 F-31




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##### Table of Contents



Subscribed
    
    
    Paid-in
    
    
    Shares withSeries
    
    shares
    
    
    Shares
    
    
    voting rightsA
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271B
    
    
    380,137,271
    
    
    
    380,137,271
    
    
    
    380,137,271
  
    
    Series A: The right to elect 6 of the 7 directors and their respective alternates.
    
    Series B: The right to receive 10% more of all dividend distributions than Series A shareholders and to elect 1 of
the 7 directors.
  Subscribed
    
    
    Paid-inSeries
    
    Capital
    
    
    capitalThCh$
    
    
    ThCh$A
    
    
    98,952,497
    
    
    
    98,952,497B
    
    
    98,952,497
    
    
    
    98,952,497Total
    
    
    197,904,994
    
    
    
    197,904,994
   2005
    
    
    2004
    
    
    2003ThCh$
    
    
    ThCh$
    
    
    ThCh$Reserve for cumulative translation adjustments (1)
    
    
    (1,189,427
    )
    
    
    14,110,531
    
    
    
    26,067,438Reserve for technical reappraisal of property, plant and equipment
    
    
    166,491
    
    
    
    166,491
    
    
    
    166,491Other reserves
    
    
    821,791
    
    
    
    821,791
    
    
    
    821,791Total
    
    
    (201,145
    )
    
    
    15,098,813
    
    
    
    27,055,720
 (1)
    
    The reserve for cumulative translation adjustments complies with Technical Bulletin No. 64
of the Chilean Institute of Accountants and Official letter No. 5,294 issued by the SVS.
  Release /
    
    
    BalanceBalance
    
    
    Foreign exchange gains
    
    
    transfers of
    
    
    December 31,Subsidiary
    
    January 1, 2005
    
    
    generated during the year
    
    
    reserve
    
    
    2005ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Rio de Janeiro Refrescos Ltda
    
    
    7,975,590
    
    
    
    (10,205,741
    )
    
    
    
    
    
    
    (2,230,151
    )Embotelladora del Atlántico S.A.
    
    
    6,134,941
    
    
    
    (5,094,217
    )
    
    
    
    
    
    
    1,040,724Total
    
    
    14,110,531
    
    
    
    (15,299,958
    )
    
    
    
    
    
    
    (1,189,427
    )
 F-32




---



##### Table of Contents



Release /
    
    
    BalanceBalance
    
    
    Foreign exchange gains
    
    
    transfers of
    
    
    December 31,Subsidiary
    
    January 1, 2004
    
    
    generated during the year
    
    
    reserve
    
    
    2004ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Rio de Janeiro Refrescos Ltda
    
    
    15,894,743
    
    
    
    (7,919,153
    )
    
    
    
    
    
    
    7,975,590Embotelladora del Atlántico S.A.
    
    
    10,172,695
    
    
    
    (4,037,754
    )
    
    
    
    
    
    
    6,134,941Total
    
    
    26,067,438
    
    
    
    (11,956,907
    )
    
    
    
    
    
    
    14,110,531
 Release /
    
    
    BalanceBalance
    
    
    Foreign exchange gains
    
    
    transfers of
    
    
    December 31,Subsidiary
    
    January 1, 2003
    
    
    generated during the year
    
    
    reserve(*)
    
    
    2003ThCh$
    
    
    ThCh$
    
    
    ThCh$
    
    
    ThCh$Rio de Janeiro Refrescos Ltda.
    
    
    37,903,304
    
    
    
    (22,008,561
    )
    
    
    
    
    
    
    15,894,743Embotelladora del Atlántico S.A. (*)
    
    
    17,105,790
    
    
    
    (9,275,556
    )
    
    
    2,342,461
    
    
    
    10,172,695Complejo Industrial Pet S.A. (CIPET) (**)
    
    
    7,888,384
    
    
    
    (3,922,290
    )
    
    
    (3,966,094
    )
    
    
    Total
    
    
    62,897,478
    
    
    
    (35,206,407
    )
    
    
    (1,623,633
    )
    
    
    26,067,438
 (*)
    
    In December 2003, the Company received a distribution of capital from its subsidiary
Embotelladora del Atlántico S.A. in the amount of ThUS$13,800 (ThCh$8,701,676). The
distribution of capital triggered a pro-rata recognition in income of the cumulative
translation reserve of ThCh$1,623,633.(**)
    
    As described in Note 1, effective January 1, 2003, CIPET merged with Embotelladora del
Atlántico S.A., becoming Edasas packaging division.
 F-33




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##### Table of Contents



NOTE 21  OTHER NON-OPERATING INCOME AND EXPENSES
  For the year ended December 31,2005
    
    
    2004
    
    
    2003ThCh$
    
    
    ThCh$
    
    
    ThCh$Gain on sale of Vital Aguas S.A. Shares
    
    
    3,890,351
    
    
    
    
    
    
    
    Gain on sale of plant, property and equipment
    
    
    267,834
    
    
    
    
    
    
    
    206,821Lease of property (offices)
    
    
    
    
    
    
    29,115
    
    
    
    Reversal of contingencies provisions
    
    
    
    
    
    
    
    
    
    
    1,576,391Realization of reserve for cumulative translation adjustment
    
    
    
    
    
    
    
    
    
    
    1,625,257Other income
    
    
    246,098
    
    
    
    362,807
    
    
    
    420,988Subtotal
    
    
    4,404,283
    
    
    
    391,922
    
    
    
    3,829,457Translation adjustment (1)
    
    
    2,908,703
    
    
    
    455,849
    
    
    
    5,844,699Total
    
    
    7,312,986
    
    
    
    847,771
    
    
    
    9,674,156
  For the year ended December 31,2005
    
    
    2004
    
    
    2003ThCh$
    
    
    ThCh$
    
    
    ThCh$Provision for property, plant and equipment Itaoca
    
    
    
    
    
    
    (2,995,708
    )
    
    
    Provision for labor, tax and commercial lawsuits
    
    
    (544,448
    )
    
    
    (1,716,919
    )
    
    
    (5,636,175
    )Lawsuit fees
    
    
    (502,906
    )
    
    
    
    
    
    
    Provision PIS Coffins
    
    
    (2,280,217
    )
    
    
    
    
    
    
    Provision for loss of investment in Transora
    
    
    
    
    
    
    (635,240
    )
    
    
    Loss on sale of property, plant and equipment
    
    
    
    
    
    
    (291,510
    )
    
    
    Obsolescence and write-offs of property, plant and equipment.
    
    
    (1,113,431
    )
    
    
    (128,137
    )
    
    
    (193,170
    )Provision for equity investee in Centralli Refrigerantes S.A.
    
    
    (60,817
    )
    
    
    (82,053
    )
    
    
    (1,076,400
    )Staff severance indemnities
    
    
    (2,404,004
    )
    
    
    (2,384
    )
    
    
    (67,132
    )Other expenses
    
    
    (832,309
    )
    
    
    (542,626
    )
    
    
    (970,582
    )Total
    
    
    (7,738,132
    )
    
    
    (6,394,577
    )
    
    
    (7,943,459
    )
 (1)
    
    Refers to the effects of the translation of the financial statements corresponding to
investment in foreign companies (translation of local currency to US dollars), in accordance
with Technical Bulletin No. 64 issued by the Chilean Institute of Accountants, which are
recorded on the consolidated statements of income under Other non-operating income or
expenses, as appropriate.
 F-34




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##### Table of Contents



NOTE 22  FOREIGN CURRENCY
  2005
    
    
    2004US
    
    
    Brazilian
    
    
    Argentine
    
    
    
    
    
    
    US
    
    
    Brazilian
    
    
    ArgentineAssets
    
   dollars
    
    
    reals
    
    
    pesos
    
    
    Euros
    
    
    dollars
    
    
    reals
    
    
    pesos
    
    
    Euros(in thousands)
    
    
    (in thousands)Cash
    
    
    5,554
    
    
    
    20,637
    
    
    
    18,029
    
    
    
    
    
    
    
    5,063
    
    
    
    26,054
    
    
    
    5,317
    
    
    
    20Time deposits
    
    
    41,479
    
    
    
    19,979
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    35,998
    
    
    
    1
    
    
    
    Marketable securities (net)
    
    
    7,791
    
    
    
    3,823
    
    
    
    
    
    
    
    
    
    
    
    28,851
    
    
    
    
    
    
    
    
    
    
    
    Receivables (net)
    
    
    5,138
    
    
    
    87,360
    
    
    
    22,032
    
    
    
    
    
    
    
    156
    
    
    
    65,339
    
    
    
    27,092
    
    
    
    Notes and accounts to related companies.
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    391
    
    
    
    
    
    
    
    Inventories
    
    
    6,095
    
    
    
    24,588
    
    
    
    18,577
    
    
    
    
    
    
    
    2,186
    
    
    
    29,941
    
    
    
    42,517
    
    
    
    Other current assets
    
    
    7,594
    
    
    
    42,618
    
    
    
    15,060
    
    
    
    
    
    
    
    10,246
    
    
    
    23,031
    
    
    
    11,772
    
    
    
    Property, plant and equipment
    
    
    147,031
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,736
    
    
    
    
    
    
    
    
    
    
    
    Investments in unconsolidated affiliates
    
    
    2,057
    
    
    
    5,853
    
    
    
    
    
    
    
    
    
    
    
    1,317
    
    
    
    4,303
    
    
    
    
    
    
    
    Investments in other companies
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    
    
    
    
    
    
    
    
    Goodwill (net)
    
    
    138,044
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    149,026
    
    
    
    
    
    
    
    
    
    
    
    Other long-term assets
    
    
    231,126
    
    
    
    23,570
    
    
    
    17,945
    
    
    
    15,114
    
    
    
    271,479
    
    
    
    38,348
    
    
    
    12,926
    
    
    
    15,114Total assets
    
    
    591,934
    
    
    
    228,533
    
    
    
    91,643
    
    
    
    15,114
    
    
    
    623,161
    
    
    
    223,405
    
    
    
    99,625
    
    
    
    15,134
 F-35




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##### Table of Contents



Liabilities
    
    2005
    
    2004US
    
    Brazilian
    
    Argentine
    
    
    
    
    
    US
    
    Brazilian
    
    ArgentineDollars
    
    reals
    
    pesos
    
    Euros
    
    dollars
    
    reals
    
    pesos
    
    Euros(in thousands)
    
    (in thousands)Obligations with banks and
financial institutions
    
    
    40,998
    
    
    
    4,221
    
    
    
    32,524
    
    
    
    
    
    
    
    81,996
    
    
    
    8,384
    
    
    
    
    
    
    
    Accounts payable
    
    
    4,937
    
    
    
    62,857
    
    
    
    41,142
    
    
    
    
    
    
    
    6,298
    
    
    
    70,609
    
    
    
    28,471
    
    
    
    2Other accrued liabilities
    
    
    
    
    
    
    64,986
    
    
    
    10,367
    
    
    
    
    
    
    
    
    
    
    
    48,176
    
    
    
    16,340
    
    
    
    Bonds payable
    
    
    36,714
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,714
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    54,018
    
    
    
    42,719
    
    
    
    
    
    
    
    734
    
    
    
    26,493
    
    
    
    31,943
    
    
    
    Total liabilities
    
    
    82,649
    
    
    
    186,082
    
    
    
    126,752
    
    
    
    
    
    
    
    125,742
    
    
    
    153,662
    
    
    
    76,754
    
    
    
    2Total net assets (liabilities)
    
    
    509,285
    
    
    
    42,451
    
    
    
    (35,109
    )
    
    
    15,114
    
    
    
    497,419
    
    
    
    69,743
    
    
    
    22,871
    
    
    
    15,132
 NOTE 23  CONSOLIDATED STATEMENT OF CASH FLOWS
  For the years ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Investing activitiesFixed assets additions
    
    
    2,977,593
    
    
    
    3,021,922
    
    
    
    3,569,788Sale of property, plant and equipment
    
    
    65,910
    
    
    
    43,406
    
    
    
    Financing activitiesDividend payment
    
    
    3,831,784
    
    
    
    3,969,728
    
    
    
    4,068,972
 NOTE 24  DERIVATIVE CONTRACTS
  F-36




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##### Table of Contents



Contract descriptionHedgedMaturity
    
    Specific
    
    Item
    
    Effect on incomeDerivative
    
    Period
    
    Item
    
    Amount
    
    Realized
    
    UnrealizedThCh$
    
    ThCh$
    
    ThCh$Cross Currency Swap
    
    I Quarter 2006
    
    Currency exchange US$
    
    
    2,565,151
    
    
    
    1,218,665
    
    
    
    3,785Cross Currency Swap
    
    I Quarter 2007
    
    Currency exchange US$
    
    
    2,645,278
    
    
    
    1,210,849
    
    
    
    144,316Cross Currency Swap
    
    III Quarter 2007
    
    Currency exchange US$
    
    
    2,610,970
    
    
    
    1,214,602
    
    
    
    55,006Cross Currency Swap
    
    IV Quarter 2007
    
    Currency exchange US$
    
    
    38,437,500
    
    
    
    9,868,071
    
    
    
    1,249,962Cross Currency Swap
    
    I Quarter 2008
    
    Currency exchange US$
    
    
    7,797,786
    
    
    
    3,620,434
    
    
    
    341,413Cross Currency Swap
    
    II Quarter 2008
    
    Currency exchange US$
    
    
    8,145,570
    
    
    
    3,597,802
    
    
    
    961,350Cross Currency Swap
    
    III Quarter 2008
    
    Currency exchange US$
    
    
    12,680,996
    
    
    
    5,790,650
    
    
    
    894,039Cross Currency Swap
    
    I Quarter 2013
    
    Currency exchange US$
    
    
    5,290,567
    
    
    
    2,422,357
    
    
    
    631,018Forward contract
    
    I Quarter 2006
    
    Currency exchange US$
    
    
    7,122,525
    
    
    
    
    
    
    
    (161,928
    )Forward contract
    
    II Quarter 2006
    
    Currency exchange US$
    
    
    7,209,257
    
    
    
    
    
    
    
    (162,922
    )Forward contract
    
    III Quarter 2006
    
    Currency exchange US$
    
    
    4,666,679
    
    
    
    
    
    
    
    (109,468
    )Forward contract
    
    IV Quarter 2006
    
    Currency exchange US$
    
    
    8,907,941
    
    
    
    
    
    
    
    (69,401
    )Total
    
    
    
    
    
    
    108,080,220
    
    
    
    28,943,430
    
    
    
    3,777,170
  Contract descriptionHedgedMaturity
    
    Specific
    
    Item
    
    Effect on incomeDerivative
    
    Period
    
    Item
    
    Amount
    
    Realized
    
    UnrealizedThCh$
    
    ThCh$
    
    ThCh$Cross Currency Swap
    
    I Quarter 2005
    
    Currency exchange US$
    
    
    1,063,935
    
    
    
    268,671
    
    
    
    Cross Currency Swap
    
    II Quarter 2005
    
    Currency exchange US$
    
    
    5,972,268
    
    
    
    1,743,898
    
    
    
    Cross Currency Swap
    
    IV Quarter 2005
    
    Currency exchange US$
    
    
    4,914,023
    
    
    
    1,445,881
    
    
    
    Cross Currency Swap
    
    I Quarter 2006
    
    Currency exchange US$
    
    
    2,887,332
    
    
    
    849,556
    
    
    
    Cross Currency Swap
    
    I Quarter 2007
    
    Currency exchange US$
    
    
    2,887,332
    
    
    
    849,556
    
    
    
    Cross Currency Swap
    
    III Quarter 2007
    
    Currency exchange US$
    
    
    2,887,332
    
    
    
    848,656
    
    
    
    Cross Currency Swap
    
    IV Quarter 2007
    
    Currency exchange US$
    
    
    43,309,980
    
    
    
    4,900,533
    
    
    
    Cross Currency Swap
    
    I Quarter 2008
    
    Currency exchange US$
    
    
    8,661,996
    
    
    
    2,548,669
    
    
    
    Cross Currency Swap
    
    II Quarter 2008
    
    Currency exchange US$
    
    
    8,661,996
    
    
    
    2,547,768
    
    
    
    Cross Currency Swap
    
    III Quarter 2008
    
    Currency exchange US$
    
    
    13,980,462
    
    
    
    4,032,318
    
    
    
    Cross Currency Swap
    
    I Quarter 2013
    
    Currency exchange US$
    
    
    5,774,664
    
    
    
    1,696,548
    
    
    
    Forward contract
    
    I Quarter 2005
    
    Currency exchange US$
    
    
    4,673,942
    
    
    
    
    
    
    
    (166,449
    )Forward contract
    
    II Quarter 2005
    
    Currency exchange US$
    
    
    4,968,944
    
    
    
    
    
    
    
    (176,255
    )Forward contract
    
    III Quarter 2005
    
    Currency exchange US$
    
    
    4,380,392
    
    
    
    
    
    
    
    (158,112
    )Forward contract
    
    IV Quarter 2005
    
    Currency exchange US$
    
    
    4,550,232
    
    
    
    
    
    
    
    (164,095
    )Total
    
    
    
    
    
    
    119,574,830
    
    
    
    21,732,054
    
    
    
    (664,911
    )
 F-37




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##### Table of Contents



NOTE 25  COMMITMENTS AND CONTINGENCIES
   1)
    
    The Chilean internal revenue service has commenced a penal lawsuit against the Companys
subsidiary Vital S.A. and against those ultimately responsible for the application of tax
losses. At the same time, a lawsuit has been filed against Vital S.A. for the recovery of
income tax and the application of accumulated losses. Management believes, based on the
opinion of its legal counsel, there is only a remote possibility of a negative outcome
against the Company in these proceedings.2)
    
    Embotelladora del Atlántico S.A. faces labor and other lawsuits. Accounting provisions at
December 31, 2005 for any probable loss contingency arising from these lawsuits amounted to
ThCh$1,752,274. Management believes, based on the opinion of its legal counsel, that these
lawsuits will not materially affect the Companys consolidated financial position, operating
results or cash flows when resolved in the future.3)
    
    Refrescos faces labor, tax and other legal proceedings. Accounting provisions at December 31,
2005 for any probable loss contingency arising from these lawsuits amounted to ThCh$6,614,257
Management believes, based on the opinion of its legal counsel, that these matters will not
materially affect the Companys consolidated financial position, operating results or cash
flows when resolved in the future.4)
    
    Andina faces labor, tax, commercial and other legal proceedings. Accounting provisions for
any probable loss contingency stemming from these lawsuits amounted to ThCh$74,314 at December
31, 2005. Management believes, based on the opinion of its legal counsel, that these matters
will not materially affect the Companys consolidated financial position, operating results
or cash flows when resolved in the future.
 F-38




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##### Table of Contents




    
    Andina must maintain a leverage ratio, defined as total debt/consolidated equity less
than 1.20. For purposes of calculating the leverage ratio, total debt includes; (i)
short-term bank liabilities, (ii) the current portion of long-term bank liabilities, (iii)
short-term liabilities and promisory notes, (iv) the current portion of bonds payable, v)
long-term bank liabilities, and (vi) long-term bonds payable. Consolidated equity means
total shareholders equity plus minority interest.
    
    Andina must maintain consolidated assets free of any pledge, mortgage or other
encumbrance for an amount equal to at least 1.30 times the consolidated liabilities that
are not guaranteed by the investee.
    
    Andina must retain and, in no way, sell, assign or dispose of, to a third party, the
geographical zone denominated Region Metropolitana, as a franchised territory in Chile of
The Coca-Cola Company for the preparation, production, sale and distribution of the
products and brands in accordance with the Bottler Agreement with Andina, renewable from
time to time.
    
    The Company must retain and, in no way, sell, assign or dispose of to a third party any
other territory in Argentina or Brazil which is currently franchised to a subsidiary of the
Company by The Coca-Cola Company for the preparation, production, sale, and distribution of
the products and brands of The Coca-Cola Company, as long as the referred territory
represents more than 40% of the Companys consolidated operating cash flows.
    Balances pending
    
    Year ofpayment
    
    expirationBook
    
    at year end
    
    December 31,Debtor
    

    Assets involved
    
    Value
    
    2005
    
    2004
    
    2006Guarantee creditor
    
    Name
    
    Relation
    
    Guarantee
    
    Type
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Aduana Buenos Aires
    
    Embotelladora del Atlantico S.A.
    
    Subsidiary
    
    Insurance guaranty
    
    Inventories
    
    
    2,793,734
    
    
    
    
    
    
    
    
    
    
    
    Uniao Federal
    
    Rio de Janeiro Refrescos Ltda.
    
    Subsidiary
    
    Mortgage
    
    Warehouse
    
    
    57,050
    
    
    
    60,321
    
    
    
    58,261
    
    
    
    Estado Rio de Janeiro
    
    Rio de Janeiro Refrescos Ltda.
    
    Subsidiary
    
    Mortgage
    
    Real State Property
    
    
    11,542,124
    
    
    
    8,891,513
    
    
    
    
    
    
    
    Poder Judiciario
    
    Rio de Janeiro Refrescos Ltda.
    
    Subsidiary
    
    Judicial deposit
    
    Judicial Deposit
    
    
    7,795,553
    
    
    
    
    
    
    
    
    
    
    
    Serv. Nac. de Aduanas
    
    Embotelladora Andina S.A.
    
    
    
    Guaranty receipt
    
    
    
    
    
    
    
    
    92,250
    
    
    
    
    
    
    
    92,250
 F-39




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##### Table of Contents



Payments due by periodMaturity2006
    
    2007
    
    2008
    
    2009
    
    2010
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Purchase obligations
    
    
    79,277
    
    
    
    99,093
    
    
    
    39,954
    
    
    
    39,954
    
    
    
    28,905
    
    
    
    287,183Subtotal-included in our
balance sheet
    
    
    79,277
    
    
    
    99,093
    
    
    
    39,954
    
    
    
    39,954
    
    
    
    28,905
    
    
    
    287,183Operating lease obligations
    
    
    1,228,657
    
    
    
    127,549
    
    
    
    46,621
    
    
    
    
    
    
    
    
    
    
    
    1,402,827Purchase obligations
    
    
    4,712,186
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,712,186Subtotal-not included in our
balance sheet
    
    
    5,940,843
    
    
    
    127,549
    
    
    
    46,621
    
    
    
    
    
    
    
    
    
    
    
    6,115,013Total contractual obligations.
    
    
    6,020,120
    
    
    
    226,642
    
    
    
    86,575
    
    
    
    39,954
    
    
    
    28,905
    
    
    
    6,402,196
 F-40




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##### Table of Contents



NOTE 26  GUARANTEES RECEIVED FROM THIRD PARTIES
  Type ofGuarantor
    
    guarantee
    
    Amount
    
    Currency
    
    TransactionSoc. Las Ñipas
    
    Policy
    
    
    6,971
    
    
    U.F.
    
    Advertising AgreementSoc. Com. Itahue Ltda.
    
    Policy
    
    
    5,000
    
    
    U.F.
    
    Advertising AgreementDistribuidora Monserrat S.A.
    
    Policy
    
    
    3,920
    
    
    U.F.
    
    Advertising AgreementSoc. Administradora Plaza Cent.
    
    Policy
    
    
    3,076
    
    
    U.F.
    
    Advertising AgreementIansagro S.A.
    
    Deposit Certificate
    
    
    4,735,875
    
    
    ThCh$
    
    WarrantsIansagro S.A.
    
    Deposit Certificate
    
    
    3,788,700
    
    
    ThCh$
    
    WarrantsIansagro S.A.
    
    Deposit Certificate
    
    
    2,841,525
    
    
    ThCh$
    
    WarrantsPeñaloza Ballero Limitada
    
    Receipt
    
    
    50,000
    
    
    ThCh$
    
    Purchase OrderRussel W. Coffin
    
    Letter of Credit
    
    
    39,436,416
    
    
    USD
    
    Purchase NitvitgovRefrigerantes S.A.CONFAB
    
    Mortgage
    
    
    30,000,000
    
    
    USD
    
    Purchase Rio de Janeiro Refrescos Ltda.Several Clients
    
    Deposits
    
    
    966,180
    
    
    USD
    
    Container GuarantySoc. Com. Champfer
    
    Mortgage
    
    
    642,970
    
    
    USD
    
    Distributor CreditMac Coke Dist. De Beb.
    
    Mortgage
    
    
    427,223
    
    
    USD
    
    Distributor CreditTigresa Com. Beb.
    
    Mortgage
    
    
    286,239
    
    
    USD
    
    Distributor CreditFranciscana Dist.
    
    Mortgage
    
    
    245,653
    
    
    USD
    
    Distributor CreditASXT Fluminense Distrib. Bebidas
    
    Mortgage
    
    
    239,245
    
    
    USD
    
    Distributor CreditDist. Real Cola (Apucarana)
    
    Mortgage
    
    
    234,972
    
    
    USD
    
    Distributor CreditDist União De Itaperuna
    
    Mortgage
    
    
    221,558
    
    
    USD
    
    Distributor CreditRosas de Casimiro
    
    Mortgage
    
    
    183,706
    
    
    USD
    
    Distributor CreditAguiar Distrib. De Bebidas Ltda.
    
    Mortgage
    
    
    171,316
    
    
    USD
    
    Distributor CreditMBM Distribuidora de Beb.
    
    Mortgage
    
    
    158,927
    
    
    USD
    
    Distributor CreditLedesma SAAI
    
    Guaranty
    
    
    133,534
    
    
    USD
    
    SupplierLedesma SAAI
    
    Guaranty
    
    
    132,689
    
    
    USD
    
    SupplierLedesma SAAI
    
    Guaranty
    
    
    132,689
    
    
    USD
    
    SupplierLedesma SAAI
    
    Guaranty
    
    
    132,689
    
    
    USD
    
    SupplierLedesma SAAI
    
    Guaranty
    
    
    132,689
    
    
    USD
    
    SupplierDibejon Dist. Beb. João Neiva
    
    Mortgage
    
    
    121,758
    
    
    USD
    
    Distributor Credit
 NOTE 27  SUBSEQUENT EVENTS
  
 
  
   F-41




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NOTE 28  DIFFERENCES BETWEEN CHILEAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
         For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Shareholders equity
    
    
    (8,055,888
    )
    
    
    (6,791,382
    )
    
    
    (4,235,586
    )Liabilities
    
    
    (5,854,895
    )
    
    
    (3,736,684
    )
    
    
    (2,171,126
    )Property, plant and equipment
    
    
    2,698,524
    
    
    
    2,021,047
    
    
    
    776,944Current assets
    
    
    2,555,198
    
    
    
    1,649,745
    
    
    
    11,892Other assets
    
    
    9,699,710
    
    
    
    8,302,547
    
    
    
    6,883,332Adjustment of balance sheet accounts
    
    
    1,042,649
    
    
    
    1,445,273
    
    
    
    1,265,456Adjustment of income statement accounts
    
    
    (1,612,700
    )
    
    
    (497,100
    )
    
    
    138,580Price level restatement income (expense)
    
    
    (570,051
    )
    
    
    948,173
    
    
    
    1,404,036
 F-42




---



##### Table of Contents




    
    Monetary assets and liabilities were translated at year-end rates of exchange between the U.S. dollar and the local
currency.
    
    All non-monetary assets and liabilities and shareholders equity were translated at historical rates of exchange between
the U.S. dollar and the local currency.
    
    Income and expense accounts were translated at average rates of exchange between the U.S. dollar and the local currency.
    
    Any exchange differences were included in the results of operations for the period.
     F-43




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F-44




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##### Table of Contents



SFAS No. 142, Goodwill and Other Intangible Assets establishes the following:
 
    
    The accounting for a recognized intangible asset is based on its useful life to
the reporting entity. An intangible asset with a finite useful life is amortized over
the life of the asset, but goodwill and other intangible assets with indefinite useful
lives are not amortized.
    
    The remaining useful lives of intangible assets being amortized are evaluated
each reporting period to determine whether events and circumstances warrant a revision
to the remaining period of amortization. If the estimate of an intangible assets
remaining useful life is changed, the remaining carrying value of the intangible asset
is amortized prospectively over the revised remaining useful life.
    
    Goodwill and other intangible assets with indefinite useful lives that are not
subject to amortization are tested for impairment at least annually.
    
    All goodwill must be assigned to a reporting unit, which is defined as an
operating segment or one level below an operating segment.
 SFAS No. 142 became effective for years beginning after December 15, 2001. Accordingly,
goodwill amortization was ceased for U.S. GAAP purposes beginning in 2002. The effects of
eliminating goodwill amortization recognized for Chilean GAAP purposes are included in the
reconciliation of Chilean GAAP to U.S. GAAP under paragraph (n) below.
     F-45




---



##### Table of Contents




    
    Debt securities that the Company has the positive intent and ability
to hold to maturity are classified as held-to-maturity securities and
are reported at amortized cost.
    
    Debt and equity securities that are bought and held principally for
the purpose of selling them in the near term are classified as trading
securities and are reported at fair value, with unrealized gains and
losses included in earnings.
    
    Debt and equity securities not classified as either held-to-maturity
or trading securities are classified as available-for-sale securities
and reported at fair value, with unrealized gains and losses excluded
from earnings and reported in a separate component of shareholders
equity.
      F-46




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##### Table of Contents



a.
    
    If the net effect is a loss, it should be recognized in the statements of income in the
period of change.b.
    
    If the net effect is a gain, it should be recognized when the contract is closed and
accordingly deferred on the balance sheet.c.
    
    If the net effect is a gain and net losses were recorded on the transaction in prior years, a
gain should be recognized in the statements of income in the current period up to the amount
of net losses recorded previously.d.
    
    If the effect is a net loss and net gains were recorded (as a deferred revenue) on the
transaction in prior years, the gain should be utilized to offset the net loss before
recording the remaining loss in the statements of income for the year.
 F-47




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F-48




---



##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Net income as shown in the Chilean GAAP
financial statements
    
    
    56,039,346
    
    
    
    41,604,440
    
    
    
    16,729,756Reversal of additional depreciation on revaluation
of property, plant and equipment (paragraph c)
    
    
    10,056
    
    
    
    10,140
    
    
    
    10,131Adjustment to deferred income tax provision (paragraph d)
    
    
    8,409,192
    
    
    
    381,693
    
    
    
    1,427,942Difference in accounting for investments in related
companies (paragraph e)
    
    
    (365,398
    )
    
    
    1,711,897
    
    
    
    (2,400,620
    )Amortization of goodwill (paragraph f)
    
    
    6,228,916
    
    
    
    7,186,162
    
    
    
    7,028,030Joint venture accounting (paragraph g)
    
    
    419,897
    
    
    
    419,897
    
    
    
    419,897Accumulated translation adjustment of foreign
investments (paragraph j)
    
    
    
    
    
    
    
    
    
    
    (1,623,633
    )Derivative financial instruments (paragraph k)
    
    
    4,442,081
    
    
    
    2,111,062
    
    
    
    (3,200,898
    )Net income in accordance with U.S. GAAP
    
    
    75,184,090
    
    
    
    53,425,291
    
    
    
    18,390,605
 For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Components of other comprehensive (loss) income:Cumulative translation adjustment for foreign investments
    
    
    (15,299,958
    )
    
    
    (11,956,907
    )
    
    
    (35,204,782
    )Unrealized (loss) gain on investment securities, net of
applicable
income tax expense (benefit) of ThCh$ (676,334) in 2005,
ThCh$58,959 in 2004 and
ThCh$1,565,486 in 2003 (paragraph h)
    
    
    (3,269,578
    )
    
    
    308,260
    
    
    
    7,820,984Subtotal other comprehensive (loss) income
    
    
    (18,569,536
    )
    
    
    (11,648,647
    )
    
    
    (27,383,798
    )Comprehensive income (loss) in accordance with U.S. GAAP
(paragraph 2 b)
    
    
    56,614,554
    
    
    
    41,776,644
    
    
    
    (8,993,193
    )
  F-49




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##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Other comprehensive (loss) income, before income tax:Cumulative translation adjustment for foreign investments
    
    
    (15,299,958
    )
    
    
    (11,956,907
    )
    
    
    (35,204,782
    )Unrealized gains (loss) on securitiesUnrealized holding gains (loss) arising during period
    
    
    (1,433,455
    )
    
    
    705,851
    
    
    
    11,031,082Less: reclassification adjustment for losses included
in net income
    
    
    (2,512,457
    )
    
    
    (338,632
    )
    
    
    (1,644,612
    )Other comprehensive (loss) income, before income tax
    
    
    (19,245,870
    )
    
    
    (11,589,688
    )
    
    
    (25,818,312
    )Income tax expenses related to items of other
comprehensive income
    
    
    676,334
    
    
    
    (58,959
    )
    
    
    (1,565,486
    )Other comprehensive (loss) income, net of income tax
    
    
    (18,569,536
    )
    
    
    (11,648,647
    )
    
    
    (27,383,798
    )
  For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Series A
    
    Series B
    
    Series A
    
    Series B
    
    Series A
    
    Series BBasic and diluted net income per share
    
    
    94.18
    
    
    
    103.60
    
    
    
    66.93
    
    
    
    73.62
    
    
    
    23.04
    
    
    
    25.34Weighted average number of common stock
outstanding (thousands of shares)
    
    
    380,137
    
    
    
    380,137
    
    
    
    380,137
    
    
    
    380,137
    
    
    
    380,137
    
    
    
    380,137
  For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Net income in accordance with U.S. GAAP
    
    
    75,184,090
    
    
    
    53,425,291
    
    
    
    18,390,605(less): Preferred stock dividend Series B
    
    
    (39,381,426
    )
    
    
    (27,984,167
    )
    
    
    (9,632,999
    )Basic EPSIncome available to common stockholders
    
    
    35,802,664
    
    
    
    25,441,124
    
    
    
    8,757,606Weighted average number of common shares
outstanding (thousands of shares) Series A
    
    
    380,137
    
    
    
    380,137
    
    
    
    380,137Basic and diluted net income per share Series A
    
    
    94.18
    
    
    
    66.93
    
    
    
    23.04Basic EPSIncome available to preferred stockholders
    
    
    39,381,426
    
    
    
    27,984,167
    
    
    
    9,632,999Weighted average number of common shares
outstanding (thousands of shares) Series B
    
    
    380,137
    
    
    
    380,137
    
    
    
    380,137Basic and diluted net income per share Series B
    
    
    103.60
    
    
    
    73.62
    
    
    
    25.34
 F-50




---



##### Table of Contents



At December 31,2005
    
    2004ThCh$
    
    ThCh$Shareholders equity as shown in the Chilean GAAP
financial statements
    
    
    268,436,591
    
    
    
    301,319,181Reversal of additional depreciation on revaluation of property,
plant and equipment (paragraph c)
    
    
    (1,408,718
    )
    
    
    (1,418,774
    )Adjustment to deferred income tax provision (paragraph d)
    
    
    9,472,577
    
    
    
    387,051Difference in accounting for investments in
related companies (paragraph e)
    
    
    1,308,996
    
    
    
    1,674,394Amortization of goodwill (paragraph f)
    
    
    15,915,652
    
    
    
    9,686,736Joint venture accounting (paragraph g)
    
    
    (2,519,378
    )
    
    
    (2,939,275
    )Unrealized gain on investment securities (paragraph h)
    
    
    (235,112
    )
    
    
    3,710,800Derivative financial instruments (paragraph k)
    
    
    3,777,170
    
    
    
    (664,911
    )Minimum dividend (paragraph m)
    
    
    (5,170,845
    )
    
    
    Shareholders equity in accordance with U.S. GAAP
    
    
    289,576,933
    
    
    
    311,755,202
  ThCh$BALANCE AT DECEMBER 31, 2002
    
    
    383,094,630Distribution of dividends
    
    
    (54,108,277
    )Increase in cumulative translation adjustment of foreign investments
    
    
    (35,204,782
    )Decrease in net unrealized losses on investment securities
    
    
    7,820,984Net income for the year
    
    
    18,390,605BALANCE AT DECEMBER 31, 2003
    
    
    319,993,160Distribution of dividends
    
    
    (50,014,602
    )Increase in cumulative translation adjustment of foreign investments
    
    
    (11,956,907
    )Increase in net unrealized losses on investment securities
    
    
    308,260Net income for the year
    
    
    53,425,291BALANCE AT DECEMBER 31, 2004
    
    
    311,755,202Distribution of dividends
    
    
    (73,621,978
    )Increase in cumulative translation adjustment of foreign investments
    
    
    (15,299,958
    )Increase in net unrealized losses on investment securities
    
    
    (3,269,578
    )Minimum dividend
    
    
    (5,170,845
    )Net income for the year
    
    
    75,184,090BALANCE AT DECEMBER 31, 2005
    
    
    289,576,933
 F-51




---



##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Current tax expense as per tax returns
    
    
    (9,273,711
    )
    
    
    (3,762,922
    )
    
    
    (2,682,248
    )Deferred tax expense as previously
calculated under Chilean GAAP
    
    
    724,669
    
    
    
    (323,893
    )
    
    
    1,610,164Charge for the year under Chilean GAAP
    
    
    (8,549,042
    )
    
    
    (4,086,815
    )
    
    
    (1,072,084
    )U.S. GAAP adjustments:Deferred tax effect of applying SFAS 109 to
Chilean GAAP results
    
    
    8,409,192
    
    
    
    381,693
    
    
    
    1,427,942(Charge) benefits from continuous operations
for the year under U.S. GAAP
    
    
    (139,850
    )
    
    
    (3,705,122
    )
    
    
    355,858
 F-52




---



##### Table of Contents



Chilean
    
    
    
    
    
    
    
    
    
    The Company2005
    
    and others
    
    Brazil
    
    Argentina
    
    (consolidated)ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Current tax expense as per tax return
    
    
    (5,814,371
    )
    
    
    (2,808,681
    )
    
    
    (650,659
    )
    
    
    (9,273,711
    )Deferred tax (expense) benefit as previously
calculated under Chilean GAAP
    
    
    35,614
    
    
    
    906,902
    
    
    
    (217,847
    )
    
    
    724,669(Charge) benefit for the year under
Chilean GAAP
    
    
    (5,778,757
    )
    
    
    (1,901,779
    )
    
    
    (868,506
    )
    
    
    (8,549,042
    )U.S. GAAP adjustments:Deferred tax effect of applying SFAS 109
    
    
    (316,536
    )
    
    
    8,617,947
    
    
    
    107,781
    
    
    
    8,409,192(Charge) benefit from continuous operations
for the year under U.S. GAAP
    
    
    (6,095,293
    )
    
    
    6,716,168
    
    
    
    (760,725
    )
    
    
    (139,850
    )
 Chilean
    
    
    
    
    
    
    
    
    
    The Company2004
    
    and others
    
    Brazil
    
    Argentina
    
    (consolidated)ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Current tax expense as per tax return
    
    
    (2,081,545
    )
    
    
    (1,510,191
    )
    
    
    (171,186
    )
    
    
    (3,762,922
    )Deferred tax (expense) benefit as previously
calculated under Chilean GAAP
    
    
    (2,161,138
    )
    
    
    447,243
    
    
    
    1,390,002
    
    
    
    (323,893
    )(Charge) benefit for the year under
Chilean GAAP
    
    
    (4,242,683
    )
    
    
    (1,062,948
    )
    
    
    1,218,816
    
    
    
    (4,086,815
    )U.S. GAAP adjustments:Deferred tax effect of applying SFAS 109
    
    
    89,899
    
    
    
    (5,503
    )
    
    
    297,297
    
    
    
    381,693(Charge) benefit from continuous operations
for the year under U.S. GAAP
    
    
    (4,152,784
    )
    
    
    (1,068,451
    )
    
    
    1,516,113
    
    
    
    (3,705,122
    )
 Chilean
    
    
    
    
    
    
    
    
    
    The Company2003
    
    and others
    
    Brazil
    
    Argentina
    
    (consolidated)ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Current tax expense as per tax return
    
    
    (2,682,248
    )
    
    
    
    
    
    
    
    
    
    
    (2,682,248
    )Deferred tax (expense) benefit as previously
calculated under Chilean GAAP
    
    
    (683,482
    )
    
    
    811,760
    
    
    
    1,481,886
    
    
    
    1,610,164(Charge) benefit for the year under
Chilean GAAP
    
    
    (3,365,730
    )
    
    
    811,760
    
    
    
    1,481,886
    
    
    
    (1,072,084
    )U.S. GAAP adjustments:Deferred tax effect of applying SFAS 109
    
    
    881,843
    
    
    
    534,778
    
    
    
    11,321
    
    
    
    1,427,942(Charge) benefit from continuous operations
for the year under U.S. GAAP
    
    
    (2,483,887
    )
    
    
    1,346,538
    
    
    
    1,493,207
    
    
    
    355,858
 F-53




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##### Table of Contents



For the year endedDecember 31,2005
    
    2004ThCh$
    
    ThCh$Deferred tax assets:Tax loss carryforwards
    
    
    9,838,565
    
    
    
    14,919,846Social contribution
    
    
    2,478,987
    
    
    
    2,787,908Tax-credits Argentina currency devaluation
    
    
    479,997
    
    
    
    1,114,448Provision for labor and trade lawsuits
    
    
    5,926,107
    
    
    
    5,031,615Provision for assets written-off
    
    
    1,829,816
    
    
    
    1,836,075Allowance for doubtful accounts
    
    
    328,608
    
    
    
    563,244Vacation accrual
    
    
    156,036
    
    
    
    123,377Provisions for employee benefits
    
    
    496,708
    
    
    
    509,681Joint venture accounting
    
    
    651,242
    
    
    
    759,782Fair value of derivative not considered to be hedge
    
    
    
    
    
    
    113,035Unrealized loss on investments securities
    
    
    48,966
    
    
    
    Other
    
    
    816,928
    
    
    
    503,204Less: Valuation allowance
    
    
    (2,153,954
    )
    
    
    (17,316,062
    )Total deferred tax assets
    
    
    20,898,006
    
    
    
    10,946,153Deferred tax liabilities:Depreciation
    
    
    4,242,417
    
    
    
    4,545,850Guarantees on bottles
    
    
    2,618,328
    
    
    
    2,753,820Staff severance indemnities
    
    
    304,299
    
    
    
    586,314Financial expenses
    
    
    3,363,023
    
    
    
    2,112,762Fair value of derivative not considered to be hedge
    
    
    642,119
    
    
    
    Unrealized income on investments securities
    
    
    
    
    
    
    627,367Other
    
    
    290,368
    
    
    
    466,745Total deferred tax liabilities
    
    
    11,460,554
    
    
    
    11,092,858Net deferred tax assets (liabilities) under U.S. GAAP
    
    
    9,437,452
    
    
    
    (146,705
    )Net deferred tax assets (liabilities) under Chilean GAAP
    
    
    (35,125
    )
    
    
    (533,756
    )Effect of U.S. GAAP adjustments on deferred income taxes
    
    
    9,472,577
    
    
    
    387,051
 F-54




---



##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Income tax provision at statutory Chilean tax rates
    
    
    12,805,070
    
    
    
    9,712,171
    
    
    
    2,975,733Increase (decrease) in provision resulting from:Tax effects resulting from foreign operations.
    
    
    1,979,057
    
    
    
    1,085,356
    
    
    
    179,037Permanent differences
    
    
    (181,644
    )
    
    
    (3,219,687
    )
    
    
    956,316Effect of remeasurement to U.S. dollars
(Brazil and Argentina)
    
    
    (990,181
    )
    
    
    (152,612
    )
    
    
    (1,404,440
    )Change in valuation allowance
    
    
    (13,214,008
    )
    
    
    (2,072,188
    )
    
    
    (1,527,126
    )Adjustments in prior year income taxes
    
    
    156,763
    
    
    
    (562,404
    )
    
    
    (675,766
    )Other
    
    
    (415,207
    )
    
    
    (1,085,514
    )
    
    
    (859,612
    )Effective tax provision
    
    
    139,850
    
    
    
    3,705,122
    
    
    
    (355,858
    )
       F-55




---



##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Cash
    
    
    14,412,531
    
    
    
    14,324,761
    
    
    
    9,924,227Time deposits
    
    
    4,458,538
    
    
    
    7,833,816
    
    
    
    7,011,099Money market funds
    
    
    2,277,838
    
    
    
    5,957,446
    
    
    
    26,646,855Total cash and cash equivalents
    
    
    21,148,907
    
    
    
    28,116,023
    
    
    
    43,582,181
  For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Short-term borrowings with banks and
financial institutions
    
    
    54,681,343
    
    
    
    62,253,664
    
    
    
    54,479,627Long term borrowings with banks and
financial institutions
    
    
    
    
    
    
    
    
    
    
    345,712Repayment of short-term bank borrowings
    
    
    (62,795,425
    )
    
    
    (47,262,743
    )
    
    
    (56,506,548
    )Repayment of long-term bank borrowings
    
    
    (21,776,585
    )
    
    
    (1,304,279
    )
    
    
    (1,295,291
    )Net bank borrowings
    
    
    (29,890,667
    )
    
    
    13,686,642
    
    
    
    (2,976,500
    )
     F-56




---



##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Revenue:Sales to unaffiliated customers:Soft drinks
    
    
    417,163,243
    
    
    
    374,368,809
    
    
    
    355,721,346Other beverages
    
    
    49,271,484
    
    
    
    43,956,674
    
    
    
    43,122,272Packaging
    
    
    12,037,009
    
    
    
    10,323,888
    
    
    
    11,959,046Subtotal
    
    
    478,471,736
    
    
    
    428,649,371
    
    
    
    410,802,664Intersegment sales:Soft drinks
    
    
    
    
    
    
    
    
    
    
    Other beverages
    
    
    15,510,954
    
    
    
    14,599,665
    
    
    
    14,560,657Packaging
    
    
    9,943,905
    
    
    
    8,942,607
    
    
    
    8,638,328Eliminations
    
    
    (25,454,859
    )
    
    
    (23,542,272
    )
    
    
    (23,198,985
    )Subtotal
    
    
    
    
    
    
    
    
    
    
    Total revenue
    
    
    478,471,736
    
    
    
    428,649,371
    
    
    
    410,802,664Operating income:Soft drinks
    
    
    68,845,324
    
    
    
    57,557,969
    
    
    
    45,973,994Other beverages
    
    
    6,958,042
    
    
    
    5,616,231
    
    
    
    3,926,385Packaging
    
    
    2,104,681
    
    
    
    1,975,757
    
    
    
    751,722Total operating income
    
    
    77,908,047
    
    
    
    65,149,957
    
    
    
    50,652,101Financial income:Soft drinks
    
    
    28,516,739
    
    
    
    24,153,731
    
    
    
    32,674,916Other beverages
    
    
    2,816
    
    
    
    326
    
    
    
    93,502Packaging
    
    
    2,458
    
    
    
    2,140
    
    
    
    4,062Total financial income
    
    
    28,522,013
    
    
    
    24,156,197
    
    
    
    32,772,480Financial expenses:Soft drinks
    
    
    21,012,486
    
    
    
    19,605,011
    
    
    
    21,178,841Other beverages
    
    
    2,996
    
    
    
    83,755
    
    
    
    1,412Packaging
    
    
    96,689
    
    
    
    140,774
    
    
    
    36,742Total financial expenses
    
    
    21,112,171
    
    
    
    19,829,540
    
    
    
    21,216,995
 F-57




---



##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Share of income from unconsolidated
affiliates:Soft drinks
    
    
    12,611
    
    
    
    209,396
    
    
    
    49,297Other beverages
    
    
    483,945
    
    
    
    587,566
    
    
    
    2,404,299Packaging
    
    
    272,980
    
    
    
    226,903
    
    
    
    (517,226
    )Total share of income from
unconsolidated affiliates Subtotal
    
    
    769,536
    
    
    
    1,023,865
    
    
    
    1,936,370Income tax expenses:Soft drinks
    
    
    6,095,335
    
    
    
    3,730,788
    
    
    
    916,337Other beverages
    
    
    1,817,269
    
    
    
    137,283
    
    
    
    155,747Packaging
    
    
    636,438
    
    
    
    218,744
    
    
    
    Total income tax expenses
    
    
    8,549,042
    
    
    
    4,086,815
    
    
    
    1,072,084Depreciation:Soft drinks
    
    
    26,984,028
    
    
    
    30,014,511
    
    
    
    31,591,739Other beverages
    
    
    1,124,593
    
    
    
    1,251,535
    
    
    
    1,223,376Packaging
    
    
    928,396
    
    
    
    1,315,344
    
    
    
    2,188,633Total depreciation
    
    
    29,037,017
    
    
    
    32,581,390
    
    
    
    35,003,748Segment assets:Soft drinks
    
    
    353,151,131
    
    
    
    457,183,505
    
    
    
    475,068,630Other beverages
    
    
    13,817,995
    
    
    
    11,116,310
    
    
    
    11,524,155Packaging
    
    
    10,972,456
    
    
    
    13,071,604
    
    
    
    14,327,788Total segment assets
    
    
    377,941,582
    
    
    
    481,371,419
    
    
    
    500,920,573Capital expend:Soft drinks
    
    
    26,441,914
    
    
    
    24,781,918
    
    
    
    25,805,133Other beverages
    
    
    665,725
    
    
    
    875,727
    
    
    
    969,850Packaging
    
    
    287,498
    
    
    
    492,020
    
    
    
    136,712Total capital expenditures
    
    
    27,395,137
    
    
    
    26,149,665
    
    
    
    26,911,695
 F-58




---



##### Table of Contents



For the year ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Revenue:Sales to unaffiliated customers:Chile
    
    
    219,880,814
    
    
    
    208,927,789
    
    
    
    206,185,804Brazil
    
    
    162,510,132
    
    
    
    132,564,720
    
    
    
    125,978,464Argentina
    
    
    96,080,790
    
    
    
    87,156,862
    
    
    
    78,638,396Total revenue
    
    
    478,741,736
    
    
    
    428,649,371
    
    
    
    410,802,664Operating income:Chile
    
    
    46,494,390
    
    
    
    41,959,663
    
    
    
    39,506,738Brazil
    
    
    20,480,289
    
    
    
    13,736,839
    
    
    
    7,424,247Argentina
    
    
    10,933,368
    
    
    
    9,453,455
    
    
    
    3,721,116Total operating income
    
    
    77,908,047
    
    
    
    65,149,957
    
    
    
    50,652,101Financial income:Chile
    
    
    24,051,048
    
    
    
    21,452,912
    
    
    
    29,965,255Brazil
    
    
    3,671,358
    
    
    
    2,639,869
    
    
    
    2,742,935Argentina
    
    
    799,607
    
    
    
    63,416
    
    
    
    64,290Total financial income
    
    
    28,522,013
    
    
    
    24,156,197
    
    
    
    32,772,480Financial expenses:Chile
    
    
    13,390,061
    
    
    
    10,751,167
    
    
    
    10,030,515Brazil
    
    
    3,166,703
    
    
    
    4,664,515
    
    
    
    6,829,608Argentina
    
    
    4,555,407
    
    
    
    4,413,858
    
    
    
    4,356,872Total financial expenses
    
    
    21,112,171
    
    
    
    19,829,540
    
    
    
    21,216,995Share of income from unconsolidated
affiliates:Chile
    
    
    (93,825
    )
    
    
    311,154
    
    
    
    (405,895
    )Brazil
    
    
    483,945
    
    
    
    587,566
    
    
    
    2,404,299Argentina
    
    
    379,416
    
    
    
    125,145
    
    
    
    (62,034
    )Total share of income from
unconsolidated affiliates
    
    
    769,536
    
    
    
    1,023,865
    
    
    
    1,936,370Income tax expenses (benefit):Chile
    
    
    5,778,757
    
    
    
    4,242,683
    
    
    
    3,365,730Brazil
    
    
    1,901,779
    
    
    
    1,062,948
    
    
    
    (811,760
    )Argentina
    
    
    868,506
    
    
    
    (1,218,816
    )
    
    
    (1,481,886
    )Total income tax expenses
    
    
    8,549,042
    
    
    
    4,086,815
    
    
    
    1,072,084
 F-59




---



##### Table of Contents



At December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Depreciation:Chile
    
    
    13,356,474
    
    
    
    14,541,939
    
    
    
    14,872,446Brazil
    
    
    9,008,083
    
    
    
    10,580,690
    
    
    
    10,215,943Argentina
    
    
    6,672,460
    
    
    
    7,458,761
    
    
    
    9,915,359Total depreciation
    
    
    29,037,017
    
    
    
    32,581,390
    
    
    
    35,003,748Identifiable long-lived assets:Chile
    
    
    174,273,663
    
    
    
    248,006,789
    
    
    
    270,222,290Brazil
    
    
    118,094,276
    
    
    
    125,840,660
    
    
    
    117,941,277Argentina
    
    
    71,666,144
    
    
    
    89,668,465
    
    
    
    97,771,000Total identifiable long-lived assets
    
    
    364,034,083
    
    
    
    463,515,914
    
    
    
    485,934,567
  At December 31,Industry
    
    2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Total segment assets
    
    
    377,941,582
    
    
    
    481,371,419
    
    
    
    500,920,573Cash
    
    
    14,412,531
    
    
    
    14,324,761
    
    
    
    9,924,227Financial instruments
    
    
    39,703,853
    
    
    
    24,494,473
    
    
    
    33,657,953Amounts due from related parties
    
    
    5,609,652
    
    
    
    119,892
    
    
    
    53,689Recoverable taxes
    
    
    9,780,175
    
    
    
    5,773,594
    
    
    
    4,851,913Deferred income taxes
    
    
    676,498
    
    
    
    
    
    
    
    1,432,558Investments in related companies
    
    
    21,386,070
    
    
    
    20,733,308
    
    
    
    20,617,330Investment in other companies
    
    
    54,570
    
    
    
    56,202
    
    
    
    647,253Intangible assets (net)
    
    
    175,850
    
    
    
    222,639
    
    
    
    333,765Liabilities deducted from segment assets
    
    
    56,308,816
    
    
    
    53,505,236
    
    
    
    49,224,647Total assets
    
    
    526,049,597
    
    
    
    600,601,524
    
    
    
    621,663,908Identifiable long-lived assets
    
    
    364,034,083
    
    
    
    463,515,914
    
    
    
    485,934,567Current assets
    
    
    162,015,514
    
    
    
    137,085,610
    
    
    
    135,729,341Total assets
    
    
    526,049,597
    
    
    
    600,601,524
    
    
    
    621,663,908
 F-60




---



##### Table of Contents



F-61




---



##### Table of Contents



At December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Operating income as reported under Chilean GAAP
    
    
    77,908,047
    
    
    
    65,149,957
    
    
    
    50,652,101Gain on sale of, plant property and equipment
    
    
    267,834
    
    
    
    
    
    
    
    206,821Lease of property (offices)
    
    
    
    
    
    
    29,115
    
    
    
    Reversal of contingencies provisions (1)
    
    
    
    
    
    
    
    
    
    
    1,576,391Provision for property, plant and equipment Itaoca (2)
    
    
    
    
    
    
    (2,995,708
    )
    
    
    Staff severance indemnities (3)
    
    
    (2,404,004
    )
    
    
    (2,384
    )
    
    
    (67,132
    )Lawsuit fees
    
    
    (502,906
    )
    
    
    
    
    
    
    Provision PIS Coffins
    
    
    (2,280,217
    )
    
    
    
    
    
    
    Provision for labor, tax and commercial lawsuits
    
    
    (544,448
    )
    
    
    (1,716,919
    )
    
    
    (5,636,175
    )Obsolescence and write-off of property, plant and equipment.
    
    
    (1,113,431
    )
    
    
    (128,137
    )
    
    
    (193,170
    )Loss on sale of property, plant and equipment
    
    
    
    
    
    
    (291,510
    )
    
    
    Provision for loss of investment in Transora
    
    
    
    
    
    
    (635,240
    )
    
    
    Provision for equity investee in Centralli Refrigerantes S.A.
    
    
    (60,817
    )
    
    
    (82,053
    )
    
    
    (1,076,400
    )Operating income under U.S. GAAP format
    
    
    71,270,058
    
    
    
    59,327,121
    
    
    
    45,462,436
 (1)
    
    Refers to a reassessment of contingencies which resulted in a lower assessment of probable
losses.(2)
    
    The Company recognized an impairment charge for the Itaoca plant, since the plant is
redundant to the Companys operations in Brazil. The impairment charge was based on an
independent appraisal. The Company intends to sale the plant.(3)
    
    Retroactive benefit over severance indemnities.
    F-62




---



##### Table of Contents



At December 31,2005
    
    2004Carrying
    
    Fair
    
    Carrying
    
    Fairvalue
    
    Value
    
    Value
    
    valueThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Cash
    
    
    14,412,531
    
    
    
    14,412,531
    
    
    
    14,324,761
    
    
    
    14,324,761Time deposits
    
    
    25,700,571
    
    
    
    25,700,571
    
    
    
    7,833,816
    
    
    
    7,833,816Marketable securities
    
    
    14,003,282
    
    
    
    14,005,756
    
    
    
    16,660,657
    
    
    
    16,760,239Trade accounts receivable (net).
    
    
    34,207,081
    
    
    
    34,207,081
    
    
    
    32,341,391
    
    
    
    32,341,391Notes receivable (net)
    
    
    11,142,844
    
    
    
    11,142,844
    
    
    
    10,361,590
    
    
    
    10,361,590Other receivables (net)
    
    
    19,777,487
    
    
    
    19,777,487
    
    
    
    16,860,558
    
    
    
    16,860,558Long-term time deposits
    
    
    
    
    
    
    
    
    
    
    47,574,012
    
    
    
    47,574,012Long-term credits
    
    
    8,323,000
    
    
    
    8,323,000
    
    
    
    21,463,932
    
    
    
    21,463,932Long-term investment in bonds
    
    
    82,637,436
    
    
    
    82,399,850
    
    
    
    96,108,356
    
    
    
    99,719,574Long-term receivables
    
    
    110,473
    
    
    
    110,473
    
    
    
    48,638
    
    
    
    48,638Foreign currency contracts (net)
    
    
    32,720,600
    
    
    
    32,720,600
    
    
    
    21,067,143
    
    
    
    21,067,143
 At December 31,2005
    
    2004Carrying
    
    Fair
    
    Carrying
    
    FairValue
    
    Value
    
    value
    
    ValueThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Short and long-term
term bank borrowings
    
    
    28,873,931
    
    
    
    28,873,931
    
    
    
    68,128,052
    
    
    
    68,128,052Bonds payable
    
    
    115,486,448
    
    
    
    128,170,341
    
    
    
    129,587,843
    
    
    
    144,327,839Dividends payable
    
    
    3,978,869
    
    
    
    3,978,869
    
    
    
    4,600,639
    
    
    
    4,600,639Accounts payable
    
    
    37,876,730
    
    
    
    37,876,730
    
    
    
    35,152,154
    
    
    
    35,152,154Notes payable
    
    
    
    
    
    
    
    
    
    
    5,180
    
    
    
    5,180Other creditors short and long-term
    
    
    2,972,278
    
    
    
    2,972,278
    
    
    
    3,181,589
    
    
    
    3,181,589
       F-63




---



##### Table of Contents



Years ended December 31,2005
    
    2004
    
    2003ThCh$
    
    ThCh$
    
    ThCh$Proceeds on realized gains
    
    
    30,992,120
    
    
    
    16,236,933
    
    
    
    28,621,350Realized gains
    
    
    2,512,457
    
    
    
    338,632
    
    
    
    1,676,547Proceeds on realized losses
    
    
    
    
    
    
    
    
    
    
    15,683,284Realized losses
    
    
    
    
    
    
    
    
    
    
    (31,935
    )
 F-64




---



##### Table of Contents



Year ended December 31, 2005Gross
    
    GrossUnrealized
    
    Unrealized
    
    EstimatedCost
    
    Gains
    
    Losses
    
    Fair ValueThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Available-for-sale-investmentsChilean treasury bonds
    
    
    7,374,607
    
    
    
    
    
    
    
    (45,344
    )
    
    
    7,329,263Other securities of Chilean
Institutions
    
    
    45,299,078
    
    
    
    330,474
    
    
    
    (518,821
    )
    
    
    45,110,731Foreign investments
    
    
    32,528,902
    
    
    
    193,936
    
    
    
    (195,357
    )
    
    
    32,527,481Total
    
    
    85,202,587
    
    
    
    524,410
    
    
    
    (759,522
    )
    
    
    84,967,475
 Year ended December 31, 2004Gross
    
    GrossUnrealized
    
    Unrealized
    
    EstimatedCost
    
    Gains
    
    Losses
    
    Fair ValueThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Available-for-sale-investmentsChilean treasury bonds
    
    
    8,341,357
    
    
    
    153,059
    
    
    
    
    
    
    
    8,494,416Other securities of Chilean
Institutions
    
    
    60,361,157
    
    
    
    1,672,261
    
    
    
    (40,482
    )
    
    
    61,992,936Foreign investments
    
    
    33,185,445
    
    
    
    2,080,020
    
    
    
    (154,058
    )
    
    
    35,111,407Total
    
    
    101,887,959
    
    
    
    3,905,340
    
    
    
    (194,540
    )
    
    
    105,598,759
 Year ended December 31, 2003Gross
    
    GrossUnrealized
    
    Unrealized
    
    EstimatedCost
    
    Gains
    
    Losses
    
    Fair ValueThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Available-for-sale-investmentsChilean treasury bonds
    
    
    9,151,767
    
    
    
    
    
    
    
    (72,387
    )
    
    
    9,079,380Other securities of Chilean
Institutions
    
    
    55,126,195
    
    
    
    1,902,098
    
    
    
    (319,535
    )
    
    
    56,708,758Foreign investments
    
    
    25,718,085
    
    
    
    1,833,405
    
    
    
    
    
    
    
    27,551,490Total
    
    
    89,996,047
    
    
    
    3,735,503
    
    
    
    (391,922
    )
    
    
    93,339,628
 F-65




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##### Table of Contents



Year ended December 31, 2005After one
    
    After fiveyear but
    
    years butWithin
    
    within
    
    within ten
    
    Afterone year
    
    five years
    
    years
    
    ten years
    
    TotalThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$
    
    ThCh$Available-for-sale-investmentsChilean treasury bonds
    
    
    
    
    
    
    
    
    
    
    7,374,607
    
    
    
    
    
    
    
    7,374,607Other securities of Chilean
institutions
    
    
    
    
    
    
    9,489,873
    
    
    
    35,809,205
    
    
    
    
    
    
    
    45,299,078Foreign investments
    
    
    2,565,151
    
    
    
    10,664,413
    
    
    
    19,299,338
    
    
    
    
    
    
    
    32,528,902Total
    
    
    2,565,151
    
    
    
    20,154,286
    
    
    
    62,483,150
    
    
    
    
    
    
    
    85,202,587
    Business Segment
    
    ThCh$Softdrinks
    
    
    87,308,791
     F-66




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##### Table of Contents



F-67




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##### Table of Contents



EXHIBIT INDEX
 Item
    
    Description1.1
    
    English translation of our Bylaws (filed with the U.S. Securities and
Exchange Commission in our annual report on Form 20-F for the fiscal
year ended December 31, 1996 and incorporated herein by reference)8.1
    
    List of our subsidiaries (filed herewith).12.1
    
    Certification of Jaime Garcia pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).12.2
    
    Certification of Osvaldo Garay pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith).13.1
    
    Certification of Jaime Garcia pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith).13.2
    
    Certification of Osvaldo Garay pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(filed herewith).