Table of Contents

 

**As filed with the Securities and Exchange Commission on April 30, 2013**

 

**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**     |
| ** ** | ** **                                                                                                                               |
| **x**      | **ANNUAL REPORT PURSUANT TO   SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the fiscal year ended December 31, 2012** |
| ** ** | ** **                                                                                                                               |
| **OR**     |
| ** ** | ** **                                                                                                                               |
| **o**      | **TRANSITION REPORT PURSUANT TO   SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                           |
| ** ** | ** **                                                                                                                               |
| **o**      | **SHELL COMPANY REPORT PURSUANT   TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                        |

 

**For the transition period from                       to                        **

 

Commission file number 001-13142

 
| **Embotelladora Andina S.A.**                                                                                                                    |
|--------------------------------------------------------------------------------------------------------------------------------------------------|
| (Exact name of Registrant as specified in its charter)                                                                                           |
|                                                                                                                                             |
| **Andina Bottling Company**                                                                                                                      |
| (Translation of the Registrant’s name in English)                                                                                           |
|                                                                                                                                             |
| **Republic of Chile**                                                                                                                            |
| (Jurisdiction of incorporation or organization)                                                                                                  |
|                                                                                                                                             |
| **Miraflores 9153, 7th Floor**

**Renca - Santiago, Chile**                                                                                      |
| (Address of principal executive offices)                                                                                                         |
|                                                                                                                                             |
| **Paula Vicuña, Tel. (56-2) 2338-0520  E-mail: paula.vicuna@koandina.com**

**Miraflores 9153, 7th Floor - Renca - Santiago,   Chile** |
| (Name, Telephone, E-mail and/or Facsimile number and Address of   Company Contact Person)                                                        |

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

| Title of each   class                                                                      |   | Name of each   exchange on which registered |
|--------------------------------------------------------------------------------------------|--------|---------------------------------------------|
| Series A Shares, Series B Shares of Registrant represented by   American Depositary Shares |   | New York Stock Exchange                     |
|                                                                                       |   |                                        |

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: **None**

 

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act

**7.625% Notes due October 1, 2027**

**7.875% Notes due October 1, 2097**

 

The number of outstanding shares of the issuer’s stock as of December 31, 2012 was 946,578,736 as follows:

**473,289,368 Series A Shares**

**473,289,368 Series B Shares**

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

x Yes   o No

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes   x No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes   o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

o Yes   o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

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

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing

 

| U.S. GAAP o |   | International Financial Reporting Standards as issued   by the international Accounting Standards Board x |   | Other o. |
|-------------|--------|-----------------------------------------------------------------------------------------------------------|--------|----------|

 

If Other has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow

o Item 17   o Item 18

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes   x No

 

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**TABLE OF CONTENTS**

 
| ** **     | ** **                                                                     | **Page** |
|----------------|--------------------------------------------------------------------------------|----------|
|           |                                                                           |     |
| PART I    |                                                                           | 3        |
|           |                                                                           |     |
| ITEM 1.        | IDENTITY OF DIRECTORS,   SENIOR MANAGEMENT AND ADVISERS                        | 3        |
| ITEM 2.        | OFFER STATISTICS AND   EXPECTED TIMETABLE                                      | 3        |
| ITEM   3.      | KEY   INFORMATION                                                              | 3        |
| ITEM 4.        | INFORMATION ON   THE COMPANY                                                   | 16       |
| ITEM 4A.       | UNRESOLVED   SECURITIES AND EXCHANGE COMMISSION STAFF COMMENTS                 | 49       |
| ITEM 5.        | OPERATING   AND FINANCIAL REVIEW AND PROSPECTS                                 | 49       |
| ITEM 6.        | DIRECTORS,   SENIOR MANAGEMENT AND EMPLOYEES                                   | 70       |
| ITEM 7.        | MAJOR   SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            | 81       |
| ITEM 8.        | FINANCIAL   INFORMATION                                                        | 82       |
| ITEM 9.        | THE OFFER AND   LISTING                                                        | 83       |
| ITEM 10.       | ADDITIONAL INFORMATION                                                         | 86       |
| ITEM 11.       | QUANTITATIVE   AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 98       |
| ITEM 12.       | DESCRIPTION   OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 99       |
| ITEM 12D.3     | AMERICAN   DEPOSITARY RECEIPTS                                                 | 100      |
| ITEM 12D.4     | DIRECT AND   INDIRECT PAYMENTS BY THE DEPOSITARY                               | 100      |
|           |                                                                           |     |
| PART II   |                                                                           | 101      |
|           |                                                                           |     |
| ITEM 13.       | DEFAULTS,   DIVIDEND ARREARAGES AND DELINQUENCIES                              | 101      |
| ITEM 14.       | MATERIAL   MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 101      |
| ITEM 15.       | CONTROLS   AND PROCEDURES                                                      | 101      |
| ITEM 16A. | AUDIT   COMMITTEE FINANCIAL EXPERT                                             | 102      |
| ITEM 16B.      | CODE OF ETHICS                                                                 | 102      |
| ITEM 16C.      | PRINCIPAL   ACCOUNTANT FEES AND SERVICES                                       | 102      |
| ITEM 16D. | EXEMPTIONS   FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                   | 103      |
| ITEM 16E.      | PURCHASERS   OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      | 103      |
| ITEM 16F.      | CHANGE IN   REGISTRANT’S CERTIFYING ACCOUNTANT                            | 104      |
| ITEM 16G.      | CORPORATE   GOVERNANCE                                                         | 104      |
|           |                                                                           |     |
| PART III  |                                                                           | 109      |
|           |                                                                           |     |
| ITEM 17.       | FINANCIAL   STATEMENTS                                                         | 109      |
| ITEM 18.       | FINANCIAL   STATEMENTS                                                         | 109      |
| ITEM 19.       | EXHIBITS                                                                       |     |

 

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**INTRODUCTION**

 

**References**

 

Unless the context otherwise requires, as used in this annual report the following terms have the meanings set forth below:

 

·             the “Company”, “we”, “Andina” and “Coca-Cola Andina” means Embotelladora Andina S.A. and its consolidated subsidiaries;

·             “Andina Brazil” means the Company’s subsidiary, Rio de Janeiro Refrescos Ltda. and its subsidiaries;

·             “AESA” means the Company’s subsidiary, Andina Empaques Argentina S.A.

·             “EDASA” means the Company’s subsidiary, Embotelladora del Atlántico S.A.;

·             “PARESA” means the Company’s subsidiary, Paraguay Refrescos S.A.

·             “CMF” means the Company’s affiliate, Envases CMF S.A.;

·             “ECSA” means the Company’s affiliate, Envases Central S.A.;

·             “Vital Jugos” means the Company’s affiliate, Vital Jugos S.A., previously known as Vital S.A. ;

·             “VASA” means the Company’s affiliate, Vital Aguas S.A.;

·             “TAR” means the Company’s subsidiary, Transportes Andina Refrescos Ltda.

·             “TP” means the Company’s subsidiary, Transportes Polar S.A.

·             “The Coca-Cola Company” or “TCCC” means The Coca-Cola Company or any of its subsidiaries, including without limitation Coca-Cola de Chile S.A. (“CC Chile”), which operates in Chile, Recofarma Industrias do Amazonas Ltda. (“CC Brazil”), which operates in Brazil and Servicios y Productos para Bebidas Refrescantes S.R.L. (“CC Argentina”), which operates in Argentina.

·             the “Chilean territory” means the Metropolitan Region of Santiago and the neighboring provinces of Cachapoal and San Antonio; starting in 4Q12, and due to the merger with Embotelladoras Coca-Cola Polar, we also participate in the regions of Antofagasta, Atacama, Coquimbo, Aisén and Magallanes.

·             the “Brazilian territory” means the majority of the State of Rio de Janeiro, and the totality of the State of Espírito Santo; and

·             the “Argentine territory” means the provinces of Córdoba, Mendoza, San Juan, San Luis, Entre Rios, Buenos Aires (only San Nicolás and Ramallo) and most of Santa Fe. Starting in 4Q12, and due to the merger with Embotelladoras Coca-Cola Polar, we also participate in the provinces of  La Pampa, Neuquén, Río Negro, Chubut, Santa Cruz, Tierra del Fuego  and part of the province of  Buenos Aires.

·             the “Paraguayan territory” means the country of Paraguay

 

**PRESENTATION OF FINANCIAL AND CERTAIN OTHER INFORMATION**

 

Unless otherwise specified, references herein to “dollars,” “U.S. dollars” or “US$” are to United States dollars; references to “pesos,” “Chilean pesos”, “Ch$” or “ThCh$” are to Chilean pesos; references to “UF” are to Unidades de Fomento, a daily indexed Chilean peso-denominated monetary unit that takes into account the effect of the Chilean inflation rate during the previous month; references to “Argentine pesos” or “AR$” are to Argentine pesos, references to “real” or “reais” or “R$” are to Brazilian reais and references to “guaranies” or “guarani” or “G$” are to Paraguayan Guaranies. Certain percentages and amounts contained in this annual report have been rounded for ease of presentation.

 

For the convenience of the reader, this document contains translations of certain Chilean peso amounts into U.S. dollars at specified rates. Unless otherwise indicated, U.S. dollar equivalent information for amounts in Chilean pesos is based on the Observed Exchange Rate (as defined under “Item 3. Key Information—Exchange Rates”) reported by the Banco Central de Chile (the Central Bank of Chile), which we refer to as the “Central Bank.” The Federal Reserve Bank of New York does not report a noon buying rate in New York City for Chilean pesos. No representation is made that the peso or U.S. dollar figures presented in this annual report could have been or could be converted into U.S. dollars or pesos, as the case may be, at any particular rate or at all.

 

On August 28, 2007 the Chilean Superintendence of Insurance and Securities announced the adoption of the International Financial Reporting Standards (“IFRS”)in Chile which became mandatory for companies of a certain size beginning 2009 and 2010.  The Company decided to adopt the IFRS as issued by the International Accounting Standards Board (“IASB”) as its accounting and reporting rules beginning January

 

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1, 2010.  Additionally the period between January 1 and December 31, 2009 constituted the transition period towards IFRS and the Financial Statements of the year 2010 were presented comparatively with 2009.

 

**Forward-looking information**

 

This annual report contains or incorporates by reference statements that constitute “forward-looking statements,” in that they include statements regarding the intent, belief or current expectations of our directors and officers with respect to our future operating performance. Such statements include any forecasts, projections and descriptions of anticipated cost savings or other synergies. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” variations of such words, and similar expressions are intended to identify such forward-looking statements. You should be aware that any such forward-looking statements are not guarantees of future performance and may involve risks and uncertainties, and that actual results may differ from those set forth in the forward-looking statements as a result of various factors (including, without limitations, the actions of competitors, future global economic conditions, market conditions, foreign exchange rates, and operating and financial risks related to managing growth and integrating acquired businesses), many of which are beyond our control. The occurrence of any such factors not currently expected by us would significantly alter the results set forth in these statements. You should not place undue reliance on such statements, which speak only as of the date that they were made. Our independent auditors have not examined or compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we might issue in the future. We do not undertake any obligation to release publicly any revisions to such forward-looking statements after filing of this annual report to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

 

**Market Data**

 

We have computed the information contained in this annual report regarding annual volume and per capita growth rates and levels, and market share, product segment, and population data in bottling and franchise territories, and it is based upon statistics accumulated and certain assumptions we have made. Additional data was obtained from third parties. Market share information presented with respect to soft drinks, juices, waters and beer is based on data supplied by A.C. Nielsen Company (“A.C. Nielsen”) and by IPSOS company and is believed to be accurate although no assurances to that effect can be given. Certain market data herein (including percentage amounts) may not sum due to rounding.

 

**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**

 

**A.****           ****Selected Financial Data**

 

The following table presents our selected consolidated and other financial and operating information at the dates and for the periods indicated. The selected financial information at December 31, 2012 and 2011 and for each of the three years ended December 31, 2012, has been derived from, should be read in conjunction with, and is qualified in its entirety by reference to our Consolidated Financial Statements, included in Item 18 of this annual report, that we refer to in this annual report as the “Consolidated Financial Statements.” Our Consolidated Financial Statements are prepared in accordance with IFRS as issued by the IASB.

 

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Our consolidated financial results include the results of our subsidiaries located in Chile, Brazil, Argentina and Paraguay. Our subsidiaries outside Chile prepare their financial statements in accordance with IFRS and to comply with local regulations in accordance with generally accepted accounting principles of the country in which they operate. The Consolidated Financial Statements reflect the results of the subsidiaries outside of Chile, translated to Chilean pesos (functional and reporting currency of the parent company) and are presented in accordance with IFRS.  The International Financial Reporting Standards requires assets and liabilities to be translated from the functional currency of each entity to the reporting currency (Chilean peso) at end of period exchange rates and income and expense accounts to be translated at the average monthly exchange rate for the month in which income or expense is recognized. Unless otherwise specified, our financial data is presented herein in nominal Chilean pesos and U.S. dollars.

 

The following table presents our selected consolidated financial information. This information should be read in conjunction with, and is qualified in its entirety by reference to, our Consolidated Financial Statements, including the notes thereto in Item 18. The selected financial information contained herein is presented on a consolidated basis, and is not necessarily indicative of our financial position or results of operations at or for any future date or period.

 
| ** **                                                                                               | ** ** | **For the period ended December 31,**                                                                                                                                                           | ** ** |
|----------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| ** **                                                                                               | ** ** | **2012**                                                                                                                                                                                                                 | ** ** | **2012** | ** ** | **2011** | ** ** | **2010** | ** ** | **2009** | ** ** |
| ** **                                                                                               | ** ** | **(in million nominal Chilean pesos and million US$, with the exception of those related to   debt, shares and sales volume)** | ** ** |
| ** **                                                                                               | ** ** | **MUS$ (6)**                                                                                                                                                                                                        | ** ** | **MCh$$(6)** | ** ** | **MCh$** | ** ** | **MCh$** | ** ** | **MCh$** | ** ** |
| ***Income Statement Data***                                                                              |       |                                                                                                                                                                                                                     |       |   |   |   |   |   |   |   |   |
| *IFRS :*                                                                                                 |       |                                                                                                                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Net Sales                                                                                                |       | 2,442                                                                                                                                                                                                                    |       | 1,172,293 |   | 982,864 |   | 888,714 |   | 785,845 |   |
| Cost of sales                                                                                            |       | -1,456                                                                                                                                                                                                                   |       | -698,955 |   | -578,581 |   | -506,882 |   | -455,300 |   |
| Administrative, distribution and selling expenses                                                        |       | -665                                                                                                                                                                                                                     |       | -319,174 |   | -261,859 |   | -232,598 |   | -197,422 |   |
| Other Operating Income                                                                                   |       | 321                                                                                                                                                                                                                      |       | 154,164 |   | 142,424 |   | 149,234 |   | 133,123 |   |
|                                                                                                     |       |                                                                                                                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Other (expense) income , net *[financial   results, exchange differences and share in equity investees]* |       | -57                                                                                                                                                                                                                      |       | -27,390 |   | -10,712 |   | -9,294 |   | -5,972 |   |
| Income taxes                                                                                             |       | -80                                                                                                                                                                                                                      |       | -38,505 |   | -34,685 |   | -36,340 |   | -29,166 |   |
| Net Income                                                                                               |       | 184                                                                                                                                                                                                                      |       | 88,269 |   | 97,027 |   | 103,600 |   | 97,985 |   |
|                                                                                                     |       |                                                                                                                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Basic and diluted earnings per share                                                                     |       |                                                                                                                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Series A(7)                                                                                         |       | 0.22                                                                                                                                                                                                                     |       | 104.12 |   | 121.54 |   | 129.78 |   | 122.75 |   |
| Series B(7)                                                                                         |       | 0.24                                                                                                                                                                                                                     |       | 114.53 |   | 133.69 |   | 142.75 |   | 135.02 |   |
| Basic and diluted earnings per ADR(3)                                                                    |       |                                                                                                                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Series A(7)                                                                                         |       | 1.3                                                                                                                                                                                                                      |       | 624.72 |   | 729.24 |   | 778.68 |   | 736.5 |   |
| Series B(7)                                                                                         |       | 1.43                                                                                                                                                                                                                     |       | 687.18 |   | 802.14 |   | 856.5 |   | 810.12 |   |
| Capital Stock                                                                                            |       |                                                                                                                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Series A                                                                                            |       | 473,289,368                                                                                                                                                                                                              |       | 473,289,368 |   | 380,137,271 |   | 380,137,271 |   | 380,137,271 |   |
| Series B                                                                                            |       | 473,289,368                                                                                                                                                                                                              |       | 473,289,368 |   | 380,137,271 |   | 380,137,271 |   | 380,137,271 |   |
| Issued Capital                                                                                           |       | 564                                                                                                                                                                                                                      |       | 270,759 |   | 230,892 |   | 230,892 |   | 230,892 |   |
| Total dividends declared                                                                                 |       |                                                                                                                                                                                                                     |       |   |   |   |   |   |   |   |   |
| Total Series A Shares                                                                               |       | 71                                                                                                                                                                                                                       |       | 34,018 |   | 33,809 |   | 32,578 |   | 29,700 |   |

 

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| Total Series B Shares                                |   | 78     |   | 37,420    |   | 37,190  |   | 35,836  |   | 32,670  |   |
|-----------------------------------------------------------|--------|--------|--------|-----------|--------|---------|--------|---------|--------|---------|--------|
|                                                      |   |   |   |      |   |    |   |    |   |    |   |
| ***Balance Sheet Data***                                  |   |   |   |      |   |    |   |    |   |    |   |
| *IFRS:*                                                   |   |   |   |      |   |    |   |    |   |    |   |
| Total assets                                              |   | 3,208  |   | 1,539,836 |   | 741,959 |   | 688,314 |   | 642,692 |   |
| Current debt that accrues interest(1)                     |   | 192    |   | 92,002    |   | 12,117  |   | 11,996  |   | 5,800   |   |
| Non-current debt that accrues interest                    |   | 362    |   | 173,880   |   | 74,641  |   | 70,449  |   | 73,150  |   |
| Controlling and non-controlling shareholders’ equity |   | 1,861  |   | 893,605   |   | 421,979 |   | 394,865 |   | 373,558 |   |
|                                                      |   |   |   |      |   |    |   |    |   |    |   |
| ***Other Financial Information***                         |   |   |   |      |   |    |   |    |   |    |   |
| *IFRS*                                                    |   |   |   |      |   |    |   |    |   |    |   |
| Cash flows from operating activities                      |   | 393    |   | 188,857   |   | 138,950 |   | 125,848 |   | 131,126 |   |
| Cash flows from investing activities                      |   | -325   |   | -156,170  |   | -89,621 |   | -80,504 |   | -84,318 |   |
| Cash flows from financing activities                      |   | -7     |   | -3,551    |   | -67,159 |   | -62,548 |   | -67,756 |   |
| Depreciation and amortizations                            |   | 112    |   | 53,824    |   | 39,498  |   | 37,015  |   | 36,807  |   |
| Capital expenditures                                      |   | 300    |   | 143,764   |   | 126,931 |   | 95,462  |   | 49,483  |   |
|                                                      |   |   |   |      |   |    |   |    |   |    |   |
| Ratio of total debt to total capitalization(2)            |   | 0.23   |   | 0.23      |   | 0.17    |   | 0.17    |   | 0.17    |   |
|                                                      |   |   |   |      |   |    |   |    |   |    |   |
| ***Other Operating Data***                                |   |   |   |      |   |    |   |    |   |    |   |
| Sales Volume                                              |   |   |   |      |   |    |   |    |   |    |   |
| Coca-Cola Soft Drinks (million UCs)(5)                    |   | 517.6  |   | 517.6     |   | 448.2   |   | 438     |   | 419.6   |   |
| Other beverages (million UCs) (4)(5)(6)                   |   | 78.6   |   | 78.6      |   | 53.3    |   | 51.2    |   | 39.0    |   |

 

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*(1)**        **Includes interest bearing liabilities including current bank liabilities, bonds payable discounting issuance expenses and initial discounts that are recognized forming part of the liability and other financial liabilities that accrue short term bank interests and the portion of long—term bank liabilities and bonds payable within 12 months.*

*(2)**        **Total debt is calculated as the sum of current and non-current financial interest bearing debt. Total capitalization is calculated as the sum of total financial debt, non-controlling interest and shareholders’ equity attributable to the controlling shareholder. Shareholders’ equity has been determined under IFRS.*

*(3)**        **Each ADR represents six shares of common stock of the corresponding series of Shares..*

*(4)**        **Includes waters, juices, beer and other spirits.*

*(5)**        **Unit cases (“UCs”) refer to 192 ounces of finished beverage product (24 eight-ounce servings) or 5.69 liters.*

*(6)**        **Due to the materialization  of the merger with Embotelladoras Coca Cola Polar S.A. on October 1, 2012,  2012 figures both monetary and volume figures include the operations of the last quarter of the territories of Ex Embotelladoras Coca Cola Polar S.A., as well as the consolidated figures for the last quarter of Sociedades Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. all which due to the merger passed from being associates to being subsidiaries that must be incorporated in the consolidation.*

*(7)**        **For the calculation of the profits per share, it is taken into consideration the average amount of outstanding shares that is 400.809.380 shares.*

 

**Exchange Rates**

 

The following table sets forth the annual low, high, average and period-end Observed Exchange Rate for U.S. dollars for each year beginning in 2008 and for each month during the six months immediately preceding the month of this annual report, as reported by the Central Bank.

 

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| ** **            | ** ** | **Daily Observed Exchange Rate Ch$ per US$(1)** | ** ** |
|-----------------------|------------|-------------------------------------------------------------------------------|------------|
| **Year**              | ** ** | **Low(2)**                                                                    | ** ** | **High(2)** | ** ** | **Average(3)** | ** ** | **Period End** | ** ** |
|                  |       |                                                                          |       |   |   |   |   |   |   |
| 2008                  |       | 431.22                                                                        |       | 676.75 |   | 522.35 |   | 636.45 |   |
| 2009                  |       | 491.09                                                                        |       | 643.87 |   | 559.67 |   | 507.10 |   |
| 2010                  |       | 468.01                                                                        |       | 549.17 |   | 510.22 |   | 468.01 |   |
| 2011                  |       | 455.91                                                                        |       | 533.74 |   | 483.90 |   | 519.20 |   |
| 2012                  |       | 469.65                                                                        |       | 519.69 |   | 486.59 |   | 479.96 |   |
|                  |       |                                                                          |       |   |   |   |   |   |   |
| **Month**             |       |                                                                          |       |   |   |   |   |   |   |
| September 2012   |       | 469.65                                                                        |       | 481.11 |   | 474.91 |   | 473.77 |   |
| October 2012     |       | 471.54                                                                        |       | 481.98 |   | 475.67 |   | 480.59 |   |
| November 2012    |       | 476.20                                                                        |       | 484.48 |   | 480.56 |   | 480.39 |   |
| December 2012    |       | 474.36                                                                        |       | 481.28 |   | 477.11 |   | 479.96 |   |
| January 2013     |       | 470.67                                                                        |       | 475.47 |   | 472.28 |   | 471.44 |   |
| February 2013    |       | 470.67                                                                        |       | 473.60 |   | 472.42 |   | 472.96 |   |
| March 2013       |       | 471.10                                                                        |       | 474.82 |   | 472.44 |   | 472.03 |   |
| April 2013   (4) |       | 466.50                                                                        |       | 477.74 |   | 472.17 |   | 472.73 |   |

 

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*Source*: Chilean 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.

(4)                  Considers until April 26th, 2012

 

The Observed Exchange Rate on April 26, 2012 was Ch$472.73 per US$1.00.

 

**B.            Capitalization and Indebtedness**

 

**Not applicable.**

 

**C.            Reasons for the offer and use of proceeds**

 

**Not applicable.**

 

**D.            Risk Factors**

 

The Company is subject to various economic, political, social and competitive conditions. Any of the following risks, if they materialize, could materially and adversely affect our business, results of operations, prospects and financial condition.

 

**Risks Related to our Company**

 

***We rely heavily on our relationship with The Coca-Cola Company (“TCCC”) which has substantial influence over our business and operations***

 

Approximately 82% of our net sales in 2012 were derived from the distribution of Coca-Cola soft drinks and 15% from the distribution of other beverages bearing trademarks owned by TCCC. We produce, market and distribute Coca-Cola products through standard bottler agreements between our bottler

 

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subsidiaries and, in each case, the local subsidiary of TCCC or, in the case of fruit juices and nectars, The Minute Maid Company, a subsidiary of TCCC. TCCC has the ability to exercise substantial influence over our business through its rights under the Bottler Agreements. See “Item 7. Major Shareholders and Related Party Transactions—Bottler Agreements.” Under the Bottler Agreements, TCCC unilaterally sets the prices for Coca-Cola soft drink concentrates and Coca-Cola beverages (in the case of soft drinks pre-mixed by TCCC) sold to us. TCCC also monitors pricing changes we institute and has the right to review and approve our marketing, operational and advertising plans. These factors may impact our profit margins which could adversely affect our net income and results of operations. Our marketing campaigns for all Coca-Cola products are designed and controlled by TCCC. Pursuant to the Bottler Agreements, we are required to submit a business plan to TCCC for prior approval on a yearly basis. In accordance with the Bottler Agreements, TCCC may, among other things, require that we demonstrate financial ability to meet our business plan and if we are not able to demonstrate our financial capacity TCCC may terminate our rights to produce, market and distribute Coca-Cola soft drinks or other Coca-Cola beverages in territories where we have such approval. Under the Bottler Agreements, we are prohibited from producing, bottling, distributing or selling any products that could be substituted for, be confused with or be considered an imitation of, Coca-Cola soft drinks or other Coca-Cola beverages and products.

 

We depend on TCCC to renew the Bottler Agreements which are subject to termination by TCCC in the event we default or upon expiration of their respective terms. We cannot assure you that the Bottler Agreements will be renewed or extended upon their expiration, and even if they are renewed, we cannot be certain that renewal will be granted on the same terms as those currently in effect. Termination, non-extension or non-renewal of any of the Bottler Agreements would have a material adverse effect on our business, financial condition and results of operation.

 

In addition, any acquisition we make of bottlers of Coca-Cola products in other countries may require, among other things, the consent of TCCC under bottler agreements to which such other bottlers are subject. We cannot assure you that TCCC will consent to any future geographic expansion of our Coca-Cola beverage business. In addition, we cannot assure you that our relationship with TCCC will not undergo significant changes in the future. If such changes do occur, our operations, and financial results and condition could be materially affected.

 

***Our business is highly competitive and subject to price competition which may adversely affect our net profits and margins***

 

The soft drink and non-alcoholic beverage businesses are highly competitive in each of our Company’s franchise territories. In our franchise territories we compete with bottlers of regional brands, including low cost “B brand” beverages and Pepsi products.  In Argentina and Brazil we compete with Companhia de Bebidas das Americas, commonly referred to as AmBev, the largest brewer in Latin America and a subsidiary of InBev S.A., which sells Pepsi products, in addition to a portfolio that includes local brands with flavors such as guaraná. This competition is likely to continue, and we cannot assure you that it will not intensify in the future which could materially and adversely affect our financial condition and results of operations. See “Item 4. Information on the Company — Part B. Business Overview— Soft Drink Business—Competition.”

 

***Changes in the nonalcoholic beverages business environment could adversely affect our financial results***

 

The nonalcoholic beverages business environment is rapidly evolving as a result of, among other things, changes in consumer preferences, including changes based on health and nutrition considerations and obesity concerns, shifting consumer tastes and needs, changes in consumer lifestyles and competitive product and pricing pressures. In addition, the industry is being affected by the trend toward consolidation in the retail channel. If we are unable to successfully adapt to this rapidly changing environment, our net income, share of sales and volume growth could be negatively affected.

 

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***Raw material prices may be subject to U.S. dollar/local currency exchange risk and price volatility which could increase our costs of operations***

 

Numerous raw materials, including sugar and resin, are used in producing beverages and containers. We purchase raw materials from both domestic and international suppliers. See “Item 4. Information on the Company—Part B. Business Overview—Soft Drink Business—Raw Materials and Supplies.” Because the prices of raw materials are fixed in U.S. dollars, we are subject to local currency risk in each of our operations. If the Chilean peso, Brazilian real or Argentine peso were to depreciate significantly against the U.S. dollar, the cost of certain raw materials could rise significantly, which could have an adverse effect on our financial condition and results of operations. We cannot assure you that these currencies will not lose value against the U.S. dollar in the future.   Additionally, some raw materials prices are subject to high volatility that could also have a material negative effect over our profitability.

 

***Instability in the supply of utility services and oil prices may adversely impact our results of operations***

 

Our operations depend on a stable supply of utilities and fuel in the countries where we operate that the Company cannot assure fluctuations in oil prices have adversely affected our cost of energy and transportation in the four countries we operate and we expect that they will continue to do so in the future. We believe that the increase of energy prices will not have a significant effect over our results of operations.

 

***Water scarcity and poor quality could negatively impact the Company’s production costs and capacity.***

 

Water is the main ingredient in substantially all of our products. It is also a limited resource in many parts of the world, facing unprecedented challenges from overexploitation, increasing pollution and poor management. As demand for water continues to increase around the world, and as the quality of available water deteriorates, the Company may incur increasing production costs or face capacity constraints that could adversely affect our profitability or net operating revenues in the long run.

 

***Significant additional labeling or warning requirements may inhibit sales of affected products.***

 

The countries in which we operate, may adopt significant additional product labeling or warning requirements relating to the chemical content or perceived adverse health consequences of certain of the Coca-Cola products. These types of requirements, if they become applicable to one or more of the Coca-Cola products under current or future environmental or health laws or regulations, may inhibit sales of such products.

 

***If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted.***

 

We are increasingly dependent on information technology networks and systems, including the Internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for digital marketing activities and electronic communications among the Company and our clients, suppliers and also among our subsidiaries. Security breaches of this infrastructure can create system disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent such breaches, our operations could be disrupted, or we may suffer financial damage or loss because of lost or misappropriated information.

 

***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 Receipts.***

 

As a general rule, international investors consider Argentina and Paraguay, and to a lesser extent Chile and Brazil, to be emerging market economies. Consequently, economic conditions and the market for securities of emerging market countries influence investors’ perceptions of Chile, Brazil and Argentina and their evaluation of companies’ securities located in these countries.

 

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During periods of heightened investor concern regarding emerging market economies, in particular Argentina and to a lesser extent Brazil and Paraguay, have experienced significant outflows of U.S. dollars.

 

In addition, in these periods Brazilian, Argentine and Paraguayan companies have faced higher costs for raising funds, both domestically and abroad, as well as limited access to international capital markets, which have negatively affected the prices of the aforementioned countries securities. Although economic conditions are different in each of the emerging-market countries, investors’ reactions to developments in one of these countries may affect the securities of issuers in the others, including Chile. For example, adverse developments in other developing or emerging market countries may lead to decreased investor interest in investing in Chile or in the securities of Chilean companies, including securities of the Company.

 

***It may be difficult to enforce civil liabilities against us or our directors, executive officers or controlling persons***

 

We are a *sociedad anónima*, or stock corporation, organized under the laws of Chile. Some of our directors, executive officers and controlling persons reside in Chile or outside of the United States. In addition, all or a substantial portion of the assets of these persons and of our assets are located outside of the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons, or to enforce against them in U.S. courts judgments predicated upon civil liability provisions of the federal securities laws of the United States or otherwise obtained in U.S. courts. Because our assets are located outside of the United States, any judgment obtained in the United States against us may not be fully collectible in the United States.

 

***If we experience strikes, work stoppages or labor unrest, our business would suffer.***

 

Strikes, work stoppages or other forms of labor unrest at any of our production facilities could impair our ability to supply products to customers, which would reduce our revenues and could expose us to customer claims.

 

***Regulatory Risks***

 

We are subject to regulation in each of the territories in which we operate. The principal areas in which we are subject to regulation are water, environment, labor, taxation, health and antitrust. Regulation could also affect our ability to set prices for our products. The adoption of new laws or regulations or a stricter interpretation or enforcement thereof in the countries in which we operate may increase our operating costs or impose restrictions on our operations which, in turn, may adversely affect our financial condition, business and results. Further changes in current regulations may result in an increase in compliance costs, which may have an adverse effect on our future results or financial condition.

 

Voluntary price restraints or statutory price controls have been imposed historically in several of the countries in which we operate. Currently there are no price controls applicable to our products in any of the territories in which we operate, other than in Argentina, were there are voluntary price restraints. There are currently no published laws or regulations imposing price controls on our products in Argentina. Nonetheless, the company has assented to the request by Argentine Government authorities to maintain prices of certain products sold through supermarkets. The imposition of these restrictions or voluntary price restraints in Argentina or other territories may have an adverse effect on our results and financial condition.  We cannot assure you that government authorities in Argentina or in any country in which we operate will not impose statutory price controls, or that we will not be asked to accept further voluntary price restraints in the future.

 

***The countries in which we operate may adopt new tax laws or modify existing laws to increase taxes applicable to our business.***

 

We cannot assure you that any governmental authority in any country where we operate will not impose new taxes or increase taxes on our products in the future. The imposition of new taxes or increases in taxes on our products may have a material adverse effect on our business, financial condition, prospects and results.

 

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For example, in Chile, a tax reform became effective on 2011, pursuant to which there was a temporary increase in the income tax rate from 17% to 20%, to finance the reconstruction of the country after the earthquake of 2010. Pursuant to an amendment issued on 2012, the 20% income tax rate will continue to apply through 2013 and onwards.

 

In Brazil, the federal taxes applied on the production and sale of beverages are based on the national average retail price, calculated based on a yearly survey of each Brazilian beverage brand, combined with a fixed tax rate and a multiplier specific for each class of presentation (glass, plastic or can). On October 1, 2012, a number of changes to the federal taxes on beverages became effective. These changes include the increase of the multipliers used to calculate soft drink taxes sold  in cans or glass bottles. As of effectiveness,  the multiplier for cans increased from 30.0% to 31.9%, and as of October 2014, the multiplier will further be increased gradually to 38.1% by October 1, 2018. The multiplier for glass bottles increased from 35.0% to 37.2% as of effectiveness, and as of October 2014, the multiplier will further be increased gradually to 44.4% by October 1, 2018. In addition, the amendment suspended the 50% production tax benefit that had previously applied to juice-added soft drinks, and raised the rate for such beverages to the level currently applied to cola beverages. In addition to the changes in the federal sales taxes on soft drinks, there was a reduction in the federal production tax rate  on concentrate, from 27.0% to 20.0%. This reduction reduces the tax credit on the purchase of concentrate.

 

**Risks Relating to Chile**

 

***Our growth and profitability depend on economic conditions in Chile***

 

Approximately 49% of our assets and 32% of our net sales in 2012 were derived from our operations in Chile. Thus, our financial condition and results of operations depend significantly on economic conditions prevailing in Chile. According to data published by the Central Bank, the Chilean economy grew at a rate of 6.1% in 2010, 6.0 % in 2011 and 5.6% in 2012. Our financial condition and results of operations could also be adversely affected by changes over which we have no control, including, without limitation:

 

·                          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 annual rates of inflation in Chile which in 2010, 2011 and 2012 were 3.0%, 4.4% and 1.5%, respectively (as measured by changes in the consumer price index and as reported by the Chilean National Institute of Statistics) could adversely affect the Chilean economy and have a material adverse effect on our financial condition and results of operations. We cannot assure you that, under competitive pressure, we will be able to realize price increases, which could adversely impact our financial condition and results of operations. Additionally, an important part of our financial debt is UF denominated, this is, linked to the inflation of the country, and therefore the value of the debt reflects any increase of the inflation in Chile.

 

***The Chilean peso is subject to depreciation and volatility which could adversely affect the value of an investment in our securities***

 

The Chilean government’s economic policies and any future changes in the value of the Chilean peso against the U.S. dollar, could adversely affect our operations and financial results and the dollar value of an investor’s return. The Chilean peso has been subject to large nominal devaluations in the past and may be

 

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subject to significant fluctuations in the future. Based on the Observed Exchange Rates for U.S. dollars in the period from 2010 to 2012 the Chilean peso relative to the U.S. dollar appreciated 5.62% in nominal terms. During 2012 the Chilean peso relative to the U.S. dollar depreciated 0.5% in nominal terms. See “Item 3. Key Information-Exchange Rates.”

 

Our Class A shares and Class B shares are traded in Chilean pesos on the Chilean Stock Exchanges. Cash distributions with respect to the shares will be received in Chilean pesos by the depositary, currently The Bank of New York Mellon Corporation (as depositary for the Series A and Series B shares represented by the Series A and Series B ADRs), which will convert such Chilean pesos to U.S. dollars at the then prevailing exchange rate to make U.S. dollar payments in respect of the ADRs. If the value of the Chilean peso depreciates relative to the U.S. dollar, the value of the ADRs and any distributions to be received from the depositary would be adversely affected. In addition, the depositary will incur costs (to be ultimately borne by the ADR holders) in connection with the foreign currency conversion and subsequent distribution of dividends or other payments with respect to our ADRs.

 

***Exchange controls and withholding taxes in Chile may limit repatriation of foreign investments***

 

Equity investments in Chile by persons who are not Chilean residents are generally subject to various exchange control regulations that govern the convertibility and repatriation of the investments and earnings. The ADRs are governed by an Agreement among us, the depositary and the Central Bank of Chile (the “Foreign Investment Agreement”). The Foreign Investment Agreement guarantees the depositary and the ADR holders access to Chile’s Formal Exchange Market, permits the depositary to remit dividends it receives from us to the ADR holders and permits the holders of ADRs to repatriate the proceeds of the sale of shares withdrawn from the ADR facility, thereby enabling them to acquire currencies necessary to repatriate investments in the shares and earnings there from.  Pursuant to current Chilean law, the Foreign Investment Agreement may not be amended unilaterally by the Central Bank of Chile, and there are judicial precedents (which are not binding with respect to future judicial decisions) indicating that the Foreign Investment Agreement may not be voided by future legislative changes.

 

Dividends received by ADR holders of are paid net of foreign currency exchange fees and expenses of the depositary and are subject to Chilean withholding tax, currently imposed at a rate of 35%, subject to credits in certain cases as described under “Item 10. Additional Considerations —Tax Considerations Relating to Equity Securities”.

 

We cannot assure you that additional restrictions applicable to ADR holders , the disposition of the shares underlying the ADRs and the convertibility and/or the repatriation of the proceeds from such disposition or the payment of dividends will not be imposed in the future, nor can we advise as to the duration or impact of such restrictions if imposed. If for any reason, including changes in the Foreign Investment Agreement or Chilean law, the depositary was unable to convert Chilean pesos to U.S. dollars, investors would receive dividends or other distributions, if any, in Chile and in Chilean pesos.

 

**Risks Relating to Brazil**

 

***Our business is dependent to some extent on economic conditions in Brazil***

 

Approximately 21% of our assets and 38% of our consolidated net sales in 2012 were derived from our operations in Brazil. Because demand for soft drinks and beverage products is usually correlated to economic conditions prevailing in the relevant local market, which in turn is dependent on the macroeconomic condition of the country in which the market is located, our financial condition and results of operations to a considerable extent are dependent upon political and economic conditions prevailing in Brazil.  According to data available to general public, the Brazilian economy grew at a rate of 7.5% in 2010, 2.7% in 2011 and 1.0% in 2012.

 

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***The Brazilian government exercises influence over the Brazilian economy, which together with historically volatile Brazilian political and economic conditions, could adversely affect our financial condition and results of operations and the market price of our shares and ADRs***

 

Historically, the Brazilian government has changed monetary, credit, tariff, and other policies to influence the course of Brazil’s economy. Such government actions have included wage and price controls as well as other measures such as freezing bank accounts, imposing exchange controls and imposing limits on imports and exports. Changes in policy and other political and economic developments could adversely affect the Brazilian economy and have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that present economic conditions and policies intended to promote a sustainable economic development will continue.

 

***Although inflation in Brazil has stabilized in recent years, increased inflation may adversely affect the operations of Andina Brazil which could adversely impact our financial condition and results of operations***

 

As measured by the Brazilian *Índice Nacional de Preços ao Consumidor* or INPC, inflation in Brazil was 6.5%, 6.1% and 6.2% in 2010, 2011 and 2012, respectively. Increased inflation rates may result in lower consumer purchasing power on behalf of consumers and lower sales volume for Andina Brazil. We cannot assure you that levels of inflation in Brazil will not increase in future years and have a material adverse effect on our business, financial condition or results of operations. Inflationary pressures may lead to further government intervention in the economy, including the introduction of government policies that could adversely affect the results of operations of Andina Brazil and consequently our financial condition and results of operations and the market price of our shares and ADSs.

 

***The Brazilian real is subject to depreciation and volatility which could adversely affect our financial condition and results of operations***

 

During 2010, the *real* apreciated 4.3% against the U.S. dollar compared to the prior year period. Nevertheless in 2011 and 2012 it depreciated 12.6% and 8.9%, which had an impact in the financial condition and results of operations of our Brazilian subsidiary.

 

Depreciation of the *real* relative to the U.S. dollar may increase the cost of servicing foreign currency-denominated debt that we may incur in the future, which could adversely affect our results of operations and financial condition. In addition, depreciation of the *real*can create inflationary pressures in Brazil that may negatively affect our results of operations. Depreciation generally curtails access to international capital markets and combined with other macroeconomic aspects, may prompt recessionary government intervention. It also reduces the U.S. dollar value of our revenues, distributions and dividends, and the U.S. dollar equivalent of the market price of our common shares. On the other hand, the appreciation of the real against the U.S. dollar may lead to the deterioration of Brazil’s public accounts and balance of payments, as well as to lower economic growth from exports.

 

***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***

 

Brazilian law guarantees foreign shareholders of Brazilian companies the right to repatriate their invested capital and to receive all dividends in foreign currency provided that their investment is registered with Brazil’s Central Bank. We registered our investment in Andina Brazil with the Brazilian Central Bank on October 19, 1995. Although dividend payments related to profits obtained subsequent to January 1, 1996 are not subject to income tax, after the sum of repatriated capital and invested capital exceeds the investment amount registered with the Brazilian Central Bank, repatriated capital is subject to a capital gains tax of 15%. Under current Chilean tax law, we will realize a tax credit in respect of all Brazilian taxes paid relating to Andina Brazil. There can be no assurance that the Brazilian government will not impose additional restrictions or modify existing regulations that would have an adverse effect on an investor’s ability to repatriate funds from Brazil nor can there be any assurance of the timing or duration of such restrictions, if imposed in the future.

 

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**Risks Relating to Argentina**

 

***Our business is dependent to some extent on economic conditions in Argentina***

 

Approximately 13% of our assets and 27% of our net sales in 2012 were derived from our operations in Argentina. Because demand for soft drinks and beverage products usually is correlated to economic conditions prevailing in the local market, which in turn is dependent on the macroeconomic condition of the country, the financial condition and results of operations of our franchise in Argentina are, to a considerable extent, dependent upon political and economic conditions prevailing in Argentina.

 

GDP growth in Argentina was 9.2% in 2010, 8.3% in 2011 and 2.0% in 2012. Facing the international financial crisis, the public sector did not default and carried out payments using the reserves of Argentina’s Central bank and loans from Banco de la Nación Argentina, generating new and significant macroeconomic policy challenges. Although Argentina managed to roll with the punches of a recessive year and an international crisis without upsetting the main financial variables, we cannot assure that economic conditions in Argentina will continue improving or that our operations will continue experiencing good results.

 

***Political and economic instability may recur which could have a material adverse effect on our Argentine operations and on our financial condition and results of operations.***

 

In the period from 1998 through 2003, Argentina experienced acute economic problems that culminated with the restructuring of substantially all of Argentina’s sovereign bond indebtedness. A succession of presidents were inaugurated during this crisis period and various states of emergency were declared that suspended civil liberties and instituted restrictions on transfers of funds abroad and foreign exchange controls, among other measures. Argentina’s GDP contracted 10.9% in 2002. Beginning 2003, Argentine GDP began to recover and from 2004 to 2008 recorded an average rate of growth of 8.4%.  In the political environment, legislative elections carried out in June of 2009 were a misfortune for the government’s political party losing the majority in both houses. This new political scenario in Argentina could make the executive power need to arrive at a consensus with the opposition regarding rules and regulations in order for them to be approved by the legislative power.

 

The macroeconomic condition in Argentina has been characterized by:

 

·                  increased inflation which has been slightly controlled by price control;

·                  deeper state of intervention in the economy;

·                  fiscal deficit ; and

·                  strong salary pressures.

 

The Argentine government continues to face significant exposure to litigation from holders of its defaulted debt that did not participate in the Argentine government’s exchange offer.

 

***The Argentine government could impose 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***

 

Under current Argentine law, we may declare and distribute dividends with respect to our Argentine subsidiary and our Argentine banks may lawfully process payments of those dividends to us and other non-resident shareholders.   Our declaration and distribution of dividends is subject to certain statutory requirements and must be consistent with our audited financial statements.  The processing of payment of dividends by our Argentine banks is subject to Argentine Central Bank regulations, including verification of our Argentine subsidiary’s compliance with foreign debt and direct investment disclosure obligations.  In addition to statutory and administrative rules affecting our Argentine subsidiary’s payment of dividends, during 2012 the Argentine Government imposed discretionary restrictions on Argentine companies as part of a policy to limit outbound transfers of U.S. dollars.  These de facto restrictions essentially halted dividend payments to non-resident shareholders.   The Argentine Government has begun to relax these restrictions.  Nonetheless, we cannot give any assurances that we will be able to cause our Argentine subsidiary to

 

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distribute dividends to its non-resident shareholders now or in the foreseeable future, despite otherwise meeting all statutory and regulatory requirements for payment.

 

***Argentina’s government may impose certain restrictions on imports which could have an impact in our operation.***

 

Argentina’s government could eventually limit our access to foreign exchange to pay for imports, and also could restrict raw materials or machinery imports, which are necessary for our operation in the country.

 

***Inflation in Argentina may adversely affect our operations which could adversely impact our financial condition and results of operations***

 

Argentina has experienced high levels of inflation in recent decades, resulting in large devaluations of its currency. Argentina’s historically high rates of inflation resulted mainly from its lack of control over fiscal policy and the money supply. The official annual rates of inflation (published by INDEC-*Instituto Nacional de Estadísticas y Censos*- National Statistics and Census Institute as measured by changes in the consumer price index) between 2010, 2011 and 2012 were, 10.9%, 9.5% and 10.8%, respectively for each year.  High levels of inflation in Argentina could adversely affect the Argentine economy and have a material adverse effect on our financial condition and results of operations.  In the last years the accuracy of the national accounts of Argentina was questioned by some international public organizations.

 

***The Argentine peso is subject to depreciation and volatility which could adversely affect our financial condition and results of operations***

 

During 2012, the exchange rate in Argentina underwent a depreciation of 13.8%. The Argentine government’s economic policies and any future devaluation of the Argentine peso against the U.S. dollar could adversely affect our financial condition and results of operations. The Argentine peso has been subject to large devaluations in the past and may be subject to significant fluctuations in the future.

 

We cannot assure you that the policies to be implemented by the Argentine government in the future will stabilize the value of the Argentine peso against foreign currencies

 

**Risks Related to Paraguay**

 

***Our business is dependent to some extent on economic conditions in******Paraguay***

 

Approximately 17% of our assets and 3% of our net sales in 2012 were derived from our operations in Paraguay. Since the demand for soft drinks and drinks is generally related to the economic conditions prevailing in the local market which, in turn, depend on the macroeconomic and political conditions of the country, our financial situation and our operations results could be adversely affected by changes in these factors over which we have no control.

 

The Gross Domestic Product (GDP) for 2012 reveals a contraction of the real economy of around -1.2% compared to the previous year, result it is interrupted two years of a very good behavior of the economic activity (4% in 2011 and 15% in 2010),

 

The economic performance in 2012 was influenced by a predominant factor that motivated a declination in economic activity: the effects of the drought that had a negative impact in the agricultural industry for 2011/2012, mainly on soybeans, corn and sunflower crops, in addition to the outbreak of foot and mouth disease detected in the last months of 2011 that resulted in the closing of markets for Paraguayan meat and has had an effect in the reduction of the levels of slaughtering during the first half of this year which, however, was reversed during the second half of the year, experiencing a significant upturn with the return of more than 20 markets for Paraguayan meat.

 

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***Inflation in Paraguay may adversely affect our operations which could adversely impact our financial condition and results of operations***

 

Inflation during 2012 was 4%, below 4,9% in 2011 and 7,2% in 2010. This annual inflationary result implies that the total inflation has, for the sixth consecutive year, a one-digit figure and is below the top of the target range (7,5%).

 

An increase in the inflation could decrease the purchasing power of our consumers, which could have an effect in our volume growth and therefore, could have an impact in our sales income. We can’t assure you that the Paraguayan inflation will continue to be under the current levels.

 

***The Paraguayan Guaraní is subject to depreciation and volatility which could adversely affect our financial condition and results of operations***

 

The exchange rate is free and fluctuant and the BCP participate in the exchange market in order to smooth abrupt oscillations.

 

In 2012, the local currency appreciated in 3.0%. Nevertheless, it was very variable during the year. It was appreciated during the first quarter to then become strongly depreciated (around 11%), as a result of the lower export earnings to then be stabilized towards the last quarter of the year, closing 2012 with an appreciation of around 3%.

 

An important depreciation of the local currency could adversely affect our financial situation and financial results, because 25% of our total costs of raw materials and supplies are in dollars, as well as other expenses such as professional fees and maintenance costs.

 

***Risk Factors Relating to the ADRs and Common Stock***

 

***Preemptive rights may be unavailable to ADR holders***

 

According to the *Ley de Sociedades Anónimas* No. 18.046 and the *Reglamento de Sociedades Anónimas* (collectively, the “Chilean Companies Law”), whenever we issue new shares for cash, we are required to grant preemptive rights to holders of our shares (including shares represented by ADRs), giving them the right to purchase a sufficient number of shares to maintain their existing ownership percentage. However, we may not be able to offer shares to United States holders of ADRs pursuant to preemptive rights granted to our shareholders in connection with any future issuance of shares unless a registration statement under the U.S. Securities Act of 1933, as amended, is effective with respect to such rights and shares, or an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended, is available.

 

Under the procedure established by the Central Bank of Chile, the foreign investment agreement of a Chilean company with an existing ADR program will become subject to an amendment (which will also be deemed to incorporate all laws and regulations applicable to international offerings in effect as of the date of the amendment) that will extend the benefits of such contract to new shares issued pursuant to a preemptive rights offering to existing ADR owners and to other persons residing and domiciled outside of Chile that exercise preemptive rights, upon request to the Central Bank of Chile. We intend to evaluate at the time of any rights offering the costs and potential liabilities associated with any such registration statement as well as the indirect benefits to us of enabling United States ADR holders to exercise preemptive rights and any other factors that we consider appropriate at the time, and then make a decision as to whether to file such registration statement.

 

We cannot assure you that any registration statement would be filed. To the extent ADR holders are unable to exercise such rights because a registration statement has not been filed, the depositary will attempt to sell such holders’ preemptive rights and distribute the net proceeds thereof if a secondary market for such rights exists and a premium can be recognized over the cost of any such sale. If such rights cannot be sold,

 

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they will expire and ADR holders will not realize any value from the grant of such preemptive rights. In any such case, such holder’s equity interest in the Company would be diluted proportionately.

 

***Shareholders’ rights are less well defined in Chile than in other jurisdictions, including the United States***

 

Under the United States federal securities laws, as a foreign private issuer, we are exempt from certain rules that apply to domestic United States issuers with equity securities registered under the United States Securities Exchange Act of 1934, as amended, including the proxy solicitation rules, the rules requiring disclosure of share ownership by directors, officers and certain shareholders. We are also exempt from certain of the corporate governance requirements of the Sarbanes-Oxley Act of 2002 and the New York Stock Exchange, Inc., including the requirements concerning independent directors.

 

Our corporate affairs are governed by the laws of Chile and our *estatutos* or bylaws, which function not only as our bylaws but also as our articles of incorporation. Under such laws, our shareholders may have fewer or less well-defined rights than they might have as shareholders of a corporation incorporated in a U.S. jurisdiction.

 

Pursuant to Law No. 19,705, enacted in December 2000, the controlling shareholders of an open stock corporation can only sell their controlling shares via a tender offer issued to all shareholders in which the bidder would have to buy all the offered shares up to the percentage determined by it, when the price paid is substantially higher than the market price (that is, when the price paid was higher than the average market price of a period starting 90 days before the proposed transaction and ending 30 days before such proposed transaction, plus 10%).

 

***The market for our shares may be volatile and illiquid***

 

The Chilean securities markets are substantially smaller, less liquid and more volatile than major securities markets in the United States. The *Bolsa de Comercio de Santiago* (the “Santiago Stock Exchange”), which is Chile’s principal securities exchange, had a market capitalization of approximately US$313,456  million at December 31, 2012 and an average monthly trading volume of approximately US$3,870 million for 2012. The lack of liquidity owing, in part, to the relatively small size of the Chilean securities markets may have a material adverse effect on the trading prices of our shares. Because the market for our ADRs depends, in part, on investors’ perception of the value of our underlying shares, this lack of liquidity for our shares in Chile may have a significant effect on the trading prices of our ADRs.

 

**ITEM 4.****                        ****INFORMATION ON THE COMPANY**

 

**A.****                    ****History and development of the Company**

 

Our legal name is Embotelladora Andina S.A. and our commercial name is Andina. We were incorporated and organized on February 7, 1946 under the Chilean Companies Law as a *sociedad anónima* (stock corporation). An abstract of our bylaws is registered with the *Registro de Comercio de Santiago* (Public Registry of Commerce of the City of Santiago) under No. 581 on page 768 of the year 1946. Pursuant to our bylaws, our term of duration is indefinite.

 

Our shares of common stock are listed and traded on the Bolsa de Comercio de Santiago (Santiago Stock Exchange),  on the Bolsa Electrónica de Chile (the Chilean Electronic Stock Exchange) and the Bolsa de Comercio de Valparaiso (the Valparaiso Stock Exchange). Our Series A and Series B ADRs representing our Series A and Series B shares, respectively, are listed on the New York Stock Exchange. Our principal executive offices are located at Avenida Miraflores 9153, Piso 7, Renca, Santiago, Chile. Our telephone number is +56-2-2338-0520 and our website is www.koandina.com.

 

Our depositary agent for the ADRs in the United States is The Bank of New York Mellon Corporation, located at One Wall Street, New York, New York 10286. Our depositary agent’s telephone number is (212) 815-2296. Our authorized representative in the United States is Puglisi & Associates, located at 850

 

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Library Avenue, Suite 204, Newark, Delaware 19711, United States and their phone number is (302) 738-6680.

 

**History**

 

In 1941, The Coca-Cola Company licensed a private Chilean company to produce Coca-Cola soft drinks in Chile, and production began in 1943. In 1946, the original licensee withdrew from the license arrangement, and a group of U.S. and Chilean investors formed Andina, which became The Coca-Cola Company’s sole licensee in Chile. Between 1946 and the early 1980s, Andina developed the Chilean market for Coca-Cola soft drinks with a system of production and distribution facilities covering the central and southern regions of Chile. In the early 1980s, Andina sold its Coca-Cola licenses for most areas outside the Santiago metropolitan region and concentrated on the development of its soft drink business in the Santiago area. Although no longer the sole Coca-Cola bottler in Chile, Andina has been the principal manufacturer of Coca-Cola products in Chile for an uninterrupted period of 66 years.

 

In 1985, a majority of Andina’s shares was acquired by four Chilean families who compromise Inversiones Freire Ltda. (“Freire” or “the Controlling Shareholders”). On December 31, 2012, the Controlling Shareholders owned 55.3% of our outstanding Series A shares, which have preferred voting rights and thereby control the Company; and 45.3% of our outstanding Series B shares, consequently the Controlling Shareholders of Andina hold a 50.3% ownership interest in the Company.   Further information regarding our Controlling Shareholders can be found on page 114 of our 2012 Annual Report which is available at our website: www.koandina.com.

 

Andina Brazil, our Brazilian subsidiary, began production and distribution of Coca-Cola soft drinks in Rio de Janeiro in 1942. In June 1994, we acquired 100% of the capital stock of Andina Brazil for approximately US$120 million and contributed an additional US$31 million to Andina Brazil’s capital immediately after the acquisition to repay certain indebtedness of Andina Brazil.   In 2000, we purchased through Andina Brazil, from the Coffin Group, a Coca-Cola franchise license for a territory in Brazil comprising the State of Espírito Santo and part of the States of Rio de Janeiro and Minas Gerais (NVG), for US$74.5 million. NVG was merged into Andina Brazil in 2000, and its operations were integrated with Andina Brazil in 2001.   In 2004, Andina Brazil entered into a franchise swap agreement with the Brazilian subsidiary of The Coca-Cola Company, Recofarma Indústria do Amazonas Ltda., for (1) an exchange of franchising rights, goods and other assets of Andina Brazil in the territory of Governador Valadares in the State of Minas Gerais, and (2) other franchise rights of The Coca-Cola Company in the territories of Nova Iguaçu in the state of Rio de Janeiro, which was previously owned by Companhia Mineira de Refrescos S.A.  In 2007 TCCC along with the Coca-Cola bottlers in Brazil create a Joint Venture, Mais Indústria de Alimentos, in order to enhance the non-carbonated business for the entire System in that country, and in   2008 The Coca-Cola System acquires a second company that produces non carbonated beverages called Sucos del Valle do Brasil Ltda  These two companies merged in 2011 and SABB (Sistema de Alimentos y Bebidas do Brasil) was created  in which Andina Brazil holds a 5.74% ownership interest. In 2010 TCCC along with the Coca-Cola bottlers in Brazil acquired Leão Junior S.A. through a Joint Venture.  Leão Junior S.A. among others, commercializes Matte Leão.  This company has a consolidated presence and market share within the ready-to-drink teas category in Andina Brazil’s territory. Andina Brazil has an 18.20% ownership interest in Leão Junior S.A.  Andina Brazil holds an average ownership interest of 10.74% in Leão Junior and SABB. In November, 2012 Andina Brazil materialized the acquisition of a 40% stake in Sorocaba Refrescos S.A., a Coca-Cola  bottler located in the state of Sao Paulo, for $R146,946,004.

 

Production of Coca-Cola soft drinks in the Argentine territory began in 1943 with the start-up of operations in the province of Córdoba, Argentina, through Inti S.A.I.C., which we refer to as “INTI”. In July 1995, we (through Inversiones del Atlántico S.A., an investment company incorporated in Argentina), which we refer to as “IASA”, acquired a 59% interest in Edasa, the parent company of Rosario Refrescos S.A. and Mendoza Refrescos S.A. These entities were subsequently merged to create Rosario Mendoza Refrescos S.A., which we refer to as “Romesa”. In 1996 we acquired an additional 35.9% interest in Edasa, an additional 78.7% interest in Inti, a 100% interest in Cipet located in Buenos Aires (a PET plastic bottle and packaging business) and a 15.2% interest in Cican S.A. During 1997, the operations of Romesa were merged with INTI. In 1999, Edasa was merged into IASA. In 2000, IASA was merged into Inti, which in turn changed its

 

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corporate name to Embotelladora del Atlántico S.A. (EDASA). In 2002 Cipet merged into Edasa. During 2007 EDASA’s ownership interest in Cican S.A. was sold to Femsa. Currently, Edasa is the Coca-Cola bottler in the provinces of Entre Rios, San Luis, San Juan, Mendoza, part of Santa Fe and part of Buenos Aires (San Nicolás y Ramallo.)

 

In 1998, Andina repurchased from The Coca-Cola Company its 49% stake in Vital. Concurrently with that transaction, The Coca-Cola Company purchased Vital’s mineral water springs located at Chanqueahue, 80 miles south of Santiago. As part of the transaction, the Vital bottler agreement was replaced with a juice bottler agreement with Minute Maid International Inc., as well as a new mineral water bottling agreement with The Coca-Cola Company. In addition, the 1995 shareholders’ agreement between us and The Coca-Cola Company regarding ownership of Vital was terminated. The restructuring of the water and juice business in Chile enhanced our focus on the production of soft drinks, water and juice.  During 2005, the production and packaging business of water, juice and non-carbonated beverages licensed by TCCC in Chile was restructured. Vital Aguas S.A., which we refer to as VASA, was created to develop the production and packaging businesses of Vital de Chanqueahue, mineral water and other water products. VASA is focused on developing juice and non-carbonated beverages. Andina, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. own 56.5%, 26.4% and 17.1%, respectively, of the outstanding capital of VASA.  During January of 2011, the juice business was restructured, allowing the incorporation of the other Coca-Cola bottlers in Chile to the property of Vital S.A. which changed its name to Vital Jugos S.A.  Andina, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. own 57%, 28% and 15%, respectively, of the outstanding capital of Vital Jugos S.A.

 

In Chile we participate in the business of producing PET bottles through a 50/50 joint venture we entered into with Cristalerías de Chile in the year 2001.  On January 27, 2012, Coca-Cola Embonor through its subsidiary, Embonor Empaques S.A. acquired Cristalerías de Chile’s stake equivalente to a 50% ownership interest in Envases CMF.

 

On March 30, 2012, after completion of due-diligence procedures, the Company signed a Promissory Merger Agreement with Embotelladoras Coca-Cola Polar S.A. (“Polar”). Polar is also a Coca-Cola bottler with operations in: Chile, servicing territories in the II, III, IV, XI and XII regions; Argentina, servicing territories in Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro La Pampa and the western zone of the province of Buenos Aires; and Paraguay, servicing the whole country. The merger was made in order to reinforce the Company’s leadership position among Coca-Cola bottlers in South America.

 

Prior to closing, the merger was approved by the shareholders of both of the companies, as well as the Chilean Superintendence of Securities and Insurance, and the Coca-Cola Company. The terms of the merger prescribed the exchange of newly issued Company shares at a rate of 0.33269 Series A shares and 0.33269 Series B shares, for each outstanding share of Polar. Prior to the materialization of the merger and the approval of the Shareholder Meetings of the Company and Polar, dividends were distributed among their respective shareholders, in addition to those already declared and distributed with charge to 2011 income. The dividends distributed by the Company and Polar amounted to Ch$28,155,862,307 and Ch$29,565,609,857 respectively, that represented Ch$35.27 per each share of the Series A and Ch$38.80 per each share of the Series B.

 

The physical exchange of shares took place on October 16, 2012, with which former shareholders of Polar then had a 19.68% ownership interest in the merged Company. Based upon the terms of the executed agreements, the actual control over day-to-day operations of Polar transferred to the Company as of October 1, 2012, and the Company began consolidating Polar’s operations from that date forward. Additionally and as a result of Embotelladora Andina becoming the legal successor of Polar’s rights and obligations, the Company indirectly acquired additional ownership interest in Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. that added to its previous ownership interest in those entities. The Company’s current ownership enables it to exercise control over these entities, and thus incorporate them into the consolidation of the financial statements beginning October 1, 2012.

 

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PARESA is the first authorized Coca-Cola Bottler Company in Paraguay, which started its operations in May 13, 1965. In 1967, Plant 1 was inaugurated with a capacity of 400,000 annual unit cases. In 1980, the Barcequillo Plant - located on Km 3.5 Barcequillo of the Ñemby route, in the City of San Lorenzo- was inaugurated, reaffirming and applying the concept of the highest end technology of bottling. Beginning in 2004, Paresa became property of the Grupo Polar from Chile, continuing its operations in the Paraguayan market. On October 1, 2012, Paresa became part of Grupo Coca-Cola Andina due to the merger of  Embotelladoras Coca-Cola Polar S.A. into Embotelladora Andina S.A.

 

In 1996, our shareholders approved the Reclassification of Capital Stock, which we refer to as the “Reclassification”, of Andina’s common stock into two new series of shares. Pursuant to the Reclassification, each outstanding share of Andina’s common stock was replaced by one newly issued Series A share and one newly issued Series B share. The Series A and Series B shares are principally differentiated by their voting and economic rights. Therefore, and after the modification of our bylaws as of June 25, 2012, that increased the number of directors from 7 to 14 — and thus, eliminating the alternate directors-  the holders of the Series A shares have full voting power and are entitled to elect 12 of 14 members of the board of directors, and the holders of the Series B shares have no voting rights but for the right to elect 2 members of the board of directors. In addition, holders of Series B shares are entitled to a dividend 10% greater than any dividend on Series A shares.

 

After the Reclassificaction, the Superintendence of Pension Fund Managers (*Superintendencia de Administradores de Fondos de Pensiones*) decreed that Chilean pension funds would not be permitted to acquire Series B Shares due to their limited voting rights. Later, during 2004, the Superintendence approved Series B shares as investment instruments for Chilean Pension funds. Series A shares have always been eligible as investment instruments.

 

**Capital Expenditures**

 

During 2012 the Company financed its permanent investments exclusively from internal resources.

 

The following table sets forth our capital expenditures by territory and line of business for the periods indicated:

 
| ** **                  | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------|------------|--------------------------------------------|------------|
| ** **                  | ** ** | **2012 **                             | ** ** | **2011** | ** ** | **2010** | ** ** |
| ** **                  | ** ** | **MCh$**                                   | ** ** | **MCh$** | ** ** | **MCh$** | ** ** |
| **Soft   Drinks:**          |       |                                       |       |   |   |   |   |
| Chilean territory           |       | 53,249                                     |       | 72,669 |   | 46,673 |   |
| Brazilian   territory       |       | 36,109                                     |       | 28,951 |   | 35,607 |   |
| Argentine   territory       |       | 44,682                                     |       | 18,801 |   | 8,961 |   |
| Paraguayan territory        |       | 6,085                                      |       |   |   |   |   |
| ** **                  |       |                                       |       |   |   |   |   |
| **Other   Beverages:**      |       |                                       |       |   |   |   |   |
| ** **                  |       |                                       |       |   |   |   |   |
| Vital Jugos S.A.   and VASA |       | 1,487                                      |       | — |   | 3,315 |   |
| Argentine territory         |       | —                                     |       | 3,780 |   | — |   |
| **PET   Packaging:**        |       |                                       |       |   |   |   |   |
| Argentine   territory       |       | 2,152                                      |       | 2,730 |   | 906 |   |
| **Total**** **         | ** ** | **143,764**                                | ** ** | **126,931** | ** ** | **95,462** | ** ** |

 

During 2012, the Company has made disbursements totaling Ch$3,333 million (unaudited figures) for improvements in industrial processes, equipment to measure industrial waste flows, laboratory analyses, consulting on environmental impacts and other studies.  For further details please refer to Note 27 of our Consolidated Financial Statements filed herewith.

 

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Our total capital expenditures were Ch$143,764 million in 2012 and Ch$126,931 million in 2011. In 2012, capital expenditures were principally related to the following:

 

**Soft drinks:**

 

***Chile***

 

·                  Returnable bottles (glass and PET bottles) and bottle cases;

·                  Cooling equipment, post mix and other point of sale equipment;

·                  New equipment to increase efficiency and production capacity;

·                  Implementation of the new Renca bottling facility.

 

***Brazil***

 

·                  Returnable Ref Pet and glass bottles and bottle cases;

·                  Coolers, post-mix and other point-of-sale equipment;

·                  Equipment to increase efficiency and production capacity;

·                  Purchase of distribution trucks and automobiles for the sales force.

·                  Industrial projects at Jacarepaguá: Pet Ref Line, 2 volumetric fillers and one blower.

 

***Argentina***

 

·                  Bottles (glass and PET bottles) and bottle cases;

·                  Coolers and post mix equipment;

·                  OW PET production line and the adaptation of another existing OW line to improve productivity;

·                  Nueva Línea de Embotellado para productos de llenado en caliente “Hot Fill” Line for waters and sensitive products; (investment began in 2011) and a New Line of Tetra Pack Juice packaging;

·                  Expansion of the Finished product deposit and of the patio in the Floor of the Córdoba Plant (13,600 m2) and in the Bahia Blanca plant (2,800 m2);

·                  Purchase and modifying Moulds for Short Finish.

 

***Paraguay (only considers the investments materialized in 4Q12)***

 

·                  New Line for waters and sensitive products.

·                  Equipment to increase efficiency and production capacity.

·                  Miebach Project — Warehouses, deposits and roof in the truck cargo loading area.

·                  Bottles (glass and PET bottles).

·                  Coolers and post mix equipment.

 

**Juices and Waters**

 

***Juices***

 

·                  Incorporation of a new Tetra Gemina line and a new pasteurizer with a production capacity of 500cc, 750cc, 1000cc and 1.500cc. formats;

·                  Water Treatment System (Reverse Osmosis), for production with controlled water demineralization formulated products;

·                  Investment in a new PET Aseptic line (STORK);

·                  Adaptation of OW Pet Line No. 3 for the manufacture of new Andina Sabores Caseros and Glaceau Vitamin Water products;

·                  Purchase and installation of pasteurizer for line 3;

·                  Upgrade of the central control system  of the design//formulation room;

·                  Acquisition and installation boiler for steam generation;

·                  Expansion of the finished products warehouse (system drive in) and freight yard//patio.

 

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·                  Increase of capacity and change of technology in the Industrial Water pumping systems (60 to 150 m3 hr).

 

Waters

 

·                  Construction of a new casino;

·                  Expansion of the finished product warehouse (system drive in);

·                  Monitoring system and ozonisation record;

·                  Conversion of cappings into Short Finish tops  in Line 3 and 4;

·                  Installation of automatic volume controller for CO2;

·                  Riles containment pool.

 

**Divestitures**

 

Not Applicable

 

**B.****                    ****Business Overview**

 

Andina is among the seventh largest Coca-Cola bottlers in the world, servicing franchised territories with 50 million people, delivering over 3,300 million liters of soft drinks, juices, and bottled waters on 2012. We are nationwide producers of soft drinks in Paraguay, the largest producer of soft drinks in Chile and the second largest soft drink producer in Brazil and in Argentina. Our principal business is the production and distribution of Coca-Cola soft drinks, which accounted for 82% of our consolidated net sales in 2012. On 2012, we recorded consolidated net sales of Ch$967,370 million and total sales volume of 517.6 million unit cases of Coca-Cola soft drinks.

 

In addition to the Coca-Cola soft drinks business, through Vital Jugos S.A., we produce and distribute fruit juices and other fruit-flavored beverages in Chile under trademarks owned by TCCC. Through Vital Aguas S.A., we produce and sell mineral water and purified water in Chile under trademarks owned by TCCC.  Through Envases Central S.A. we produce flavored waters and certain formats for soft drinks under trademarks owned by TCCC.  We also manufacture PET bottles primarily for our own use in the packaging of Coca-Cola soft drinks in Chile and Argentina. In Brazil, we also distribute the beer brands Amstel, Bavaria, Birra Moretti, Dos Equis (XX), Edelweiss, Heineken, Kaiser, Murphy ́s, Sol and Xingú. Also we distribute beer in the south of Argentina and spirits in the south of Chile.

 

**Our Products**

 

We produce, market and distribute the following Coca-Cola trademark beverages and brands licensed from third parties throughout our franchise territories:

 

*Chile:* Andina, Andina Light, Aquarius, Benedictino, Burn, Coca-Cola, Coca-Cola Light, Coca-Cola Zero, Dasani Citrus Antiox, Dasani Durazno, Dasani Manzana, Dasani Tangerine, Dasani Manzana Antiox, Fanta Frutilla, Fanta Limón, Fanta Naranja, Fanta Naranja Zero, Fanta Uva, Fanta Roja, Hugo, Kapo, Minute Maid 100%, Sabores Caseros, Fuze Tea, Fuze Tea Light, Nestea, Nestea Light, Nordic Mist Ginger Ale, Nordic Mist Tónica, Powerade, Glaceau, Powerade Light, Quatro Guarana, Quatro Light, Sprite, Sprite Zero, Inca Kola, Inca Kola Zero, Tai, Cantarina, Vital and some spirits in Punta Arenas.

 

*Brazil:* Amstel, Aquarius Fresh, Bavaria, Birra Moretti, Burn, Chá Leão, Coca-Cola, Coca-Cola Light, Coca-Cola Light Plus, Coca-Cola Zero, Crystal, Del Valle, Del Valle Frut, Del Valle Limao & Nada, Del Valle Fruta & Nada, Del Valle Mais, Del Valle Mais Soja, Dos Equis, Edelweiss, Fanta, Fanta Diet, Fanta Zero, Gladiator, Guaraná Leão, Heineken, I9, Kaiser, Kapo, Kapo Chocolate, Kuat, Kuat Eko, Kuat Zero,

 

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Leão Ice Tea, Matte Leão, Matte+Guaraná Leão, Murphy’s, Powerade, Schweppes, Schweppes Light, Sol, Sprite, Sprite Diet, Sprite Zero, Xingú.

 

*Argentina:* Aquarius (Manzana, Naranja, Pera, Pomelo, Pomelo Rosado and Uva), Bonaqua (with and without gas), Cepita (Banana, Durazno, Naranja and Uva),  Nutri Defensas; Manzana and Naranja 100%; Multifruta; Naranja Light and Pomelo Rosado), Coca-Cola (Regular, Light and Zero), Crush (Lima-Limón and Naranja), Dasani (with and without gas), Epika, Fanta (Limón, Naranja, Naranja Zero and Pomelo), Kin (with and without gas), Powerade (Citrus, Frutas Tropicales, Mandarina, Manzana, Mountain Blast, Naranja and Naranja Light), Quatro Liviana (Pomelo, Limonada and Naranja Durazno), Schweppes (Citrus, Citrus Light, Lima limón, Pomelo and Tónica), Sprite (Regular and Zero) and Tai. Beers (Austral, Bieckert, Birra Moretti, Budweiser, Corona, Guiness, Heineken, Imperial, Kunstmann, Modelo, Otro mundo, Palermo, Paulaner, Salta and Schneider), Energy drinks Black Fire and Infusions (yerba La Vuelta).

 

*Paraguay*: Aquarius Manzana, Aquarius Naranja, Aquarius Pera, Burn Energy, Coca-Cola, Coca-Cola Zero, Crush Naranja, Crush Piña, Crush Pomelo, Dasani without Gas, Dasani with Gas, Fanta Guaraná, Fanta Naranja, Fanta Naranja Zero, Fanta Naranja Mandarina, Fanta Piña, Frugos Durazno, Frugos Manzana, Frugos Naranja, Frugos Pera, Powerade Manzana, Powerade Mountain blast, Powerade Multifruta, Powerade Naranja, Sprite, Sprite Zero, Schweppes Tónica and Schweppes Citrus.

 

We produce, market and distribute Coca-Cola soft drinks in our franchise territories through standard bottler agreements between our bottler subsidiaries and the local subsidiary in each jurisdiction of TCCC (collectively, the “Bottler Agreements”). We consider the enhancement of our relationship with TCCC an integral part of our business strategy.

 

We seek to enhance our business throughout the franchise territories by developing existing markets, penetrating other soft drink, waters and juices markets, forming strategic alliances with retailers to increase consumer demand for our products, increasing productivity, and by further internationalizing our operations.

 

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**1. Soft Drink Business**

 

**Sales Overview**

 

We measure sales volume in terms of unit cases, which we refer to as UCs. Unit cases contain 192 ounces of finished beverage product (24 eight-ounce servings) or 5.69 liters. The following table illustrates our historical sales volumes for each of our territories:

 
| ** ** | ** ** | **Soft Drink Sales Volumes** | ** ** |
|------------|------------|---------------------------------------------|------------|
| ** ** | ** ** | **Year ended December 31,**  | ** ** |
| ** ** | ** ** | **2012**                                    | ** ** | **2011** | ** ** | **2010** | ** ** |
| ** ** | ** ** | **(millions of UCs)**             | ** ** |
| Chile      |       | 149.9                                       |       | 135.1 |   | 132.6 |   |
| Brazil     |       | 197.8                                       |       | 183.5 |   | 187.0 |   |
| Argentina  |       | 153.4                                       |       | 129.6 |   | 118.4 |   |
| Paraguay   |       | 16.5                                        |       |   |   |   |   |

 

In 2012, our Coca-Cola soft drinks business accounted for net sales of Ch$967,370 million and operating income of Ch$147,381 million representing 82% and 96% of our consolidated net sales and operating income, respectively.

 

Our Chilean soft drink operations accounted for net sales in 2012 of Ch$299,673 million; the Brazilian soft drink operations for net sales of Ch$359,116 million, the Argentine soft drink operations for net sales of Ch$281,696 million, and the Paraguayan soft drinks operations for net sales of Ch$26,885 million.

 

The following tables set forth, for the periods indicated, our net sales and volume of Coca-Cola soft drinks sold in our franchise territories for the periods indicated.

 
| ** **           | ** ** | **Year ended December 31, 2012** | ** ** |
|----------------------|------------|------------------------------------------------------|------------|
| ** **           | ** ** | **Chile**                                            | ** ** | **Brazil** | ** ** | **Argentina** | ** ** | **Paraguay*** | ** ** |
| ** **           | ** ** | **MM$**                                              | ** ** | **MMCUs** | ** ** | **MM$** | ** ** | **MMCUs** | ** ** | **MM$** | ** ** | **MMCUs** | ** ** | **MM$** | ** ** | **MMCUs** | ** ** |
| Colas                |       | 228,651                                              |       | 114.4 |   | 280,829 |   | 154.7 |   | 218,878 |   | 119.2 |   | 16,373 |   | 10.1 |   |
| Flavored soft drinks |       | 71,023                                               |       | 35.5 |   | 78,287 |   | 43.1 |   | 62,818 |   | 34.2 |   | 10,512 |   | 6.4 |   |
| Total                |       | 299,673                                              |       | 149.9 |   | 359,116 |   | 197.8 |   | 281,696 |   | 153.4 |   | 26,885 |   | 16.5 |   |

 

 
| ** **           | ** ** | **Year ended December 31, 2011** | ** ** |
|----------------------|------------|------------------------------------------------------|------------|
| ** **           | ** ** | **Chile**                                            | ** ** | **Brazil** | ** ** | **Argentina** | ** ** |
| ** **           | ** ** | **MM$**                                              | ** ** | **MMCUs** | ** ** | **MM$** | ** ** | **MMCUs** | ** ** | **MM$** | ** ** | **MMCUs** | ** ** |
| Colas                |       | 197,610                                              |       | 104.6 |   | 302,278 |   | 148.5 |   | 162,180 |   | 101.7 |   |
| Flavored soft drinks |       | 57,826                                               |       | 30.5 |   | 63,326 |   | 35.0 |   | 46,668 |   | 27.9 |   |
| Total                |       | 255,436                                              |       | 135.1 |   | 365,604 |   | 183.5 |   | 208,848 |   | 129.6 |   |

 
| ** **           | ** ** | **Year ended December 31, 2010** | ** ** |
|----------------------|------------|------------------------------------------------------|------------|
| ** **           | ** ** | **Chile**                                            | ** ** | **Brazil** | ** ** | **Argentina** | ** ** |
| ** **           | ** ** | **MM$**                                              | ** ** | **MMCUs** | ** ** | **MM$** | ** ** | **MMCUs** | ** ** | **MM$** | ** ** | **MMCUs** | ** ** |
| Colas                |       | 189,941                                              |       | 104.4 |   | 297,644 |   | 155.6 |   | 127,808 |   | 91.5 |   |
| Flavored soft drinks |       | 51,231                                               |       | 28.2 |   | 53,180 |   | 31.4 |   | 39,139 |   | 26.9 |   |
| Total                |       | 241,172                                              |       | 132.6 |   | 350,824 |   | 187.0 |   | 166,947 |   | 118.4 |   |

 

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(*) Figures only reflect 4Q12 in Paraguay

 

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In Chile, Coca-Cola soft drinks are distributed in returnable and non-returnable glass and PET bottles and aluminum cans of various sizes. It is also distributed as Post-mix syrup, which is mixed with carbonated water in a dispenser at the point of sale, in stainless steel and bag-in-box containers. In Brazil, Coca-Cola soft drinks are distributed in returnable and non-returnable glass and PET bottles of various sizes, in aluminum cans and also as post-mix syrup. In Argentina, Edasa produces and distributes Coca-Cola soft drinks in returnable and non-returnable glass and PET bottles of various sizes, in aluminum cans and as post-mix syrup. In Paraguay Coca-Cola soft drinks are distributed in returnable and non-returnable glass and PET bottles and aluminum cans. It is also distributed as Post-mix syrup, which is mixed with carbonated water in a dispenser at the point of sale, in stainless steel and bag-in-box containers. Regarding Juices, they are distributed in non-returnable glass and PET bottles, returnable glass bottles, in bi-laminated sachets, cardboard Tetra Pak containers and bag-in-box as concentrated juice that is mixed with water at the point of sale. Waters are distributed in returnable glass bottles and non-returnable PET bottles.

 

The following table sets forth, for the periods indicated, our sales of Coca-Cola soft drinks in Chile, Brazil, Argentina and Paraguay by packaging type, measured as a percentage of total sales volume:

 

**Soft Drink Sales by Packaging Type**

 
| ** **     | ** ** | **Year Ended December 31,** | ** ** |
|----------------|------------|--------------------------------------------|------------|
| ** **     | ** ** | **2012**                                   | ** ** | **2011** | ** ** |
| ** **     | ** ** | **Chile**                                  | ** ** | **Brazil** | ** ** | **Argentina** | ** ** | **Paraguay** | ** ** | **Chile** | ** ** | **Brazil** | ** ** | **Argentina** | ** ** |
| ** **     | ** ** | **% Total**                           | ** ** | **% Total** | ** ** | **% Total** | ** ** | **% Total** | ** ** | **% Total** | ** ** | **% Total** | ** ** | **% Total** | ** ** |
| ** **     | ** ** | **Mix**                                    | ** ** | **Mix** | ** ** | **Mix** | ** ** | **Mix** | ** ** | **Mix** | ** ** | **Mix** | ** ** | **Mix** | ** ** |
| Returnable     |       | 59                                         |       | 9 |   | 50 |   | 49 |   | 61 |   | 11 |   | 51 |   |
| Non-returnable |       | 37                                         |       | 88 |   | 49 |   | 50 |   | 35 |   | 86 |   | 48 |   |
| Post Mix       |       | 4                                          |       | 3 |   | 1 |   | 1 |   | 4 |   | 3 |   | 1 |   |
| **Total**      | ** ** | **100**                                    | ** ** | **100** | ** ** | **100** | ** ** | **100** | ** ** | **100** | ** ** | **100** | ** ** | **100** | ** ** |

 

**Customers and Distribution**

 

As of December 31, 2012, we sold our products to approximately 63,000 customers in Chile, 68,500 customers in Brazil, 79,401 customers in Argentina and 49,300 customers in Paraguay. Although the mix varies significantly among the franchise territories, our distribution network generally relies on a combination of Company-owned trucks and independent distributors in each territory.

 

The following table sets forth, for the periods indicated, our sales of Coca-Cola soft drinks in Chile, Brazil, Argentina and Paraguay, by type of customer, measured as a percentage of total sales volume:

 

**Soft Drink Sales by Type of Customer**

 
| ** **             | ** ** | **Year ended December 31,** | ** ** |
|------------------------|------------|--------------------------------------------|------------|
| ** **             | ** ** | **2012**                                   | ** ** | **2011** | ** ** |
| ** **             | ** ** | **Chile**                                  | ** ** | **Brazil** | ** ** | **Argentina** | ** ** | **Paraguay** | ** ** | **Chile** | ** ** | **Brazil** | ** ** | **Argentina** | ** ** |
| ** **             | ** ** | **(%)**                                    | ** ** |
|                   |       |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Mom & Pops    |       | 51                                         |       | 24 |   | 47 |   | 40 |   | 53 |   | 22 |   | 50 |   |
| Supermarkets           |       | 20                                         |       | 30 |   | 20 |   | 9 |   | 17 |   | 28 |   | 18 |   |
| On Premise             |       | 13                                         |       | 22 |   | 3 |   | 22 |   | 11 |   | 26 |   | 3 |   |
| Wholesale distributors |       | 16                                         |       | 24 |   | 30 |   | 28 |   | 19 |   | 24 |   | 29 |   |
| **Total**              |       | 100                                        |       | 100 |   | 100 |   | 100 |   | 100 |   | 100 |   | 100 |   |

 

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*Chile*. As of December 31, 2012, Andina’s sales force consisted of 297 salespeople (262 workers hired indefinitely and 35 hired on a fixed term basis) who call on most customers on average 1.8 times per week. For sales to major supermarkets, we employ 6 key account heads, 20 field supervisors and 534 third party promoters who are on-site supervisors who handle our products, monitor displays and track the pricing and marketing strategies of our competitors. Account executives are also assigned to major fast food outlets to work with the customer to develop sales on a consistent basis. Our distribution system for our soft drink products consisted of a group of 67 exclusive distributors, which are independent businesses that collectively deploy approximately 571 trucks (30 of which are company property), depending on seasonal demand. The 67 distributors collectively service all of our Chilean customers. In most cases, the distributor collects payment from the customer in cash or check. Where applicable, the driver also either collects empty returnable glass or PET bottles of the same type and quantity as the bottles being delivered, or collects cash deposits for the net returnable bottles delivered. This task is particularly significant in the Chilean territory where returnable containers accounted for approximately 59% of total soft drinks volume in 2012. Certain important customers (such as supermarkets), maintain accounts receivables with us, which are settled on average every 45 days after invoices are issued. On average, accounts receivable from all clients are liquidated on a 20-day term.

 

*Brazil*. As of December 31, 2012, Andina Brazil’s sales force in Brazil consisted of an average of 1,325 salespeople (475 commercial representatives and 375 supermarket promoters, 29 unpackers y 77 field supervisors) divided into three major groups responsible for: (i) sales to key accounts and fast food chains (who purchase soft drinks in post-mix dispensers, in cans and bottles), (ii) sales to supermarkets (consisting of bottle and can sales) and (iii) all other traditional customers. Each of these three groups also manages sales of the other beverages (beer, water, juice, energy drinks and ready-to-drink tea) distributed by Andina Brazil. In Brazil, we generally distribute Coca-Cola soft drinks through a distribution system that includes: (i) trucks operated by independent distributors pursuant to exclusive distribution arrangements with us;  (ii) trucks operated by independent transport companies on a non-exclusive basis and (iii) own trucks. In 2012, 10% was distributed by exclusive distributors, 85.5% by independent transport companies and (iii) 5% by our own trucks. Distribution of all of Andina Brazil’s beverages takes place from distribution centers and production facilities. In 2012, approximately 18% of Andina Brazil’ soft drink sales were paid for in cash at the time of delivery, 9% were paid by check and 73% were paid were paid with other bank securities with an average payment term of 13 days.

 

*Argentina*. As of December 31, 2012, our sales force in Argentina consisted of 642 employees, grouped in salespeople, merchandisers, and Contact Center personnel. In 2012, 70% of Edasa’s Coca-Cola soft drinks were distributed by direct distribution (trucking) and 30% by wholesale distribution. All of the direct distribution is done by a group of independent transport companies (each with three or more trucks). In 2012, approximately 75% of EDASA’s soft drink sales were paid for in cash and 25% were credit sales.

 

*Paraguay*: As of December 31, 2012, the sales force consisted of 282 people, grouped into sellers and*shelf stackers* or replenishers. Paresa distributed 71% Coca-Cola soft drinks through direct distribution, and 29% through wholesalers distributors. The frequency of visit of the direct sale is 1.6 times a week. For sales to important supermarkets, there is one key account manager, 5 sales people and 99 on-site outsourced sales promoters who handle our products, monitor exhibitions and follow up on our pricing strategies, exhibitions and the marketing of our competitors. There are also account executives appointed to major “fast food” chains that work with the client to develop sales in a consistent way. All direct distribution is done by a group of small truck businessmen. In 2012 approximately 64% of sales of Paresa soft drinks were paid in cash and 36% were credit sales.

 

**Competition**

 

We face intense competition throughout the franchise territories principally from bottlers of competing soft drink brands. See “Item 3. Key Information — Risk Factors — Risks Related to our Company — Our business is highly competitive and subject to price competition which may adversely affect our net profits and margins.”

 

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*Chile.*The soft drink segment of the Chilean beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to deliver product in popular bottle sizes, distribution capacity, and the amount of returnable bottles held by retailers or by consumers. Returnable bottles can be exchanged at the time of new purchases in lieu of paying a bottle deposit, thereby decreasing the purchase price. Our main competitor in the Chilean franchise territory is Embotelladora Chilenas Unidas or ECUSA, a subsidiary of Compañía Cervecerías Unidas S.A. or CCU, the major brewer in Chile. ECUSA produces and distributes Pepsi-Cola products and its own brands (soft drinks and bottled water).

 

*Brazil.*The soft drink segment of the Brazilian beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising and distribution capacity (including the number and location of sales outlets). According to A.C. Nielsen, our main soft drink competitor in the Brazilian territory is American Beverage Company or Ambev, the largest beer producer and distributor in Brazil and also produces soft drinks, including Pepsi-Cola products.

 

*Argentina.*The soft drink segment of the Argentine beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to produce bottles in popular sizes and distribution capacity. The greatest competitor is Ambev, the Latin American unit of the largest brewery group of the world (Inbev) that produces and commercializes Pepsi-Cola products. As far as B-brands, the most significant are: Talca, Pritty and Interlagos representing over 60% of the volume for B-brands. Pritty S.A., a company established in the city of Córdoba, is dedicated to the production and sale of beverages without alcohol; it commercializes Pritty, Doble Cola, Saldán, Switty, Rafting, Hook and Magna. O.E.S.A., a preceding Pepsi bottler in the province of Mendoza, produces and commercializes soft drinks and soda water under the brand Talca. Embotelladora Comahue, located in Río Negro comercializes the brands Interlagos, Patagonia y Bardas Limay.

 

*Paraguay:* The soft drink segment of the Paraguayan beverage industry is highly competitive. The most important areas of competition are product image, pricing, advertising, ability to produce bottles in popular and the amount of returnable bottles held by retailers or by consumers.

 

The greatest competitor is the local brand “Niko/De La Costa” produced and bottled by Embotelladora Central S.A , which has a 20.7% market share. The segment of economic brands in Paraguay represents 29.6% of the soft drink industry. Pepsi which resumed its operations in Paraguay in November 2011, reached a market share of 10.2% in December 2012, and it is produced and marketed by Group Vierci, a local franchisee.

 

Based on reports by A.C. Nielsen, we estimate that in 2012, our average soft drink market share within our franchise territories reached 69.5%, 59.1%, and 59.1% for Chile, Brazil, and Argentina, respectively. In the case of Paraguay, our average soft drink  market share for October, November and December 2012 published by IPSOS reached 60,1%.

 

The following table presents the market share of our main competitors in Chile, Brazil and Argentina for the periods indicated:

 

**Market Share**

 
| ** **                   | ** ** | **Year ended December 31,** | ** ** |
|------------------------------|------------|--------------------------------------------|------------|
| ** **                   | ** ** | **2012**                                   | ** ** | **2011** | ** ** |
| ** **                   | ** ** | **Chile**                                  | ** ** | **Brazil** | ** ** | **Argentina** | ** ** | **Paraguay*** | ** ** | **Chile** | ** ** | **Brazil** | ** ** | **Argentina** | ** ** |
| ** **                   | ** ** | **(%)**                                    | ** ** |
| Coca-Cola soft drinks        |       | 69                                         | %          | 59 | % | 59 | % | 60 | % | 69 |   | 57 |   | 57 |   |
| ECUSA soft drinks            |       | 21                                         |       | — |   | — |   | — |   | 20 |   | — |   | — |   |
| Pepsi-Cola and 7 Up products |       | 4                                          |       | 5 |   | 20 |   | 9 |   | 4 |   | 4 |   | 21 |   |
| Pritty products              |       | —                                     |       | — |   | 7 |   | — |   | — |   | — |   | 8 |   |
| Antarctica products          |       | —                                     |       | 12 |   | — |   | — |   | — |   | 12 |   | — |   |
| Brahma products              |       | —                                     |       | 1 |   | — |   | — |   | — |   | 2 |   | — |   |
| Other                        |       | 6                                          |       | 23 |   | 14 |   | 31 |   | 7 |   | 25 |   | 14 |   |
| Total                        |       | 100                                        | %          | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |

 

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*Source: A.C. Nielsen*

*(*)**In the case of Paraguay, the average market share for October, November and December 2012 published by IPSOS*

 

**Seasonality**

 

Each of our lines of business is seasonal. Most of our beverage products have their highest sales volumes during the South American summer (October through March), with the exception of nectar products, which have a slightly higher sales volume during the South American winter (April through September).

 

**Raw Materials and Supplies(1)**

 

The principal raw materials used in the production of Coca-Cola soft drinks are concentrate, sweetener, water and carbon dioxide gas. Production also requires glass and plastic bottles, bottle tops and labels. Water used in soft drink production is treated for impurities and adjusted for taste reasons. All raw materials, especially water, are subjected to continuous quality control.

 

*Chile—Raw Materials.* We purchase concentrate at prices established by TCCC. We mainly purchase sugar from Industria Azucarera Nacional S.A., IANSA and to Sucden Chile S.A., although we may purchase sugar in the international market when prices are favorable, and have done so on occasion. Chilean sugar prices are subject to a price band established by the Chilean government on an annual basis. We obtain carbon dioxide gas from Linde Gas Chile S.A. and Praxair. Andina’s affiliate Envases CMF, produces returnable PET bottles and non-returnable PET pre-forms which are blown at our Renca plant. We purchase glass bottles principally from Cristalerías de Chile S.A. and Cristalerías Toro S.A.I.C.  Bottle caps are purchased from Closure Systems International, Alucaps Mexicana S.A. de C.V., Inyecal S.A. and other suppliers.

 

During 2012, 80% of the variable cost of sales for softdrinks produced by Andina Chile corresponded to main raw materials.  The cost of each raw material within the total of main raw materials is the following: concentrate represents 63%; sugar and artificial sweeteners 24%; non-returnable bottles 8%; bottle caps 4% and carbon dioxide 1%. Water does not constitute an important cost as raw material. Additionally, the cost of finished products purchased from third parties (“ECSA”) is included within the cost of sales of soft drinks. These costs represent 17% of the total costs of sales of soft drinks and correspond to cans and some PET bottles.

 

*Brazil - Raw Materials.* Andina Brazil purchases concentrate in the city of Manaus at prices established by TCCC. Manaus has been designated as a duty-free development zone by the Brazilian government. Andina Brazil purchases sugar from Brazilian suppliers, in particular from Copersucar Ltda. It purchases carbon dioxide gas mainly from Companhia White Martins Gases S.A..  PET pre-forms from Braspla Ltda., and Amcor Ltda. Glass bottles are purchased from Owens-Illinois ; Cans are purchased from Rexam and Latapack Ball;  metal bottle caps from Aro S.A.;  and Plastic bottle caps are purchased from Closure Systems International and Rexam.  Andina Brazil purchases water from the municipality of Rio de Janeiro.

 

During 2012, 99,3% of the variable cost of sales for softdrinks produced by Andina Brazil corresponded to main raw materials  The cost of each raw material within the total of main raw materials is the following: concentrate (including juice used for some flavors) represents 34,0%; sugar and artificial sweeteners 22.6%; non-returnable bottles 21.0%; cans 13.9%, bottle caps 3.2%, carbon dioxide and others 4.6%. Additionally, the cost of soft drinks finished products purchased from third parties is included within the cost of sales of soft drinks. These costs represent 0.7% of the total costs of sales of soft drinks and correspond to some formats of cans, PET and non-returnable glass bottles.

 

*Argentina - Raw Materials.* Edasa purchases concentrate at prices established by The Coca-Cola Company. Edasa purchases sugar mainly from Ing. y Refinería San Martín de Tabacal S.A., Cía. Azucarera Concepción S.A., and Atanor S.C.A.;  fructose from Productos de Maíz S.A. and Glucovil S.A., and carbon dioxide gas from Praxair S.A. and Air Liquide S.A. Edasa buys non-returnable and returnable PET bottles to

 

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*(1)  For detailed information please visit our website www.embotelladoraandina.com*

 

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AEASA and glass bottles from Cattorini Hermanos S.A. and Cristalerías de Chile S.A., the plastic caps from Alusud S.A. and Cristal Pet., and metal caps from Metalgráfica Cearense S.A. and Aro S.A. in Brazil. Regarding water supply for the production of soft drink, Edasa owns water wells and pays a fee to the Dirección Provincial de Aguas Sanitarias.  Edasa also buys stretch wrap from Manuli Packaging Argentina, Plastiandino S.A., Sanlufilm S.A., Atiles S.A., IPESA Ind. Plast. S.A. and Rio Chico S.A., and carton from Cartocor S.A. and Papeltécica S.A.

 

The cost of each raw material as a percentage of the total cost of raw materials is the following: concentrate 52%; sugar and artificial sweeteners 27%; non-returnable bottles 13%; bottle caps 3% and carbon dioxide 1%. The remaining 2% corresponds to packaging. Water does not represent a significant cost as raw material. Additionally, the cost of finished products purchased from third parties is included within the cost of sales of soft drinks. These costs represent 2% of the total costs of sales of soft drinks and correspond to can formats, juices and some bottled water products.

 

*Argentina PET Packaging - Raw Materials.* The principal raw material required for production of PET bottles is PET resin; during 2012 this raw material was mainly from DAK Américas de Argentina S.A. and Cabelma S.A. Also, but in a lesser extent, they imported from Nan Ya Plastics Corp., Far Eastern New Century and DAK Americas  EE.UU. In 2012, AEASA’s costs for PET resin accounted for 61% of the total variable cost of its sales of PET bottles and preforms.

 

*Paraguay - Commodities*: Paresa acquires concentrates at prices established by TCCC. Paresa acquires sugar from Azucarera Paraguaya S.A. carbon dioxide gas is obtained from provider Liquid Carbonic (Praxair). Non-returnable pre-forms are mainly supplied by local provider Inpet, from Cristalpet, and from the associate company Andina Empaques de Argentina; the pre-forms are blown in our plant located in San Lorenzo. Glass bottles are bought from Cattorini Hermanos S.A. and Vidriolux. RefPet bottles are purchased from Cristalpet and Andina Empaques de Argentina. Plastic caps are bought from Sinea, and metal caps from Aro S.A. de Brazil. Plastic wrappers are purchased from suppliers Manuli, IPESA, Petropack, Bolsiplast and Anchor Packaging.

 

The cost of each commodity within the total cost of raw materials is the following: the concentrate (including juice used for some flavors) represents 44%, sugar and artificial sweeteners 32%, pet supplies 15%, bottle caps 3%; carbon dioxide 1% and packing material 2%. Water is not a significant cost as a raw material. Additionally, the cost of finished products purchased from third parties is included in the cost of sales of soft drinks; these costs represent 1% of total cost of sales of soft drinks and consist of cans

 

**Marketing**

 

We and TCCC jointly promote and market Coca-Cola soft drinks in our franchise territories, in accordance with the terms of our respective Bottler Agreements. During 2012, we paid approximately 50% of the advertising and promotional expenses incurred by TCCC  in our franchise territories. Nearly all media advertising and promotional materials for Coca-Cola soft drinks are produced and distributed by TCCC . See “Item 4. Information on the Company —Bottler Agreements.”

 

*Channel Marketing*. In order to provide more dynamic and specialized marketing of our products, our strategy is to divide our market into distribution channels. Our principal channels are small retailers, “on-premise” consumption such as restaurants and bars, supermarkets and third party distributors. Presence in these channels entails a comprehensive and detailed analysis of the purchasing patterns and preferences of various groups of soft drink consumers in each type of location or distribution channel. In response to this analysis, we seek to tailor our product, price, packaging and distribution strategies to meet the particular needs of and exploit the potential of each channel.

 

We believe that the implementation of our channel marketing strategy also enables us to respond to competitive initiatives with channel-specific responses as opposed to market-wide responses. This focused response capability isolates the effects of competitive pressure in a specific channel, thereby avoiding costlier market-wide responses. Our channel marketing activities are facilitated by our management information systems. We have invested significantly in creating such systems, including providing hand-held computer

 

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and data gathering equipment to support the gathering of product, consumer and delivery information required to implement our channel marketing strategies effectively for most of our sales routes in Chile, Brazil, Argentina and Paraguay. We will continue investing to increase pre-sale coverage in our territories.

 

Our consolidated total advertising expenditures in 2012 were Ch$38,667 million.

 

**Advertising**

 

We advertise in all major communications media. We focus our advertising efforts on increasing brand recognition by consumers and improving our customer relations. National advertising campaigns are designed and proposed by TCCC ‘s local affiliates, with our input at the local or regional level.

 

**2.  Other Beverages**

 

*Chile*. In addition to Coca-Cola soft drinks, through Vital Jugos S.A., we produce and sell juices, other fruit flavored beverages, ready-to-drink tea and sports drinks, and through Vital Aguas S.A. we produce and sell mineral water and purified water. Juices are produced and sold under the brands Andina del Valle (juices and fruit nectars), , Kapo (fantasy drink), Aquarius (flavored water), Fuze Tea (ready-to-drink tea), Glaceau Vitamin Water (food for athletes with added vitamins and minerals) and Powerade (isotonic).Waters are produced and sold under the brands Vital (mineral water) in the following versions: with gas, without gas and Soft Gas; Dasani (purified water) in the following versions: with gas, without gas, and soft gas; Benedictino (purified water) in the following versions:  with gas and without gas.

 

*Brazil*. We distribute beer under the Amstel, Birra Moretti, Dos Equis (XX), Edelweiss, Heineken, Kaiser, Murphys, Sol, Xingu and Bavária labels. We also distribute water under the labels Crystal and Aquarius Fresh and sell and distribute ready-to-drink juices under the labels Del Valle Frut, Del Valle Mais, and Kapo; milk and cocoa-based beverages under the Kapo Chocolate brand, energy drinks under the brand names Burn and Gladiator, isotonics under i9 and Powerade brand names and Chá Leão, Leão Ice Tea, Matte Leão, and Guaraná Leão ready-to-drink teas.

 

*Argentina*. We produce and distribute ready-to-drink juices under the Cepita brand name. We also produce and sell water under the brands Kin, Bonaqua (mineral water with and without gas), Aquarius and Quatro Liveana (flavored waters), as well as Powerade in the isotonic segment. With the incorporation of Coca Cola Polar Argentina S.A. we distribute energizers under the trademark Black Fire and beers (among which are: Palermo, Schneider, Heineken, and Budweiser).

 

*Paraguay*: We produce and distribute juices ready to be consumed under the trademark Frugos. We also manufacture and sell water under the trademarks Dasani (purified water), Aquarius (flavored water) and isotonic drinks like Powerade. We also manufacture and sell energy drinks in disposable glass bottles under the trademark Burn and we import and distribute Burn cans.

 

**Waters and Juices in Chile**

 

*Sales*. In 2012, net sales of waters and juices in Chile represented 6.4% of our consolidated net sales. On a consolidated basis, sales of waters and juices in Chile were Ch$74,812 million.

 

The following table sets forth for the periods indicated, Vital Jugos’and Vital Aguas’ net sales and sales by volume of unit cases of waters and juices:

 

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**Waters and Juices Sales by Net Sales and Volume(1)**

 
| ** **                           | ** ** | **Year-ended December 31,**                       | ** ** |
|--------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                           | ** ** | **2012**                                                    | ** ** | **2011** | ** ** |
| ** **                           | ** ** | **In million Ch$ and million UCs** | ** ** |
| ** **                           | ** ** | **Ch$**                                                     | ** ** | **UCs** | ** ** | **Ch$** | ** ** | **UCs** | ** ** |
| Andina Frut an Andina Néctar    |       | 37,826                                                      |       | 21.4 |   | 29,222 |   | 17 |   |
| Kapo                                 |       | 6,636                                                       |       | 4.8 |   | 6,629 |   | 4.6 |   |
| Powerade                             |       | 4,384                                                       |       | 1.7 |   | 2,545 |   | 1.0 |   |
| Fuze Tea                             |       | 988                                                         |       | 0.5 |   | 951 |   | 0.5 |   |
| Vitamin Water and Aquarius           |       | 162                                                         |       | 0.1 |   | 388 |   | 0.2 |   |
| Dasani (purified and flavored water) |       | 0                                                           |       | 0 |   | 450 |   | 0.4 |   |
| Benedictino (purified water)         |       | 723                                                         |       | 1.1 |   | 2,225 |   | 4.0 |   |
| Vital (mineral water)                |       | 11,730                                                      |       | 17.2 |   | 9,342 |   | 14.0 |   |
| **Total(2)**                         | ** ** | **62,449**                                                  | ** ** | **46.8** | ** ** | **51,752** | ** ** | **41.6** | ** ** |

 

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*(1)Reflects the sale of Vital Jugos and Vital Aguas to bottlers of The Coca-Cola Company.*

*(2)Includes sales to related companies which are eliminated upon consolidation.*

 

*Marketing.* Marketing and promotional programs, including television, radio and print advertising, point-of-sale advertising, sales promotions and entertainment are developed by TCCC for all Vital Jugos’ and Vital Aguas’ products.

 

*Customers and Distribution*. Juices and waters throughout Chile are distributed by means of distribution agreements between TCCC and the Coca-Cola bottlers in Chile. In 2012, Andina distributed approximately 70% of the products of Vital Jugos and Vital Aguas, and the other Coca-Cola bottler in Chile distributed the remaining 30%. Each Coca-Cola bottler in Chile distributes the products of Vital Jugos and Vital Aguas in its respective franchise territory. Under Vital Jugos’ and Vital Aguas’ distribution agreements, each bottler has the exclusive right to distribute waters and juices in its territory.

 

Our management believes that our distribution arrangements for waters and juices provide an effective means of distributing those products throughout Chile using the extensive distribution system of the Coca-Cola bottlers. We have a good working relationship with the other Coca-Cola bottler that distribute waters and juices. If the other Coca-Cola bottler were to cease distribution, our management believes it could arrange alternative distribution arrangements, but the transition to the new arrangements could involve significant delays in distributing products and would involve additional costs and an initial reduction in sales.

 

*Competition*. Vital Aguas’ principal competitor regarding water is CCU with the Cachantún brand.   Additionally there are low priced brands (B-brands) in the water segment in Chile.   Vital Jugos S.A.’s principal competitors regarding juices are, Watt’s-CCU, Corpora Tres Montes and three of the leading dairy producers in Chile: Soprole S.A., Nestlé Chile S.A. and Loncoleche S.A., who is also a subsidiary of Watt’s S.A. During 2006, the largest Chilean brewery CCU acquires from Watts S.A. a 50% ownership interest of the juice brands in Chile, creating a joint venture for the management of this business area. The Chilean market for fruit-flavored beverages and waters also includes low-cost, lower-quality fruit juice concentrates and artificially flavored powdered beverage mixes. We do not consider these products to compete with our waters and juices business because we believe that these products are of lower quality and value.

 

Based on reports by A.C. Nielsen, we estimate that in 2012, our market share within our Chilean franchise territories reached 36.7% for the juice segment and 41.7% for waters.

 

*Raw material for Juices*. The principal raw materials used by Vital Jugos S.A. in the production of juices and as a percentage of total raw material costs, are sweeteners 13.2%, fruit pulp and juices 13.5%, flavors, aromas and citric acid 17.8%, containers 25.5% and wrapping material 4.7%, all of which during 2012 accounted for 81.1% of total costs for sales of juice, including packaging.

 

*Raw materials for Waters:* The principal raw materials used by Vital Aguas S.A. in the production of mineral water and purified unflavored and purified flavored water and as a percentage of total raw material costs are: Non-returnable PET packaging 42.7%, mineral water, flavor, aromas, sweeteners and citric acid 23.6%, packaging material 5.0%, caps 5.8% and carbonation 0.9%, all of which during 2012 accounted for 81.1% of total costs for sales of water, including packaging.

 

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**Beer, Juices and Waters in Brazil**

 

*Sales*. In 2012, net sales of beer, juices, waters, tea based beverages, isotonics and energy drinks in Brazil were Ch$92,480 million, representing 7.9% of our consolidated net sales.

 

Andina Brazil uses its distribution system to distribute beer in the Brazilian territory. Andina Brazil started distributing beer in the 1980s as a result of the acquisition of Kaiser by a consortium of Coca-Cola bottlers (including Andina Brazil) in Brazil. In March 2002, the Canadian brewing company Molson Inc. acquired Cervejarias Kaiser S.A. (“Kaiser”). In 2006, Femsa acquired from Molson the controlling ownership interest over Kaiser y later in 2010 Heineken acquired the controlling interest of Femsa’s beer operation. Andina Brazil buys beer from Heineken at a price determined by Heineken and sells it to its customers with a fixed margin. In the case of certain discount sales that have been approved by Heineken, Heineken shares between 50% and 100% of the cost of such discounts. In 2012, Andina Brazil’s net sales of beer were Ch$25,320 million, of which Bavaria brand beer accounted for 44.4%, Heineken for 33.2%, Kaiser for 18.4%, Sol for 2.9%, y Xingú for 0.6%, and all the other brands accounted for 0.5% of net sales.

 

*Competition*. In the beer sector, Andina Brazil’s main competitor is Ambev that during 2012 had a very dominant position in the Brazilian market.

 

*The Distribution Agreements. *TCCC and the Brazilian Association of Coca-Cola Manufacturers entered into an agreement regarding the distribution through the Coca-Cola System of beer produced and imported by Heineken. The agreements were signed May 30, 2003, and are renewable for a period of 20 years.

 

Andina Brazil is not allowed to produce, bottle, sell or obtain any interest in any bottled or tap beer under any other label or in any bottle or packaging that could be confused with brand beers, except as may be mutually agreed in writing between Andina Brazil and Heineken.

 

Under the terms of the distribution agreement, Heineken undertakes all responsibility for planning and managing advertising, marketing and promotional activities related to beer.  Andina Brazil, however, is free to undertake marketing or promotional activities with Heineken ́s prior approval. The parties have agreed to assume joint responsibility for the costs of certain promotional activities (radio or television) and for certain outdoor events which take place in the Rio de Janeiro and Espirito Santo region. Andina Brazil has agreed to devote at least 2.3% of its sales net of taxes of Heineken products to such promotional activities or events.

 

Andina Brazil is prohibited from assigning, transferring, or otherwise encumbering the Heineken distribution agreement or any interest therein for the benefit of third parties without prior written consent from Heineken may terminate the distribution agreement immediately in the event that Andina Brazil (i) declares bankruptcy, is made a party to bankruptcy proceedings or is placed under judicial administration, (ii) is dissolved or liquidated or its assets are nationalized, expropriated, attached or intervened, (iii) undergoes a change of business or of control, (iv) ceases to be a franchisee of TCCC or (v) causes a material breach of the Heineken distribution agreement. In addition, Heineken may terminate the Heineken distribution agreement one year after delivery of notice that Andina Brazil is not complying with the terms thereof. Andina Brazil may terminate the Heineken distribution agreement in the event of a material breach thereof by Heineken.

 

**3. PET Packaging**

 

**Overview and Background**

 

We produce PET bottles in both returnable and non-returnable formats. As a returnable packaging material, PET has advantages compared to glass because it is lightweight, difficult to break, transparent and easily recyclable. On average, returnable PET bottles can be used up to 12 times. Non-returnable PET bottles also are produced in various sizes and are used by a variety of soft drink producers and, in Chile, by producers of edible oil products, wine and personal hygiene products.

 

In 2012, AEASA was one of the largest manufacturers of PET products in Argentina. In 2012, Andina Brazil purchased its PET preforms mainly from Brasalpla and also from Amcor and Owens-Illinois.

 

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Sales . In 2012, AEASA had net sales of Ch$13.261 million with sales to EDASA amounting to Ch$5,522 million. AEASA also sold PET bottles to third parties accounting for approximately Ch$7,739 million.

 

*Competition*. We are suppliers of returnable and non-returnable PET bottles for Coca-Cola bottlers in Argentina and Chile. According to the pre-existing agreements between TCCC and the other Coca-Cola bottlers within South America, we must obtain the consent and assistance of TCCC  to expand our sales of returnable PET bottles to said bottlers.

 

In Chile, we do not have any principal competitors in the non–returnable PET bottles market for oils, wines and personal hygiene. There are a few producers of non-returnable PET bottles in Chile who are significantly smaller than CMF. Plasco S.A., the second Chilean manufacturer of non-returnable PET bottles, does not compete with us because it is the exclusive supplier of PET bottles for ECUSA. (The Chilean Pepsi bottler).

 

In Argentina, we compete principally with Alpla S.A. and Amcor. AEASA is the supplier of returnable PET bottles to all Coca-Cola bottlers in Argentina.

 

**4.             Patents and Licenses**

 

The Company has entered into Bottler Agreements with TCCC by which it has the license to produce and distribute Coca-Cola brand products within its operating franchise territories in Chile, Brazil and Argentina. The Company’s operations are highly dependent on maintaining and renewing the Bottler Agreements which provide for the production and distribution of Coca-Cola brand products.

 

**Bottler Agreements**

 

The Bottler Agreements are international standard contracts TCCC enters into with bottlers outside the United States for the sale of concentrates and beverage basis for certain Coca-Cola soft drinks and non-soft drink beverages.

 

Bottler Agreements are renewable upon request by the bottler and at the sole discretion of TCCC. We cannot assure you that the Bottler Agreements will be renewed upon their expiration, and even if they are renewed.

 

The Bottler Agreements provide that we will purchase our entire requirement of concentrates and beverage basis for Coca-Cola soft drinks and other Coca-Cola beverages from The Coca-Cola Company and other authorized suppliers. Although under the Bottler Agreements TCCC, in its sole discretion, may set the price of concentrates and beverage basis, among other terms, we set the price of products sold to retailers at our discretion, subject only to certain price restraints.

 

We are the sole producer of Coca-Cola soft drinks and other Coca-Cola beverages in our franchise territories. Although this right is not exclusive, TCCC  has never authorized any other entity to produce or distribute Coca-Cola soft drinks or other Coca-Cola beverages in such territories, although we cannot assure you that in the future it will not do so. In the case of post-mix soft drinks, the Bottler Agreements explicitly establish such non-exclusive rights.

 

The Bottler Agreements include an acknowledgment by us that TCCC is the sole owner of the trademarks that identify the Coca-Cola soft drinks and other Coca-Cola beverages and of any secret formula used in concentrates.

 

All distribution must be in authorized containers. TCCC has the right to approve, at its sole discretion, any and all kinds of packages and containers for beverages, including their size, shape and any of their attributes. TCCC  has the authority at its sole discretion to redesign or discontinue any package of any of the

 

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Coca-Cola products, subject to certain limitations, so long as Coca-Cola soft drinks and other Coca-Cola beverages are not all discontinued at the same time. We are prohibited from producing or handling any other beverage products, other than those of TCCC or other products or packages that would imitate, infringe or cause confusion with the products, trade dress, containers or trademarks of TCCC, or from acquiring or holding an interest in a party that engages in such activities. The Bottler Agreements also impose restrictions concerning the use of certain trademarks, authorized containers, packaging and labeling of TCCC and prohibit bottlers from distributing Coca-Cola soft drinks or other Coca-Cola beverages outside their designated territories.

 

The Bottler Agreements require us to maintain adequate production and distribution facilities; inventories of bottles, caps, boxes, cartons and other exterior packaging or materials; to undertake adequate quality control measures prescribed by TCCC; to develop, stimulate, and fully satisfy the demand for Coca-Cola soft drinks and other Coca-Cola beverages and to use all approved means, and spend such funds on advertising and other forms of marketing, as may be reasonably required to meet that objective; and to maintain such sound financial capacity as may be reasonably necessary to assure performance by us and our affiliates of our obligations to TCCC. All Bottler Agreements require us annually to submit our business plans for such franchise territories to TCCC, including without limitation, marketing, management and promotional and advertising plans for the following year.

 

TCCC  has no obligation to contribute to our expenditures derived from advertising and marketing, but it may, at its discretion, contribute to such expenditures and undertake independent advertising and marketing activities, as well as cooperative advertising and sales promotion that would require our cooperation and support. In each of the franchise territories, TCCC  has been contributing approximately 50% of advertising and marketing expenses, but no assurances can be given that equivalent contributions will be made in the future.

 

Each bottler is prohibited from, directly or indirectly, assigning, transferring or pledging its Bottler Agreement, or any interest therein, whether voluntarily, involuntarily or by operation of law, without the consent of TCCC, and each Bottler Agreement is subject to termination by TCCC  in the event of default by us. Moreover, the bottler may not undergo a material change of ownership or control without the consent of TCCC.

 

TCCC  may terminate a Bottler Agreement immediately, by written notice to the bottler, in the event that, inter alia, (i) the bottler suspends payments to creditors, declares bankruptcy, is declared bankrupt, is expropriated or nationalized, is liquidated, dissolved, changes its legal structure, or pledges or mortgages its assets; (ii) the bottler does not comply with instructions and standards established by TCCC  relating to the production of its authorized soft drink products; (iii) the bottler ceases to be controlled by its controlling shareholders; or (iv) the terms of the Bottler Agreement come to violate applicable law.

 

Either party to any Bottler Agreement may, with 60 days’ notice thereof to the other party, terminate the Bottler Agreement in the event of non-compliance by the other party with the terms thereof so long as the party in non-compliance has not remedied such non-compliance during this period. In addition, if a bottler does not wish to pay the required price for concentrate for any Coca-Cola products, it must notify TCCC within 30 days of receipt of The Coca-Cola Company’s new prices. In the case of any Coca-Cola soft drink or other Coca-Cola beverages other than Coca-Cola concentrate, the franchise regarding such product shall be deemed automatically canceled three months after TCCC’ s receipt of the bottler’s notice of refusal. In the case of Coca-Cola concentrate, the Bottler Agreements shall be deemed terminated three months after TCCC’s receipt of the bottler’s notice of refusal. TCCC may also terminate the Bottler Agreements if the bottler or any individual or legal entity that controls, owns a majority share in or directly or indirectly influences the management of the bottler, engages in the production of any non-Coca-Cola beverage, whether through direct ownership of such operations or through control or administration thereof, provided that, upon request, the bottler shall be given six months to remedy such situation.

 

*Chile Bottler Agreements*:  (i) .  The licenses for the territories in Chile expire in 2013 and 2018; (ii) on December 22, 2005, Vital S.A. and The Coca-Cola Company entered into a Juice Bottler Agreement

 

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by which The Coca-Cola Company authorized Vital S.A. to produce, prepare and bottle in packaging previously approved by TCCC the following brands: Andina Frut Andina Nectar, Kapo, Nestea, Fruitopia and Powerade.  The Agreement will expire on December 31, 2015, and sets forth that Andina, and the other Chilean Coca-Cola bottler, Embonor, have the right to purchase products from Vital S.A. as well as produce, package, and sell these products at their respective production facilities; (iii) on December 22, 2005, Vital Aguas S.A. and TCCC entered into a Water Manufacturing and Packaging Agreement for the preparation and packaging of beverages that will be in effect until December 31, 2015, regarding the brands Vital, Chanqueahue, Vital de Chanqueahue, Benedictino, Dasani and Aquarius.

 

*Brazil–Bottler Agreement:*the licenses for the territories in Brazil will expire in 2017.

 

*Argentina –Bottler Agreement*: the licenses for the territories in Argentina expires in 2013 and 2017**.**

 

*Paraguay–Bottler Agreement:*the licenses for the territories in Paraguay will expire in 2014.

 

**PET Agreements**

 

On June 29, 2001, we and Cristalerías de Chile S.A. signed a series of contracts forming a joint venture for the development of a PET production facility in Chile through the formation of Envases CMF S.A. We contributed the assets necessary to further the development of the joint venture. Our subsidiary Andina Inversiones Societarias S.A. holds a 50% stake in the joint venture while Cristalerías de Chile S.A. retains the other 50% interest. On January 27, 2012, Coca-Cola Embonor through its subsidiary, Embonor Empaques S.A. acquired Cristalerías de Chile’s stake equivalente to a 50% ownership interest in Envases CMF.

 

**5.         Regulation**

 

**General**

 

We are subject to the full range of government regulations generally applicable to companies engaged in business in our franchise territories, including but not limited to labor, social security, public health, consumer protection, environmental, sanitation, employee safety, securities and anti-trust laws. Currently, no material legal or administrative proceedings are pending against us with respect to any regulatory matter in any of our franchise territories except those listed as such in “Item 8. Financial Information—Legal Proceedings.” We believe, to the best of our knowledge that we are in compliance in all material respects with applicable statutory and administrative regulations relating to our business in each of our franchise territories.

 

*Chile*. There are no special licenses or permits required to manufacture and distribute soft drinks and juices in the Chilean territory. Food and beverage producers in Chile, however, must obtain authorization from (and their activities are subject to supervision by) the Chilean Environmental Protection Services (*Servicio Sanitario Metropolitano del Ambiente*), which inspects production facilities and takes liquid samples for analysis on a regular basis. Our permit from the Chilean Environmental Protection Authority was obtained on January 8, 1992 and is in effect indefinitely. In addition, production and distribution of mineral water is subject to special regulations such that mineral water may be drawn only from sources designated for such purpose by presidential decree. Certification of compliance with such decree is provided by the National Health Service, the Undersecretary’s Office of the Ministry of Health (*Servicio de Salud Metropolitano del Ambiente*). Our mineral water production facilities have received the required certification.

 

*Brazil*. Labor laws, in addition to mandating employee benefits, include regulations to ensure sanitary and safe working conditions in our production facilities located in Brazil. Food and beverage producers in Brazil must register their products with and receive a ten-year permit from the Ministry of Agriculture and Provisioning and the Ministry of Health, which oversees diet products. Our permits from said Ministries are valid and in force for a term of ten years for each product we produce. Although we cannot assure you that they will be renewed, we have not experienced any material difficulties in renewing our permits in the past nor do we expect to experience any difficulties in the future. The Ministries do not regularly inspect facilities but they do send inspectors to investigate any complaints it receives.

 

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*Argentina*. While most laws applicable to Edasa are enforced at the federal level, some, such as sanitary and environmental regulations, are primarily enforced by provincial and municipal governments. There are no licenses or permits required for the manufacture or distribution of soft drinks in the Argentine territory. However, our production facilities are subject to registration with federal and provincial authorities and to supervision by municipal health agencies, which certify compliance with applicable laws.

 

**Environmental Matters**

 

It is our policy to conduct environmentally sound operations on a basis consistent with applicable laws and with criteria established by TCCC. Although regulation of matters relating to the protection of the environment is not as well-developed in the franchise territories as in the United States and other industrialized countries, we expect that additional laws and regulations may be enacted in the future with respect to environmental matters that may impose additional restrictions on us which could materially or adversely affect our results of operations in the future. There are no material legal or administrative proceedings pending against us in any of the franchise territories with respect to environmental matters, and we believe that, to the best of our knowledge, we are in compliance in all material respects with all environmental regulations applicable to us.

 

*Chile.* The Chilean government has several regulations governing environmental matters relating to our operations, whereby, starting from the Constitution, the right of property is established, providing that restrictions to such right may be set by law, among which is the conservation of the environment.

 

For instance, Law 3,133 regulated discharge of residual industrial waste, and the Sanitary Code contains provisions relating to liquid and solid waste disposal, basic environmental conditions in the workplace, and the protection of water for human consumption. Supreme Decree No. 594, ensues from the Sanitary Code, which governs some matters related to solid and liquid wastes, among which stands out the prohibition to discharge hazardous substances into the public system or groundwater.

 

Law 19,300, passed in March 1994, addresses general environmental concerns that may be applicable to our activities and which, if applicable, would require us to hire independent experts to conduct environmental impact studies or declarations of any future projects or activities that could be impacted by the regulations of Law 19,300. This Law creates the National Commission on the Environment, which is supported by regional commissions to supervise environmental impact studies and declarations for all new projects, to enforce the regulations of Law 19,300 and to grant discretionary power to regulators. In January 2010 the law suffered an organic amendment with the enactment publication of Law 20,417, which created a new environmental institution, contemplating the creation of the Ministry of Environment, Environmental Assessment Services, the Superintendence of Environmental Protection and the Environmental Courts (3), which became effective on December 2012. In Particular, the Environmental Court in the Metropolitan Region shall begin functioning during the first half of 2013.

 

The first Environmental Court to start operating in other regions is the Court in Antofagasta and Coquimbo, and shall begin its in June 2013.

 

1.              Waste Waters

 

1.1 Generals:  In 1993, the Chilean government published regulations that updated the provisions of Law 3,133, which was finally repealed in 2002 by Law 19,821, which also reaffirmed the control of the Superintendence of Sanitary Services over industrial liquid waste These regulations place limits on the disposal of harmful substances which may be hazardous to water used in irrigation or water for consumption by people or animals without prior authorization from the Ministry of Public Works and a favorable determination from the Superintendence of Sanitary Services. The regulations also mandate governmental approval of any systems to treat or discharge liquid industrial waste (regulated by Supreme Decree 90 for discharges to open courses and by Supreme Decree 609 for discharges to sewage collectors, amended during 2000 by Supreme Decree 3592).

 

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1.2       Santiago Plant: In 1996, we installed a liquid industrial waste treatment plant to comply with the Chilean liquid waste emissions standards, in effect since 1998. As of May of 2006, the first stages of liquid industrial waste treatment are done at our facilities and then it is completed at La Farfana. Currently there is an outsourcing agreement with the company Ecoriles for the treatment of liquid industrial waste.

 

1.3       Coquimbo Plant: The construction of the liquid industrial waste treatment plant-which is the Coquimbo Plant- was approved by Resolution No 042, dated April 9, 1999, issued by the CONAMA of the IV Region of Coquimbo. On December 1, 2004, an agreement was executed with the local sanitary company (Aguas del Valle S.A.) for the direct discharge of liquid waste into the sewage system. This agreement remains in full force and effect in case there are any complications with the operation of the waste water (riles) treatment plant. On December 28, 2005, through SISS EX Resolution No. 3854, the monitoring program of the Quality of the Effluent generated by our Riles treatment plant. Therefore, DS 609 that Establishes the Emission Standard for regulation of contaminants associated with industrial liquid waste discharges to sewage systems —started being fulfilled.  On November 20, 2012, SISS EX Resolution No. 3854/2005, was amended by Resolution Ex. No. 5089. This involved the modification of the parameters for the monitoring of the treatment plant, specifically the extension of the pH operating range (5.5-9.0). The water obtained/used for the preparation of our products is obtained from the well built within our premises, thus the company is complying Res No. 425/2008 that sets a new text for the Resolution that establishes the standards of exploration and exploitation ground waters.

 

1.4       Punta Arenas Plant: Since 2005, it has its own effluent waters secondary treatment system, securing the compliance with the DS 609, with its own Environmental Qualification Resolution. This operation is carried out by specialist staff within the plant.

 

2.              Solid Waste:

 

2.2       General: On the other hand, the management and disposal of the generated solid waste must be operated having operational and sanitary disposal authorizations. Both [authorizations] are granted by the Health SEREMI as set forth in Resolution No. 5081 (Non-hazardous residues) and in DS N° 148. Sanitary Regulations for Hazardous Waste Management.

 

The next challenge is the bill on *the*Extended Producer’s Responsibility (REP or EPR) that is currently being considered, which returns the responsibility of managing the waste to the companies that manufacture such products that transform into waste.

 

Extended Producer Responsibility requires that the companies that manufacture and /or sell products or containers become financially or physically responsible for such products after their lifespan expires, that is, the responsibility of the producers to arrange, using sustainable processes, the collection, recycling and disposal of waste generated at the end of its life span.

 

2.3       Santiago Plant: According to the arrangements that had been made in the Carlos Valdovinos Plant, as from August 2011 the Renca plant has a Solid Waste Management Center where the waste generated in the operation is temporarily stored in order to be sold (Non-hazardous waste) with the purpose of being recycled and destruct those that are hazardous.

 

Coquimbo Plant: In 2008, the Health SEREMI of the Region of Coquimbo, authorized through Exempt Resolution No. 2181, the *SITIO DE ALMACENAMIENTO DE RESIDUOS PELIGROSOS* (“HAZARDOUS WASTE STORAGE SITE) (September 2, 2008). Since August 2012, our plant has a Management Center of Non-hazardous Solid Waste where the waste generated in the operation (recyclable and non-recyclable) is temporarily stored, and has different destinations: 1. returned to its vendor (to CMF); 2.  sold (Non-hazardous recyclable waste) 3.  sent to a Sanitary Landfill (waste similar to household).

 

Additionally, the muds generated in our effluent treatment plant are considered solid waste. Their disposal is authorized by Resolution Exempt No. 3854 dated December

 

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28, 2005 issued by the Superintendency of Sanitary Services (SISS). Their definitive disposition is performed at the Panul – Coquimbo Landfill that is administered by Tasui Services S.A.

 

2.4       Punta Arenas Plant: The Punta Arenas Plant has a waste collection center that has all its health authorizations:

 

·                  Sanitary Authorization for the operation of a warehouse for the temporary storage of hazardous waste generated by the industry itself, as requested by DS 148.

·                  Sanitary authorization for the accumulation of liquid and solid industrial non-hazardous waste within the facility, as set forth in DS 594

 

3.              Air pollution:

 

3.2 General: Emissions are regulated by several regulatory bodies, standing out, among others, the declaration of the metropolitan Region as a zone saturated of some contaminants, the obligation to compensate for emissions, the Air Pollution Prevention and Decontamination Plan for the Metropolitan Region, emission standards of particulate material and gases for stationary and group sources, the mandatory obligation to declare emissions of substances that deplete the ozone layer. Atmospheric emissions are regulated by several regulatory bodies:

 

· D.S. No. 4/1994 - *Establece Norma de Emisión de Contaminantes Aplicables a los Vehículos motorizados y fija los procedimientos para su control* (Establishes Pollutant Standard Applicable to motor vehicles and sets procedures for its control).

· D.S. 211/1991- *Norma sobre Emisiones de Vehículos motorizados livianos* (Emissions standard for light motor vehicles)

· D.S. 54/1994 - *Establece Norma de Emisión aplicables a Vehículos motorizados mediano que Indica* (Establishes Emission Standard applicable to the medium motor vehicles that it indicates)

· D.S. 149/2007 - *Regula las Concentraciones de Contaminantes como el NO, CO y HC* (Regulates the concentrations of pollutants such as NO, CO and HC).

· D.S. 144/1961 - *Establece normas para evitar emanaciones o contaminantes atmosféricos de cualquier naturaleza* (Establishes standards to prevent atmospheric emissions or pollutants of any kind).

· D.S. 138/2005 - *Establece Obligación de Declarar las Emisiones de Fuentes Fijas* (Establishes the obligation to report emissions from stationary sources)

· D.S. 48/1984 - *Reglamento de Calderas y Generadores de Vapor* (Regulation of boilers and steam generators).

· The D.S. 686- *Norma de Emisión para la Regulación de la Contaminación Lumínica”*(Emission Standard for Control of Light Pollution) adopted on August 2, 1999. It was created considering that the heavens of Regions II, III and IV of our country is a valuable environmental and cultural heritage to develop the astronomical observation activity.

· The D.S. No. 146 - *Establece los niveles de ruido máximo que puede emitir una fuente fija y que afecte al entorno donde se encuentra ubicado esta fuente* (Establishes the maximum levels of noise that emit a fixed source and affecting the environment where such source is located).

· In the case of Punta Arenas plant it complies with D.S. No. 48 — that requesting the registration of the boiler before the Health Ministerial Regional Secretariat. Regarding air emissions, it [plant] declares that is complies with what D.S. 138 provides. This boiler is not controlled, since it operates with natural gas which makes this operation organic since it is the fuel that least contaminates.

 

There can be no assurance that future legislative regulatory developments will not impose further restrictions that would be material to our operations in Chile. We believe that, to the best of our knowledge we are in compliance with all material aspects of the Chilean environmental regulations.

 

4.              Certifications

 

4.2       Santiago Plant: In 2006 TCCC  issued its audit regarding Certifications of Quality, Security and Environment Systems known as PHASE 3, and we have become the first

 

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production facility in Chile to receive this certification with the maximum qualifications.. These certifications were revalidated according to the new KORE (Coca-Cola Requirements) dispositions beginning August 2010.

** **

During 2005, our  production facility in Chile , became the first plant in Latin America to achieve the four Quality System Certifications, Food Safety and Quality Management System (HACCP-Hazard Analysis and Critical Control Point), Environment (ISO 14001:2004), Security and Occupational Health (OHSAS 18001:1999) and Quality (ISO 9001:2000). Also in 2005 it achieves the National Award for Quality from Chilecalidad. In September of 2007 and 2010 these certifications were extended for another 3 years. Additionally during December 2010 we achieved certification for Food Safety Management (ISO 2200).

 

During 2011, with the new Renca Bottling facility beginning operations,  the geographical spread of our integrated management system was expanded, in a first stage, certifying, the Quality Management System (ISO 9000) and Food Safety (ISO 22000). In March 2012 we obtrained the respective certifications for Environment (ISO 14001) and Security and Occupational Health (ISO 18001) . For 2013, the Food Safety Management System will be certified under the FSSC 22000 (Food Safety System Certification) standard which is fully recognized and accepted by the Global Food Safety Initiative (GFSI) and the European Cooperation for Accreditation (EA).

 

The distribution centers also count with the following certifications:  Food Safety and Quality Management System (HACCP) since 2007 and Security and Occupational Health (OHSAS 18001:2008) since June 2009, both valid for a period of 3 years. As part of the logistics management, distribution centers were audited during the first half of 2011 and 2012, maintaining the aforementioned systems certifications.

 

In 2003, the production facilities of Rengo and Vital were certified under the *Codex Alimentarius* and the Chilean regulation 2861:2004 for their production processes. These certifications were renewed in 2009. As of December 31, 2012 these production facilities held the following certifications: (i) Food Safety and Quality Management (HACCP); (ii) Quality Management (ISO 9001); (iii) Environment Management (ISO 14001);  (iv) Security and Occupational Health (ISO 18000); and (v) Food Safety Management under ISO 22000 regulations and Best Practices of Food Manufacturing under PAS 220.

 

4.3       Coquimbo Plant: The plant has the following certifications:

 

· In June 2003, HACCP Codex Alimentarius.

· In July 2006, Occupational Health and Safety (OHSAS 18001:2000)

· In November 2008, Environmental Certification (ISO 14001:2004) and Quality Certification (ISO 9001:2008).

· In January 2011 Food Safety System Certification (ISO 22000/2005), and PAS 220/2008.  In November 2011, the latter were recertified for 3 additional years within the abovementioned systems. (ISO 9001 - ISO 14001 - OHSAS 18001).

· In 2009 and 2012 the plant meets the Coca-Cola Company standards, certifying the KORE Environmental Requirements and Safety and Occupational Health

 

4.4       Punta Arenas Plant: Punta Arenas Plant 2003 certified its Quality, Environmental and Security system denominated “Evolution”. The system is required by TCCC. In 2010, the change from Evolution to KORE- the current TCCC system- was certified. In 2003 the Punta Arenas Plant was certified under ISO 9001 and HACCP. Later, in August 2006 it obtained the OHSAS 18001 certification, and in November 2008 ISO14001 and ISO22000, in addition to PAS 220 in January 2011. In December 2012 the Food Safety Certification was changed by SSC 22000, now being worldwide recognized and certifiable. The Integrated Management System is monitored annually and is recertified every three years, which ensuring the maintenance and continuous improvement of the system.

 

*Brazil*. Our Brazilian operations are subject to several environmental laws, none of which currently impose substantial restrictions on us. The Brazilian Constitution establishes the broad guidelines for the new treatment of environmental concerns, dedicating an entire chapter (Chapter VI, Article 225) to the protection

 

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of the environment, along with several other articles related to the environmental law and urban law. Environmental issues are regulated at the federal, state and municipal levels.  The Brazilian Constitution empowers the public authorities to develop regulations designed to preserve and restore the environment and to control industrial processes that affect human life. Violations of these regulations are subject to criminal, civil and administrative penalties.

 

In addition, Law No. 6,938 of 1981, known as the Brazilian Environmental Policy, introduced an entirely different environmental regime by which no environmental damage is exempt from coverage. The legislation is based on the idea that even a polluting waste tolerated under the established standards could cause environmental damage, and therefore subjects the party causing such damage to payment of an indemnity. Moreover, as mentioned above, activities damaging to the environment lead to criminal and administrative penalties, provided for in Law 9,605 of 1998 or the Environmental Crimes Act.

 

Numerous governmental bodies have jurisdiction over environmental matters. At the federal level, the *Ministério do Meio Ambiente* (Brazilian Ministry of Environment) and the *Conselho Nacional do Meio-Ambiente* or CONAMA dictate environmental policy, including, without limitation, initiating environmental improvement projects, establishing a system of fines and administrative penalties and reaching agreements on environmental matters with offending industries. The *Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis* or IBAMA enforces environmental regulations set by CONAMA. In addition, various federal authorities have jurisdiction over specific industrial sectors, but none of these currently affect us. Finally, various state and local authorities regulate environmental matters in the Brazilian territory including the *Fundação Estadual de Engenharia do Meio-Ambiente* or FEEMA, the principal environmental authority in Rio de Janeiro and the *Instituto Estadual de Medio Ambiente e Recursos Hídricos* or IEMA, the principal environmental authority in Espírito Santo. FEEMA and IEMA periodically inspect industrial sites and test liquid waste for contamination. We believe to the best of our knowledge that we are in compliance in all material respects with the standards established by all the governmental authorities applicable to our operations in Brazil. We cannot assure you, however, that additional regulations will not be enacted in the future, and that such restrictions would not have a material adverse effect on our results or operations. The operation in Brazil as that of Chile counts with all certifications  mentioned in terms of Quality, Environment and Occupational Health and Safety and those associated with Food Safety and Best Practices in Food Processing.

 

*Argentina*. The Argentine Constitution, as amended in 1994, allows any individual who believes a third party may be damaging the environment to initiate an action against it. No such action has ever been instituted against us, but we cannot assure you that an action will not be brought in the future. Though provincial governments have primary regulatory authority over environmental matters, municipal and federal authorities are also competent to enact decrees and laws on environmental issues. Thus, municipalities are competent on local environmental matters, such as waste management, while the federal government regulates inter-province environmental issues, such as transport of hazardous waste or environmental matters covered by international treaties.

 

In 2002, the National Congress approved federal Law No. 25,612, *Gestión Integral de Residuos Industriales y de Actividades de Servicios*(Integral Management of Industrial Residues and Service Activities) and Law No. 25,675, *Ley General del Ambiente* (General Environmental Law) establishing minimum guidelines for the protection of the sustainable environmental management and the protection of biodiversity, applicable throughout Argentina. The law establishes the purposes, principles and instruments of the national environmental policy, the concept of  “minimum guidelines,” the judicial competence and the rules governing environmental education and information, citizens’ participation and self-management, among other provisions.

 

Provincial governments within the Argentine territory have enacted laws establishing a framework for the preservation of the environment.  Provincial laws that are applicable to industrial facilities at EDASA, among others are Law No. 7,343 of the Province of Córdoba, and Law No. 11,459 of the Province of Buenos Aires. These laws contain principles on environmental policy and management, as well as rules on environmental impact assessment. They also give certain agencies competence in environmental issues.

 

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Almost all provinces as well as many municipalities have established rules regarding the use of water, the sewage system and the disposal of liquids into underground flows of water or rivers. There are currently no claims pending against us on this matter. The violation of these rules usually results in fines.

 

During October of 2009, the National Award for Quality Foundation that promotes excellence in the development of processes and products in that country, granted us the 2009 National Award for Quality, which was handed by the president of Argentina, Cristina Fernandez de Kirchner.

 

In the operation in Argentina we maintain all certifications mentioned for Chile in addition to the Excellence Level Award of TCCC achieved in December 2010 by EDASA, due to the constant importance given to the excellence in the development of processes, products and activities.

 

Another international recognition was the obtaining achieving the Iberoamerican Quality Award for Plants from FUNDIBEQ, organization attached to the Ibero-American Summit of Heads of State and Government of the Iberoamerican Secretary General’s office (SEGIB).

 

In 2011 EDASA was recognized by the Ministry of Industry, Trade and Labor of the province of Córdoba, with the “Award for Eco efficiency”, for its efforts in reducing the carbon footprint in its operations during 2010. Another important award during of 2011 has been the “Live Positively” Cup awarded by the Latin America South Division of TCCC, who governed by the concept of sustainable development in our “social license” to operate, conducted a Ranking of bottlers according to performance in sustainability based on 5 pillars: Work environment; Water; Energy; Sustainable packaging; Wellness and Community.

 

In 2012 the *Ministerio de Industria, Comercio y Trabajo* (Department of Industry, Commerce and Labor) of the Province of Córdoba, recognized EDASA with the “*Quality Award*” for the implementation of its Integrated Sustainability System, aligning the management processes of international standards (ISO9001, ISO14001, ISO22000, PAS 220 and OHSAS18001) with six strategic areas: Products and Services, Business Partners, Environment, Profitability, People and Community; which has led the company to achieve sustained results over time and be recognized internationally for its level of excellence.

 

***Paraguay***: The environmental framework comprises several national and local environmental regulations. The Paraguayan Constitution of 1992 states that everyone has the right to live in a healthy and ecologically balanced environment and has the obligation to preserve it. All damage caused to the environment will carry the obligation to repair and compensate.

 

Considered the “*Mother of Environmental Law*” in the country, Law 1561/00 chartered the three primary environmental agencies in Paraguay. These are: the *Secretaría del Ambiente* (SEAM or the Environmental Department), *Consejo Nacional del Ambiente* (CONAM or the National Environmetal Counsel), y el Sistema Nacional del Ambiente (SISNAM or National Environmental System). The Law establishes the authorities and responsibilities of the agencies to develop and oversee the national environmental policy.

 

Of the three, the SEAM is the main environmental institution responsible for the development and implementation of national environmental laws. The SEAM is the main authority responsible for implementing most of the national environmental standards and the main agency responsible for monitoring their compliance. The CONAM is responsible for investigating and establishing the main goals in the environmental policies, which the SEAM must then implement. The SISNAM in turn, is integrated by several bodies -including governmental and municipal agencies and private sector stakeholders- all interested in solving environmental issues. The SISNAM provides a discussion forum for the public and private sectors to work together collectively, developing ideas and plans to promote a sustainable development. Law 1561/00 also provides that all actions of the SEAM must, ultimately, meet the mandates established in Articles 7 and 8 of the Constitution.

 

According to Law 1561/00, Law 294/93 on Environmental Impact Assessment and other relevant regulations, landowners and others who intend to exploit the land for industrial, agricultural or other purposes, are prevented from deforesting native forests, convert non-forested areas located in forested lands for commercial

 

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purposes, or in general, exploit the land for industrial or agricultural purposes without preparation, appraisal and approval of an environmental impact study and the previous authorization granted as a permit issued by the SEAM.

 

*Environmental Impact*: Law 294/93 states that the above mentioned activities will be subject to an environmental impact assessment procedure and certain requirements applicable to such evaluation. Additionally, the Law sets out the rights and obligations that shall be triggered by any damage caused to the environment and mainly provides the obligation to restore the environment to its previous state or instead, if that is technically impossible, the corresponding payment or compensation. In accordance with Law 294/93, agricultural activities require and environmental impact assessment.

 

*Illegal disposal of waste*: The treatment, storage, disposal or removal of waste outside of the institutions designated to that effect, deviating from the applicable established laws and administrative regulations shall be punished with imprisonment of up to 5 years and/or a fine.

 

The Criminal Code defines waste including hazardous substances that can cause disease or infection, flammable or explosive substances that can pollute water and soil.

 

*Hazardous industrial waste*: Law 42/90 prohibits the importation or facilitation of the receipt, storage, use or distribution of products classified as hazardous or as industrial waste. Breaches to the law will be considered a crime against the human and the environmental health; and may be punishable with imprisonment of between 2 to 10 years. Public officials that breach this law may be removed from their positions and subsequently disqualified to hold public or commercial positions. Through Law 567/95, Paraguay ratified the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal.

 

*Water Resources Act of Paraguay*: Law 3239/07 on water resources establishes the sustainable management of all waters (superficial, ground, atmospheric) and the territories that generate such waters, regardless of their location, physical condition or natural occurrence within the Paraguayan territory, in order to make it socially, economically and environmentally sustainable for the people living in the territory of Paraguay. The supervising agency is the SEAM. Superficial and ground waters are property of the State’s public domain. The Law establishes the following order of priority for the use of water: i) Fulfillment of the needs of aquatic ecosystems; ii) Social use within the home environment; iii) Use and enjoyment for agricultural activities, including aquaculture; iv) use and utilization for power generation; v) Use and enjoyment for other industrial activities; vi) Use and enjoyment for other activities. The use of water for productive purposes is subject to the authorization granted by the State through a permit (for the use of small amounts of water) or through concessions (prior public bidding process), in both cases after the payment of applicable rights. Authorizations may be revoked based on the occurrence of the causes [situations] contemplated in the law. Concessions may be expropriated for public benefit, or be terminated in certain situations established by the Law. In addition, a National Registry of Water Resources has been created to keep record of all individuals or legal entities that utilize water resources or engage in activities related to them.

 

The SEAM, which is responsible for the fulfillment of laws on water resources, can apply sanctions, including: warnings, temporary or permanent suspension of authorizations or concessions, confiscations and/or fines. These penalties are applicable regardless of other civil or criminal sanctions or of the revocation of the environmental authorizations granted by SEAM.

 

Superficial and ground waters are property of the State public domain. All citizens of the Republic of Paraguay are holders of the right to use and enjoy water resources, not foreign States or their representatives. The use and enjoyment of superficial and ground water resources for human consumption are a priority. Other uses and enjoyments shall follow the order of priority established by law. The use and enjoyment for industrial activities is fifth in priority, having preeminence the social use within the home environment, fulfillment of the needs of aquatic ecosystems; the generation of energy and agricultural activities.

 

The use of water resources and their flows, except the direct personal or family use, may only be granted by a permit or concession.

 

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Any work or activity related to the use of water resources must previously undergo the procedure of Environmental Impact Assessment. The issuance of a certificate by the SEAM regarding the water availability, in the quality and quantity required by the activity and in the area of the project site, is a pre-requisite for obtaining a positive Environmental Impact Statement.

 

Law 3239/07 controls most, but not all, types authorizations for the use of water. For example, Law 1614-1600 specifically regulates the public water supply service and sewage.

 

Authorizations for the use of water resources grant the holder a public precarious right to use water, but not the domain or other property right over it. This permit is revocable and may be granted through several authorizations: for use of small amounts of water, temporary uses and authorizations for the discharge of effluents.

 

Authorizations are granted through a Resolution and are personal and not transferable. The duration of the permit will be determined by taking into consideration the nature of the investment, the impact on water resource utilized and the social utility of the business venture.

 

On the other hand the right to use water resources may be granted for all such uses that do not need to be authorized by a permit. These authorizations will be granted through a contract, prior public bidding process, for a determined period of time.

 

Concessions for the use of water resources for commercial export purposes in whatever forms, shall be authorized by law. The holder of the concession acquires a subjective/personal public right to use water, but not the domain or any other property right over it. Concessions may be assigned to third parties prior approval by a Decree issued by Executive Branch in the form established in the regulations of this Law; and in accordance with the terms and conditions provided for in the corresponding concession contract.

 

*Crimes againts**the environment*: Law 716/96 establishes  the sanctions applicable to crimes against the environment. The breach of environmental laws and regulations is punishable with criminal, civil and administrative sanctions, including mitigation measures and the compensation of damages that may result from breaches to the environmental law and its regulations.

 

Any person (including directors, officers and managers of legal entities) who commits a crime against the environment and the quality of human life, such as: discharging gases or pollutant industrial waste into the atmosphere, the discharge of effluents and untreated industrial waste, cutting or burning forests or vegetation which seriously harm the ecosystem, among others; shall be punished by imprisonment and/or fines, sanctions that are graduated in each particular case according to the aggravating factors.

 

As for administrative sanctions, they may vary -from notices and fines to the complete or partial suspension of activities, a and they even may involve the revocation or cancellation of tax benefits, cancellation or termination of bank credit lines and the restriction to executing contracts with public entities.

 

Coca-Cola Paresa Paraguay fulfills all regulations established by governmental authorities applicable to our operations in Paraguay. However, it is not possible to guarantee that other rules may be passed in the future that might contain potential restrictions and that such restrictions would not have a material effect on our results or operations.

 

This operation has external certifications for the Management System such as: Quality Management ISO 9001-2008, Environmental Management ISO 14001-2004, Occupational and Safety Health Management OHSAS 18001-2007, Food Safety ISO 22005-2005 and PAS 220-2008.

 

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**C.            Organizational Structure**

 

The following table presents information relating to the main activity of our subsidiaries and our direct and indirect ownership interest in them as of the date of preparation of this document:

 
| **Subsidiary**                         | ** ** | **Activity**                                                                                                   | ** ** | **Country of   Incorporation** | ** ** | **Percentage   Ownership** | ** ** |
|----------------------------------------|------------|----------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|----------------------------|------------|
| Embotelladora Andina Chile S.A. (1)    |       | Manufacture, bottle, distribute, and   commercialize non-alcoholic beverages.                                  |       | Chile                               |       | 99.99                      |       |
| Vital Jugos S.A.   (4) and (5)         |       | Manufacture, distribute, and commercialize   all kinds of food products, juices, and beverages.                |       | Chile                               |       | 65.00                      |       |
| Vital Aguas S.A.   (4) and (5)         |       | Manufacture, distribute, and commercialize   all kinds of waters and beverages in general.                     |       | Chile                               |       | 66.50                      |       |
| Servicios   Multivending Ltda.         |       | Commercialize products through equipment and   vending machines.                                               |       | Chile                               |       | 99.99                      |       |
| Transportes Andina   Refrescos Ltda.   |       | Provide administration services and   management of domestic and foreign ground transportation.                |       | Chile                               |       | 99.99                      |       |
| Transporte Polar   S.A. (6)            |       | Provide administration services and   management of domestic and foreign ground transportation.                |       | Chile                               |       | 99.99                      |       |
| Envases CMF S.A.                       |       | Manufacture, acquire and commercialize all   types of containers and packaging; and provide bottling services. |       | Chile                               |       | 50.00                      |       |
| Envases Central   S.A. (4)             |       | Manufacture and packaging of all kinds of   beverages, and commercialize all kinds of packaging.               |       | Chile                               |       | 59.27                      |       |
| Andina Bottling   Investments S.A.     |       | Manufacture, bottle and commercialize   beverages and food in general. Invest in other companies.              |       | Chile                               |       | 99.99                      |       |
| Andina Bottling   Investments Dos S.A. |       | Carryout exclusively foreign permanent   investments or lease all kinds of real estate.                        |       | Chile                               |       | 99.99                      |       |
| Inversiones Los   Andes Ltda. (6)      |       | Invest in all types of real property and   chattels                                                            |       | Chile                               |       | 99.99                      |       |
| Andina Inversiones Societarias S.A.    |       | Invest in all types of companies and   commercialize food products in general.                                 |       | Chile                               |       | 99.99                      |       |

 

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  (1)At the Extraordinary Shareholders’ Meeting held November 22, 2011, the shareholders of Embotelladora Andina Chile S.A. agreed to increase the capital of the latter from Ch$10,000,000 -divided into 10,000 shares- to Ch$4,778,206,076 -divided into 4,778,206 shares-. It was agreed that the capital increase was to be subscribed and paid by the shareholder Embotelladora Andina S.A. through the contribution of movable goods and real estate property, which are identified in the minutes of the Shareholders’ Meeting. The Shareholders’ Meeting was reduced to public document on November 28, 2011, granted by the notary public of Santiago, Cosme Gomila.

 

(2) At the Extraordinary General Shareholders’ Meeting held November 1st 2011, Embotelladora del  Atlántico S.A. decided to divide part of its equity to form a new company, Andina Empaques Argentina S.A., for the purpose of developing the design, manufacture and sale of all kinds of plastic products or products derived from the industry for plastics, primarily in the packaging division. Accounting and tax effects will begin on January 1st 2012.

 

(3)  In October 2012, 40% of the Brazilian company Sociedad Brasilera Sorocaba Refrescos S.A. was acquired for a total price of 146. 9 million Brazilian Reais.

 

(4) Vital Aguas S.A., Vital Jugos S.A. and Envases Central S.A., modified their percentage interests, due to the merger with Embotelladoras Coca Cola Polar in 2012.

 

(5) During 2012 a capital increase was made for M$6,960,000, of which, Embotelladora Andina S.A. paid the M$2,380,320 according to its percentage of interests.

 

(6) Companies incorporated during 2012, due to the merger with Embotelladoras Coca Cola Polar S.A.

 

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| **Subsidiary**                                  | ** ** | **Activity**                                                                                                                                          | ** ** | **Country of   Incorporation** | ** ** | **Percentage   Ownership** | ** ** |
|-------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|------------|----------------------------|------------|
| Rio de Janeiro Refrescos Ltda.                  |       | Manufacture and commercialize beverages in   general, powdered juices and other related semi-processed products.                                      |       | Brazil                              |       | 99.99                      |       |
| Holdfab 2   Participações Ltda.       |       | Manufacture, bottle and commercialize   beverages and food in general, and beverage concentrate. Invest in other   companies                          |       | Brazil                              |       | 36.40                      |       |
| Sistema de   Alimentos e Bebidas do Brasil Ltda |       | Manufacture, bottle and commercialize   beverages and food in general. Invest in other companies.                                                     |       | Brazil                              |       | 5.74                       |       |
| Leao Junior S.A.                                |       | Manufacture, bottle and commercialize   beverages and food in general. Invest in other companies.                                                     |       | Brazil                              |       | 18.20                      |       |
| Sorocaba Refrescos S.A. (3)                     |       | Manufacture, bottle and commercialize   beverages and food in general. Invest in other companies.                                                     |       | Brazil                              |       | 40.00                      |       |
| Kaik Participações   Ltda.            |       | Invest in other companies with own   resources.                                                                                                       |       | Brazil                              |       | 11.32                      |       |
| Embotelladora del Atlántico S.A.(2)        |       | Manufacture, bottle, distribute, and   commercialize non-alcoholic beverages. Design, produce, and commercialize   plastic products mainly packaging. |       | Argentina                           |       | 99.98                      |       |
| Coca Cola Polar Argentina S.A. (6)              |       | Manufacture, bottle, distribute, and   commercialize non-alcoholic beverages. Design, produce, and commercialize   plastic products mainly packaging. |       | Argentina                           |       | 99.99                      |       |
| Andina Empaques S.A. (2)                        |       | Design, produce, and commercialize plastic   products mainly packaging.                                                                               |       | Argentina                           |       | 99.98                      |       |
| Paraguay Refrescos S.A. (6)                     |       | Manufacture, bottle, distribute, and   commercialize non-alcoholic beverages. Design, produce, and commercialize   plastic products mainly packaging. |       | Paraguay                            |       | 97.83                      |       |
| Abisa Corp.                                     |       | Invest in financial instruments.                                                                                                                      |       | British Virgin Islands         |       | 99.99                      |       |
| Aconcagua Investing Ltda.(6)                    |       | Invest in financial instruments.                                                                                                                      |       | British Virgin Islands         |       | 99.99                      |       |

 

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The following chart presents in summary form the Company’s direct and indirect ownership participations in subsidiaries and affiliates:

 

 

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**D.****           ****Property, Plants and Equipment**

 

We maintain production plants in each of the principal population centers that comprise the franchise territories. In addition, we maintain distribution centers and administrative offices in each of the franchise territories. The following table sets forth in square meters, our principal properties, and facilities in each of the franchise territories:

 
| ** **                         | ** ** | **Main Use**                                                         | ** ** | **Surface (Square   Meters)** | ** ** |
|------------------------------------|------------|---------------------------------------------------------------------------|------------|------------------------------------|------------|
| **CHILE**                          | ** ** | ** **                                                                | ** ** | ** **                         | ** ** |
| **Embotelladora Andina S.A.**      | ** ** | ** **                                                                | ** ** | ** **                         | ** ** |
| Región   Metropolitana        |       | Offices /   Production of Soft Drinks / Distribution Centers / Warehouses |       | 494,386                            |       |
| Rancagua                           |       | Warehouses                                                                |       | 25,920                             |       |
| San Antonio                        |       | Warehouses                                                                |       | 19,809                             |       |
| Antofagasta                        |       | Offices /   Production of Soft Drinks / Distribution Centers / Warehouses |       | 34,729                             |       |
| Coquimbo                           |       | Offices /   Production of Soft Drinks / Distribution Centers / Warehouses |       | 31,383                             |       |
| Punta Arenas                       |       | Offices /   Production of Soft Drinks / Distribution Centers / Warehouses |       | 109,517                            |       |
| Coyhaique                          |       | Warehouses                                                                |       | 5,093                              |       |
| Taltal                             |       | Warehouses                                                                |       | 975                                |       |
| Tocopilla                          |       | Warehouses                                                                |       | 562                                |       |
| Calama                             |       | Warehouses                                                                |       | 10,700                             |       |
| Ovalle                             |       | Warehouses                                                                |       | 6,223                              |       |
| Vallenar                           |       | Warehouses                                                                |       | 5,000                              |       |
| Copiapó                       |       | Warehouses                                                                |       | 26,800                             |       |
| **Vital Jugos S.A.**               | ** ** | ** **                                                                | ** ** | ** **                         | ** ** |
| Región   Metropolitana        |       | Offices / Production of Juices                                            |       | 40,000                             |       |
| **Vital Aguas S.A.**               | ** ** | ** **                                                                | ** ** | ** **                         | ** ** |
| Rengo                              |       | Offices / Production of Waters                                            |       | 12,375                             |       |
| **Envases   CMF S.A.**             |       |                                                                      |       |                               |       |
| Región   Metropolitana        |       | Offices /   Production of bottles and PET preforms                        |       | 74,001                             |       |
| **Envases Central S.A.**           | ** ** | ** **                                                                | ** ** | ** **                         | ** ** |
| Región   Metropolitana        |       | Offices /   Production of Soft Drinks                                     |       | 50,100                             |       |
| Total Chile                        |       |                                                                      |       | 947,573                            |       |
|                               |       |                                                                      |       |                               |       |
| **BRAZIL**                         |       |                                                                      |       |                               |       |
| **Rio de Janeiro Refrescos Ltda.** |       |                                                                      |       |                               |       |
| Jacarepaguá                   |       | Offices /   Production of Soft Drinks / Distribution Centers / Warehouses |       | 249,470                            |       |
| Vitória                       |       | Offices /   Production of Soft Drinks / Warehouses                        |       | 93,320                             |       |
| Nova Iguaçu                   |       | Warehouses                                                                |       | 82,618                             |       |
| Bangu                              |       | Distribution Centers                                                      |       | 44,389                             |       |
| Campos                             |       | Distribution Centers                                                      |       | 42,370                             |       |
| Cachoeira do   Itapemirim          |       | Cross Docking                                                             |       | 8,000                              |       |
| Sao Cristovao                      |       | Distribution Centers                                                      |       | 4,500                              |       |
| Sao Goncalo                        |       | Distribution Centers                                                      |       | 10,880                             |       |
| Cabo Frio                          |       | Distribution Centers                                                      |       | 1,985                              |       |
| Sao Pedro da   Aldeia              |       | Distribution Centers                                                      |       | 10,139                             |       |

 

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| Total Brazil                              |       |                                                                      |       | 547,671       |       |
|-------------------------------------------|------------|---------------------------------------------------------------------------|------------|---------------|------------|
|                                      |       |                                                                      |       |          |       |
| **ARGENTINA**                             |       |                                                                      |       |          |       |
| **Embotelladora del Atlántico S.A.** |       |                                                                      |       |          |       |
| Córdoba                              |       | Offices /   Production of Soft Drinks / Distribution Centers / Warehouses |       | 1,009,516     |       |
| Santo Tomé                           |       | Offices / Warehouses                                                      |       | 89,774        |       |
| San Juan                                  |       | Offices / Warehouses                                                      |       | 48,036        |       |
| Mendoza                                   |       | Offices / Warehouses                                                      |       | 41,579        |       |
| Rosario                                   |       | Offices / Warehouses                                                      |       | 28,070        |       |
| Río IV                               |       | Cross Docking                                                             |       | 7,482         |       |
| San Luis                                  |       | Offices / Warehouses                                                      |       | 6,069         |       |
| Bahía Blanca                         |       | Offices /   Production of Soft Drinks / Distribution Centers / Warehouses |       | 31,280        |       |
| Chacabuco                                 |       | Offices / Distribution Centers / Warehouses                               |       | 5,129         |       |
| Pergamino                                 |       | Offices / Distribution Centers / Warehouses                               |       | 1,195         |       |
| General Pico                              |       | Offices / Distribution Centers / Warehouses                               |       | 2,547         |       |
| Neuquén                              |       | Offices / Distribution Centers / Warehouses                               |       | 5,400         |       |
| Trelew                                    |       | Offices /   Production of Soft Drinks / Distribution Centers / Warehouses |       | 16,024        |       |
| **Andina Empaques Argentina S.A.**        |       |                                                                      |       |          |       |
| Buenos Aires                              |       | Production of PET   bottles and preforms                                  |       | 27,043        |       |
| Total Argentina                           |       |                                                                      |       | 1,319,144     |       |
|                                      |       |                                                                      |       |          |       |
| **PARAGUAY**                              | ** ** | ** **                                                                | ** ** | ** **    | ** ** |
| **Paraguay Refrescos S.A.**               | ** ** | ** **                                                                | ** ** | ** **    | ** ** |
| San Lorenzo                               |       | Offices /   Production of Soft Drinks / Warehouses                        |       | 275,292       |       |
| Coronel Oviedo                            |       | Offices / Warehouses                                                      |       | 32,911        |       |
| Encarnación                          |       | Offices / Warehouses                                                      |       | 12,744        |       |
| Ciudad del Este                           |       | Offices / Warehouses                                                      |       | 14,620        |       |
| Total Paraguay                            |       |                                                                      |       | 335,567       |       |
|                                      |       |                                                                      |       |          |       |
| **TOTAL**                                 | ** ** | ** **                                                                | ** ** | **3,149,955** | ** ** |

 

We have full ownership of our properties and they are not subject to material encumbrances.

 

**Capacity by Line of Business**

 

Set forth below is certain information concerning the installed capacity and approximate average utilization of our production facilities, by line of business.

 

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| ** **                            | ** ** | **Year Ended December   31,**             | ** ** |
|---------------------------------------|------------|-------------------------------------------|------------|
| ** **                            | ** ** | **2012**                                  | ** ** | **2011** | ** ** |
| ** **                            | ** ** | **Annual   Total   Installed   Capacity** | ** ** | **Average   Capacity   Utilization   (%)** | ** ** | **Capacity   Utilization   During   Peak   Month   (%)** | ** ** | **Annual   Total   Installed   Capacity** | ** ** | **Average   Capacity   Utilization   (%)** | ** ** | **Capacity   Utilization   During   Peak   Month   (%)** | ** ** |
|                                  |       |                                      |       |   |   |   |   |   |   |   |   |   |   |
| Soft drinks   (millions of UCs):      |       |                                      |       |   |   |   |   |   |   |   |   |   |   |
| Chile                                 |       | 301                                       |       | 56 |   | 66 |   | 157 |   | 82 |   | 96 |   |
| Brazil                                |       | 307                                       |       | 72 |   | 79 |   | 272 |   | 68 |   | 79 |   |
| Argentina                             |       | 273                                       |       | 67 |   | 80 |   | 169 |   | 60 |   | 75 |   |
| Paraguay                              |       | 80                                        |       | 84 |   | 86 |   |   |   |   |   |   |   |
| Other beverages   (millions of UCs)   |       |                                      |       |   |   |   |   |   |   |   |   |   |   |
| Chile                                 |       | 49                                        |       | 80 |   | 98 |   | 49 |   | 80 |   | 98 |   |
| Argentina                             |       | 46                                        |       | 37 |   | 59 |   | 54 |   | 25 |   | 47 |   |
| Paraguay                              |       | 16                                        |       | 80 |   | 95 |   |   |   |   |   |   |   |
| PET packaging   (millions of bottles) |       | 750                                       |       | 92 |   | 100 |   | 750 |   | 92 |   | 100 |   |

 

Total installed annual production capacity assumes production of the mix of products and containers produced in 2012.

 

In 2012, we continued to modernize and renovate our manufacturing facilities in order to maximize efficiency and productivity; we also made significant improvements to our auxiliary services and complementary processes such as water treatment plants and effluent treatment stations.  At present, we estimate we have the capacity in each of the franchise territories to meet consumer demand for each product format. Because bottling is a seasonal business with significantly higher demand during the South American summer and because soft drinks are perishable, it is necessary for bottlers to carry significant over-capacity in order to meet the substantially greater seasonal demand. We assure the quality of our products through worldwide class practices and procedures maintaining quality control laboratories and structures in each production facility where raw materials are tested and where we analyze samples of our products.

 

As of December 31, 2012, we had total installed annual production capacity, including soft drinks, fruit juices, and water, of 1,072 million unit cases. Our primary facilities include:

 

·                          through Coca-Cola Andina, in the Chilean territory,  four soft drink production facilities with ten production lines in Renca, six production lines in Antofagasta,  three production lines in Coquimbo and tow production lines in Punta Arenas with total installed annual capacity of 301 million unit cases (28.1% of our total installed annual capacity);

·                          through Vital Jugos in the Chilean territory, one fruit juice production facility, with six production lines, with total installed annual capacity of 21 million unit cases (2.0% of our total installed annual capacity);

·                          through Vital Aguas in the Chilean territory, one mineral water production facility, with four production lines, with total installed annual capacity of 28 million unit cases (2.6% of our total installed annual capacity);

·                          through Rio de Janeiro Refrescos in the Brazilian territory, two soft drink production facilities with thirteen production lines with total installed annual capacity of 307 million unit cases (28.6% of our total installed annual capacity); and

·                          through Embotelladora del Atlántico in the Argentine territory, three soft drink production facilities with fourteen  production lines with a total installed annual capacity of 273 million unit

 

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cases (25.5% of our total installed annual capacity); and one facility for the production of juices with four production lines that covers the needs of our franchise with a total installed annual capacity of 11 million unit cases (1.0% of our total installed annual capacity), and one production line for waters and sensistive products with a total installed annual capacity of 35 million unit cases (3.3% of our total installed annual capacity)

·                          through Andina Empaques Argentina S.A. in the Argentine territory one production facility for bottles and preforms that covers the needs of the Coca-Cola system in that country with a total installed annual capacity of 750 million units and

·                          through Paresa in the Paraguayan territory, one production facility located in San Lorenzo, with seven production lines and two tetra pack lines (1.5% of our total installed annual capacity) .

 

**ITEM 4A.****               ****UNRESOLVED SECURITIES AND EXCHANGE COMMISSION STAFF COMMENTS**

 

**Not Applicable .**

 

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

 

**Basis of Presentation**

 

The following discussion should be read in conjunction with and is qualified in its entirety by reference to the Consolidated Financial Statements, including the notes thereto.

 

These Financial Statements have been prepared in accordance with IFRS issued by the IASB.

 

These Financial Statements reflect the consolidated financial position of Embotelladora Andina. S.A. and its subsidiaries as of December 31, 2012, and 2011  as well as the operating results, changes in shareholders’ equity and cash flows for the years ended December 31, 2012, 2011, and 2010, all of which were approved by the Board of Directors on April 30, 2012.

 

Our consolidated financial results include the results of our subsidiaries located in Chile, Brazil, Argentina and Paraguay. Our subsidiaries outside Chile prepare their financial statements in accordance with IFRS and to comply with local regulations in accordance with generally accepted accounting principles of the country in which they operate. The Consolidated Financial Statements reflect the results of the subsidiaries outside of Chile, translated to Chilean pesos (functional and reporting currency of the parent company) and are presented in accordance with IFRS.  The International Financial Reporting Standards requires assets and liabilities to be translated from the functional currency of each entity to the reporting currency (Chilean peso) at end of period exchange rates and income and expense accounts to be translated at the average monthly exchange rate for the month in which income or expense is recognized

 

**Factors Affecting Comparability**

 

During 2012, there were no changes in the application of IFRS as compared to the previous year that could materially affect the comparability of the financial statements. However, on October 1, 2012, the merger with Embotelladoras Coca Cola Polar S.A. was materialized, so assets and liabilities of the said bottler were incorporated to the consolidation as of October 1, 2012, at their fair value, as well as the results of its operations in October, November and December in Argentina, Chile and Paraguay. Additionally, due to the merger and as a result of an increase of percentage interests, Vital Aguas S.A., Vital Jugos S.A. y Envases Central S.A. are included in the consolidation.

 

**Critical Accounting Estimates**

 

*Discussion of critical accounting estimates*

 

In the ordinary course of business, we have made a number of estimates and assumptions relating to the reporting of our results of operations and financial position in the preparation of financial statements in

 

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conformity with IFRS. We cannot assure you that actual results will not differ from those estimates. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments, often as a result of the need to make estimates and assumptions about the effect of matters that are inherently uncertain. For a more detailed discussion of accounting policies significant to our operations, please see Note 2 to our Consolidated Financial Statements.

 

*Impairment of goodwill and intangible assets of indefinite useful life*

 

The Company tests if goodwill and intangible assets of indefinite useful life have suffered impairment loss on an annual basis or whenever there are indicators of impairment. The recoverable amounts of cash generating units are determined based on calculations of the value in use.  The key variables that management calculates include the volume of sales, prices, marketing expenses and other economic factors.  The estimation of these variables requires a material administrative judgment as those variables imply inherent uncertainties.  However, the assumptions are consistent with our internal planning. Therefore, management evaluates and updates estimates according to the conditions affecting the variables.  If these assets are deemed to have become impaired, they will be written off at their estimated fair value or future recovery value according to discounted cash flows.

 

*Fair Value of Assets and Liabilities*

 

IFRS requires in certain cases that assets and liabilities be recorded at their fair value.  Fair value is the amount at which an asset can be purchased or sold or the amount at which a liability can be incurred or liquidated in an actual transaction among parties duly informed under conditions of mutual independence, different from a forced liquidation.

 

The basis for measuring assets and liabilities at fair value are the current prices in the active market.  Lacking such an active market, the Company estimates said values based on the best information available, including the use of models or other valuation techniques.

 

The Company estimated the fair value of the intangible assets acquired as a result of the Polar merger based on the multiple period excess earning method, which implies the estimation of future cash flows generated by the intangible asset, adjusted by cash flows that do not come from the intangible asset, but from other assets.  For this, the Company estimated the time during which the intangible asset will generate cash flows, the cash flows themselves, cash flows from other assets and a discount rate.

 

Other assets acquired and implicit liabilities in the business combination are carried at fair value using valuation methods that are considered appropriate under the circumstances including the cost of depreciated recovery and recent transaction values for comparable assets, among others. These methodologies require certain inputs to be estimated, including the estimation of future cash flows.

 

*Provision  for doubtful accounts*

 

The Company evaluates the possibility of collecting trade accounts receivable using several factors. When the Company becomes aware of a specific inability of a customer to fulfill its financial commitments, a specific provision for doubtful accounts is estimated and recorded, which reduces the recognized receivable to the amount that the Company estimate will ultimately be collected. In addition to specifically identifying potential uncollectible customer accounts, debits for doubtful accounts are accounted for based on the recent history of prior losses and a general assessment of trade accounts receivable, both outstanding and past due, among other factors. The balance of the Company’s trade accounts receivable was ThCh$159,540,993 at December 31, 2012 (ThCh$114,618,699 in 2011), net of an allowance for doubtful accounts provision of ThCh$1,486,749 (ThCh$1,544,574 in 2011). Historically, doubtful accounts have represented an average of less than 1% of consolidated net sales.

 

*Useful life, residual value and impairment of property, plant, and equipment*

 

Property, plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of those assets. Changes in circumstances, such as technological advances, changes to the

 

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Company’s business model, or changes in its capital strategy might modify the effective useful lives as compared to our estimates. Whenever the Company determines that the useful life of property, plant and equipment might be shortened, it depreciates the excess between the net book value and the estimated recoverable amount according to the revised remaining useful life. Factors such as changes in the planned use of manufacturing equipment, dispensers, and transportation equipment or computer software could make the useful lives of assets shorter. The Company reviews the impairment of long-lived assets each time events or changes in circumstances indicate that the book value of any of those assets might not be recovered. The estimate of future cash flows is based, among other things, on certain assumptions about the expected operating profits in the future. Company estimates of non-discounted cash flows may differ from real cash flows because of, among other reasons, technological changes, economic conditions, changes in the business model, or changes in the operating profit. If the sum of non-discounted cash flows that have been projected (excluding interest) is less than the carrying value of the asset, the asset will be written down to its estimated fair value.

 

*Liabilities for bottle and case collateral*

 

We have a liability for deposits received for bottles and cases provided to our customers and distributors. The liability represents the deposit value that we may be required to remit upon receipt from the customer or distributor of the bottles and cases, in good condition, along with the original invoice. The liability is not subject to price level restatements as per current agreements with customers and distributors. We estimate the liability for deposits based on an periodic inventory of bottles sold to customers and distributors, estimates of bottles in circulation and a weighted average historical deposit value per bottle or case. Significant management judgment is involved in estimating the number of bottles in circulation, the deposit value that could be subject to redemption and the timing of disbursements related to this liability.

 

**5.A Operating Results**

 

**Summary of Operations**

 

The following table sets forth, for the periods indicated, sales volume, net sales and operating income for the Company’s operations in Chile, Brazil, Argentina and Paraguay, respectively, expressed in each case in nominal million Chilean pesos as of December 31, 2012, 2011 and 2010, and as a percentage of consolidated net sales or operating income, as the case may be:

 
| ** **        | ** ** | **Years ended December 31,** | ** ** |
|-------------------|------------|---------------------------------------------|------------|
| ** **        | ** ** | **2012**                                    | ** ** | **2011** | ** ** | **2010** | ** ** |
| ** **        | ** ** | **MUCs**                                    | ** ** | **MUCs** | ** ** | **MUCs** | ** ** |
| **Sales volume:** | * *   | * *                                    | * *   | * * | * * | * * | * * |
| *Chile*           | * *   | *185.4*                                     | * *   | *158.0* | * * | *161.5* | * * |
| Soft Drinks       |       | 149.9                                       |       | 135.1 |   | 132.6 |   |
| Mineral Water     |       | 16.8                                        |       | 10.6 |   | 9.3 |   |
| Juices            |       | 18.6                                        |       | 12.4 |   | 19.6 |   |
| *Brazil*          | * *   | *225.0*                                     | * *   | *205.1* | * * | *202.5* | * * |
| Soft Drinks       |       | 197.8                                       |       | 183.5 |   | 187.0 |   |
| Mineral Water     |       | 5.8                                         |       | 4.5 |   | 3.7 |   |
| Juices            |       | 16.2                                        |       | 13.4 |   | 7.9 |   |
| Beer              |       | 5.2                                         |       | 3.7 |   | 3.9 |   |
| *Argentina*       | * *   | *167.0*                                     | * *   | *138.4* | * * | *125.2* | * * |
| Soft Drinks       |       | 153.4                                       |       | 129.6 |   | 118.4 |   |
| Mineral Water     |       | 9.8                                         |       | 6.2 |   | 4.8 |   |
| Juices            |       | 3.8                                         |       | 2.6 |   | 2.0 |   |
| *Paraguay*        | * *   | *18.8*                                      |       |   |   |   |   |
| Soft Drinks       |       | 16.5                                        |       |   |   |   |   |
| Mineral Water     |       | 1.5                                         |       |   |   |   |   |
| Juices            |       | 0.8                                         |       |   |   |   |   |

 

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| ** **                    | ** ** | **Years ended December 31,** | ** ** |
|-------------------------------|------------|---------------------------------------------|------------|
| ** **                    | ** ** | **2012**                                    | ** ** | **2011** | ** ** | **2010** | ** ** |
| ** **                    | ** ** | **MCh$**                                    | ** ** | **%** | ** ** | **MCh$** | ** ** | **%** | ** ** | **MCh$** | ** ** | **%** | ** ** |
| **Net sales:**                |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Chile                         |       | 374,873                                     |       | 32.0 |   | $ | 304,948 |   | 31.0 |   | 295,659 |   | 33.3 |   |
| Brazil                        |       | 451,597                                     |       | 38.5 |   | 445,693 |   | 45.4 |   | 407,782 |   | 45.9 |   |
| Argentina                     |       | 315,336                                     |       | 26.9 |   | 232,223 |   | 23.6 |   | 185,273 |   | 20.8 |   |
| Paraguay                      |       | 32,028                                      |       | 2.7 |   |   |   |   |   |   |   |   |   |
| Inter-country eliminations(1) |       | (1,541                                      | )          | (0.1 | ) | — |   |   |   | — |   | — |   |
| **Total**                     | ** ** | **1,172,293**                               | ** ** | **100** | ** ** | **982,864** | ** ** | **100** | ** ** | **888,714** | ** ** | **100** | ** ** |
|                          |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| ** **                    | ** ** | **MCh$**                                    | ** ** | **%** | ** ** | **MCh$** | ** ** | **%** | ** ** | **MCh$** | ** ** | **%** | ** ** |
| **Operating income:**         |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Chile                         |       | 57,685                                      |       | 37.4 |   | 56,170 |   | 39.4 |   | 57,442 |   | 38.5 |   |
| Brazil                        |       | 64,647                                      |       | 41.9 |   | 64,047 |   | 45.0 |   | 72,252 |   | 48.4 |   |
| Argentina                     |       | 32,091                                      |       | 20.8 |   | 25,942 |   | 18.2 |   | 23,442 |   | 15.7 |   |
| Paraguay                      |       | 4,620                                       |       | 3.0 |   |   |   |   |   |   |   |   |   |
| Corporate expenses(2)         |       | (4,879                                      | )          | (3.1 | ) | (3,735 | ) | (2.6 | ) | (3,902 | ) | (2.6 | ) |
| **Total**                     | ** ** | **154.164**                                 | ** ** | **100** | ** ** | **142,424** | ** ** | **100** | ** ** | **149,234** | ** ** | **100** | ** ** |
|                               |            |                                             |            |  |  |  |  |  |  |  |  |  |  |  |

 

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*(1)  Eliminations represent intercompany sales.*

*(2)  Corresponds to corporate expenses that are not distributable in the operations.*

 

The following table sets forth, for the periods indicated, the net sales and operating income contributed by product type, expressed in each case in nominal million Chilean pesos as of December 31, 2012, 2012 and 2010, and as a percentage of consolidated net sales or operating income, as the case may be:

 
| ** **                    | ** ** | **Years ended December 31,** | ** ** |
|-------------------------------|------------|---------------------------------------------|------------|
| ** **                    | ** ** | **2012**                                    | ** ** | **2011** | ** ** | **2010** | ** ** |
| ** **                    | ** ** | **MCh$**                                    | ** ** | **%** | ** ** | **MCh$** | ** ** | **%** | ** ** | **MCh$** | ** ** | **%** | ** ** |
| **Net sales:**                |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Soft drinks                   |       | 967,370                                     |       | 82.5 |   | 829,888 |   | 84.4 |   | 758,943 |   | 85.4 |   |
| Other beverages(1)            |       | 197,900                                     |       | 16.9 |   | 145,121 |   | 14.8 |   | 121,650 |   | 13.7 |   |
| Packaging                     |       | 8,564                                       |       | 0.7 |   | 7,855 |   | 0.8 |   | 8,121 |   | 0.9 |   |
| Inter-company eliminations(2) |       | (1,541                                      | )          | (0.1 | ) |   |   |   |   |   |   |   |   |
| **Total**                     | ** ** | **1,172,293**                               | ** ** | **100** | ** ** | **982,864** | ** ** | **100** | ** ** | **888,714** | ** ** | **100** | ** ** |
| **Operating income:**         |       |                                        |       |   |   |   |   |   |   |   |   |   |   |
| Soft drinks                   |       | 147,381                                     |       | 95.6 |   | 128,783 |   | 90.4 |   | 136,891 |   | 91.7 |   |
| Other beverages(1)            |       | 4,421                                       |       | 2.9 |   | 10,923 |   | 7.7 |   | 9,518 |   | 6.4 |   |
| Packaging                     |       | 2,362                                       |       | 1.5 |   | 2,718 |   | 1.9 |   | 2,825 |   | 1.9 |   |
| **Total**                     | ** ** | **154,164**                                 | ** ** | **100** | ** ** | **142,424** | ** ** | **100** | ** ** | **149,234** | ** ** | **100** | ** ** |

 

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*(1)**        **Includes, in Chile, waters and juices; in Brazil, beer, water, energy drinks, Nestea products and fruit flavored juices; and in Argentina fruit flavored waters, waters and juices.*

*(2)**        **Eliminations represents intercompany sales*

 

The following table sets forth, for the periods indicated, information derived from our consolidated income statements, expressed in nominal million Chilean pesos as of December 31, 2012, 2011 and 2010, and as a percentage of consolidated net sales or operating income, as the case may be:

 
| ** **                                          | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                          | ** ** | **2012**                                   | ** ** | **2011** | ** ** | **2010** | ** ** |
| ** **                                          | ** ** | **MCh$**                                   | ** ** | **%** | ** ** | **MCh$** | ** ** | **%** | ** ** | **MCh$** | ** ** | **%** | ** ** |
| **Net   sales**                                     | ** ** | **1,172,293**                              | ** ** | **100.0** | ** ** | **982,864** | ** ** | **100** | ** ** | **888,714** | ** ** | **100** | ** ** |
| Cost of sales                                       |       | (698,955                                   | )          | (59.6 | ) | (578,581 | ) | (58.9 | ) | (506,882 | ) | (57.0 | ) |
| Gross profit                                        |       | 473,338                                    |       | 40.4 |   | 404,283 |   | 41.1 |   | 381,832 |   | 43.0 |   |
| Distribution,   administrative and selling expenses |       | (319,174                                   | )          | (27.2 | ) | (261,859 | ) | (26.6 | ) | (232,598 | ) | (26.2 | ) |
| **Operating   income**                              | ** ** | **154,164**                                | ** ** | **13.2** | ** ** | **142,424** | ** ** | **14.5** | ** ** | **149,234** | ** ** | **16.8** | ** ** |
| Non-operating   income (expenses), net              |       | (27,390                                    | )          | (2.3 | ) | (10,712 | ) | (1.1 | ) | (9,294 | ) | (1.0 | ) |
| Income taxes                                        |       | (38,505                                    | )          | (3.3 | ) | (34,685 | ) | (3.5 | ) | (36,340 | ) | (4.1 | ) |
| **Net   income**                                    | ** ** | **88,269**                                 | ** ** | **7.5** | ** ** | **97,027** | ** ** | **9.9** | ** ** | **103,600** | ** ** | **11.7** | ** ** |

 

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**Results of Operations for the Years Ended December 31, 2012 and 2011**

** **
| ** **                                             | ** ** | **Chile**   | ** ** | **Brazil**  | ** ** | **Argentina** | ** ** | **Paraguay** | ** ** | **Eliminations** | ** ** | **Total (1)** | ** ** |
|--------------------------------------------------------|------------|-------------|------------|-------------|------------|---------------|------------|--------------|------------|------------------|------------|--------------------|------------|
| **M Ch$**                                         | ** ** | **2012**    | ** ** | **2011**    | ** ** | **2012**      | ** ** | **2011**     | ** ** | **2012**         | ** ** | **2011**           | ** ** | **2012 (3)** | ** ** | **2012** | ** ** | **2011** | ** ** | **2012** | ** ** | **2011** | ** ** |
| ** **                                             | ** ** | ** **  | ** ** | ** **  | ** ** | ** **    | ** ** | ** **   | ** ** | ** **       | ** ** | ** **         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Net   sales**                                        | ** ** | **374,873** | ** ** | **304,948** | ** ** | **451,597**   | ** ** | **445,693**  | ** ** | **315,336**      | ** ** | **232,223**        | ** ** | **32,028** | ** ** | **(1,541** | **)** | ** ** | ** ** | **1,172,293** | ** ** | **982,864** | ** ** |
| Cost of sales                                          |       | (224,024    | )          | (176,464    | )          | (272,890      | )          | (267,389     | )          | (181,924         | )          | (134,728           | )          | (21,658 | ) | 1,541 |   |   |   | (698,955 | ) | (578,581 | ) |
| Gross profit                                           |       | 150,849     |       | 128,484     |       | 178,707       |       | 178,304      |       | 133,412          |       | 97,495             |       | 10,370 |   |   |   |   |   | 473,338 |   | 404,283 |   |
| Distribution,   administrative and selling expenses(2) |       | (93,164     | )          | (72,314     | )          | (114,060      | )          | (114,258     | )          | (101,321         | )          | (71,552            | )          | (5,750 | ) |   |   |   |   | (314,295 | ) | (258,124 | ) |
| Corporate expenses                                     |       |        |       |        |       |          |       |         |       |             |       |               |       |   |   |   |   |   |   | (4,879 | ) | (3,735 | ) |
| **Operating   income**                                 | ** ** | **57,685**  | ** ** | **56,170**  | ** ** | **64,647**    | ** ** | **64,046**   | ** ** | **32,091**       | ** ** | **25,943**         | ** ** | **4,620** | ** ** | ** ** | ** ** | ** ** | ** ** | **154,164** | ** ** | **142,424** | ** ** |

 

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*(1)**                    **Total does not equal the sum of all the franchise territories due to inter-country eliminations.*

*(2)**                   **The majority of corporate expenses were distributed in the operations.*

*(3)**                    **Only 4Q12 figures*

 

***Opening Remarks***

 

The merger by absorption with Embotelladoras Coca-Cola Polar (“Polar”) took place on October 1, 2012, whereby Embotelladora Andina (the Company) increased its ownership interest in Vital, Vital Jugos and ECSA, incorporating them into the consolidation of results as of that date, as well as the results of Polar for the fourth quarter of 2012.

 

***Net Sales***

 

Consolidated Sales Volume was 596.2 million unit cases in 2012, an increase of 18.9%. Soft drinks grew 15.5%, while juices and waters together increased 47.9%. Excluding the effect of the merger with Polar, consolidated sales volume grew 8.7%, where soft drinks grew 6.7% and juices and waters together grew 24.3%. The incorporation of Polar’s operations as of October 1, 2012, contributed with 51.1 million unit cases.

 

The variations of the Brazilian Real, the Argentine Peso and the Paraguayan Guaraní, all relative to the Chilean Peso, have an impact on the conversion of figures to Chilean Pesos. On average, during the year and with respect to the Chilean Peso, the Brazilian Real depreciated 13.9%, the Argentine Peso 8.8%, and the Paraguayan Guarani 5.1%, generating a negative impact on income and a positive impact on costs and expenses.

 

Net Sales totaled Ch$1,172,293 million, a 19.3% increase, primarily explained by higher volumes and prices in the four countries where we operate, and partially offset by the effect of conversion of figures. In 2012, the soft drink segment represented 82.4% of consolidated Net Sales , which was slightly lower than the 84.4% we reported in 2011. Excluding the effect of the merger with Polar, Net Sales increased 8.9%, mainly explained by: (i) the effect of the increase in volumes, especially in Brazil and Argentina, as a result of the industry’s growth and of an increase in our market share, and (ii) the increase in revenues per unit case in local currency, mainly due to price increases in line with local inflation. These two effects are partially offset by the effect of the conversion of figures to Chilean Pesos. The incorporation of Polar’s operations as of October 1, 2012 contributed Ch$102,168 million to Net Sales.

 

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In Chile, Sales Volume during 2012 reached 185.4 million unit cases, which represents an increase of 17.3%, and is mainly explained by the 54.1% growth of the juice and water segments and the 11.0% growth of the soft drinks segment. Excluding the effect of the merger with Polar, Sales Volume grew 5.5%, driven by the juice and water segments that together grew 18.9%, while the soft drinks category grew 3.2%. The incorporation of Polar`s operations as of October 1, 2012, contributed 18.7 million unit cases.

 

The incorporation of Polar did not involve significant changes in market share, since both companies had very similar figures. Regarding the soft drink segment, our market share reached 69.4%, which on average involved a gain of 20 basis points compared with the previous year. Average value market share was 71.9% in 2012, which compares with 71.6% in 2011. Categories of waters and juices still have a very low market penetration when compared to other developed countries, and therefore have presented high growth rates in recent years.

 

Net Sales in Chile were Ch$374,873 million, representing an increase of 22.9% explained by the following two effects: (i) greater volumes, mainly due to the merger with Polar, and by higher volumes of waters and juices resulting from the strong growth that these industries are experiencing and (ii) the increase of average revenue per unit case, basically explained by higher prices, in line with local inflation. Excluding the effect caused by the merger with Polar, Net Sales grew 10.1%. The incorporation of Polar’s operations as of October 1, 2012, contributed Ch$39,064 million to Net Sales.

 

Soft drinks Net Sales in Chile were Ch$299,673 million in 2012, an increase of 17.3% over the previous year, mainly due to the 11.0% increase in volumes and by a higher average revenue per unit case. Excluding the effect of the merger with Polar, Net Sales for soft drinks in Chile were Ch$276,014 million, an increase of 8% due to a 3.2% increase in volumes and an increase of the average revenue per unit case of 5%. Net sales of juices and water in Chile were Ch$74,902 million in 2012, 51.3% higher than in 2011, explained by the 54.1% increase in volumes and partially offset by a reduction in the average revenue per unit case. Excluding the effect of the merger with Polar, this figure was Ch$59,795 million, which represented an increase of 21% due to a volume growth of 19% and an increase in the average revenue per unit case of 2%. The incorporation of Polar’s operations as of October 1, 2012, contributed with Ch$23,659 million in soft drinks, and Ch$15,106 million in juices and waters.

 

In Brazil, 2012 Sales Volume reached 225.0 million unit cases, which represented a growth of 9.7%, explained by higher volumes in the juices and waters categories (23.0%), while the soft drink category expanded 7.8%. Sales volumes were positively impacted by: (i) a better execution at the points of sale as a result of an increase in the sales force, and (ii) industry growth, influenced by the 14% adjustment in the minimum wage. Net sales were Ch$451,597 million (+1.3%), explained by higher volumes and price increases slightly lower than local inflation. These effects were partially offset by the negative effect of the conversion of figures. In 2012, our average market share in the soft drink segment was 59.1%, 170 basis points higher than the previous year, which reflects our strong competitive position and the positive impact that our sales’ strategy has had. In value terms, our average market share reached 67.0% in 2012, in comparison with the 66.4% obtained in 2011.

 

Net Sales of soft drinks in Brazil were Ch$359,116 million in 2012, a drop of 1.8% over the previous year, which is explained by a 7.8% increase in volumes and by price increases slightly below local inflation. These effects were more than offset by the strong negative impact of conversion of figures. Net sales of juices, waters and beer in Brazil were Ch$92,480 million in 2012, representing an increase of 15.5% due to higher volumes and mix effect, partially offset by the conversion of figures.

 

In Argentina, 2012 Sales Volume reached 167 million unit cases, representing an increase of 20.7%, basically due to a 55.9% growth in the segment of juices and waters, leveraged by the launching of our new Bonaqua mineral water, and by the 18.3% growth of the soft drinks segment. Excluding the effect of the merger with Polar, sales volumes grew 10.8%, driven by juices and waters that together grew 41.3%, while the soft drinks category grew by 8.8%. The incorporation of Polar’s operations as of October 1, 2012, contributed 13.6 million unit cases.

 

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The incorporation of Polar did not involve significant changes in market share, as both companies had very similar figures. Regarding the soft drink segment, our market share reached 58.8%, which -on average- involves a market share gain of 150 basis points in comparison with the previous year, and is mainly explained by a greater presence in supermarkets and a better execution in the returnable bottle segment. Average value market share was 63.9% in 2012, which compares to 63.4% in 2011. The waters and juices categories still have a very low penetration in the market compared to other developed countries, and therefore have presented high growth rates in recent years.

 

Net Sales in Argentina were Ch$315,336 million, which represents an increase of 35.8%, that is explained by the following effects: (i) greater volumes, mainly due to the merger with Polar, as well as by the incorporation of Bonaqua; and (ii) and increase of revenues per unit case, basically explained by price increases in line with local inflation, and partially offset by the effect of conversion of figures. Excluding the effect of the merger with Polar, Net Sales grew 21.7%, explained by the following two effects: (i) growth in volumes due to the same reasons explained above, and (ii) increases in the average revenue per unit case, basically explained by price increases in line with local inflation. The incorporation of Polar’s operations as of October 1, 2012, contributed Ch$32,618 million.

 

Net Sales of soft drinks in Argentina were Ch$281,696 million in 2012, an increase of 34.9% over the previous year, mainly due to an 18.3% increase in volume and to a higher average revenue per unit case. Excluding the effect of the merger with Polar, Net Sales of soft drinks in Argentina were Ch$253,319 million, an increase of 21.3% explained by an 8.8% increase in volumes and by price increases in line with local inflation, partially offset by the effect of the conversion of figures.

 

Net Sales of juices and water in Argentina were Ch$23,827 million in 2012, a 53.5% increase when compared with 2012, mainly due to the 55.9% increase in volumes and partially offset by a decrease in the average revenue per unit case. This decrease is explained by the effect of the launching of Bonaqua, which has a lower per unit case price than juices. On the other hand, without considering the effect of the merger with Polar, Net Sales for juices and waters were Ch$20,836 million, which represented an increase of 34%, due to the reasons already commented. The incorporation of Polar’s operations as of October 1, 2012, contributed Ch$28,377 million to the sales of soft drinks in Argentina and Ch$2,991 million to the sales of juices and waters.

 

In Paraguay, Sales Volume for the fourth quarter of 2012 reached 18.8 million unit cases. The soft drinks segment represented 87.8% of sales volume, while the remaining 12.2% were juices and waters. Net sales amounted to Ch$32,028 million. In the fourth quarter of 2012 our average market share in the soft drink segment was 60.7%. In terms of value, our average market share reached 70.4% during the fourth quarter of 2012.

 

Net Sales of soft drinks in Paraguay reached Ch$26,885 million in the fourth quarter of 2012. Net sales of juices and water in Paraguay amounted Ch$5,144 million in the fourth quarter of 2012.

 

***Cost of Sales***

 

Cost of Sales reached Ch$698,955 million in 2012, increasing 20.8% when compared to Ch$578,581 million in 2011. Excluding the effect of the merger with Polar, Cost of Sales were Ch$634,752 million, which represents an increase of 9.7%. In addition to the incorporation of Polar, that represents a cost of Ch$64,203 million, the increase in Costs of Sales is explained by: (i) changes in the products mix in Chile and Brazil, towards products with higher costs; (ii ) increases in the cost of concentrate in Chile, Brazil and Argentina;(iii) higher labor costs in Chile and Argentina; (iv) an increase of depreciation in Chile; (v) high inflation in Argentina, which affects a significant portion of our Cost of Sales; and (vi) the depreciation of local currencies in relation to the dollar, which has an impact on raw materials indexed to such currency. All the above effects were partially offset by the effect of conversion of our operations figures in Brazil and Argentina. Cost of Sales represented a 59.6% of Net Sales in 2012 and 58.9% in 2011.

 

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In Chile, Costs of Sales amounted to Ch$224,025 million in 2012, an increase of 27.0% when compared to Ch$176,464 million in 2011. Cost of Sales per unit case was Ch$1,209 in 2012, an increase of 8.2% when compared to 2011. Excluding the effect of the merger with Polar, which contributes Ch$25,400 million, Cost of Sales was Ch$198,625 million, representing an increase of 12.6% over 2011. Costs of Sales per unit case, without considering the merger with Polar was Ch$1,191 in 2012, 6.7% higher than in 2011. In addition to the incorporation of Polar, the increase in Costs of Sales per unit case is explained by: (i) higher depreciation per unit case, as the new lines of the Renca plant began to be depreciated, which explains the 43% of the increase of cost per unit case; (ii) a greater participation of distributed products, which explains an 18% of the increase in Costs of Sales per unit case; and (iii) greater labor costs due to an increase of salaries, which accounts for 8% of the increase in costs per unit case. These increases were partially offset, among others by: (i) a decrease of the cost of products purchased from third parties, since the Renca plant started producing soft drinks in PET bottles of 591cc and 250cc; and (ii) a lower cost of sugar due to the price reduction it has presented on the international markets. Cost of Sales represented a 59.8% of Net Sales in 2012 and 57.9% in 2011.

 

In Brazil, Costs of Sales reached Ch$272,890 million in 2012, 2.1% higher than Ch$267,389 million in 2011. In local currency Costs of Sales increased 18.4%. Cost of Sales per unit case was Ch$1,331 in 2012, which is 2.1% higher than in 2011, mainly due to the change in the product mix, towards distributed products which have a higher Cost of Sales. This effect was partially offset by the effect of converting figures, due to the depreciation of the Brazilian Real in relation to the Chilean Peso. Cost of Sales represented a 60.4% of Net Sales in 2012 and 60.0% in 2011.

 

In Argentina, Cost of Sales reached Ch$181,924 million in 2012, 35.0% higher than the Ch$134,728 million in 2011. In local currency, Cost of Sales increased 50.0%. Cost of Sales per unit case was Ch$1,090 in 2012, an increase of 11.9% when compared to 2011. Excluding the effect of the merger with Polar, which explains an additional cost of Ch$18,687 million, Cost of Sales was Ch$163,237 million, that is, an increase of 12.6% over 2011, while Cost of Sales per unit case was Ch$1,064 in 2012, 9.3% higher than in 2011. In addition to the incorporation of Polar, the increase in Cost of Sales per unit case in local currency is explained by: (i) higher costs of concentrate explained by price increases, accounting for the 42% of the increase in the cost per unit case; (ii) higher labor costs, mainly caused by the increase in real wages and increase of headcount as a result of higher volumes; (iii) higher depreciation due to the investments we have made in recent years; and (iv) change in the product mix towards distributed products. All these effects were partially offset by: (i) a lower cost of PET bottles and (ii) the effect of conversion of figures. Cost of Sales represented a 57.7% of Net Sales in 2012 and 58.0% in 2011.

 

***Gross Profit***

 

Due to the aforementioned, gross profit in 2012 increased by 17.1% in 2012, reaching Ch$473,338 million, or 40.4% of Net Sales, compared to Ch$404,283 million, or 41.1%, of Net Sales, in 2011. Excluding the effect of the merger with Polar, gross profit in 2012 reached $435,373 million, representing 40.7% of Net Sales, and an increase of 7.7% compared with the previous year. The incorporation of Polar accounted for Ch$37,965 million of additional Gross Profit.

 

***Sales and Administrative Expenses***

 

Sales and Administrative (SG&A) Expenses totaled Ch$314,295 million in 2012, representing 26.8% of Net Sales in 2012, 21.8% higher than the Ch$258,124 million in 2011 (26.3% of Net Sales for that year). Excluding the effect of the merger with Polar, SG&As were Ch$286,444 million, representing 26.8% of Net Sales and were 11.0% higher than the previous year. In addition to the incorporation of Polar, which explains and additional cost of Ch$27,851 million, the increase in SG&A Expenses is explained by: (i) greater costs of distribution in the three countries in which we operate; (ii) higher labor costs in Argentina and Chile; and (iii) greater depreciationcharges in Brazil.

 

In Chile, SG&A Expenses were Ch$93,164 million in 2012, representing 24.9% of Net Sales, and 28.8% higher than the Ch$72,314 million in 2011 (23.7% of Net Sales for that year). Excluding the effect of

 

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the merger with Polar, SG&As were Ch$84,257 million, representing 25.1% of Net Sales and an increase of 16.5% when compared to the previous year. In addition to the incorporation of Polar, which explains an additional cost of Ch$8,907 million, the increase of SG&A Expenses is mainly explained by the fact that during the fourth quarter of 2011 there was a positive effect caused by other operating income classified under this item and, in this period, such situation did not happen. Excluding this item, SG&A Expenses would have increased 12%, mainly due to: (i) greater costs of distribution, 20% higher when compared to the previous year, due to greater volumes and increases of tariffs; and (ii) a 16% increase in labor costs, due to increases of real wages and the simultaneous operation of two production plants during 2012.

 

In Brazil, SG&A Expenses were Ch$114,060 million in 2012, 0.2% lower when compared to Ch$114,258 million 2011. This reduction is explained by the effect of currency conversion. In local currency SG&A Expenses increased 15.8%, mainly due to: (i) higher costs of labor, which in local currency were 31% higher than last year; (ii) greater distribution costs in local currency, that were 14% higher when compared to the year above, and (iii) greater depreciation charges, which in local currency was 29% higher than the previous year. As a percentage of Net Sales, SG&A Expenses were 25.3% in 2012, and 25.6% in 2011.

 

In Argentina, SG&A Expenses were Ch$101,321 million in 2012, representing 32.1% of Net Sales, and 41.6% higher when compared to Ch$71,552 million in 2011 (30.8% of the Net Sales for that year). Excluding the effect of the merger with Polar, SG&As were Ch$88,126 million, representing 31.2% of Net Sales, 23.2% higher when compared to the previous year. In addition to the incorporation of Polar, which explains the additional cost of Ch$13,195 million, the increase in SG&As is mainly explained by the effect of local inflation in these costs, among which the following stand out: (i) greater costs of distribution, which -in local currency- were 39 % higher when compared to the previous year and were also affected by higher volumes; and (ii) higher labor costs, which -in local currency- were 29% higher than the previous year. These effects were partially offset by the effect of conversion of figures.

 

In Paraguay, SG&A Expenses were Ch$5,750 million and, as a percentage of sales, they reached 18.0%.

 

***Operating Income***

 

As a consequence of the aforementioned, Operating Income increased 8.2% in 2012, reaching Ch$154,164 million, or 13.2% of net sales, compared to Ch$142,424 million, or 14.5% of net sales in 2011. Excluding the effects of the merger with Polar, Operating Income was Ch$144,050 million, representing 13.5% of Net Sales and a 1.1% increase when compared to the previous year. The incorporation of the operations of Polar explained Ch$10,114 million additional Operating Income.

 

***Non-operating Income (Expense), Net***

 

The following table sets forth, for the periods indicated, the items of non-operating income (expense), net:

 
| ** **                                                                                                               | ** ** | **For the year ended   December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                                                                               | ** ** | **2012**                                                  | ** ** | **2011** | ** ** |
| ** **                                                                                                               | ** ** | **(million Ch$)**                                    | ** ** |
|                                                                                                                     |       |                                                      |       |   |   |
| Other income and   expenses, by function and other gains and losses                                                      |       | (14,490                                                   | )          | (7,511 | ) |
| Financial Income                                                                                                         |       | 2,728                                                     |       | 3,182 |   |
| Financial Costs                                                                                                          |       | (11,173                                                   | )          | (7,235 | ) |
| Share of income   (losses) from affiliated companies and joint business that are accounted for   using the equity method |       | 1,770                                                     |       | 2,026 |   |
| Exchange rate   differences                                                                                              |       | (4,471                                                    | )          | 3 |   |
| Profit from unit   of adjustment                                                                                         |       | (1,754                                                    | )          | (1,177 | ) |
| Non-operating income,   net                                                                                              |       | (27,390                                                   | )          | (10,712 | ) |

 

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Non-Operating Results totaled a loss of (Ch$27,390) million, which compares negatively to a loss of (Ch$10,712) million recorded during 2011. The account with greater variation is “Other income and expenses, by function and other gains and losses” which reflects a higher loss of Ch$6,979 million due to (i) expenses of the merger with Polar recognized  in 2012 for MM$4,518; (ii) higher expenses for derivatives transactions for MM$2,584. Financial costs increased Ch$3,938 in 2012, mainly due to: (i) greater debt mainly originated in Chile; and (ii) recognition for 3 months of the financial liabilities for the debts of the companies incorporated by the merger with Polar. Finally, exchange rate differences had a higher loss of MM$4,474 than the previous year, caused by the update of accounts payables to related companies.

 

***Income Taxes***

 

Income taxes in 2012 increased 11.0% to Ch$38,505 million compared to Ch$34,685 million in 2011. The increase is principally explained by i) higher tax liabilities due to the incorporation of Polar during 2012; (ii) profit increase of our subsidiary in Argentina, country that has the highest income tax rate of the group; and (iii) recognition of expenses caused by the change of the income tax rate from 18.5% to 20%, occurred  in Chile during 2012

 

***Net Income***

 

As a result of the aforementioned, net income in 2012 was Ch$88,269 million, representing 7.5% of net sales and a decrease of 9.0% compared to net income of Ch$97,027 million in 2011.

 

**Impact of Foreign Currency Fluctuations**

 

In Chile we had losses of Ch$4,471 million in 2012 due to the revaluation of the Chilean peso with respect to the Argentinean peso and the Brazilian real, currencies in which we maintained accounts receivables.  This loss compares to a profit of Ch$3 million in 2011, where the Chilean peso did not appreciated respect to the other local currencies of the countries in which we operate. Our net asset position in U.S. dollars is insignificant.

 

In accordance with IFRS conversion methods, assets and liabilities from Argentina, Paraguay and Brazil are converted from their functional currency (Argentine Peso, Paraguayan Guaraní and Brazilian Real respectively) to the reporting currency of the parent company (Chilean peso) at the end of period exchange rate, and income accounts at the exchange rate as of the date of the transaction or monthly average exchange rate of the month when it took place.  The effects of translation are presented as comprehensive income and do not affect the results for the years ended December 31, 2012, 2011 and 2010. The translation effects due to the currency conversion undertaken for assets and liabilities in accordance with the method previously explained resulted in a decrease of other comprehensive income of Ch$35,983 during 2012 (net decrease of Ch$1,965  million during 2011 and decrease of Ch$9,450 million during 2010) We also present under other comprehensive income the net effect as result of the restatement of Chilean pesos to U.S. Dollars and Brazilian Reais to U.S. dollars resulting from the update of intercompany accounts that have designated as part of the Company’s investment,  this effect resulted in an increase of Ch$5,113 million during 2012 ( decrease of Ch$1,087 and Ch$1,845 million during 2011 and 2010).

 

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In Chile we use hedge agreements, to protect against foreign currency risk, which has an impact on our dollar denominated raw materials needs. The mark to market of these contracts was recorded in 2012 and 2011 as other earnings and losses in the consolidated statements of income. For further information about the instruments we use to protect against foreign currency risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk.”

 

**Impact of Governmental Policies**

 

Our business is dependent upon the economic conditions prevailing in our countries of operation. Various governmental economic, fiscal, monetary and political policies, such as those related to inflation or foreign exchange, may affect these economic conditions, and in turn may impact our business. These government policies may also affect investments by our shareholders.

 

For a discussion of political factors and governmental, economic, fiscal and monetary policies that could materially affect investments by U.S. shareholders as well as our operations, please refer to “Item 3. Key Information—Risk Factors” and “Item 10. Additional Information”

 

**Results of Operations for the Years Ended December 31, 2011and 2010**

 
| ** **                                           | ** ** | **Chile**   | ** ** | **Brazil**  | ** ** | **Argentina** | ** ** | **Total (1)** | ** ** |
|------------------------------------------------------|------------|-------------|------------|-------------|------------|---------------|------------|--------------------|------------|
| **M Ch$**                                       | ** ** | **2011**    | ** ** | **2010**    | ** ** | **2011**      | ** ** | **2010**           | ** ** | **2011** | ** ** | **2010** | ** ** | **2011** | ** ** | **2010** | ** ** |
| ** **                                           | ** ** | ** **  | ** ** | ** **  | ** ** | ** **    | ** ** | ** **         | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Net sales**                                        | ** ** | **304,948** | ** ** | **295,659** | ** ** | **445,693**   | ** ** | **407,782**        | ** ** | **232,223** | ** ** | **185,273** | ** ** | **982,864** | ** ** | **888,714** | ** ** |
| Cost of sales                                        |       | (176,464    | )          | (170,125    | )          | (267,389      | )          | (232,906           | )          | (134,728 | ) | (103,851 | ) | (578,581 | ) | (506,882 | ) |
| Gross profit                                         |       | 128,484     |       | 125,534     |       | 178,304       |       | 174,876            |       | 97,495 |   | 81,422 |   | 404,283 |   | 381,832 |   |
| Distribution, administrative and selling expenses(2) |       | (72,314     | )          | (68,092     | )          | (114,258      | )          | (102,624           | )          | (71,552 | ) | (57,980 | ) | (258,124 | ) | (228,696 | ) |
| Corporate expenses                                   |       |        |       |        |       |          |       |               |       |   |   |   |   | (3,735 | ) | (3,902 | ) |
| **Operating income**                                 | ** ** | **56,170**  | ** ** | **57,442**  | ** ** | **64,046**    | ** ** | **72,252**         | ** ** | **25,943** | ** ** | **23,442** | ** ** | **142,424** | ** ** | **149,234** | ** ** |

 

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*(4)**                **Total does not equal the sum of all the franchise territories due to inter-country eliminations.*

*(5)**                **The majority of corporate expenses were distributed in the operations.*

 

**Net Sales**

 

Consolidated Sales Volume amounted to 501.2 million unit cases in 2011, an increase of 2.5%. Soft Drinks grew 2.3%, while the other categories of, Juices, Waters, and Beer together increased by 4.2%. Particularly, the Waters segment recorded a significant 19.6% increase.

 

The variations in the exchange rates of the Brazilian real and Argentine peso with respect to the Chilean peso, affect our results expressed in Chilean pesos. On average during the year and with respect to the Chilean peso, the Brazilian real devalued 0.3% resulting in a slight negative accounting effect upon translation of figures from Brazil; and the Argentine peso devalued 10.15%, resulting in a negative accounting impact over income and a positive impact over costs and expenses upon translation of figures for consolidation, in the end, having a negative accounting effect over results upon translation of figures from Argentina.

 

Net Sales amounted to Ch$982,864 million, a 10.6% increase mainly explained by the increase in volume and prices in the three countries. Of the consolidated net sales, soft drinks represented 84.4% in 2011, slightly lower when compared to the 85.4% in 2010.

 

In Chile, Sales Volume amounted to 158.0 million unit cases, a 2.3% decline, mainly explained by the 37.1% decrease in the juice segment. Due to the partial sale of Vital Jugos in Chile which occurred in January of 2011, this subsidiary no longer consolidates with Andina, therefore, 2011 volumes do not include the juice volume that Vital Jugos sold to Embonor and Polar (the other two Chilean Coca-Cola bottlers). Without

 

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considering this effect, volumes in Chile would have posted a 3.4% growth, with soft drink volumes growing 1.7% and the Juice and Water segment growing 14.9%. Regarding soft drinks, better execution in the market, allowed us to gain 10 bps of market share, thus reaching 69.2%. Our average value market share was 71.6% during 2011 compared to 71.8% in 2010. With respect to Juices and Waters, these are categories which still have low per capita consumption as compared with more developed markets, and thus have been presenting high growth rates in the last years.

 

Net Sales amounted to Ch$304,948 million, a 3.1% improvement, driven by higher volumes and prices, and offset by the non consolidation of Vital Jugos, which participated in 2010 in 4.5% of total revenues. Soft drink net sales in Chile amounted to Ch$255,436 million during 2011, representing a 5.9% increase regarding the previous year, principally explained by a 1.7% increase in volumes and by an increase of the average income per unit case. Net sales of juices and waters in Chile was Ch$49,512 million in 2011, showing a decrease of 9.1% from 2010. This decrease was led by a 37.1% decrease of sales volume of the juice segment, explained by the non consolidation of Vital Jugos in 2011. When considering proforma sales, juice sales would have grown 20.5%, led by a 15.1% volume increase, coupled with price increases slightly above local inflation.

 

In Brazil, Sales Volume amounted to 205.1 million unit cases, a 1.3% increase driven by the Juice, Water and Beer segment (+39.4%), while the soft drinks category showed a 1.9% decrease. Soft drink volumes were negatively impacted by the consumption slowdown observed in the economy during all of 2011, by higher inflation and by adverse weather conditions.  Juices and Waters were positively impacted by the incorporation to our portfolio of the Matte Leão brand. Net Sales reached Ch$445,693 million (+9.3%) due to higher volumes, price adjustments in line with local inflation and a change of our product mix towards more expensive products. In year 2011, our average volume market share in the soft drink market in Brazil reached 57.4%, same figure as 2010, reflecting a strong competitive position. Our average value market share was 66.4% during 2011 compared to 67.0% in 2010.

 

Soft drink Net Sales in Brazil amounted to Ch$365,604 million during 2011, representing a 4.2% increase regarding the previous year, mainly explained by price adjustments that were slightly below local inflation, coupled with  the decrease of 1.9% in  soft drinks volumes.  On the other hand, the Company’s beer, water and juice operations in Brazil generated net sales in 2011 of Ch$80,089 million, representing a 40.6% increase from 2010, mainly explained by increased volumes due to the incorporation to our portfolio of the Matte Leão brand.

 

In Argentina, Sales Volume amounted to 138.4 million unit cases, an increase of 10.5%.  Soft drinks grew 9.4% and the other categories of juices and waters together grew 29.1%. Net Sales reached Ch$232.223 million (+25.3%), explained by (i) price increases in local currency, in line with local inflation, (ii) volume increases, and (iii) the devaluation of the Argentine peso with respect to the Chilean peso. In year 2011, our average volume market share in the soft drink market in Argentina increased to 57.3% reflecting that we maintain a strong competitive position. Our average value market share was 63.4% during 2011 compared to 62.8% in 2010.

 

Soft drinks Net Sales in Argentina amounted to Ch$208.848 million during 2011, representing a 25.1% increase  when compared to the previous year, mainly explained by higher volumes in this segment and price increases, that were in line with local inflation, in local currency.  Net sales of PET packaging and juices in Argentina were Ch$23,375 million in 2011, representing an increase of 27.5% compared to 2010 resulting from the same reasons given for the increase in Soft Drinks Net Sales.

 

***Cost of Sales***

 

Cost of sales were Ch$578,581 million in 2011, representing 58.9% of net sales, compared to Ch$506,882 million, or 57.0% of net sales in 2010. The increase in cost of sales in 2011 was principally due to (i) significant increase in the cost of sugar per unit case in the three countries where we operate; (ii) change in the mix of products in Chile and Brazil, and (iii) increased concentrate costs in Chile and in Argentina, (iv) increased labor costs in Chile and (v) high inflation in Argentina that affects an important portion of our cost of sales.

 

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In Chile, Cost of Sales were Ch$176,464 million in 2011, a 3.7% increase when compared to the Ch$170,125 million in 2010. The cost of sales per unit case sold reached Ch$1,118 in 2011, a 6.2% increase when compared to 2010, mainly due to (i) sugar costs per unit case that on average were approximately 16% above last year, explaining  20% of the increase in the cost  of sales per unit case (ii)  higher mix of distributed juice and water products in our total sales, which explains 35% of the increase in the cost of sales per unit case, (iii) an 8% increase in the concentrate cost per unit case,  which explains 23% of the increase in the cost of sales  per unit case,  and (iv)  higher labor costs due to an increase in wages and to the fact that the Company has been running two production plants simultaneously during the fourth quarter of 2011.  The percentage representing cost of sales regarding net sales was 57.9% for the year 2011 and 57.5% for the year 2010.

 

In Brazil, Cost of Sales were Ch$267,389 million in 2011, a 14.8% increase when compared to the Ch$232,906 million in 2010.  The cost of sales per unit case  reached Ch$1,304 in 2011, increasing 13.4% when compared to 2010,  mainly due to (i) higher mix of distributed products in our total sales, which explains 74% of the increase in the cost of sales per unit case, (ii) increased costs of PET bottles (approximately 14% higher per unit case when compared to 2010), and which explains 11% of the increase in cost of sales per unit case and (iii) sugar costs per unit case, that on average were approximately 5% higher when compared to 2010, and which explains 5% of the increase in the cost of sales per unit case. The percentage representing cost of sales regarding net sales was 60.0% for 2011 and 57.1% for the year 2010.

 

In Argentina, Cost of Sales were Ch$134,728 million in 2011, a 29.7% increase when compared to the Ch$103,851 million in 2010. The cost of sales per unit case reached Ch$974 in 2011, increasing 17.4% when compared to 2010, mainly due to increases in (i) sugar costs, that on average, and in local currency, were approximately 68% higher per unit case, when compared to last year, and which explains 45% of the increase in cost of sales per unit case, (ii) higher concentrate prices, due to price increases,   which explains 26% of the increase in cost of sales per unit case and (iii) the 10.15% devaluation of the Argentine peso with respect to the Chilean peso, resulting in a positive accounting impact upon translation of figures from local currency to Chilean pesos. The percentage representing cost of sales regarding net sales was 58.0% during 2011 and 56.1% for the year 2010.

 

***Gross Profit***

 

Due to the aforementioned, gross profit in 2011 increased by 5.9%, reaching Ch$404,283 million, or 41.1% of net sales, compared to Ch$381,832 million, or 43.0% of net sales in 2010.

 

***Distribution, Administrative and Selling Expenses***

 

Distribution, administrative and selling expenses amounted to Ch$261,859 million in 2011, representing 26.6% of net sales for 2011, a 12.6% increase with respect to the Ch$232,598  million in 2010, that represented 26.2% of net sales for that year. SG&A expenses increased principally because of (i) higher distribution costs in the three countries where we operate, (ii) higher labor costs in Argentina and in Chile and (iii) higher inflation in Argentina.

 

In Chile, SG&A expenses were Ch$72,314 million in 2011, a 6.2% increase when compared to the Ch$68,092 million in 2010.  This increase was mainly due to (i) distribution costs which were 14% higher than the previous year,   (ii) a 12% increase in labor costs due to wage increases, hiring of third party logistic personnel, and  to the fact that the Company has been running two production plants simultaneously during the fourth quarter of 2011, and (iii)  higher depreciation charges (57% increase)  mainly associated with the new bottling facility.  As a percentage of net sales, selling and administrative expenses were 23.7% in 2011 compared with 23.0% in 2010

 

In Brazil, SG&A expenses were Ch$114,258 million in 2011, a 11.3% increase when compared to the Ch$102,624 million in 2010.  The main factors that explain this increase are (i) higher distribution costs, which grew 14% when compared to 2010, and (ii) higher marketing expenses, which grew 17%. As a

 

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percentage of net sales, selling and administrative expenses were 25.6% in 2011 compared with 25.2% in 2010.

 

In Argentina SG&A expenses were Ch$71,552 million in 2011, a 23.4% increase when compared to the Ch$57,980 million in 2010. This increase was mainly due to (i) distribution costs which were 24% higher than the previous year, due to higher volumes and local inflation, (ii) a 28% increase in labor costs due to wage increases as a result of local inflation, and    (iii) higher plant to warehouse transportation costs, which increased 25%. As a percentage of net sales, selling and administrative expenses were 30.8% in 2011 compared with 31.3% in 2010.

 

***Operating Income***

 

As a consequence of the aforementioned, Operating Income decreased 4.6% in 2011, amounting to Ch$142,424 million, or 14.5% of net sales, compared to Ch$149,234 million, or 16.8% of net sales in 2010.

 

***Non-operating Income (Expense), Net***

 

The following table sets forth, for the periods indicated, the items of non-operating income (expense), net:

 
| ** **                                                                                                               | ** ** | **For the year ended   December 31,** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                                                                               | ** ** | **2011**                                                  | ** ** | **2010** | ** ** |
| ** **                                                                                                               | ** ** | **(million Ch$)**                                    | ** ** |
|                                                                                                                     |       |                                                      |       |   |   |
| Other income and   expenses, by function and other gains and losses                                                      |       | (7,511                                                    | )          | (7,143 | ) |
| Financial Income                                                                                                         |       | 3,182                                                     |       | 3,376 |   |
| Financial Costs                                                                                                          |       | (7,235                                                    | )          | (7,402 | ) |
| Share of income   (losses) from affiliated companies and joint business that are accounted for   using the equity method |       | 2,026                                                     |       | 2,315 |   |
| Exchange rate   differences                                                                                              |       | 3                                                         |       | (222 | ) |
| Profit from unit   of adjustment                                                                                         |       | (1,177                                                    | )          | (218 | ) |
| Non-operating   income, net                                                                                              |       | (10,712                                                   | )          | (9,294 | ) |

 

Non-Operating Results totaled a loss of (Ch$10,712) million, which compares negatively to a loss of (Ch$9,294) million recorded during 2010. The account with greater variation is “Other income and expenses, by function and other gains and losses” which reflects a higher loss of Ch$368 million due to (i) increased provisions for contingencies relating primarily to the Brazilian operation; (ii) greater property, plant and equipment write-offs relating mainly to the construction of the new plant located in Renca; partially offset by (iii) losses registered in 2010 and not present in the year 2011 resulting from the earthquake on February 27, 2010 (iii) earnings recognized in 2011 resulting from benefits associated with tax credits from previous years recognized by Brazilian authorities (iv) earnings in the proportional sale of the affiliate Vital juices S.A. in January 2011 (v) greater earning per the update of judicial deposits (vi) lower expenses in 2011 regarding 2010 resulting from non-operating fees and donations.

 

***Income Taxes***

 

Income taxes in 2011 decreased 4.6% to Ch$34,685 million compared to Ch$36,340 million in 2010. The decrease is principally explained by (i) lower profits from the Brazilian operation during the year 2011 versus the year 2010, which are partially offset by (ii) greater profits from the Argentine operation during the year 2011 versus the year 2010.

 

***Net Income***

 

As a result of the aforementioned, net income in 2011 was Ch$97,027 million, representing 9.9% of net sales and a decrease of 6.3% compared to net income of Ch$103,600 million in 2010.

 

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**Impact of Foreign Currency Fluctuations**

 

In Chile we had gains of Ch$3 million in 2011 due to the revaluation of the Chilean peso, compared to a negative impact of foreign currency fluctuations in 2010 in the amount of approximately Ch$222 million, due to our low net asset position in U.S. dollars amounting to a total of approximately US$3 million.

 

In accordance with IFRS conversion methods, assets and liabilities from Argentina and Brazil are converted from their functional currency (Brazilian Real and Argentine Peso, respectively) to the reporting currency of the parent company (Chilean peso) at the end of period exchange rate, and income accounts at the exchange rate as of the date of the transaction or monthly average exchange rate of the month when it took place.  The effects of translation are presented as comprehensive income and do not affect the results for the years ended December 31, 2011, 2010 and 2009. The translation effects due to the currency conversion undertaken for assets and liabilities in accordance with the method previously explained resulted in a decrease of other comprehensive income of Ch$2,600 during 2011 (decrease of Ch$5,171 million during 2010 and increase of Ch$6,496 million during 2009) for Brazil and an increase of other comprehensive income of Ch$635 million during 2011 (decrease of Ch$4,279 and Ch$15,428 million during 2010 and 2009 respectively) for Argentina.  We also present under other comprehensive income the net effect as result of the restatement of Chilean pesos to U.S. Dollars and Brazilian Reais to U.S. dollars resulting from the update of intercompany accounts that have designated as part of the Company’s investment, this effect resulted in an increase of Ch$1,087 million during 2011 (decrease of Ch$1,845 and Ch$1,355 million during 2010 and 2009).

 

We use hedge agreements, to protect against foreign currency risk. In 2011 and 2010 these agreements partially offset the effects of the variation of the Chilean peso exchange rate, whose results are recorded as earnings and losses in the consolidated statements of income. For further information about the instruments we use to protect against foreign currency risk, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk.”

 

**Impact of Governmental Policies**

 

Our business is dependent upon the economic conditions prevailing in our countries of operation. Various governmental economic, fiscal, monetary and political policies, such as those related to inflation or foreign exchange, may affect these economic conditions, and in turn may impact our business. These government policies may also affect investments by our shareholders.

 

For a discussion of political factors and governmental, economic, fiscal and monetary policies that could materially affect investments by U.S. shareholders as well as our operations, please refer to “Item 3. Key Information—Risk Factors” and “Item 10. Additional Information”

 

**5.B Liquidity and Capital Resources**

 

***Capital Resources, Treasury and Funding Policies***

 

The products we sell are mainly paid for in cash and short term credit, and therefore our main source of financing comes from the cash flow of our operations.  This cash flow has  been generally sufficient to cover the investments necessary for the normal course of our business, as well as the distribution of dividends approved by the General Shareholders’ Meeting.  Nevertheless, in 2012 was necessary to use banking loans to finance the acquisition of the 40% stake of Sorocaba Refrescos in Brazil for R$147 million. Also, aour net cash position diminished after the merger with Polar, mainly because Polar used to have more debt when compared to Andina’s balance sheet. Should  additional funding be required for future geographic expansion or other needs, the main sources of financing to consider are: (i) debt offerings in the Chilean and foreign capital markets  (ii) borrowings from commercial banks, both internationally and in the local markets where we have operations; and; (iii) public equity offerings.

 

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Certain restrictions could exist to transfer funds among our operating subsidiaries. We have transferred funds from Argentina to Chile through capital reductions in 2010, but in 2011 and 2012, all cash flow generated by the subsidiary in Argentina was reinvested in the operation. During 2010, 2011 and 2012 we received dividends from our subsidiary in Brazil.  No assurance can be made that we will not face restrictions in the future regarding the distribution of dividends from our foreign subsidiaries.

 

Our management believes that we have access to financial resources to maintain our current operations and provide for our current capital expenditure and working capital requirements, scheduled debt payments, interest and income tax payments and dividends to shareholders. The amount and frequency of future dividends to our shareholders will be determined by the General Shareholders’ Meeting upon the proposal of our board of directors in light of our earnings and financial condition at such time, and we cannot assure you that dividends will be declared in the future, except for the minimum 30% of annual profits required by Chilean law.

 

Our board of directors has been empowered by our shareholders to define our financing and investment policies. Our bylaws do not define a strict financing structure, nor do they limit the types of investments we may make. Traditionally, we have preferred to use our own resources to finance our investments.

 

Our general financing policy is that each subsidiary should finance its own operations. From this perspective, each subsidiary’s management must focus on cash generation and should establish clear targets for operating income, capital expenditures and levels of working capital. These targets are reviewed on a monthly basis to ensure that their objectives are met. Should increased financing needs arise, either as a result of a cash deficit or to take advantage of market opportunities, our general policy is to prefer local financing to allow for natural hedging. If local financing conditions were not acceptable, because of costs or other constraints, Andina will provide financing, or our subsidiary could finance itself in a currency different than the local one.

 

Our cash surplus policy is that Andina invests any cash surplus in a portfolio of investment grade securities until such time as our board of directors makes a final decision as to the disposition of the surplus.

 

Derivative instruments are utilized only for business purposes, and never for speculative purposes. Forward currency contracts are used to cover the risk of local currency devaluation relative to the U.S. dollar in an amount approximately equal to our budgeted purchases of U.S. dollar-denominated raw materials. Depending on market conditions, instead of forward currency contracts, from time to time we prefer to utilize our cash surplus to purchase raw materials in advance to obtain better prices and a fixed exchange rate.

 

***Cash Flows from Operating Activities 2012 vs Cash Flows from Operating Activities 2012***

 

Cash flows from operating activities during 2012 amounted to Ch$188,857 million compared to Ch$138,950 million in 2011.  The increase in cash flow generation came mainly from greater collections from clients partially offset by greater payments to suppliers, mainly due to the incorporation of Polar during the 4Q12. Cash flows from operating activities without considering the merger with Polar amounted to Ch$172,754 million.

 

***Cash Flows from Operating Activities 2011 vs Cash Flows from Operating Activities 2010***

 

Cash flows from operating activities during 2011 amounted to Ch$138,950 million compared to Ch$125,848 million in 2010.  The increase in cash flow generation came mainly from greater collections from clients partially offset by greater payments to suppliers, due to greater sales volume and increased prices in line with local inflation in each country.  Other operating cash flows did not vary significantly.

 

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***Cash Flows from Investing Activities 2012 vs Cash Flows from Investing Activities 2011***

 

Cash flows for investing activities (includes purchase and sale of: property, plant and equipment; investment in associated companies; and financial investments) amounted to Ch$156,170 million in 2012 compared to Ch$89,621 million during 2012.  The investment activities of Andina during 2012, without considering the effect of the merger with Polar amounted to Ch$149,334 million.

 

The main item of investing activities is the purchase of property, plant and equipment which went from Ch$126,931 million in 2011 to Ch$143,764 million in 2012. In 2012, and without considering the effect of the merger with Polar, Andina invested Ch$131,552 million. This figure is highly influenced by the investment in a new bottling facility in Chile. Also, during 2012 we liquidated net financial investments in the amount of Ch$13,410 million and during 2011 we liquidated net financial investments in the amount of Ch$35,938 million. However, as of December 31, 2011, we had Ch$30,480 million invested in time deposits and other short-term investments.

 

Finally, during 2012 was also materialized the purchase of 40% of the capital interest in Sorocaba Refrescos S.A., which resulted in a flow of investment of $33,497 million. Additionally, a capital contribution was made to subsidiary Vital Jugos S.A. for $2,380 million.

 

***Cash Flows from Investing Activities 2011 vs Cash Flows from Investing Activities 2010***

 

Cash flows for investing activities (includes purchase and sale of: property, plant and equipment; investment in associated companies; and financial investments) amounted to Ch$89,621 million in 2011 compared to Ch$80,504 million during 2010.

 

The main item of investing activities is the purchase of property, plant and equipment which went from Ch$95,462 million in 2010 to Ch$126,931 million in 2011. This figure is highly influenced by the investment in a new bottling facility in Chile. Also, during 2011 we liquidated net financial investments in the amount of Ch$35,938 million and during 2010 we liquidated net financial investments in the amount of Ch$25,590 million. However, as of December 31, 2011, we had Ch$46,959 million invested in time deposits and other short-term investments.

 

Finally, during 2011we carried out the sale of 43% of Vital Jugos, along with capital contributions in the associated company amounting to Ch$829 million.

 

During 2010 we carried out investments in Brazilian associated companies related to the iced tea and matte business, amounting to Ch$15,229 million, which was financed with own operating resources.

 

***Cash Flows from Financing Activities 2012 vs Cash Flows from Financing Activities 2011***

 

Our financing activities are directly related to dividend distributions to our shareholders, that record a utilization of cash resources amounting to Ch$69,766 million compared to $70,906 million during 2011, and borrowings from banks and payment of these loans, in order to finance these dividend payments and investments.  Worth mentioning is that as a result of our business’ seasonality, we generate greater cash flows during the summer months (December through March), therefore during the winter season we require short term financing in order to fulfill our dividend and investment commitments.

 

As of that date, we had available short-term credit lines in an amount equivalent to Ch$77,370million. The aggregate unused portion of such lines of credit at that date was equivalent to Ch$44,300 million. Our unused sources of liquidity include 17 lines of credit. In Chile, we had the equivalent of Ch$15,000 million in credit available from two separate lines. The unused portion of such lines of credit at that date was equivalent to Ch$7,094 million. In Brazil, we had the equivalent of Ch$14,543 million in credit available with 4 lines. The unused portion of such lines of credit at that date was equivalent to Ch$6,719 million. In Argentina, we had the equivalent of Ch$47,719 million in credit available with six lines. The unused portion of such lines of credit at that date was equivalent to Ch$30,487 million. In Paraguay, we had the equivalent of Ch$33,751

 

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million in credit available with five lines. The unused portion of such lines of credit at that date was equivalent to Ch$32,655 million.

 

***Cash Flows from Financing Activities 2011 vs Cash Flows from Financing Activities 2010***

 

Our financing activities are directly related to dividend distributions to our shareholders, that record a utilization of cash resources amounting to Ch$70,906 million compared to $66,525 million during 2010, and borrowings from banks and payment of these loans, in order to finance these dividend payments and investments.  Worth mentioning is that as a result of our business’ seasonality, we generate greater cash flows during the summer months (December through March), therefore during the winter season we require short term financing in order to fulfill our dividend and investment commitments.

 

As of that date, we had available short-term credit lines in an amount equivalent to Ch$109.160 million. The aggregate unused portion of such lines of credit at that date was equivalent to Ch$87.046 million.

 

Our unused sources of liquidity include 14 lines of credit. In Chile, we had the equivalent of Ch$32,010 million in credit available from two separate lines. The unused portion of such lines of credit at that date was equivalent to Ch$30,876 million. In Brazil, we had the equivalent of Ch$51,312 million in credit available with 6 lines. The unused portion of such lines of credit at that date was equivalent to Ch$35,805 million. In Argentina, we had the equivalent of Ch$26,838 million in credit available with six lines. The unused portion of such lines of credit at that date was equivalent to Ch$20,363 million.

 

***Liabilities***

 

For the period ending December 31, 2012, our total liabilities, excluding non controlling interest, were Ch$646,231 million, representing a 102.0% increase compared to December 31, 2011. The increase in total liabilities resulted principally from increase on current and non-current financial liabilities, mainly due to the incorporation of the debt arising from the incorporation of Polar in 2012, and increases of debt arising from Andina to cover investment projects. Another item that significantly explains the increase of liabilities are deferred taxes generated by the recognition at fair value of the assets contributed by Polar. Finally, and as a result of the abovementioned merger, the balances of trade accounts payables record a significant increase caused by the greater level of operations in 2012, in relation to 2011. As of December 31, 2012, our non-current liabilities included (i) other non-current financial liabilities of Ch$173,880 million, (ii) other non-current provisions of Ch$6,423 million, (iii) deferred tax liabilities for Ch$111,415million; (iv) non-current employee benefit provisions for Ch$7,037 million; and (v) other non-current non-financial liabilities for Ch$2,106 million, totaling non-current liabilities for Ch$300,861 million during 2012 compared to Ch$123,337 million during 2011.

 

For the period ending December 31, 2012, our current liabilities, included (i) other current financial liabilities of Ch$106,248 million, (ii) commercial accounts and other accounts payable for Ch$184,318 million; (iii) current accounts payable to related entities for Ch$32,727 million; (iv) other current provisions for Ch$593 million; (v) current tax liabilities for Ch$1,115 million and (vi) other non financial current liabilities for Ch$20,369 million.  Total current liabilities during 2012 amounted to Ch$345,370 million compared to Ch$196,644 million during 2011.

 

As of December 31, 2012, our bond liabilities had a weighted average interest rate of 5.25% while our bank liabilities had a weighted average interest rate of 6.23%.

 

**Summary of Significant Debt Instruments**

 

The following is a brief summary of our significant long-term indebtedness outstanding as of December 31, 2012:

 

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*Unsecured Notes*. On October 1, 1997 we entered into an indenture pursuant to which we issued three series of bonds. One of which expired during in 2007.  The indenture imposes certain restrictions on liens, sale and leaseback transactions, assets sales and subsidiary indebtedness and certain conditions in the event of merger or consolidation.

 

The two series of bonds issued in 1997 under this indenture are the following:

·                  US$100 million of 7.625% Unsecured Notes due 2027; and

·                  US$100 million of 7.875% Unsecured Notes due 2097.

 

The Company has repurchased, through our subsidiary Abisa Corp., for cash at par value the notes outstanding and the following notes were tendered:

·                  US$100 million of the 7.625% Unsecured Notes due 2027; and

·                  US$100 million of the 7.875% Notes due 2097.

 

During 2001, Andina completed a local bond placement in the Chilean capital markets of two series of bonds, one of which expired during 2008. The outstanding series as of December 31, 2011 is the following:

 

·                  UF 3.7 million Series B of bonds due 2026, with annual interest rate over inflation of 6.50%

 

Additionally, due to the merger with Polar, and as of December 31, 2012, Andina becomes creditor of two additional bond issuances placed in the Chilean market in 2010, with the following characteristics:

 

·     UF 1.0 million Serie A of bonds, due 2017, with annual interest rate over inflation of 3.00%.

·             UF 2.5 million Serie C of bonds due 2031, with annual interest rate over inflation of 4.00%.

 

The bond issue and placement in the Chilean market is subject to the following restrictions:

 

·                  Andina must maintain an indebtedness level wherein consolidated financial liabilities must be less than 1.20 times of Consolidated Shareholders ́ Equity in the case of the Series B bond. For this purpose, Consolidated Financial Liabilities will be equal to accruing interest current liabilities, i.e (i) other current financial liabilities, plus (ii) other non-current financial liabilities.  Consolidated Equity means Total Shareholders’ Equity including non-controlling interest

·                  For series A and C, Embotelladora Andina S.A. must keep in its quarterly financial statements a level of “Net Financial Debt” not exceeding 1.5 times, measured over the figures of the consolidated financial statement. For this purpose, the level of net financial debt shall be the ratio between the net financial debt and the issuer’s total equity (equity attributable to controlling owners and to non-controlling interests). Also, the term net financial debt shall mean the difference between the financial debt and the issuer’s cash.

·                  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.

·                  For Series B, it must be kept, and under no circumstance loose, sell, assign or transfer to a third party, the geographical area currently denominated “Metropolitan Region” as a franchised territory by The Coca-Cola Company in Chile, for the elaboration, production, sale and distribution of the products and brands of the licensor, according to corresponding Bottler or License Agreement, renewable from time to time.

·                  For Series B, not to lose, sell, assign or transfer to a third party any other territory of Argentina or Brazil that to this date is currently franchised to the Company by TCCC for the elaboration, production, sale and distribution of products and brands of the licensor; provided that, any such areas represent more than 40% of Consolidated Operating Cash Flow of the Issuer.

·                  For Series A and C,  not to invest in securities issued by related parties, nor perform other operations outside of the ordinary course of business with such parties, under conditions that are less favorable to the Issuer in relation to those prevailing in the market .

·                  For series A and C it quarterly financial statements must keep a level of “Net Financial Debt Coverage” higher than 3 times.”Net Financial Debt Coverage “ shall mean the ratio between

 

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issuer’s EBITDA of the last 12 months and the issuer’s net financial expenses (financial income less financial expenses) of the last 12 months. However, it will be understood that this restriction has been breached when said Net Financial Debt Coverage is below the level indicated above for 2 consecutive quarters.

 

**5. C.****       ****Research and development, patents and licenses**

 

Given the nature of the business and the support provided by TCCC as franchisor to its bottlers, the Company’s research and development expenses are not meaningful. For more information on patents and licenses, see “Patents and Licenses”.

 

**5.D.****          ****Trend Information**

 

Our results will likely continue to be influenced by changes in the level of consumer demand in the countries in which we operate, resulting from governmental economic measures that are or may be implemented in the future. Additionally, principal raw materials used in the production of soft drinks, such as sugar and resin, may experience price increases in the future. Such price increases may affect our results if we are unable to pass the cost increases on to the sales price of our products due to depressed consumer demand and/or heightened competition.

 

Increased competition from low-price brands is another factor that could limit our ability to grow, and thus negatively affect our results.

 

Finally, exchange rate fluctuations, in particular the potential devaluations relative to the U.S. dollar of local currencies in the countries in which we operate, may adversely affect our results because of the impact on the cost of U.S. dollar-denominated raw materials and the conversion of monetary assets.

 

**5.E Off-Balance Sheet Arrangements**

 

We do not have any off-balance sheet arrangements.

 

**5.F Contractual Obligations**

 

The following table presents our contractual and comercial obligations as of December 31, 2012:

 
| ** **                          | ** ** | ** **                                                                                   | ** ** | **Payments Due by Period** | ** ** |
|-------------------------------------|------------|----------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| ** **                          | ** ** | ** **                                                                                   | ** ** | **Years**                                 | ** ** |
| ** **                          | ** ** | **Total**                                                                                    | ** ** | **Less than   1 year**          | ** ** | **1-3 Years** | ** ** | **3-5 Years** | ** ** | **More than   5 Years** | ** ** |
| ** **                          | ** ** | **(in million nominal Ch$ as of December 31, 2012)** | ** ** |
|                                |       |                                                                                         |       |                                      |       |   |   |   |   |   |   |
| Debt with   financial institutions  |       | 150,930                                                                                      |       | 95,603                                    |       | 32,528 |   | 22,799 |   | — |   |
| Bonds payable(1)                    |       | 189,037                                                                                      |       | 10,264                                    |       | 31,694 |   | 42,888 |   | 104,191 |   |
| Operating lease   obligations       |       | 7,629                                                                                        |       | 4,697                                     |       | 2,362 |   | 570 |   | — |   |
| Purchase   obligations              |       | 57,185                                                                                       |       | 42,450                                    |       | 9,839 |   | 4,896 |   |   |   |
|                                |       |                                                                                         |       |                                      |       |   |   |   |   |   |   |
| **Total   contractual obligations** | ** ** | **404,781**                                                                                  | ** ** | **153,014**                               | ** ** | **76,423** | ** ** | **71,153** | ** ** | **104,191** | ** ** |

 

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*(1) See Note 15 of the Notes to the Consolidated Financial Statements for additional information.*

 

The following table presents future expirations for the remaining long-term liabilities. These expirations have been made based on accounting estimates because the liabilities do not have specific dates of future payment as allowance for severance indemnities, contingencies, and liabilities are included.

 

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| ** **                        | ** ** | ** **                                                                                   | ** ** | **Maturity**** Years** | ** ** |
|-----------------------------------|------------|----------------------------------------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                        | ** ** | **Total**                                                                                    | ** ** | **1-3 Years**          | ** ** | **3-5 Years** | ** ** | **More than 5   Years** | ** ** |
| ** **                        | ** ** | **(in million nominal Ch$ as of December 31, 2012)** | ** ** |
| Provisions                        |       | 6,423                                                                                        |       | 6,423                       |       | — |   | — |   |
| Other long-term   liabilities     |       | 9,143                                                                                        |       | 4,008                       |       | 1,902 |   | 3,233 |   |
| **Total   long term liabilities** | ** ** | **15,566**                                                                                   | ** ** | **10,431**                  | ** ** | **1,902** | ** ** | **3,233** | ** ** |

 

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

 

**A.****           ****Directors and Senior Management**

 

Pursuant to Chilean law, we are managed by a group of executive officers under the supervision of our board of directors.  The Company’s operations in Chile, Brazil, Argentina and Paraguay report to the Corporate Office.

 

As of January 1, 2013, Alejandro Feuereisen is no longer Chief Value Chain Officer.

 

As of January 4, 2013 Pablo Court is replaced by Alan Dunford as Chief Human Resources Officer.

 

**Principal Officers**

 

The following table includes information regarding our senior executives:

 
| **Name**                  | ** ** | **Title**                        | ** ** | **Biography**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------------------------|------------|----------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                | ** ** | ** **                       | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| Miguel Ángel Peirano |       | Chief Executive Officer          |       | Joined the Company in 2011, as Chief   Executive Officer. Prior to his appointment in Andina he was President at   FEMSA Cerveza Brazil from 2009 through 2011. With Coca-Cola FEMSA he held   several positions: Vice-President. 2006-2008; Director of Operations in   Argentina from 2003 though 2005; Commercial Director during 2002;   Manufacturing Director in 2000 and Strategic Planning Director in 1999. He   also worked as Assistant Manager at McKinsey & Company in 1999.

Date of birth: March 22, 1959 |
|                      |       |                             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Andrés Wainer        |       | Chief Financial Officer          |       | Joined the Company in 1996 as research   analyst in the corporate office. In 2000 he was appointed development manager   in EDASA and in 2001 he returned to the corporate office as research and   development officer. In 2006 he was appointed finance and administration   manager at the Chilean operation and in November 2010 he returns to the   corporate office as Chief Financial Officer.

Date of birth; October 15, 1970                                                                                       |
|                      |       |                             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Rodrigo Ormaechea         |       | Chief Strategic Planning Officer |       | Joined the Company in 2011 as Chief   Strategic Planning Officer, prior to joining Andina he held the position of   projects’ manager at Virtus Partners, strategic consultant at Bain &   Co. in London, executive director at Uruguay Junior Achievement (NGO),   relationship manager Corporate Banking and M&A at ABN AMRO Bank Uruguay   and risk analyst at ABN AMRO Bank Brazil and Uruguay.

Date of Birth: January 7, 1976                                                                             |
|                      |       |                             |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Jaime Cohen               |       | Chief Legal Officer              |       | Joined the Company in 2008, as chief legal   officer. Prior to joining Andina, he held similar position at Socovesa S.A.   since 2004. Prior to that he formed part of the legal division of Citibank   since the year 2000. He also was an attorney at the law offices of Cruzat,   Ortuzar & Mackenna, Baker & McKenzie from 1996 until 1999.   He began his professional career in 1993 as lawyer at Banco de A. Edwards.

Date of birth: October 14, 1967                                                   |

 

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| **Name**                 | ** ** | **Title**                             | ** ** | **Biography**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------------------------|------------|---------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |       |                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Pablo Court              |       | Chief Human Resources Officer         |       | Joined the Company in 2008 as Chief Human   Resources Officer . Prior to joining Andina he was strategic planning and   human resources corporate officer at Indura S.A. from 1998. Before that he was   the human resources manager of Watt’s Alimentos S.A. (from 1993-2007); human   resources manager of Pesquera San José S.A. (from 1989 — 1993); and human   resources manager of Compañía Minera Disputada Las Condes (1986-1989). He did   business consulting since 1980.

Date of birth: September 22, 1956                                                                                                                                                                                                                                                           |
|                     |       |                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| German Garib             |       | Chief Process and Information Officer |       | Joined the Company in 1998, as chief   information officer. Prior to Andina, he was the marketing manager of IBM   Chile.

Date of birth: August 28, 1961                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                     |       |                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Alejandro A. Feuereisen  |       | Chief Value   Chain Officer           |       | Joined the company in 1993. On   January 1, 2012 he was appointed Chief Value Chain Officer at our   Corporate Office. In 2010 he was appointed General Manager of our Brazilian   operation. In August of 1998 he was appointed General Manager of EDASA.   From September 1995 to July 1998, he served as the 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 of his tenure at Citibank, he 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, 1953 |
|                     |       |                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Cristián   Mandiola |       | Chief   Comercial Operations Officer  |       | He joined the Company after the merger with   Embotelladoras Coca-Cola Polar assuming the position of Commercial Operations   Corporate Manager. In 1996 he joined Embotelladoras Coca-Cola Polar S.A.   assuming the responsibility for planning, organizing, strategic direction and   company results as Chile General Manager (1996-1998), Chile and Argentina   General Manager (1998-2002), Chile, Argentina and Paraguay Executive   Vice-President from August 2002 until the merger with Andina.

Date of   Birth: September 6, 1957.                                                                                                                                                                                                                                                       |
|                     |       |                                  |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Alan Dunford             |       | Chief   Projects Officer              |       | He joined the Company after the merger with   Embotelladoras Coca-Cola Polar assuming the position of Corporate Project   Manager. In 2009 he joined Embotelladoras Coca-Cola Polar S.A. assuming the   Corporate Management of Administration and Finances, to then, in 2012, assume   the General Management of the Argentinean subsidiary. As of January 4,   2013, he assumed as Human Resources Corporate Manager replacing Pablo Court.

Date of   Birth: February 11, 1957.                                                                                                                                                                                                                                                                                                                   |

 

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| **Name**                 | ** ** | **Title**                                                  | ** ** | **Biography**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------------------------|------------|------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |       |                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Abel Bouchon             |       | General Manager of Chilean Soft Drink   Operation          |       | Joined the Company in March 2009.   Previously he worked for LAN during 13 years where he served as general   manager of the international business from 2008 until March 2009; from   1998 until 2007, he served as commercial manager for the passenger business   unit and manager of the international business unit; he started working at   LAN in 1996 as manager of the domestic business unit. Prior to LAN, he worked   for Booz, Allen & Hamilton, Inc. in Buenos Aires, Argentina,   where he did his MBA summer internship as an associate in 1993, and then was   appointed project manager from 1994 until 1995. He began his professional   career in 1990 as an associate at The Chase Manhattan Bank where he worked   until 1992.

Date of birth : May 23, 1968 |
|                     |       |                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Renato Barbosa           |       | General   Manager of Rio de Janeiro Refrescos Ltda.        |       | Joins the Company on January 1, 2012 as   General Manager of our operation in Brazil.

Has worked in the Coca-Cola System for 23   years, primarily as General Manager of Brasal (Coca-Cola bottling company   servicing the western central part of Brazil.) He also has worked for other   large companies such as McDonald’s and Banco do Brasil.

Date of birth: January 14, 1960                                                                                                                                                                                                                                                                                                                                                                                                            |
|                     |       |                                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| José Luis Solorzano |       | General   Manager of Embotelladora del Atlántico S.A. |       | Joined the Company in 2003, where he served   in various managerial positions in the commercial area, passing through the   management of key accounts sales, traditional channel sales management, and   management of marketing and commercial areas. Since March of the year   2010 he took over as general manager of Andina’s Argentine operations. Prior   to his arrival at Andina, he worked as marketing manager, plant manager and   business manager of Coca-Cola Polar, for five years. Before his incorporation   to the Coca-Cola bottier system, he worked at Malloa.

Date of birth: October 9, 1970                                                                                                                                                                             |

 

**Board of Directors**

 

In accordance with our current bylaws, the board of directors must consist of fourteen directors. The directors may or may not be shareholders and are elected for a term of three years subject to indefinite re-election. All members of the board of directors are nominated and elected every three years by and during the ordinary annual shareholders’ meeting. Cumulative voting is permitted for the election of directors.

 

In the event of a vacancy, the board of directors may appoint a replacement to fill the vacancy, and the entire board of directors must be elected or re-elected at the next regularly scheduled shareholders’ meeting.

 

The majority shareholders’ agreement for the election of directors is contained in the Agreement and further explained on Item 7 “Major Shareholders and Related Companies”. In addition, pursuant to the terms and conditions of the Deposit Agreement, if no instructions are received by The Bank of New York Mellon, as depositary, it shall give a discretionary proxy to a person designated by the chairman of the board of directors of Embotelladora Andina with respect to the shares or other deposited securities that represent the ADRs.

 

As of December 31, 2012, our board of directors consisted of the following directors:

 

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| **Name**                                | ** ** | **Title**                               | ** ** | **Information**                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----------------------------------------|------------|-----------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                    |       |                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Series A**                       | ** ** | ** **                              | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** **                              | ** ** | ** **                              | ** ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                       |
| Juan Claro                              |       | Chairman of the Board of Directors      |       | Has been a member of the board of directors   since April 2004.

Principal occupation: Entrepreneur and   company directorships

Other directorships: Chairman of   Embotelladora Andina, Energía Andina Energía Covanco and Energía Llaima.   Director of Entel, Antofagasta Minerals, Antofagasta Plc, Pesquera Friosur.,   Melon S.A and Agrosuper.

Date of birth: November 7, 1950 |
|                                    |       |                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                             |
| Eduardo Chadwick Claro                  |       | Vice Chairman of the Board of Directors |       | Has been a member of the board of directors   since June 2012.

Principal occupation: Entrepreneur and   company directorships

Other   directorships:Viña Errazuriz, Empresas Penta, MaltexcoS.A., Ebema and Vinos   de Chile.

Date of birth: March 20, 1962                                                                                                                                    |
|                                    |       |                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                             |
| Arturo Majlis                           |       | 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 y Compañía

Other   directorships: Asesorías e Inversiones Til Til S.A.; Asesorias e Inversiones   MJS Ltda., Banchile Seguros de Vida, Seguros Orion and Mathiesen Group.

Date of birth: April 7, 1962                      |
|                                    |       |                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                             |
| José Antonio Garcés, Jr. |       | Director                                |       | Has been a member of the board of directors   since April 1992.

Principal occupation: General manager of   Inversiones San Andrés Ltda.

Other   directorships: Banco Consorcio, Banvida S.A.; Inmobiliaria FFV S.A.,   Fundación Paternitas, Viña Montes, Viña Garcés Silva Ltda., and USEC.

Date of birth: March 1, 1966                                                  |
|                                    |       |                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                             |
| Gonzalo Said (1)                        |       | Director                                |       | Has been a member of the board of directors   since April 1993.

Principal occupation: General manager and   director of Newport Ltda.

Other directorships: Banco BBVA, Director   Grupo Sid Handal, Member of the “Circle of Finance” of ICARE, Participates in   the Board of Universidad Finnis Terrae. Date of birth: October 16, 1964                                                  |
|                                    |       |                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                             |
| Salvador Said (1)                       |       | Director                                |       | Has been a member of the board of directors   since April 1992.

Principal occupation: Director of Said   Holding Group

Other   directorships: Cruz Blanca Salud S.A., Isapre Cruz Blanca S.A., , Parque   Arauco S.A., Edelpa S.A., BBVA Chile and Endeavor Chile.

Date of birth: September 16, 1964                                                                                           |
|                                    |       |                                    |       |                                                                                                                                                                                                                                                                                                                                                                                                             |
| Brian J.Smith                           |       | Director                                |       | Has been a member of the board of directors   since April 2009.

Principal   occupation: President Coca-Cola de Mexico

Other   directorships: Embotelladoras Coca-Cola Polar S.A.

Date of birth: December 10, 1955                                                                                                                                                                                   |

 

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| **Name**                  | ** ** | **Title** | ** ** | **Information**                                                                                                                                                                                                                                                                                                     |
|---------------------------|------------|-----------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |       |      |       |                                                                                                                                                                                                                                                                                                                |
| Gonzalo Parot (2)         |       | Director  |       | Has been a member of the board of directors   since April 2009.

Principal occupation: Engineer and   economist, Principal Partner and CEO at Elex Consulting Group

Other directorships: Kitchen Center S.A., Kitchen   Center Perú S.A., and Inmobiliaria Elex.

Date of birth: September 14, 1952 |
|                      |       |      |       |                                                                                                                                                                                                                                                                                                                |
| Enrique Cibié (2)    |       | Director  |       | Has been a member of the board of directors   since April 2012.

Principal occupation: Company directorships

Other directorships: Endesa, Masisa,   Terramater and The Grange School.

Date of birth: July 17, 1953                                                                                      |
|                      |       |      |       |                                                                                                                                                                                                                                                                                                                |
| José de Gregorio     |       | Director  |       | Has been a member of the Board since   June 2012.

Principal occupation: Professor at   Universidad de Chile

Other   directorships: Compañía Sudamericana de Vapores; Intervial S.A. and Ruta del   Maipo S.A.

Date of birth: August 17, 1959                                                 |
|                      |       |      |       |                                                                                                                                                                                                                                                                                                                |
| Juan Andrés Fontaine |       | Director  |       | Has been a member of the Board since   June 2012.

Principal occupation: Consultancy and   company directorships

Other directorships: Bolsa de Comercio de   Santiago (Santiago Stock Exchange)

Date of birth: May 21, 1954                                                                             |
|                      |       |      |       |                                                                                                                                                                                                                                                                                                                |
| Franz Alscher             |       | Director  |       | Has been a member of the Board since   June 2012.

Principal occupation: Vice President of   Finance for Latin America, The Coca-Cola Company

Other directorships: None

Date of birth: November 27, 1963                                                                                                |
|                      |       |      |       |                                                                                                                                                                                                                                                                                                                |
| Series B             |       |      |       |                                                                                                                                                                                                                                                                                                                |
|                      |       |      |       |                                                                                                                                                                                                                                                                                                                |
| Ricardo Vontobel          |       | Director  |       | Has been a member of the Board since   June 2012.

Principal occupation: General Manager of   Vonpar S.A.

Other directorships: Vonpar S.A.

Date of birth: September 16, 1959                                                                                                                            |
|                      |       |      |       |                                                                                                                                                                                                                                                                                                                |
| Mariano Rossi             |       | Director  |       | Has been a member of the Board since   June 2012.

Principal occupation: Consultancies

Other directorships: None

Date of birth: January 22, 1966                                                                                                                                                        |

 

----

*(1)**                 **Salvador Said is the cousin of Gonzalo Said.*

*(2)**                **Independent from controlling shareholder pursuant to Article 50 bis, paragraph 6 of the Chilean Public Company Law N° 18,046.*

 

**B.****           ****Compensation**

 

**Compensation of Principal Officers**

 

The Company does not have any incentive plans other than salaries. The compensation system is a mixed one, composed by a base salary and participation, which are in accordance with each market and the

 

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competitive conditions of each one. For General Managers it also considers use of cash flow versus the budget and market share versus the established goals. Amounts are different depending on each officer, position and/or responsibility, but it is applicable to all of the Company. For the year ended December 31, 2012, compensation paid out to the principal officers of Embotelladora Andina S.A. amounted to Ch$5,235 million (Ch$5,663 million in 2011).   Of the Ch$5,235 million paid to the main officers of Embotelladora Andina S.A., the variable portion was 35.5% and for the period ended December 31, 2011 the variable portion was 42%. There were not severance payments to former managers or former principal officers for the period ended December 31, 20112.

 

We do not make available to the public information as to the compensation of our executive officers on an individual basis, as disclosure of such information is not required under Chilean law.

 

**Compensation of Directors**

 

Directors receive an annual fee for attendance to meetings of the board of directors and committees. The amounts paid to each director for attendance at board meetings varies in accordance with the position held and the period of time during which such position is held. Total compensation paid to each director or alternate director during 2012, which was approved by our shareholders, was as follows:

 
| ** **                              | ** ** | **Directors’** | ** ** | **Executive** | ** ** | **Directors’** | ** ** | **Audit**     | ** ** | ** **    | ** ** |
|-----------------------------------------|------------|---------------------|------------|---------------|------------|---------------------|------------|---------------|------------|---------------|------------|
| ** **                              | ** ** | **Compensation**    | ** ** | **Committee** | ** ** | **Committee**       | ** ** | **Committee** | ** ** | **Total**     | ** ** |
| **2012**                                | ** ** | **ThCh$**           | ** ** | **ThCh$**     | ** ** | **ThCh$**           | ** ** | **ThCh$**     | ** ** | **ThCh$**     | ** ** |
|                                    |       |                |       |          |       |                |       |          |       |          |       |
| Juan Claro   González              |       | 144,000             |       | —        |       | —              |       | —        |       | 144,000       |       |
| Arturo Majlis   Albala                  |       | 72,000              |       | 72,000        |       | 12,000              |       | 12,000        |       | 168,000       |       |
| Gonzalo Said   Handal                   |       | 72,000              |       | 72,000        |       | —              |       | —        |       | 144,000       |       |
| Jose Antonio Garcés Silva (Hijo)   |       | 72,000              |       | 72,000        |       | —              |       | —        |       | 144,000       |       |
| Salvador Said   Somavía            |       | 72,000              |       | 72,000        |       | 7,000               |       | 7,000         |       | 158,000       |       |
| Eduardo Chadwick   Claro                |       | 33,000              |       | 33,000        |       | —              |       | —        |       | 66,000        |       |
| Brian J. Smith                          |       | 72,000              |       | —        |       | —              |       | —        |       | 72,000        |       |
| Gonzalo Parot   Palma                   |       | 56,000              |       | —        |       | 8,000               |       | 8,000         |       | 72,000        |       |
| Enrique Andrés   Cibie Bluth       |       | 40,000              |       | —        |       | 5,000               |       | 5,000         |       | 50,000        |       |
| José Fernando De Gregorio Rebeco   |       | 36,000              |       | —        |       | —              |       | —        |       | 36,000        |       |
| Juan Andrés   Fontaine Talavera    |       | 36,000              |       | —        |       | —              |       | —        |       | 36,000        |       |
| Franz Alscher                           |       | 36,000              |       | —        |       | —              |       | —        |       | 36,000        |       |
| Ricardo Vontobel                        |       | 36,000              |       | —        |       | —              |       | —        |       | 36,000        |       |
| Mariano Rossi                           |       | 36,000              |       | —        |       | —              |       | —        |       | 36,000        |       |
| Heriberto Urzúa   Sánchez     |       | 24,000              |       | —        |       | 4,000               |       | 4,000         |       | 32,000        |       |
| Ernesto Bertelsen   Repetto             |       | 12,000              |       | —        |       | —              |       | —        |       | 12,000        |       |
| José Domingo   Eluchans Urenda     |       | 12,000              |       | —        |       | —              |       | —        |       | 12,000        |       |
| Cristian Alliende   Arriagada           |       | 12,000              |       | —        |       | —              |       | —        |       | 12,000        |       |
| Patricio Parodi   Gil                   |       | 12,000              |       | —        |       | —              |       | —        |       | 12,000        |       |
| Jorge Hurtado   Garreton                |       | 12,000              |       | —        |       | —              |       | —        |       | 12,000        |       |
| José María   Eyzaguirre Baeza |       | 12,000              |       | —        |       | —              |       | —        |       | 12,000        |       |
| **Total Gross Amounts**                 | ** ** | **909,000**         | ** ** | **321,000**   | ** ** | **36,000**          | ** ** | **36,000**    | ** ** | **1,302,000** | ** ** |

 

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For the year that ended on December 31, 2012, the aggregate amount of compensation we paid to all directors and executive officers as a group was Ch$6,537 million of which Ch$5,235 million was paid to our executive officers. We do not disclose to our shareholders or otherwise make available to the public information as to the compensation of our executive officers on an individual basis. We do not maintain any pension or retirement programs for our directors or executive officers. See “—Employees.”

 

**C.****           ****Board Practices**

 

Our board of directors has regularly scheduled meetings at least once a month, and extraordinary meetings are convened when called by the chairman or when requested by one or more directors. The quorum for a meeting of the board of directors is established by the presence of an absolute majority of its directors. Resolutions are passed by the affirmative vote of an absolute majority of those directors present at the meeting, with the chairman determining the outcome of any tie vote.

 

**Executive Committee**

 

The Company’s Board of Directors is counseled by an Executive Committee that proposes Company policies and is currently comprised by the following Directors: Mr. Arturo Majlis Albala, Mr. José Antonio Garcés Silva (junior), Mr. Gonzalo Said Handal, Eduardo Chadwick Claro and Mr. Salvador Said Somavía, who were elected during ordinary Board Session N°1,078  held July 31, 2012. It is also comprised by the Chairman of the Board, Mr. Juan Claro González and by the Chief Executive Officer of the Company who participate by own right. This committee meets permanently throughout the year and normally holds three or four monthly sessions.

 

**Directors’ Committee**

 

Pursuant to Article 50 bis of Chilean Company Law N°18,046 and in accordance to the dispositions of Circular N°1956 and Circular N°560 of the Chilean Superintendence of Securities and Insurance, a new Directors’ Committee was elected during Board Session N°1078 dated July 31, 2012, applying the same election criteria set forth by Circular N°1956. Mr. Gonzalo Parot Palma (as Committee Chairman), Mr. Arturo Majlis Albala, and Mr. Enrique Cibie Bluth comprise the Committee.

 

The duties developed by this Committee during 2012, following the same categorization of faculties and responsibilities established by Article 50 bis of Company Law N°18,046 were the following:

 

·                  Examine the reports of external auditors, of the balance sheets and other financial statements, presented by the administrators or liquidators of the Company to the shareholders, and to take a position on such reports before they are presented to shareholders for their approval. In 2012 these matters were addressed during Sessions: N°106 on January 31; N°110 on May 29; N°112 on July 31; and N°116 on November 19.

·                  Propose names of External Auditors and Private Rating Agencies, accordingly to the Board of Directors that will then be proposed to the Shareholders’ Meeting. This matter was addressed during Session N°108 on March 27, 2012.

·                  Examine information regarding the operations referred to by Title XVI of Law N°18,046 and report on these operations. For detailed information regarding these operations, please refer to the table on Note 11 of the Consolidated Financial Statements included in this annual report. In 2012 these matters were addressed during Sessions: N°110 on May 29; N°115 on October 29; and N°116 on November 19.

 

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·                  Examine the salary systems and compensation plans of managers, principal officers and employees. During 2012, the Committee was informed about the changes of company officers and of the new guidelines for salary and compensation plans. In addition, Company management informed the Committee that it is studying a new compensation system to be analyzed, approved and implemented during the year 2013. During January 2013 session, the Committee received and revised a report regarding Coca-Cola Andina’s salary and compensation system.

·                  Report to the Board of Directors whether it is convenient or not to hire an external auditing Company to render services that do not form part of the external audit, when they are not forbidden in accordance to article 242 of Chilean Law N°18,045, in that the nature of those services may generate a risk of loss of independence. In 2012 this matter was addressed during Sessions N°106 on January 31; No 110 on May 29; No111 on June 25; No112 on July 31; and No115 on October 29.

·                  All other matters required by Company bylaws or that may be required by the Shareholders’ Meeting or by the Board of Directors. During 2012, the following matters were addressed:

·                  Review anonymous reports: During Sessions: N°106 on January 31; N°107 on February 28; N°108 on March 27; N°109 on April 26; N°110 on May 29; N°111 on June 25; N°112 on July 31: N°113 on August 17; N°114 on September 24; N°115 on October 29; N°116 on November 19; and N°114 on December 17.

·                  Review and approve Annual Report: Session N°108 on March 27.

·                  Review and approve 20F and fulfill Rule 404 of the Sarbanes- Oxley Act: Sessions N°108 on March 27; N°109 on April 26; and N°116 on November 19.

·                  Review lawsuits and contingencies: During Session N°112 on July 31.

·                  Approve Audit Committee budget: Session N°108 on March 27.

·                  Review pending legal proceedings: Session N°112 on July 31.

Review Internal Audit reports: Sessions N°109 on April 26; N°113 on August 17; N°115 on October 29; and N°116 on November 19.

 

The main expenses incurred by the Directors’ Committee have been those resulting from counseling and research. During 2012 these expenses amounted to Ch$8.1 million.

 

**Sarbanes-Oxley Audit Committee**

 

In accordance with NYSE and SEC requirements regarding compliance with the Sarbanes-Oxley Act, the Board of Directors established the first Audit Committee on July 26, 2005. This Audit Committee is renewed every year. During Board Session N°1078 dated July 31, 2012, Mr. Gonzalo Parot Palma, Mr. Arturo Majlis Albala, and Mr. Enrique Cibié Bluth were elected as members of the Audit Committee. It was determined that Mr. Gonzalo Parot Palma and Mr. Enrique Cibié Bluth complied with the independence standards set forth in the Sarbanes-Oxley Act, SEC and NYSE regulations. Mr. Enrique Cibié Bluth has been appointed by the Board of Directors as the financial expert in accordance with the definitions of the listing standards of the NYSE and the Sarbanes-Oxley Act.

 

The resolutions, agreements and organization of the Audit Committee are governed by the rules relating to Board Meetings and to the Company’s Directors’ Committee. Since its creation, the sessions of the Audit Committee have been held with the Directors’ Committee, since some of the functions are very similar and the members of both of these Committees are the same.

 

The Audit Committee Charter defines the duties and responsibilities of this Committee.  The Audit Committee is responsible for analyzing the Company’s financial statements; supporting the financial supervision and rendering of accounts; ensuring management’s development of reliable internal controls; ensuring compliance by the audit department and external auditors of their respective roles; and reviewing auditing practices.

 

The main expenses incurred by the Audit Committee have been those resulting from counseling on tax matters. During 2012 these expenses amounted to Ch$17.1 million.

 

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**6.D Employees**

 

On December 31, 2012, we had 11,984 employees, including 3,148 in Chile, 4,403 in Brazil, and 3,189 in Argentina and 1,244 in Paraguay. Of these employees, 332 were temporary employees in Chile, 122 were temporary employees in Paraguay and 578 in Argentina. During the South American summer, it is customary for us to increase the number of employees in order to meet peak demand.

 

On December 31, 2012, 1,485; 286; 2,284 and 257 of our employees in Chile, Brazil, Argentina and Paraguay, respectively, were members of unions.

 

The following table represents a breakdown of our employees for the years ended December 31, 2012, and 2011:

 
| ** **                      | ** ** | **2012**   | ** ** |
|---------------------------------|------------|------------|------------|
| ** **                      | ** ** | **Chile**  | ** ** | **Brazil** | ** ** | **Argentina** | ** ** | **Paraguay** | ** ** |
| ** **                      | ** ** | **Total**  | ** ** | **Union** | ** ** | **Non-Union** | ** ** | **Total** | ** ** | **Union** | ** ** | **Non-Union** | ** ** | **Total** | ** ** | **Union** | ** ** | **Non-Union** | ** ** | **Total** | ** ** | **Union** | ** ** | **Non-Union** | ** ** |
| Executives                      |       | 69         |       | –– |   | 69 |   | 66 |   | 3 |   | 63 |   | 109 |   | — |   | 109 |   | 24 |   | — |   | 24 |   |
| Technicians and   professionals |       | 1,040      |       | 388 |   | 652 |   | 2,537 |   | 236 |   | 2,301 |   | 637 |   | 29 |   | 608 |   | 1019 |   | 201 |   | 818 |   |
| Workers                         |       | 1,707      |       | 1,083 |   | 624 |   | 1,800 |   | 47 |   | 1,753 |   | 1,865 |   | 1,684 |   | 181 |   | 79 |   | 56 |   | 23 |   |
| Temporary Workers               |       | 332        |       | 14 |   | 318 |   | — |   | — |   | — |   | 578 |   | 571 |   | 7 |   | 122 |   | — |   | 122 |   |
| **Total**                       | ** ** | **3,148**  | ** ** | **1,485** | ** ** | **1,663** | ** ** | **4,403** | ** ** | **286** | ** ** | **4,117** | ** ** | **3,189** | ** ** | **2,284** | ** ** | **905** | ** ** | **1,244** | ** ** | **257** | ** ** | **987** | ** ** |
|                            |       |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ** **                      | ** ** | ** ** | ** ** | **2011** | ** ** | ** ** | ** ** |   |   |   |   |   |   |
| ** **                      | ** ** | **Chile**  | ** ** | **Brasil** | ** ** | **Argentina** | ** ** |   |   |   |   |   |   |
| ** **                      | ** ** | **Total**  | ** ** | **Union** | ** ** | **Non-Union** | ** ** | **Total** | ** ** | **Union** | ** ** | **Non-Union** | ** ** | **Total** | ** ** | **Union** | ** ** | **Non-Union** | ** ** |   |   |   |   |   |   |
| Executives                      |       | 42         |       | — |   | 42 |   | 79 |   | 2 |   | 77 |   | 85 |   | — |   | 85 |   |   |   |   |   |   |   |
| Technicians and   professionals |       | 650        |       | 315 |   | 335 |   | 1,451 |   | 247 |   | 1,204 |   | 349 |   | 6 |   | 343 |   |   |   |   |   |   |   |
| Workers                         |       | 716        |       | 639 |   | 77 |   | 1,317 |   | 52 |   | 1,265 |   | 1,115 |   | 966 |   | 149 |   |   |   |   |   |   |   |
| Temporary Workers               |       | 324        |       | — |   | 324 |   | — |   | — |   | — |   | 343 |   | 337 |   | 6 |   |   |   |   |   |   |   |
| **Total**                       | ** ** | **1,732**  | ** ** | **954** | ** ** | **778** | ** ** | **2,847** | ** ** | **301** | ** ** | **2,546** | ** ** | **1,892** | ** ** | **1,309** | ** ** | **583** | ** ** |   |   |   |   |   |   |

 

Management believes that is has good relations with its employees.

 

In Chile we continue to make provisions for severance indemnities in accordance with our collective bargaining agreements and labor legislations, in the amount of one month’s salary for every year of employment subject to certain restrictions. In addition, we complement our employees’ contribution to our health insurance system, thus decreasing health costs for the employees’ families. Employees are required to contribute funds for financing pension funds, which are mainly managed by private entities.

 

In Chile, 52.1% of employees with indefinite work contracts are members of labor unions. The following collective bargaining agreements are in effect as of December 31, 2012: (i) with Labor Union N° 1, that mainly represents workers from the Bottling area, from December 1, 2010 to November 30, 2015; (ii) with Labor Union N°2, that mainly represents personel from the areas of management, logistics and operations specialists from June 1, 2011 to June 31, 2015; (iii) with Labor Union N°3 that mainly represents sales force employees from May 1st, 2010 to April 31, 2014; (iv) with the new salesforce negotiating group from June 1, 2010 to May 31, 2013; (v) with Labor Union TAR, that represents workers from the distribution area from July 1, 2012 to June 30, 2014; (vi) with the *picking* area workers from the Distribution Centers in Puente Alto, Maipú, Rancagua and San Antonio from September 1, 2010 to August 31, 2014; and with the *picking* area workers from the Venecia, Renca and Carlos Valdovinos branches, from March 2011, to February 28, 2015 and (viii) collective agreement with a group of workers in the area of operations of the new plant Renca, effective as from October 1, 2011, until June 30, 2015.

 

Also, due to the merger the unions and collective agreements executed by Andina in Regions were also included. The ones in full force and effect as of December 31, 2012 in Coquimbo are: (ix) Collective bargaining agreement executed with Union No. 1, mainly integrated by workers in the production area, effective from March 1, 2010 until February 28, 2013; (x) Collective bargaining agreement with National Union No. 1, which represents part of the Administration employees and vendors, effective from January 1, 2011 until December 31, 2013; (xi) Collective bargaining agreement executed with a negotiating

 

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group of replenishers, effective from September 1, 2010 until June 30, 2013; (xii) Collective bargaining agreement executed with vendors from the base area, effective from June 1, 2011 until May 1, 2014; (xiii) Collective bargaining agreement executed with Administration employees, effective from February 1, 2011 until July 31, 2013; (xiv) Collective bargaining agreement executed with a negotiating group of Administration employees, effective from January 1, 2012 until January 31, 2014; (xv) Collective bargaining agreement executed with mostly transportation workers, effective from July 1, 2011 until June 30, 2014, and (xvi) Collective bargaining agreement executed with a negotiating group of transportation employees, effective from May 1, 2012 to April 30, 2014. The collective bargaining agreements in full force and effect as of December 31, 2012 in Antofagasta are: (xvii) Collective bargaining agreement executed with Union No. 1, integrated mainly by workers from the production area, effective from May 1, 2012 until April 30, 2014; (xviii) Collective bargaining agreement executed with Union No. 2 that represents a negotiating group employees from different areas, effective from November 27, 2011 until November 26, 2013, (xix) Collective bargaining agreement execute with a negotiation group of vendors, effective from December 1, 2010 until November 30, 2013, (xx) Collective bargaining agreement executed with transportation employees in the base zone, effective from May 4, 2012 to May 4, 2014 and (xxi) Collective bargaining agreement executed with transportation employees of Calama, effective from September 1, 2010 until September 30, 2013. Finally, collective bargaining agreements in full force and effect from December 31, 2012 in Punta Arenas are; (xxii) Collective bargaining agreement executed with Operario Unit, which mainly represents works from the production area, effective from August 1, 2011 until July 31, 2013; (xxiii) Collective bargaining agreement executed with the administration staff, effective from January 1, 2012 until December 31, 2013 and (xxiv) Collective bargaining agreement executed with transportation workers, effective from December 1, 2011 until November 30, 2013.

 

*Chilean Law 20,123 (regulates Subcontracting employment) beginning January 16, 2007.*The most significant aspects are the following: (i) amendment on the responsibility that the main company formerly had with the workers of its contractors. The main company shared responsibility regarding labor and social security obligations that can affect contractors and subcontractors favoring the workers of the contractors and subcontractors, expressly including the corresponding legal indemnities pursuant to termination of the labor relation of the workers assigned to the services. Nevertheless, this responsibility could be supplementary if the main company exerts information and retention rights in accordance to the law; (ii) an obligation is established for the main company in the sense of adopting necessary measures to effectively protect the life and health of all workers who perform duties for the company, at any of the company’s locations; (iii) creation of the concept “temporary services companies” (EST for its meaning in Spanish-*Empresa de Servicios Transitorios*) that are solely and exclusively dedicated to providing workers to third parties as temporary workers for other companies; as well as selection, qualification and formation of workers and other activities within the scope of human resources; and (iv) jurisdictional faculties are granted to *la Direccion del Trabajo* by which resolutions of this organism could be appealed before the respective Court of Appeals. In 2009, Andina implemented different actions to assure a proactive fulfillment of the new law, among other actions, the Company incorporated a group of contractor workers, as company employees, updating service agreements and implementing a Labor Audit system with contractor companies. A Contractor Regulation was established along with an internal procedure for the hiring of contractors, which must be fulfilled permanently, and must include a process of pre-qualification and a compliance assessment.

 

In Brazil, 6.5% of employees are members of labor unions. Collective bargaining agreements are negotiated on an industry-wide basis, although companies can negotiate special terms for their affiliates that apply to all employees in each jurisdiction where companies have a plant. Collective bargaining agreements are generally binding for one year.

 

With respect to Andina Brazil, there are eight collective bargaining agreements currently in force. Six agreements for employees in the State of Rio de Janeiro; (i) the Soft Drink Industry Employees’ Union agreement from July 1, 2012 to June 30, 2013; (ii) the Sales Force Union agreement from October 1, 2012 to September 30, 2013; (iii) the “Stack Machine” Operator Union agreement from May 1, 2012 to April 30, 2013; (iv)  the Driver and Helper of the Lagos Region Union agreement from May 1, 2012 through April 30, 2013; (v) Collective bargaining agreement executed with the Drivers and Nova Iguaçu Helpers affective from May 1, 2012 until April 30, 2013, and (vi) Collective bargaining agreement executed with Drivers and São Gonçalo helpers effective form May 1, 2012 until April 30, 2013.. Two agreements for employees in the

 

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State of Espírito Santo: (i) the Nourishment Union agreement from July 1, 2012 to June 30, 2013; (ii)  the Sales Force Union agreement from December 1, 2012 to November 30, 2013. These agreements do not require us to increase wages on a collective basis. Selected increases were granted, however, mainly in the manufacturing area. We provide benefits to our employees according to the relevant legislation and to the collective bargaining agreements. Andina Brazil experienced its most recent work stoppages in January and October 1990, for eight days in each instance.

 

In Argentina, 71.6% of EDASA’s employees are parties to collective bargaining agreements and are represented by local workers’ unions associated with a national federation of unions. The Argentine Chamber of Non-Alcoholic Beverages of the Argentine Republic (*Cámara Argentina de Industria de Bebidas sin Alcohol de la República Argentina* (the “Chamber”) and the Argentine Workers Federation of Carbonated Water (*Federación Argentina de Trabajadores de Aguas Gaseosas)*(the “Federation”) are parties to a collective bargaining agreement that began July 29, 2008. On November 21, 2011, the Chamber and the Federation entered into a new collective bargaining agreement establishing new salaries, new non salary benefits and a new complementary regulation on company contributions.

 

Argentine law requires severance payments upon dismissal without cause in an amount at least equal to an average of one-month’s wages for each year of employment or a fraction thereof if employed longer than three months. Severance payments are subject to maximum and minimum amounts fixed by legislations and jurisprudence of the Justice Supreme Court of Argentina.

 

At the end of 2008 Congress sanctioned Law N° 26,425 by which beginning 2009, private pension funds were eliminated instructing that all employee contributions must be destined to the government social security system, Most of the health system in the Argentine territory is run by the unions through contributions from union and non-union employees.

 

In Paraguay, 20.5% of PARESA’s employees are members of labor unions. Collective bargaining agreements are negotiated with the company (Coca-Cola Paresa Paraguay). Unions can negotiate special terms for their members, which are applicable to all employees. Collective bargaining agreements generally have a two year term of duration.

 

Collective bargaining agreements that are currently in force are: (1) Collective bargaining agreement executed with *Sindicato Autentico de Trabajadores de Paraguay Refrescos* effective from June 16, 2011 to June 15, 2013; and (2) Sindicato de Empleados de Paraguay Refrescos effective from November 9, 2012 to May 3, 2014.

 

**6.E.         Share Ownership of Directors, Members of the Directors’ Committee and Senior Executives**

 

The following table sets forth the amount and percentage of our shares beneficially owned by our directors, members of the Directors’ Committee and senior executives as of December 31, 2012

 
| ** **                                     | ** ** | **Series A** | ** ** | **Series B** | ** ** |
|------------------------------------------------|------------|-------------------|------------|-------------------|------------|
| ** **                                     | ** ** | **Beneficial**    | ** ** | **%**             | ** ** | **Direct** | ** ** | **%** | ** ** | **Indirect** | ** ** | **%** | ** ** | **Beneficial** | ** ** | **%** | ** ** | **Direct** | ** ** | **%** | ** ** | **Indirect** | ** ** | **%** | ** ** |
| ** **                                     | ** ** | **Owner**         | ** ** | **Class**         | ** ** | **Owner** | ** ** | **Class** | ** ** | **Owner** | ** ** | **Class** | ** ** | **Owner** | ** ** | **Class** | ** ** | **Owner** | ** ** | **Class** | ** ** | **Owner** | ** ** | **Class** | ** ** |
| **Shareholder**                                |       |              |       |              |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| José Antonio   Garcés Silva (junior) |       | —            |       | —            |       | — |   | — |   | 52,987,375 |   | 11.19 |   | — |   | — |   | — |   | — |   | 25,728,183 |   | 5.43 |   |
| Arturo Majlis Albala                           |       | —            |       | —            |       | — |   | — |   | 2,150 |   | 0.0006 |   | — |   | — |   | 5,220 |   | 0.0014 |   | — |   | — |   |
| Salvador Said Somavía                     |       | —            |       | —            |       | — |   | — |   | 52,987,375 |   | 11.19 |   | — |   | — |   | — |   | — |   | 49,700,463 |   | 10.50 |   |
| Gonzalo Said Handal                            |       | —            |       | —            |       | — |   | — |   | 52,987,375 |   | 11.19 |   | 11,761,462 |   | 3.094 |   | — |   | — |   | 37,914,463 |   | 8.018 |   |
| Eduardo Chadwick   Claro                       |       |              |       |              |       |   |   |   |   | 52,987,375 |   | 11.19 |   |   |   |   |   |   |   |   |   | 52,989,382 |   | 11.19 |   |

 

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

 

**A.****           ****Major Shareholders**

 

The following table sets forth certain information concerning beneficial ownership of our capital stock at December 31, 2012, with respect to the principal shareholders known to us who maintain at least a 5% beneficial ownership in our shares and with respect to all of our directors and executive officers as a group:

 
| ** **                                                | ** ** | **Series A** | ** ** | **Series B** | ** ** |
|-----------------------------------------------------------|------------|-------------------|------------|-------------------|------------|
| **Shareholder**                                           | ** ** | **Shares**        | ** ** | **% Class**  | ** ** | **Shares** | ** ** | **% Class** | ** ** |
|                                                      |       |              |       |              |       |   |   |   |   |
| Controlling   Shareholders (1)                            |       | 261,955,178       |       | 55.3              |       | 214,258,566 |   | 45.3 |   |
| The Bank of New   York Mellon(2)                          |       | 9,073,560         |       | 1.9               |       | 50,263,248 |   | 10.62 |   |
| The Coca-Cola   Company, directly or through subsidiaries |       | 69,348,241        |       | 14.65             |       | 69,348,241 |   | 14.65 |   |
| AFPs as a group   (Chilean pension funds)                 |       | 42,776,601        |       | 9.04              |       | 1,425,912 |   | 0.6 |   |
| Principal foreign   mutual funds as a group               |       | 58,025,352        |       | 0.081             |       | 79,959,878 |   | 0.059 |   |
| Executive officers   as a group                           |       | 184,066           |       | 0.038             |       | 180,430 |   | 0.038 |   |
| Directors as a   group(3)                                 |       | 211,955,657       |       | 44.78             |       | 166,332,491 |   | 35.14 |   |

 

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*(1)**        **Embotelladora Andina ́s Controlling Shareholders is comprised by: Inversiones Freire S.A., Inversiones Freire Alfa S.A., Inversiones Freire Beta S.A., Inversiones Freire Gamma S.A. and Inversiones Freire Delta S.A.; Inversiones Freire Dos S.A., Inversiones Freire Dos Alfa S.A., Inversiones Freire Dos Beta S.A., Inversiones Freire Dos Gamma S.A. e Inversiones Freire Dos Delta S.A., and Inversiones Los Aromos Limitada.**For more information on the Controlling Shareholders please refer to page 114 of the Company’s 2012 Annual Report available on the Company’s website: www.embotelladoraandina.com.*

*(2)**        **Acting as depositary for the ADRs.*

*(3)**        **Represents shares to which Mr. Gonzalo Said Handal, Mr. José Antonio Garcés Silva (junior), Mr. Salvador Said Somavía, Mr. Eduardo Chadwick Claro and Mr. Arturo Majlis Albala would claim direct and indirect.*

 

The Controlling Shareholders act pursuant to an agreement among partners (the “Agreement”). The Agreement establishes that the controlling group will jointly exercise the control of Andina in order to assure most of the votes at shareholders’ meetings and board sessions.

 

The Agreement contemplates as general rule a majority of four of the five parties, except for the following matters that will require unanimity:

 

(i) new businesses different from the current line of business (unless related to “ready to drink products” or products under a Coca-Cola franchise); (ii) amendment of the number of directors; (iii) series of shares ; (iv) split or merger (v) capital increases (subject to certain debt thresholds); and (vi) the joint acquisition of Andina’s Series A shares. The Agreement has an indefinite duration. On the other hand, and subject to the fulfillment of the rules under Title XXV of the Chilean Securities Law, sales options are established in the Agreement for each party with respect to the other at market price plus a premium of 9.9% and 25%, with a 30-day exercise period in June of each year, and in June 2017 and June 2027 respectively; and a 30 day right of first option purchase is set, if at least one of the parties decides to sell.

 

In connection with TCCC’s investment in Andina, TCCC and the Controlling Shareholders entered into a Shareholders’ Agreement dated June 25, 2012 (the “Amended and Restated Shareholders Agreement or Shareholders’ Agreement”-incorporated as Exhibit to the Form 20F), providing for certain restrictions on the transfer of shares of Andina’s capital stock by the Coca-Cola Shareholders and the Controlling Shareholders. Specifically, the Controlling Shareholders are restricted from transferring its Series A shares without the prior authorization of TCCC. The Shareholders’ Agreement also provides for certain corporate governance matters, including the right of the Coca-Cola shareholders to elect two members of our board of directors so long as

 

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TCCC and its subsidiaries collectively own, in aggregate, certain percentage of the Series A shares. In addition, in related agreements, the Controlling Shareholders granted TCCC an option, exercisable upon the occurrence of certain changes in the beneficial ownership of the Controlling Group, to acquire 100% of the Series A shares held by the Controlling Group at a price and in accordance with procedures established in such agreements

 

**B.****           ****Related Party Transactions**

 

In the ordinary course of our business, we engage in a variety of transactions with certain of our affiliates and related parties. Financial information concerning these transactions is set forth in Note 11.3 to our Consolidated Financial Statements and were carried out under the following conditions: (i) they were previously approved by the Company’s Board of Directors, with the abstainment of the director involved in the corresponding case; (ii) the purpose of these transactions was to contribute to the Company’s interest; and (iii) they were consistent to the prevailing market price, terms and conditions at the time of their aproval . Our Directors’ Committee is charged with evaluating transactions with related parties and to report on these transactions to the full board of directors. See “Item 6. Directors, Senior Management and Employees—Directors’ Committee.”

 

Our management believes, to the best of its knowledge, it has complied, in all material respects with the Chilean Public Company law regarding to the transactions with related parties in full force and effect at December 31, 2012. There can be no assurance, however, that these regulations will not be modified in the future.

 

**C.****           ****Interests of Experts and Counsel**

 

**Not applicable.**

 

**ITEM 8.                FINANCIAL INFORMATION**

 

**A.****           ****Consolidated Statements and Other Financial Information**

 

See “Item 18 —Financial Statements” for our Consolidated Financial Statements filed as part of this annual report.

 

**Contingencies**

 

We are party to certain legal proceedings that have arisen during the normal course of business, and we believe none of them are likely to have a material adverse effect on our financial condition. In accordance with accounting principles, the provisions regarding legal proceedings must be recorded if said procedures are reasonably probable to be resolved against the Company.

 

The following table represents accounting provisions made as of December 31, 2012 and 2011, for potential loss contingencies stemming from labor, tax, commercial and other litigation faced by our Company:

 
| ** ** | ** ** | **For the period ended December 31,** | ** ** |
|------------|------------|----------------------------------------------------------------|------------|
| ** ** | ** ** | **2012**                                                       | ** ** | **2011** | ** ** |
| ** ** | ** ** | **Million Ch$**                                           | ** ** | **Million Ch$** | ** ** |
| Chile      |       | 123                                                            |       | 58 |   |
| Brazil     |       | 5,098                                                          |       | 6,871 |   |
| Argentina  |       | 1,600                                                          |       | 1,042 |   |

 

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**Dividend Policy**

 

Pursuant to Chilean law, we must distribute cash dividends equal to at least 30% of our annual net income, calculated in accordance with IFRS, unless otherwise provided for by a unanimous vote of the Series A shareholders. If there is no net income in a given year, we are not legally required to distribute dividends from accumulated earnings. At the annual meeting of shareholders held in April 2012, the shareholders authorized the board of directors to distribute, at its discretion, interim dividends during 2012 and beginnings of 2013.

 

During 2010, 2011 and 2012 the respective shareholders’ meetings approved additional dividend payments to be paid from retained earnings fund in light of significant cash generation. There can be no assurance that these additional dividend payments will be available in the future.

 

The following table sets forth the nominal amount in Chilean pesos of dividends declared and paid per share each year and the U.S. dollar amounts paid to ADR holders, on each of the respective payment dates:

 
| ** ** | ** ** | ** **                 | ** ** | ** **                                                                                    | ** ** | **Series A**                    | ** ** | **Series B**         | ** ** |
|------------|------------|----------------------------|------------|-----------------------------------------------------------------------------------------------|------------|--------------------------------------|------------|---------------------------|------------|
| ** ** | ** ** | **Date   Dividend   Paid** | ** ** | **Fiscal year with respect to   which dividend was   declared** | ** ** | **Ch$ per   share   (nominal)** | ** ** | **US$ per ADR** | ** ** | **Ch$ per share   (nominal)** | ** ** | **US$ per ADR** | ** ** |
| **Year**   |       |                       |       |                                                                                          |       |                                 |       |                      |       |   |   |   |   |
| 2012       |       | 23-Jan                     |       | 2011                                                                                          |       | 8.50                                 |       | 0.01742                   |       | 9.35 |   | 0.01916 |   |
|       |       | 11-May                     |       | 2011                                                                                          |       | 10.97                                |       | 0.02256                   |       | 12.067 |   | 0.02481 |   |
|       |       | 31-May                     |       | Retained   Earnings                                                                           |       | 24.30                                |       | 0.04692                   |       | 26.730 |   | 0.05161 |   |
|       |       | 31-Oct                     |       | 2012                                                                                          |       | 12.240                               |       | 0.0255                    |       | 13.460 |   | 0.02805 |   |
|       |       | 27-Dec                     |       | 2012                                                                                          |       | 24.480                               |       | 0.0511                    |       | 26.930 |   | 0.05621 |   |
| 2011       |       | 27-Jan                     |       | 2010                                                                                          |       | 8.50                                 |       | 0.01734                   |       | 9.35 |   | 0.01907 |   |
|       |       | 12-May                     |       | 2010                                                                                          |       | 13.44                                |       | 0.02870                   |       | 14.784 |   | 0.03157 |   |
|       |       | 26-Jul                     |       | Retained   Earnings                                                                           |       | 50                                   |       | 0.10811                   |       | 55 |   | 0.11892 |   |
|       |       | 26-Jul                     |       | 2011                                                                                          |       | 8.50                                 |       | 0.01838                   |       | 9.35 |   | 0.02022 |   |
|       |       | 27-Oct                     |       | 2011                                                                                          |       | 8.50                                 |       | 0.01696                   |       | 9.35 |   | 0.01866 |   |
| 2010       |       | 28-Jan                     |       | 2009                                                                                          |       | 7.00                                 |       | 0.01344                   |       | 7.70 |   | 0.01479 |   |
|       |       | 28-Apr                     |       | 2009                                                                                          |       | 11.70                                |       | 0.02239                   |       | 12.87 |   | 0.02462 |   |
|       |       | 18-May                     |       | Retained   Earnings                                                                           |       | 50.00                                |       | 0.09283                   |       | 55.00 |   | 0.10212 |   |
|       |       | 27-jul                     |       | 2010                                                                                          |       | 8.50                                 |       | 0.01635                   |       | 9.35 |   | 0.01799 |   |
|       |       | 27-oct                     |       | 2010                                                                                          |       | 8.50                                 |       | 0.01731                   |       | 9.35 |   | 0.01904 |   |

 

**B.****           ****Significant Changes since the Annual Financial Statements**

 

**Not applicable.**

 

**ITEM 9.****                        ****THE OFFER AND LISTING**

 

**A.****           ****Offer and Listing Details**

 

Shares of Andina’s common stock trade in Chile on the *Bolsa de Comercio de Santiago*, the *Bolsa de Valores Electrónica* and the *Bolsa de Valores de Valparaíso*. Also shares of Andina’s common stock have traded in the United States on the New York Stock Exchange (“NYSE”) since July 14, 1994 in the form of 

 

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ADRs, which represent six shares of common stock. The Depositary for the ADRs is The Bank of New York Mellon.

 

The table below shows the high and low daily closing prices of the common stock in Chilean pesos and the trading volume of the common stock on the Santiago Stock Exchange for the periods indicated. It also shows the high and low daily closing prices of the ADRs and the volume traded in the NYSE.

* *
| ** **       | ** ** | ** ** | **Share Volume**   | ** ** | ** **                  | ** ** | ** **        | ** ** | ** **        | ** ** | ** ** | ** ** |
|------------------|------------|------------|-------------------------|------------|-----------------------------|------------|-------------------|------------|-------------------|------------|------------|------------|
| ** **       | ** ** | ** ** | **(in thousands)** | ** ** | **Ch$ per Share** | ** ** |
| ** **       | ** ** | ** ** | **Series A**       | ** ** | **Series B**           | ** ** | **Series A** | ** ** | **Series B** | ** ** |
| ** **       | ** ** | ** ** | ** **              | ** ** | ** **                  | ** ** | **High**          | ** ** | **Low**           | ** ** | **High**   | ** ** | **Low** | ** ** |
|             | 2010       |       | 15,196                  |       | 110,049                     |       | 2,072             |       | 1,282             |       | 2,501      |       | 1,621 |   |
|             | 2011       |       |                    |       |                        |       |              |       |              |       |       |       |   |   |
| 1st Quarter      |       |       | 15,153                  |       | 23,597                      |       | 2,120             |       | 1,749             |       | 2,521      |       | 1,985 |   |
| 2nd Quarter      |       |       | 9,429                   |       | 19,655                      |       | 2,000             |       | 1,828             |       | 2,336      |       | 2,150 |   |
| 3rd Quarter      |       |       | 10,555                  |       | 19,600                      |       | 2,000             |       | 1,600             |       | 2,300      |       | 1,780 |   |
| 4th Quarter      |       |       | 3,279                   |       | 16,748                      |       | 1,940             |       | 1,765             |       | 2,400      |       | 1,999 |   |
|             | 2012       |       |                    |       |                        |       |              |       |              |       |       |       |   |   |
| 1st Quarter      |       |       | 10,809                  |       | 20,786                      |       | 2,300             |       | 1,847             |       | 2,780      |       | 2,220 |   |
| 2nd Quarter      |       |       | 13,897                  |       | 19,454                      |       | 2,350             |       | 2,135             |       | 2,800      |       | 2,552 |   |
| 3rd Quarter      |       |       | 10,339                  |       | 23,451                      |       | 2,300             |       | 2,090             |       | 2,835      |       | 2,440 |   |
| 4th Quarter      |       |       | 10,832                  |       | 59,746                      |       | 2,550             |       | 2,220             |       | 3,155      |       | 2,728 |   |
| Last six months: |       |       |                    |       |                        |       |              |       |              |       |       |       |   |   |
| oct-12           |       |       | 3,675                   |       | 13,408                      |       | 2,550             |       | 2,220             |       | 3,155      |       | 2,728 |   |
| nov-12           |       |       | 4,156                   |       | 27,602                      |       | 2,540             |       | 2,375             |       | 3,100      |       | 2,991 |   |
| Dec-12           |       |       | 3,001                   |       | 18,737                      |       | 2,460             |       | 2,375             |       | 3,100      |       | 2,950 |   |
| Jan-13           |       |       | 2,921                   |       | 4,144                       |       | 2,440             |       | 2,312             |       | 3,140      |       | 2,960 |   |
| feb-13           |       |       | 1,575                   |       | 6,185                       |       | 2,585             |       | 2,440             |       | 3,320      |       | 3,002 |   |
| mar-13           |       |       | 4,107                   |       | 6,299                       |       | 2,622             |       | 2,470             |       | 3,350      |       | 3,000 |   |

 
| ** **       | ** ** | ** ** | **ADR Volume**     | ** ** | ** **                  | ** ** | ** **        | ** ** | ** **        | ** ** | ** ** | ** ** |
|------------------|------------|------------|-------------------------|------------|-----------------------------|------------|-------------------|------------|-------------------|------------|------------|------------|
| ** **       | ** ** | ** ** | **(in thousands)** | ** ** | **US$ per Share** | ** ** |
| ** **       | ** ** | ** ** | **Series A**       | ** ** | **Series B**           | ** ** | **Series A** | ** ** | **Series B** | ** ** |
| ** **       | ** ** | ** ** | ** **              | ** ** | ** **                  | ** ** | **High**          | ** ** | **Low**           | ** ** | **High**   | ** ** | **Low** | ** ** |
|             | 2010       |       | 2,076                   |       | 7,140                       |       | 29                |       | 15                |       | 31         |       | 19 |   |
|             | 2011       |       |                    |       |                        |       |              |       |              |       |       |       |   |   |
| 1st Quarter      |       |       | 297                     |       | 1,764                       |       | 25.72             |       | 20.65             |       | 31.41      |       | 25.19 |   |
| 2nd Quarter      |       |       | 200                     |       | 1,161                       |       | 25.27             |       | 22.69             |       | 29.75      |       | 27.35 |   |
| 3rd Quarter      |       |       | 198                     |       | 1,153                       |       | 26.25             |       | 19.25             |       | 30.17      |       | 21.00 |   |
| 4th Quarter      |       |       | 216                     |       | 1,011                       |       | 24.05             |       | 19.65             |       | 29.48      |       | 23.62 |   |
|             | 2012       |       |                    |       |                        |       |              |       |              |       |       |       |   |   |
| 1st Quarter      |       |       | 645                     |       | 1,257                       |       | 28.40             |       | 20.87             |       | 34.63      |       | 26.21 |   |
| 2nd Quarter      |       |       | 150                     |       | 693                         |       | 29.00             |       | 24.29             |       | 35.30      |       | 29.04 |   |
| 3rd Quarter      |       |       | 267                     |       | 1,117                       |       | 28.51             |       | 25.52             |       | 36.31      |       | 30.60 |   |
| 4th Quarter      |       |       | 214                     |       | 2,963                       |       | 33.16             |       | 27.59             |       | 39.85      |       | 34.06 |   |
| Last six months: |       |       |                    |       |                        |       |              |       |              |       |       |       |   |   |
| oct-12           |       |       | 81                      |       | 713                         |       | 33.16             |       | 27.59             |       | 39.85      |       | 34.06 |   |
| nov-12           |       |       | 69                      |       | 1,929                       |       | 31.43             |       | 29.46             |       | 38.72      |       | 36.99 |   |
| Dec-12           |       |       | 65                      |       | 321                         |       | 31.47             |       | 29.25             |       | 39.19      |       | 37.28 |   |
| Jan-13           |       |       | 50                      |       | 270                         |       | 31.43             |       | 30.03             |       | 39.94      |       | 37.75 |   |
| feb-13           |       |       | 69                      |       | 227                         |       | 33.34             |       | 30.48             |       | 41.85      |       | 38.71 |   |
| mar-13           |       |       | 42                      |       | 301                         |       | 34.07             |       | 30.84             |       | 42.23      |       | 38.39 |   |

 

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*Source:Bloomberg*

 

The total number of registered ADR holders Andina had at December 2012 was 35 (23 in the Series A ADRs and 12 in the Series B ADRs). As of this date the ADRs represented 6.3% of the total number of our issued and outstanding shares. On December 31, 2012, the closing price for the Series A shares on the Santiago Stock Exchange was Ch$2,436.90 per share (US$29.94 per Series A ADR), and Ch$3,011.70 for the Series B shares (US$37.97 per Series B ADR). At December 31, 2012, there were 1,512,260 Series A ADRs (equivalent to 9,073,560 Series A shares) and 8,377,208 Series B ADRs (equivalent to 50,263,248 Series B shares).

 

Trading activity on the Santiago Stock Exchange is on average substantially less than that on the principal national securities exchanges in the United States. We estimate that for the year ended December 31, 2012, Andina’s shares were traded on the Santiago Stock Exchange on an average of approximately 73.89% and 100% of such trading days, for Series A and Series B shares respectively.

 

Other than as previously discussed in “Item 7-Major Shareholders” we are not aware of any other existing contracts or documents that impose material limitations or qualifications on the rights of shareholders of our listed securities.

 

**The Yankee Bonds**

 

Our 7 5/8% Notes due 2027 and 7 7/8% Notes due 2097 are not listed on any stock exchange or other regulated market and through its subsidiary, Abisa Corp S.A. (formerly Pacific Sterling), Embotelladora Andina S.A. repurchased its Yankee Bonds issued on the U.S. Market during the years 2000, 2001, 2002, 2007 and 2008. The entire placement amounted to US$350 million, of which US$200 million are outstanding and are presented after deducting the long-term liability from the other financial liabilities item.

 

**Debt Securities**

 

The Central Bank is responsible, *inter alia*, for Chile’s monetary policies and exchange controls. The Central Bank has authorized Chilean issuers to offer bonds in Chile and abroad under the terms of Chapter XIV of the Compendium of Foreign Exchange Regulations (*Compendio de Normas de Cambios Internacionales* or CFER). The following paragraphs summarize some of the Central Bank rules on international bond issuances. This summary does not intend to be complete and those interested in a full description should refer to Chapter XIV of the CFER.

 

Effective April 19, 2001 the CFER greatly simplified the procedure to register capital contributions, investments and foreign loans, including bonds issuances. Payments or remittances of funds, to or from Chile, in connection with credits granted abroad should be made through the Formal Exchange Market, which is composed by the main commercial banks that operate in Chile. When foreign currency resulting from loans or bonds is made available to the beneficiary in the country, the intervening bank should issue the pertinent “Form” and request certain information from the debtor and creditor, as applicable, pursuant to Chapter XIV.

 

Payments or remittances of foreign currency as capital, interest, adjustments, profits and other benefits originating in the transactions regulated under Chapter XIV must be reported to the Central Bank as follows: (i) if the foreign currency represents a remittance made from Chile, the intervening Formal Exchange Market bank should issue the above form; (ii) the issuer or borrower should inform the Central Bank, within the first 10 days of the month following the date of the transaction, if the foreign currency used to make the pertinent payments originates from credit transactions for which the foreign currency has been used directly abroad or if the corresponding payment obligation is fulfilled abroad using funds other than those indicated in Chapter XIV.

 

Any change in the terms of the transaction must be reported to the Central Bank within 10 days after formalization. This requirement applies, among others, to the substitution of the debtor or creditor, total or

 

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partial assignments of credits or rights and the modification of the financial terms of the respective credit regarding investments or capital contributions.

 

Exchange rule amendments dated April 2001 established that transactions recorded prior to April 19, 2001 will continue to be governed by the rules in force at the time they were recorded, but that the parties may choose to apply the new regulations.

 

These procedures also apply to foreign loans obtained through the placement of convertible bonds, in which case the issuer shall report to the Central Bank any increase or decrease in their registered amount as a result of the conversion of convertible bonds denominated and payable in Chilean pesos, for other convertible bonds denominated and payable in foreign currency or shares, as applicable, acquired by foreign investors with proceeds that had entered Chile under the terms of Chapter XIV.

 

According to Chapter XIV, the Central Bank established that credits relating to acts, agreements or contracts which create a direct obligation of payment or remittance of foreign currency abroad by persons domiciled or residing in Chile, that exceed on an individual basis the sum of US$100,000 or the equivalent in other foreign currencies, absent any special rule in the CFER, shall be reported to the Chilean Central Bank by the obligor either directly or through a Formal Exchange Market entity using the forms contained in the CFER, within 10 days from formalization.

 

In February 1999, after obtaining the requisite authorization from the Central Bank, we issued bonds in the international markets, subject to the exchange regulations in effect at that time. The main difference between the exchange regime applicable to our bond issuances and those currently in effect, is that in the case of our bond issuances the Central Banks warrants the access to currency markets. However, the regime applicable to our bond issuance has less flexibility as far as the procedures to carry out payments or remittances to bond holders.

 

We cannot give any assurance that the Central Bank will not impose future restrictions applicable to the holders of debt securities, nor can we make any evaluation of the duration or impact of such restrictions, if imposed.

 

**B.****           ****Markets.**

 

See Item 9. The Offer and Listing –– A. Offer and Listing Details.

 

**ITEM 10.              ADDITIONAL INFORMATION**

 

**A.****           ****Share Capital**

 

**Not applicable.**

 

**B.****           ****Memorandum and Articles of Association**

 

Our By-Laws (“*Estatutos*”) are incorporated as Exhibit to this Form 20F, and are also available on our website www.embotelladoraandina.com, under Corporate Governance/Board of Directors/Deeds of Incorporation

 

**C.****           ****Material Contracts**

 

On August 30, 2012, Andina Brazil entered into a Share Purchase and Sale Agreement for the acquisition of 40% of the capital shares of Sorocaba Refreshments S.A., a manufacturer authorized by TCCC, based in the city of Sorocaba, State of São Paulo, owned by Compañía Maranhense de Refrigerantes (sucesora de Renosa Ind. Brasileira de Bebidas S/A) and in November 2012 RJR paid the purchase price of R$146,946,044.00

 

The General Extraordinary Shareholders Meeting of Embotelladora Andina S.A. held on June 25, 2012, approved the merger (by absorption) of Embotelladora Coca Cola Polar S.A. and Embotelladora

 

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Andina S.A. On September 28, 2012 Embotelladora Andina S.A. and Embotelladora Coca Cola Polar S.A. signed the public deed of the merger of their operations, in which they declared that merger has been materialized and perfected on October 1, 2012. This operation began on February 2, 2012, and allows Embotelladora Andina S.A. to consolidate its leading position in the business of bottling products licensed by The Coca-Cola Company in the southern cone and generate opportunities for growth and generation of value for its shareholders and employees. In practice, Embotelladora Andina S.A. is the second largest Coca-Cola bottler in South America and the seventh in the world, with operations in Argentina, Brazil, Chile and Paraguay. The transaction took the form of a merger (by absorption) and the exchange of newly issued shares of Andina, at a ratio of 0.33268606071 shares of Andina Series A shares and 0.33268606071 Andina Series B shares for each share of Embotelladoras Coca-Cola Polar S.A. The final process of exchange of shares took place on October 16, 2012.

 

During 2012, Andina Argentina held, among others, the following contracts with economic or strategic transcendent content: natural gas supply agreements, and electricity supply agreements; IP telephony services agreement (with supplier SIEMENS); purchase of new forklift agreement (with supplier Toyota) which are necessary due to enlargement of the Cordoba Plant Deposit; and agreement for the extension of the Deposit of Final Products and Patio of the Cordoba Plant (13,600 m2) and at the Bahia Blanca Plant (2,800 m2).

 

During 2012, PARESA executed a contract with TECNOEDIL S.A. building company for the construction of Warehouse 9, extension of Warehouse 8 for forklifts and the construction of the Distribution building, which represents additional storage capacity, the total contract value Gs.8,262,784,550. Additionally, on June 1, 2012 and agreement was signed with AZPA (Azucarera Paraguaya S.A.) for the supply of sugar, raw material, which considers the provision of 38.500 tons (Thirty eight thousand five hundred tons) until May 31, 2013, the total value of the contract is Gs.192,500,000,000.

 

In October 2011, Andina Brazil entered into an agreement with the company “Light Esco — Prestação de Serviços S/A”, for the construction and operation of an electrical cogeneration station at the Jacarepaguá bottling facility. The term of this agreement is 15 years, since the date on which the station begins operating, which would enter into operation towards the year 2013 and will ensure the supply of energy for the plant. The estimated value of the agreement is of $738 million reals. At the end of the contractual term, ownership of the cogeneration station will be transferred to Andina Brazil and equipment maintenance and upgrades will be carried out by Light Esco.

 

On June 30, 2011, Andina Brazil together with the other bottlers of the Coca-Cola System in Brazil, and Recofarma (company of the Coca-Cola Group Brazil), signed an amendement to the agreement with SABB - SISTEMA DE ALIMENTOS E BEBIDAS DO BRASIL, new corporate name of Sucos del Valle, approving the incorporation of Mais Indústria de Alimentos Ltda to SABB, and bottlers remained with 50% of the share capital of SABB. With this agreement, Andina Brazil went on to have a total ownership of 5.74% of the share capital of SABB.

 

During January of 2011, the juice business in Chile was restructured, allowing the incorporation of the other Coca-Cola bottlers in Chile in the property of Vital S.A. which changed its name to Vital Jugos S.A. Andina, Embonor S.A. and Embotelladora Coca-Cola Polar S.A. own 57%, 28% and 15%, respectively, of the outstanding capital of Vital Jugos S.A.

 

During 2011, Edasa, among others, entered into the following materially significant agreements: construction of the new plant for raw sugar; purchase of machinery and equipment for the REF PET line N°8 and N°7 (600 bottles per minute) ; construction and equipment for a new filling line for water and sensitive products; supply of natural gas; supply of electric power and long distance and inter-deposit service agreements.

 

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**D.****           ****Exchange Controls**

 

**Foreign Investment and Exchange Controls in Chile**

 

The Central Bank is responsible, among other matters, for setting monetary policies and exchange controls in Chile. As of April 19, 2001, the Chilean Central Bank (“CCB”) eliminated prior foreign exchange controls, imposed certain reporting requirements and determined that certain operations be conducted through the Formal Exchange Market (“FEM”). The main purpose of these amendments, as declared by the Central Bank, is to facilitate the flow of capital into Chile and outside the country and to foster foreign investment.

 

Equity investments in Chile (including investments in stock) by non-resident persons or entities must comply with some of the existing exchange control restrictions. Foreign investments may be registered with the Foreign Investment Committee (*Comité de Inversiones Extranjeras*) in accordance with Law N° 600 of 1974 and amendments or with the Central Bank in accordance with Chapter XIV of the Compendium of Foreign Exchange Regulations (*Compendio de Normas de Cambios Internacionales* or CFER) of the Central Bank. In the case of Decree Law N° 600, foreign investors execute a foreign investment agreement with Chile, thus guaranteeing access to the FEM.  However, investors under Decree Law N° 600 will only be able to repatriate capital one-year after the investment. Earnings can be remitted abroad at any time. In the case of CFER, capital as well as earnings can be repatriated at any time, without an agreement with the Central Bank.

 

During 2001 the CCB eliminated certain exchange controls.  For instance, it revoked Chapter XXVI of the CFER, which regulated the issuance and placement of ADRs by Chilean corporations. Pursuant to the new rules, the Central Bank’s approval is no longer a pre-condition for ADR issuances or foreign investment contracts with the CCB. ADR issuances are now regarded as an ordinary foreign investment, and the only requirements are that the CCB be informed of the transaction, by fulfilling the rules of Chapter XIV of the CFER, that mainly establishes that the monies come in or leave the country exclusively through the Formal Exchange Market, if the recipient of the investment decides to enter the foreign currency to the country or if it carries out payments or remittances from Chile.

 

Notwithstanding these changes, exchange transactions authorized prior to April 19, 2001 remained subject to the rules in force as of the date of such transactions.  The new exchange regime did not affect Chapter XXVI of the CFER and the Foreign Investment Contract - FIC between Andina, the Central Bank and The Bank of New York Mellon (as depositary of the shares represented by ADRs).  Notwithstanding the previous, the parties to the FIC may choose to adopt the norms imposed by the CCB, resigning to those of the FIC, and which has been the option we have taken until this date. The FIC is the agreement by which access to the FEM is given to the depositary and ADR holders.  The FIC adopted the dispositions of Chapter XXVI and was celebrated pursuant to Article 47 of the Constitutional Organic Act of the CCB.

 

Under Chapter XXVI of the CFER, if the funds to purchase the common shares underlying the ADRs are brought into Chile, the depositary must deliver, on behalf of foreign investors, an annex providing information on the transaction to the Formal Exchange Market entity involved, together with a letter instructing such entity to deliver the foreign currency or the equivalency in pesos, on or before the date the foreign currency is brought or is to be brought into Chile.

 

Repatriation of amounts received with respect to deposited common shares or common shares withdrawn from deposits on surrender of ADRs (including amounts received as cash dividends and proceeds from the sale in Chile of the underlying common shares and any rights arising there from) need be made through the FEM. The FEM entity intervening in the repatriation must provide certain information to the CCB on the following banking business day.

 

Under Chapter XXVI and the FIC, the CCB agreed to grant to the depositary, on behalf of ADR holders, and to any investor not residing nor domiciled in Chile who acquire shares or replace ADRs for common stock, which we refer to as the Withdrawn Shares, FEM access to convert Chilean pesos into U.S. dollars and to remit those dollars outside Chile including amounts received as: (i) cash dividends; (ii) proceeds from the sale in Chile of Withdrawn Shares; (iii) proceeds from the sale in Chile of preemptive rights to subscribe for additional shares; (iv) proceeds from the liquidation, merger or consolidation of

 

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Andina; (v) proceeds resulting from capital decreases or earnings or liquidations; and (vi) other distributions, including those in respect of any re-capitalization resulting from holding shares, ADRs or by Withdrawn Shares.

 

The guarantee of FEM access under the FIC will extend to the participants of the ADR offering if the following requirements are met: (i) that the funds to purchase the shares underlying the ADRs are brought into Chile and converted into Chilean pesos through the FEM; (ii) that the purchase of the underlying shares is made on a Chilean stock exchange; and (iii) that within five business days from the conversion of the funds into Chilean pesos, the CCB is informed that the funds converted were used to purchase the underlying shares, if those funds are not invested in shares within that period, it can access the FEM to reacquire foreign currency, provided that the request is submitted to the CCB within seven banking business days of the initial conversion into pesos.

 

Chapter XXVI provides that FEM access in connection with dividend payments is conditioned to our certifying to the CCB that a dividend payment has been made and that any applicable tax has been withheld. Chapter XXVI also provides that FEM access in connection with the sale of Withdrawn Shares, or distribution thereon, is conditioned upon receipt by the CCB (i) a certificate by the depositary or custodian, as the case may be, that the shares have been withdrawn in exchange for delivery of the appropriate ADRs, and (ii) a waiver of the benefits of the FIC with respect to ADRs (except in connection with the proposed sale of the shares) until the Withdrawn Shares are re-deposited.

 

FEM access under any of the circumstances described above is not automatic. Pursuant to Chapter XXVI, such access needs the BCC’s approval on a request submitted to that end through a banking institution established in Chile. The FIC provides that if the BCC has not acted upon the request within seven banking days, the request is deemed to have been granted.

 

Under current Chilean law, the BCC cannot unilaterally change the FIC. The Chilean Courts (although not binding on future judicial decisions) also have established that the FIC cannot be annulled by future legislative changes. No assurance can be given, however, that additional Chilean restrictions applicable to the holders of ADRs, to the disposition of underlying shares, or to the repatriation of proceeds from their disposition, will not be imposed in the future; nor can there be any assessment of the duration or impact of any restrictions that might be imposed. If for whatever reason, including changes in the FIC or Chilean law, the Depositary is prevented from converting Chilean pesos into U.S. dollars; the investors shall receive dividends or other payments in Chilean pesos, which shall subject the investors to exchange rate risks. It cannot be assured that the CFER, as amended, or any other exchange regulation will not be amended in the future, or that if new regulations are enacted that they shall have no material bearing on Andina or the ADR holders.

 

No assurance can be given that Andina will be able to purchase U.S. dollars in the local exchange market at any time in the future, nor that any such purchase will be for the amounts necessary to pay any sum due under any of its capital or debt instruments. Likewise, it is not possible to guarantee that changes to the regulations of the CCB or other legislative changes relating to exchange controls will not restrict nor impair Andina’s ability to purchase U.S. dollars in order to make payment on its debt instruments.

 

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**E.****           ****Taxation**

 

**Tax Considerations Relating to Equity Securities**

 

***Chilean Tax Considerations***

 

The following discussion summarizes the material Chilean income tax consequences of an investment in Andina’s stock or ADRs by an individual who is not domiciled or resident in Chile or a legal entity that is not organized under the laws of Chile and does not have a permanent establishment in Chile (a “foreign holder”). This discussion is based upon Chilean income tax laws presently in force, including Ruling No. 324 of January 29, 1990 of the *Servicio de Impuestos Internos* (the Chilean Internal Revenue Service or “SII”) and other applicable regulations and rulings that are subject to change without notice. The discussion is not intended as a tax advice to any particular investor, which can be rendered only in light of that investor’s particular tax situation. Each investor or potential investor is encouraged to seek independent tax advice with respect to consequences of investing in Andina’s stock or the ADRs.

 

Under Chilean law, all matters regarding taxation such as tax rates (including tax rates applicable to foreign investors), the computation of taxable income for Chilean purposes, the manner in which Chilean taxes are imposed and collected, and others thereof, may only be imposed or amended by a law enacted by Congress. In addition, the SII is empowered to issue rulings and regulations of either general or specific application, and to interpret the provisions of Chilean tax law. Chilean tax may not be assessed retroactively against taxpayers who act in good faith relying on such rulings, regulations and interpretations, but the SII may change said rulings, regulations and interpretations prospectively. There is no income tax treaty in force between Chile and the United States.

 

*Cash Dividends and Other Distributions*

 

Dividends we pay with respect to the shares of stock held by a foreign holder will be subject to Chilean withholding tax at a rate of 35% (the “Withholding Tax”). The tax paid by the Company on profits originating from Chile from which the dividends are paid (the “First Category Tax”), imposed at a rate of 20%, will be credited against the Withholding Tax. The credit will increase the base upon which the Withholding Tax is imposed. Consequently, dividends that are attributable to current profits will be subject to an effective dividend withholding tax rate of 18.7%, calculated as follows:

 
| ** **                                                                                  | ** ** | **Ch$ ** | ** ** |
|---------------------------------------------------------------------------------------------|------------|---------------|------------|
| Company taxable   income                                                                    |       | 100.0         |       |
| First Category Tax   (20.0% of Ch$100)                                                      |       | (20.0         | )          |
| Net distributable   income                                                                  |       | 80.0          |       |
|                                                                                        |       |          |       |
| Dividend   distributed                                                                      |       | 80.0          |       |
|                                                                                        |       |          |       |
| Withholding Tax   (35% of the sum of Ch$80.0 dividend plus Ch$20.0 First Category Tax paid) |       | (35.0         | )          |
| Credit for First   Category Tax                                                             |       | 20.0          |       |
|                                                                                        |       |          |       |
| Net additional tax   withheld                                                               |       | (15.0         | )          |
| Net dividend   received                                                                     |       | 65.0          |       |
|                                                                                        |       |          |       |
| Effective dividend   withholding rate (15.0/80.0)                                           |       | 18.7          | %          |

 

Profits originating from Brazil, Argentina or Paraguay have a different tax treatment for credit on First Category Tax.

 

For purposes of determining the amount of First Category Tax we pay on profits from which the dividends are paid, dividends are attributed to our oldest retained profits.

 

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The two aforementioned factors generate a profit origin mix and thus, an additional net tax withholding.

 

Dividend distributions made in property will be subject to the same Chilean tax rules as cash dividends. Our stock dividends are not subject to Chilean taxation.

 

*Capital Gains*

 

Gains recognized from the sale or exchange of ADRs by a foreign holder outside Chile will not be subject to Chilean taxation. Gains recognized on a sale or exchange of shares of stock will be subject to both the First Category Tax and the Withholding Tax (the former being credited against the latter) if either: (i) the foreign holder has held the shares of common stock for less than one year, (ii) the foreign holder acquired and disposed of the shares of common stock in the ordinary course of its business or as an habitual trader of shares; or (iii) the foreign holder transfers shares of common stock to a related person, as defined by Chilean tax law. In all other cases, gain on the disposition of shares of common stock will be subject only to the First Category Tax, currently imposed at a rate of 17%, except if it is for shares resulting from an exchange of ADRs for shares (flow back) in which case, the Chilean Internal Revenue Service pursuant to Oficio 1,705 dated May 15, 2006 has interpreted that said shares may benefit from article 18 ter if the ADRs were acquired through a stock broker or by any other circumstance stipulated by that norm.

 

The tax basis of shares of common stock received in exchange for ADRs will be determined in accordance with the valuation procedure set forth in the deposit agreement, which values shares of common stock at the highest reported sales price at which they trade on the Santiago Stock Exchange on the date of the withdrawal of the shares of common stock from the depositary. Consequently, the conversion of ADRs into shares of common stock, and the immediate sale of the shares for the value established under the deposit agreement, will not generate a capital gain subject to taxation in Chile. However, in the case where the sale of the shares is made on a day that is different than the date in which the exchange is recorded, capital gain subject to taxation in Chile may be generated. In connection thereto, on October 1, 1999 the Chilean Internal Revenue Service issued Ruling No. 3708 whereby it allowed Chilean issuers of ADRs to amend the deposit agreements to which they are parties in order to include a clause that states that, in the case that the exchanged shares are sold by the ADRs’ holders on a Chilean Stock Exchange either on the same day in which the exchange is recorded or within the two business days prior to such date, the acquisition price of such exchanged shares shall be the price registered in the invoice issued by the stock broker that participated in the sale transaction. Consequently, should this amendment be included in the deposit agreement, the capital gain that may be generated if the exchange date is different than the date in which the shares received in exchange for ADRs were sold, will not be subject to taxation. We reiterate that if a contributor in good faith adopts Oficio 1,705, then the excess value will not be subject to taxation in Chile.

 

The distribution and exercise of preemptive rights relating to the shares of common stock will not be subject to Chilean taxation. Any gain on the sale or assignment of preemptive rights relating to the shares of common stock will be subject to both the First Category Tax and the Withholding Tax (the former being credited against the latter).

 

*Other Chilean Taxes*

 

No Chilean inheritance, gift or succession taxes apply to the transfer or disposition of the ADRs by a foreign holder, but such taxes generally will apply to the transfer at death or by gift of shares of common stock by a foreign holder. No Chilean stamp, issue, registration or similar taxes or duties apply to foreign holders of ADRs or shares of common stock.

 

*Withholding Tax Certificates*

 

Upon request, we will provide to foreign holders appropriate documentation evidencing the payment of Chilean withholding taxes.

 

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***United States Tax Considerations Relating toADRs or Shares of Common Stock***

 

The following discussion summarizes certain U.S. federal income tax consequences of an investment in ADRs or shares of common stock. This discussion is based upon U.S. federal income tax laws presently in force. The discussion is not a full description of all tax considerations that may be relevant to a decision to purchase ADRs or shares of common stock. In particular, the discussion is directed only to U.S. holders (as defined below) that hold ADRs or shares of common stock as capital assets, and it does not address the tax treatment of holders that are subject to special tax rules under the Internal Revenue Code of 1986 as amended (the “Code”), such as financial institutions, regulated investment companies, real estate investment trusts, investors in pass-through entities, dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, insurance companies, tax-exempt entities, persons holding ADRs or shares of common stock as part of a hedging, integrated, conversion or constructive sale transaction or a straddle, holders of 10% or more of our voting shares, persons liable for alternative minimum tax or persons whose “functional currency” is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Code and regulations, rulings and judicial decisions there under as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. In addition, the discussion below assumes that the Deposit Agreement, and all other related agreements, will be performed in accordance with their terms. If a partnership holds our ADRs or shares of common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partners in a partnership holding ADRs or shares of common stock should consult their tax advisors. This summary does not contain a detailed description of all the United States federal income tax consequences to a holder in light of its particular circumstances and does not address the effects of any state, local or non-United States tax laws. **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 ADRs or shares of common stock.**

 

As used herein, the term “U.S. holder” means a holder of ADRs or shares of common stock that is (i) an individual U.S. citizen or resident, (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust that: (a) is subject to the primary supervision of a court within the United States and with respect to which one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

 

If the obligations contemplated by the deposit agreement are performed in accordance with its terms, ADR holders generally will be treated for U.S. federal income tax purposes as the owners of the shares of common stock represented by those ADRs. Deposits or withdrawals of shares of common stock by U.S. holders in exchange for ADRs will not result in the realization of gain or loss for U.S. federal income tax purposes. The U.S. Treasury has expressed concerns that intermediaries in the chain of ownership bewtween the holder of an ADR and the issuer of the security underlying the ADR may be taking actions that are inconsistent with the claiming of foreign tax credits for U.S. holders of ADRs. Such actions would also be inconsistent with the claiming of the reduced rate of tax, described below, applicable to dividends received by certain non-corporate holders. Accordingly, the analysis of the creditability of Chilean taxes and the availability of the reduced tax rate for dividends received by certain non-corporate holders, each described below, could be affected by actions taken by that intermediaries in the chain of ownership bewtween the holder of an ADR and the Company.

 

*Cash Dividends and Other Distributions*

 

Cash dividends (including the amount of any Chilean taxes withheld) paid to U.S. holders with respect to the ADRs or shares of common stock generally will be treated as dividend income to such U.S. holders, to the extent paid out of current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such income will be includable in the gross income of a U.S. holder as ordinary income on the day received by the Depositary, in the case of ADRs, or by the U.S. holder, in the case of shares of common stock. The dividends will not be eligible for the dividends received deduction allowed to corporations under the Code. With respect to non-corporate U.S. holders, certain dividends received before January 1, 2011 from a qualified foreign corporation may be subject to reduced rates of taxation. A foreign corporation is treated as

 

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a qualified foreign corporation with respect to dividends received from that corporation on shares (or ADRs backed by such shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that our ADRs (which are listed on the New York Stock Exchange), but not our shares of common stock, are readily tradable on an established securities market in the United States. Thus, we do not believe that dividends that we pay on our shares of our common stock that are not backed by ADRs currently meet the conditions required for these reduced tax rates. There can be no assurance that our ADRs will be considered readily tradable on an established securities market in later years. Non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. Non-corporate U.S. holders should consult their own tax advisors regarding the application of these rules given their particular circumstances.

 

Dividends paid in Chilean pesos will be includable in income in a U.S. dollar amount based on the exchange rate in effect on the day of receipt by the Depositary, in the case of ADRs, or by the U.S. holder in the case of shares of common stock, regardless of whether the Chilean pesos are converted into U.S. dollars. If the Chilean pesos received as dividends are not converted into U.S. dollars on the date of receipt, a U.S. holder will have a basis in the Chilean pesos equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the Chilean pesos will be treated as U.S. source ordinary income or loss, regardless of whether the pesos are converted into U.S. dollars.

 

The Chilean Withholding Tax (net of any credit for the First Category Tax) paid by or for the account of any U.S. holder may be eligible, subject to generally applicable limitations and conditions, for credit against the U.S. holder’s federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid with respect to the ADRs or shares of common stock generally will be foreign source income and will generally constitute passive category income. Further, in certain circumstances, a U.S. holder that (i) has held ADRs or shares of common stock for less than a specified minimum period during which it is not protected from risk of loss or (ii) is obligated to make payments related to the dividends, will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on ADRs or shares of common stock. The rules governing the foreign tax credit are complex. Investors are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

 

Distributions to U.S. holders of additional shares of common stock or preemptive rights with respect to shares of common stock that are made as part of a pro rata distribution to all shareholders of the Company generally should not be subject to U.S. federal income tax.

 

To the extent that the amount of any distribution exceeds our current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the ADRs or shares of common stock (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the investor on a subsequent disposition of the ADRs or shares of common stock), and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. Consequently, such distributions in excess of our current and accumulated earnings and profits generally would not give rise to foreign source income and a U.S. holder generally would not be able to use the foreign tax credit arising from any Chilean withholding tax imposed on such distributions unless such credit can be applied (subject to applicable limitations) against U.S. taxes due on other foreign source income in the appropriate category for foreign tax credit purposes. However, we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles. Therefore, a U.S. holder should expect that a distribution will generally be treated as a dividend (as discussed above).

 

We do not believe that we are, for U.S. federal income tax purposes, a passive foreign investment company (a “PFIC”), and expect to continue our operations in such a manner that we will not be a PFIC. If, however, we are or become a PFIC, U.S. holders could be subject to additional U.S. federal income taxes on

 

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gain recognized with respect to the ADRs or shares of common stock and on certain distributions, plus an interest charge on certain taxes treated as having been deferred by the U.S. holder under the PFIC rules of the U.S. federal income tax laws.

 

Non-corporate U.S. holders will not be eligible for reduced rates of taxation on any dividends received from us prior to January 1, 2011, if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.

 

*Capital Gains*

 

U.S. holders that hold ADRs or shares of common stock as capital assets will recognize capital gain or loss for federal income tax purposes on the sale or other disposition of such ADRs or shares (or preemptive rights with respect to such shares) held by the U.S. holder or the Depositary. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by a U.S. holder generally will be treated as U.S. source gain or loss. Consequently, in the case of a disposition of shares of common stock (which, unlike a disposition of ADRs, may be taxable in Chile), the U.S. holder may not be able to use the foreign tax credit for Chilean tax imposed on the gain unless it can apply (subject to applicable limitations) the credit against tax due on other income from foreign sources.

 

*Estate and Gift Taxation*

 

As discussed above under “Chilean Tax Considerations — Other Chilean Taxes,” there are no Chilean inheritance, gift or succession taxes applicable to the transfer or disposition of ADRs by a foreign holder, but such taxes generally will apply to the transfer at death or by gift of shares of common stock by a foreign holder. The amount of any inheritance tax paid to Chile may be eligible for credit against the amount of U.S. federal estate tax imposed on the estate of a U.S. holder. U.S. holders should consult their personal tax advisors to determine whether and to what extent they may be entitled to such credit. The Chilean gift tax generally will not be treated as a creditable foreign tax for U.S. tax purposes.

 

*Information Reporting and Backup Withholding*

 

In general, information reporting requirements will apply to dividends in respect of ADRs or the shares of common stock or the proceeds received on the sale, exchange, or redemption of the ADRs or the shares of common stock paid within the United States (and in certain cases, outside of the United States) to U.S. holders other than certain exempt recipients. A backup withholding tax may apply to such payments if the U.S. holder fails to provide an accurate taxpayer identification number or certification of other exempt status or fails to report interest and dividends required to be shown on its federal income tax returns. The amount of any backup withholding from a payment to a U.S. holder will be allowed as a refund or a credit against the U.S. holder’s U.S. federal income tax liability, provided the required information is furnished to the Internal Revenue Service.

 

**Tax Considerations Relating to Debt Securities**

 

***General***

 

In October 1997, we issued US$100 million of 7.625% Unsecured Notes due 2027 and US$100 million of 7.875% Unsecured Notes due 2097 (together the “Debt Securities”). The following is a summary of certain Chilean tax and U.S. federal income tax considerations relating to the purchase, ownership and disposition of Debt Securities. The summary does not purport to be a comprehensive description of all tax considerations that may be relevant to a decision to purchase Debt Securities. This summary does not describe any tax consequences arising under the laws of any state, locality or taxing jurisdiction other than the United States and Chile.

 

This summary is based on the tax laws of Chile and the United States as in effect on the date hereof, as well as regulations, rulings and decisions of Chile and the United States available on or before such date and

 

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now in effect. All of the foregoing is subject to change, which change could apply retroactively and could affect the continued validity of this summary.

 

There is currently no tax treaty between the United States and Chile.

 

***Chilean Tax Considerations***

 

The following is a general summary of the material consequences under Chilean tax law, as currently in effect, of an investment in the Debt Securities made by a Foreign Holder. The term “Foreign Holder” means: (i) an individual, who is not a resident in Chile (for purposes of Chilean taxation, an individual is resident in Chile if he or she has resided in Chile for more than six months in one calendar year, or a total of more than six months in two consecutive fiscal years); or (ii) a legal entity that is not organized under the laws of Chile, unless the Debt Securities are assigned to a branch or an agent, representative or permanent establishment of such entity in Chile.

 

Under Chile’s Income Tax Law, payments of interest made in respect of the Debt Securities to a Foreign Holder will generally be subject to a Chilean withholding tax (the “Chilean Interest Withholding Tax”) currently assessed at a rate of 4.0%. If the Debt Securities are issued through our offshore branch, payment to Foreign Holders of Debt Securities by such branch generally will not be subject to the Chilean withholding tax.

 

Chile’s Income Tax Law provides that any capital gains realized on the sale or other disposition by a Foreign Holder of the Debt Securities generally will not be subject to any Chilean income taxes provided that such sale or other disposition occurs outside of Chile (except that any premium payable on redemption of the Debt Securities will be treated as interest and subject to the Chilean Interest Withholding Tax, as described above).

 

A Foreign Holder will not be liable for gift, inheritance or similar taxes with respect to its holdings unless the securities held by a foreign holder:

 

·                  are located in Chile at the time of such Foreign Holder’s death, or

 

·                  if they are located outside of Chile, they were purchased or acquired with funds derived from Chilean source income,

 

The initial issuance of the Debt Securities by a foreign entity (be they a company or a branch) is generally not subject to stamp taxes in Chile. If stamp taxes apply, a foreign or Chilean holder will not be liable for Chilean stamp, registration or similar taxes because these would be payable by the Company.

 

***United States Tax Considerations Relating to Debt Securities***

 

The following summary describes certain U.S. federal income tax consequences of the ownership of Debt Securities by U.S. holders (as defined below) as of the date hereof. Except where noted, it deals only with Debt Securities held as capital assets and does not deal with special situations, such as those of dealers in securities or currencies, financial institutions, insurance companies, regulated investment companies, real estate investment trusts, tax-exempt entities, investors in pass-through entities, persons holding the Debt Securities as a part of a hedging, integrated, conversion or constructive sale transaction or a straddle, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, persons liable for the alternative minimum tax or holders of Debt Securities whose “functional currency” is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Code, and regulations, rulings and judicial decisions there under as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. If a partnership holds our Debt Securities, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Partners in a partnership holding our Debt Securities should consult their tax advisors.

 

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**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.**

 

As used herein, a “U.S. holder” of the Debt Securities means a holder of the Debt Securities that is (i) an individual U.S. citizen or resident, (ii) a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust that (a)  is subject to the primary supervision of a court within the United States and with respect to which one or more U.S. persons have the authority to control all substantial decision of the trust or (b) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

 

*Payments of Interest*

 

Interest on the Debt Securities will generally be taxable to a U.S. holder as ordinary income at the time it is paid or accrued in accordance with the U.S. holder’s method of accounting for tax purposes. In addition to interest on the Debt Securities, a U.S. holder will be required to include in income any additional amounts and any tax withheld from interest payments notwithstanding that such withheld tax is not in fact received by such U.S. holder. A U.S. holder may be entitled to deduct or credit such tax, subject to applicable limitations in the Code, including that the election to deduct or credit foreign taxes applies to all of the U.S. holder’s foreign taxes for a particular year. Interest income, including Chilean taxes withheld there from and additional amounts on the Debt Securities, generally will constitute foreign source income and generally will be considered passive category income, which is treated separately from other types of income in computing the foreign tax credit that may be allowable to U.S. holders under U.S. federal tax laws. A U.S. holder will generally be denied a foreign tax credit for Chilean taxes imposed with respect to the Debt Securities where such a holder does not meet a minimum holding period requirement during which the holder is not protected from risk of loss.

 

The rules governing the foreign tax credit are complex. We urge investors to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

 

*Market Discount*

 

If a U.S. holder purchases a Debt Security for an amount that is less than its principal amount, the amount of the difference will be treated as “market discount” for U.S. federal income tax purposes, unless that difference is less than a specified de minimis amount. Under the market discount rules, the U.S. holder will be required to treat any principal payment on, or any gain on the sale, exchange, retirement or other disposition of, a Debt Security as ordinary income to the extent of the market discount that the U.S. holder has not previously included in income and is treated as having accrued on the Debt Security at the time of its payment or disposition.

 

In addition, the U.S. holder may be required to defer, until the maturity of the Debt Security or its earlier disposition in a taxable transaction, the deduction of all or a portion of the interest expense on any indebtedness attributable to the Debt Security. A U.S. holder may elect, on a bond-by-bond basis, to deduct the deferred interest expense in a tax year prior to the year of disposition. U.S. holders should consult their own tax advisors before making this election.

 

Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the Debt Security, unless the U.S. holder elects to accrue on a constant interest method. A U.S. holder may elect to include market discount in income currently as it accrues, on either a ratable or constant interest method, in which case the rule described above regarding deferral of interest deductions will not apply.

 

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*Amortizable Bond Premium*

 

A U.S. holder that purchases a Debt Security for an amount in excess of its principal amount will be considered to have purchased the Debt Security at a “premium.” The U.S. holder may elect to amortize the premium over the remaining term of the Debt Security on a constant yield method as an offset to interest when includible in income under the holder’s regular accounting method. If the U.S. holder does not elect to amortize bond premium, that premium will decrease the gain or increase the loss the holder would otherwise recognize on disposition of the Debt Security.

 

*Sale, Exchange and Retirement of Debt Securities*

 

Upon the sale, exchange, retirement or other disposition of the Debt Securities, a U.S. holder will recognize gain or loss equal to the difference between the amount realized upon the sale, exchange, retirement or other disposition (less any accrued interest, which will be taxable as such if not previously included in income) and the U.S. holder’s adjusted tax basis in the Debt Securities. A U.S. holder’s tax basis in the Debt Securities generally will be the U.S. holder’s cost therefore, increased by market discount previously included in income, and reduced by any amortized premium. Except as described above with respect to market discount, gain or loss realized by a U.S. holder on the sale, exchange, retirement or other disposition of the Debt Securities will generally be capital gain or loss. Gain or loss realized by a U.S. holder on the sale, exchange, retirement or other disposition of the Debt Securities will generally be treated as U.S. source gain or loss. Consequently, a U.S. holder may not be able to claim a credit for any Chilean tax imposed on the sale, exchange, retirement or other disposition of the Debt Securities due to limitations on the foreign tax credit under the Code. Capital gains of individuals derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

 

*Information Reporting and Backup Withholding*

 

In general, information reporting requirements will apply to certain payments of principal and interest on the Debt Securities and to the proceeds of the sale of the Debt Securities made to U.S. holders other than certain exempt recipients. A backup withholding tax will apply to such payments if the U.S. holder fails to provide its taxpayer identification number or a certification of exempt status, or, in the case of interest payments, fails either to report in full dividend and interest income or to make certain certifications.

 

Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the U.S. holder’s U.S. federal income tax liability provided the required information is furnished to the Internal Revenue Service.

 

***Special Tax Considerations Relating to the 2097 Debentures***

 

As a result of the 2097 Debentures’ 100 year term, it is not certain whether such Debentures will be treated as debt or as equity for U.S. federal income tax purposes. We have taken the position that the 2097 Debentures constitute debt for financial reporting and U.S. federal income tax purposes. Our position, however, is not binding on the Internal Revenue Service. Although classification of the 2097 Debentures as equity generally would not significantly affect a U.S. holder’s taxable income resulting from an investment in the 2097 Debentures, the discussion that follows also briefly describes certain U.S. federal income tax consequences that would arise if the 2097 Debentures were not treated as debt for U.S. federal income tax purposes.

 

If the 2097 Debentures are treated as equity for U.S. federal income tax purposes, the potential differences in the U.S. federal income tax treatment to U.S. holders of the 2097 Debentures that would result include (i) payments denominated as interest on the 2097 Debentures (including additional amounts) would be reclassified as dividends to the extent paid out of the current or accumulated earnings and profits of the Company (as determined using U.S. federal income tax principles) and (ii) U.S. holders would be required to report such payment amounts as ordinary income when actually or constructively received (instead of accruing such amounts as interest, even if such U.S. holders are accrual method taxpayers). To the extent any such payments exceed such earnings and profits, they would be treated as a return of capital or capital gain (although, as we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles. U.S. holders should expect that such payments will generally be treated as dividends). Amounts

 

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treated as dividends will not be eligible for the dividends received deduction generally allowed U.S. corporations. In addition, because our 2097 Debentures are not readily tradable on an established securities market in the United States, we do not believe that any amounts treated as dividends currently meet the conditions required for the reduced tax rates that apply to qualified dividend income received by non-corporate U.S. holders. **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.**

 

**F.****            ****Dividends and Paying Agents**

 

Not applicable.

 

**G.****          ****Statement by Experts**

 

Not applicable.

 

**H.****          ****Documents on Display**

 

We are subject to the informational reporting requirements of the U.S. Securities Exchange Act of 1934, as amended, which requires that we file periodic reports and other information with the SEC. As a foreign private issuer, we file annual reports on Form 20-F as opposed to Form 10-K. We do not file quarterly reports on Form 10-Q but furnish quarterly reports and reports in relation to material events on Form 6-K. As a foreign private issuer, we are exempt from the rules under the U.S. Securities Exchange Act of 1934, as amended, prescribing the furnishing and content of proxy statements and short-swing profit disclosure and liability.

 

You may read and copy all or any portion of the annual report or other information in our files in the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can also access these documents through the SEC’s website at www.sec.gov or from our corporate website www.embotelladoraandina.com or request a hard copy through our website also. You can also request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. In addition, reports and other information concerning us may be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which our ADRs are listed.

 

We also file reports with the Chilean *Superintendencia de Valores y Seguros*. You may read and copy any materials filed with the SVS directly from its website www.svs.cl of from our corporate website www.embotelladoraandina.com or request a hard copy through our website also.  The documents referred to in this annual report can be inspected at El Golf 40 Oficina 401, Las Condes, Santiago, Chile.

 

**I.****               ****Subsidiary Information**

 

Not applicable.

 

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

 

Market risk generally represents the risk that losses may occur in the values of financial instruments as a result of movements in interest rates, foreign currency exchange rates and commodity prices. We are exposed to changes in financial market conditions in the normal course of our business due to our use of certain financial instruments as well as transacting in various foreign currencies and translation of our foreign subsidiaries’ financial statements into the Chilean peso.

 

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**Interest Rate Risk**

 

Our primary interest rate exposures relate to U.S. dollar denominated and UF long-term fixed rate bond liabilities and other long-term variable and fixed rate bank liabilities. We also invest in certain medium-term bond securities that bear a fixed interest rate. We monitor our exposure to interest rate fluctuations regularly depending on market conditions.

 

The following table provides information about our long-term debt and bond investments that are sensitive to changes in market interest rates as of December 31, 2012.

 
| ** **                       | ** ** | **Expected Maturity Date** | ** ** | **Estimated Fair   Market   Value** | ** ** |
|----------------------------------|------------|--------------------------------------|------------|------------------------------------------|------------|
| ** **                       | ** ** | **2012**                             | ** ** | **2013**                                 | ** ** | **2014** | ** ** | **2015** | ** ** | **2016** | ** ** | **Thereafter** | ** ** | **Total** | ** ** | **Total** | ** ** |
| ** **                       | ** ** | **MCh$**                             | ** ** | **MCh$**                                 | ** ** | **MCh$** | ** ** | **MCh$** | ** ** | **MCh$** | ** ** | **MCh$** | ** ** | **MCh$** | ** ** | **MCh$** | ** ** |
| ** **                       |       |                                 |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest Earning Assets**      |       |                                 |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Time deposits and credit links   |       | 783                                  |       | —                                   |       | — |   | — |   | — |   | — |   | 783 |   | 783 |   |
| Weighted average interest rate   |       | 3.50                                 | %          | —                                   |       | — |   | — |   | — |   | — |   | 3.50 | % | — |   |
|                             |       |                                 |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| **Interest Bearing Liabilities** |       |                                 |       |                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term debt (Bonds)           |       | 4,377                                |       | 9,514                                    |       | 9,762 |   | 10,025 |   | 10,305 |   | 86,750 |   | 130,733 |   | 176,410 |   |
| Fixed Rate                       |       | 6.50                                 | %          | 4.40                                     | %          | 4.45 | % | 4.51 | % | 4.56 | % | 5,54 | % | 5.23 | % | — |   |
| Bank liabilities                 |       | 87,281                               |       | 15,613                                   |       | 12,292 |   | 9,934 |   | 8,514 |   | — |   | 133,634 |   | 133,634 |   |
| Weighted average interest rate   |       | 7.05                                 | %          | 5.32                                     | %          | 5.02 | % | 4.25 | % | 3.52 | % | — |   | 6.23 | % | — |   |

 

**Foreign Currency Risk**

 

As of December 31, 2011, the Company only has short-term liabilities denominated in U.S. dollars, which are counterbalanced by cash balances and mutual funds also denominated in that currency, thus the risk of exposure to the accrual of fluctuations of the value of the US dollar is low. Net assets balance is denominated in dollars as of December 31, 2012, which amounts to $2,393 million as detailed below:

 

The following table summarizes the financial instruments held December 31, 2012, denominated in dollars:

 
| ** **                | ** ** | **2013**  | ** ** | **2014**   | ** ** | **2015**   | ** ** | **2016**   | ** ** | **2017**   | ** ** | **2018   Onwards** | ** ** | **Total** | ** ** | **Fair   estimated   Market   Value** | ** ** |
|---------------------------|------------|-----------|------------|------------|------------|------------|------------|------------|------------|------------|------------|--------------------|------------|-----------|------------|---------------------------------------|------------|
| ** **                | ** ** | **MM$**   | ** ** | **MM$**    | ** ** | **MM$**    | ** ** | **MM$**    | ** ** | **MM$**    | ** ** | **MM$**            | ** ** | **MM$**   | ** ** | **MM$**                               | ** ** |
| Assets                    |       |      |       |       |       |       |       |       |       |       |       |               |       |      |       |                                  |       |
| Deminonated in US Dollars |       |      |       |       |       |       |       |       |       |       |       |               |       |      |       |                                  |       |
| Assets                    |       |      |       |       |       |       |       |       |       |       |       |               |       |      |       |                                  |       |
| Cash and Cash equivalents |       | 5,067     |       |       |       |       |       |       |       |       |       |               |       | 5,067     |       | 5,067                                 |       |
| Mutual Fund               |       | 3,610     |       |       |       |       |       |       |       |       |       |               |       | 3,610     |       | 3,610                                 |       |
| Liabilities               |       |      |       |       |       |       |       |       |       |       |       |               |       |      |       |                                  |       |
| Bank debt                 |       | (6,284    | )          |       |       |       |       |       |       |       |       |               |       | (6,284    | )          | (6,284                                | )          |
| Net Assets (Liabilities)  | ** ** | **2,393** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** **         | ** ** | **2,393** | ** ** | **2,393**                             | ** ** |

 

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

 

Not applicable.

 

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**ITEM 12.D.3.****                  ****AMERICAN DEPOSITARY RECEIPITS**

 

The Bank of New York Mellon serves as the depositary for our ADRs. ADR holders are required to pay various fees to the depositary, and the depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid.

 

ADR holders are required to pay the depositary amounts in respect of expenses incurred by the depositary or its agents on behalf of ADR holders, including expenses arising from compliance with applicable law, taxes or other governmental charges, or conversion of foreign currency into U.S. dollars. The depositary may decide in its sole discretion to seek payment by either billing holders or by deducting the fee from one or more cash dividends or other cash distributions.

 

ADR holders are also required to pay additional fees for certain services provided by the depositary, as set forth in the table below.

 
| **Depositary service**                                                       | ** ** | **Fee payable by ADR holders**                      |
|-----------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------|
| Issuance and   delivery of ADRs, including in connection with share distributions |       | Up to US$ 5.00   per 100 ADSs (or portion thereof)                 |
| Withdrawal of shares   underlying ADRs                                            |       | Up to US$ 5.00   per 100 ADSs (or portion thereof)                 |
| Registration for the   transfer of shares                                         |       | Registration or   transfer fees that may from time to time be in effect |
| Cash distribution   fees                                                          |       | US$ 0.02 or   less per ADS                                         |

 

In addition, holders may be required to pay a fee for the distribution or sale of securities. Such fee (which may be deducted from such proceeds) would be for an amount equal to the lesser of (1) the fee for the issuance of ADRs that would be charged as if the securities were treated as deposited shares and (2) the amount of such proceeds.

 

**12.D.4****           ****DIRECT AND INDIRECT PAYMENTS BY THE DEPOSITARY**

 

**Fees Incurred in Past Annual Period**

 

From January 1, 2010 to December 31, 2011, the Company received from the depositary US$125,112.74 for continuing annual stock exchange listing fees, standard out-of-pocket maintenance costs for the ADRs (consisting of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls), any applicable performance indicators relating to the ADR facility, underwriting fees and legal fees.

 

**Fees to be Paid in the Future**

 

The Bank of New York Mellon, as depositary, has agreed to reimburse the Company for expenses they incur that are related to establishment and maintenance expenses of the ADR program. The depositary has agreed to reimburse the Company for its continuing annual stock exchange listing fees. The depositary has also agreed to pay the standard out-of-pocket maintenance costs for the ADRs, which consist of the expenses of postage and envelopes for mailing annual and interim financial reports, printing and distributing dividend checks, electronic filing of U.S. Federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. It has also agreed to reimburse the Company annually for certain investor relationship programs or special investor relations promotional activities. In certain instances, the depositary has agreed to provide additional payments to the Company based on any applicable performance indicators relating to the ADR facility. There are limits on the amount of expenses for which the depositary will reimburse the Company, but the amount of reimbursement available to the Company is not necessarily tied to the amount of fees the depositary collects from investors.

 

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The depositary collects its fees for delivery and surrender of ADRs directly from investors depositing shares or surrendering ADRs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

 

**PART II**

 

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

 

Not applicable.

 

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

 

The information requested by this item has been previously provided in the annual report for the year 2004. See “Item 4. Information on the Company—Part A. History and Development of the Company.”

 

**ITEM 15.****                 ****CONTROLS AND DISCLOSURE PROCEDURES**

 

(a)         **Disclosure Controls and Procedures**

 

We have evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of December 31, 2012. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

(b)         **Management’s Annual Report on Internal Control Over Financial Reporting**

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a—15(f) and 15d—15(f) under the Securities Exchange Act of 1934, as amended. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

 

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB. Our internal control over financial reporting includes those policies and procedures that (i) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions or our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS as issued by the IASB, and that our receipts an expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.

 

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on our evaluation under the framework in Internal Controls—Integrated framework issued by the Committee of Sponsoring Organizations of the Tread way Commission, our management concluded that our internal control over financial reporting was effective as of December 31, 2012.

 

Management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the acquired company Embotelladoras Coca Cola Polar S.A. and the subsidiaries Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. which are included in the 2012 consolidated financial statements of Embotelladora Andina S.A. and subsidiaries, and constituted 20% and 15% of total assets and net assets, respectively, as of December 31, 2012 and 9% and 6% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of Embotelladora Andina S.A. and subsidiaries, also did not include an evaluation of the internal control over financial reporting of Embotelladoras Coca Cola Polar S.A. and subsidiaries.

 

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2012 has been audited by the Company’s registered independent accounting firm, which opinion is stated in their report, included on pages F-2 and F-3 herein.

 

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

 

Our board of directors has determined that Mr. Enrique Cibié Bluth is our Audit Committee Financial Expert as defined in the instructions to Item 16A of Form 20-F. Our board of directors has also determined that Mr. Enrique Cibié Bluth and Mr. Gonzalo Parot Palma are Independent Directors as defined in Section 303A.02 of the NYSE’s Listed Company Manual.

 

**ITEM 16B.****        ****CODE OF ETHICS**

 

We have adopted a Code of Business Conduct that constitutes a code of ethics for our employees. This Code applies to our Chief Executive Officer and all senior financial officers of our Company, including the Chief Financial Officer or any other persons performing similar functions, as well as to all other officers and employees of the Company. Our Code of Business Conduct is available on our website www.embotelladoraandina.com. If we make any substantive amendment to the Code or grant any waivers, including any implicit waiver, from a provision of the Code, we will disclose the nature of such amendment or waiver on the above mentioned website through a 6-K form.

 

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

 

***Fees Paid To Independent Public Accountants***

 

The following table sets forth, for each of the years indicated, the kinds of fees paid to our external auditors and the percentage of each of the fees out of the total amount paid to them.

 
| ** **                 | ** ** | **Year Ended December 31,** | ** ** |
|----------------------------|------------|--------------------------------------------|------------|
| ** **                 | ** ** | **2012**                                   | ** ** | **2011** | ** ** |
| ** **                 | ** ** | **Fees**                                   | ** ** | **% of Total** | ** ** | **Fees** | ** ** | **% of Total** | ** ** |
| **Services rendered** | ** ** | **MCh$**                                   | ** ** | **Fees** | ** ** | **MCh$** | ** ** | **Fees** | ** ** |
| Audit fees(1)              |       | 861                                        |       | 85 | % | 545 |   | 95 | % |
| Audit-related   fees(2)    |       | 10                                         |       | 1 | % | 16 |   | 3 | % |
| Tax fees(3)                |       | 11                                         |       | 1 | % | 10 |   | 2 | % |
| Other Fees                 |       | 131                                        |       | 13 | % |   |   |   |   |
| Total                      |       | 1,013                                      |       | 100 | % | 571 |   | 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.*

 

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***Directors’ Committee and Audit Committee Pre-Approval Policies and Procedures***

 

We have adopted pre-approval policies and procedures under which all audit and non-audit services provided by our external auditors must be pre-approved by our Director’s Committee and Audit Committee and then it is discussed and approved by these committees during its meetings, which take place at least four times a year. Once the proposed service is approved, our subsidiaries or we formalize the engagement of services. In addition, the members of our board of directors are briefed on matters discussed by the different committees of our board of directors.

 

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

 

The Company’s Audit Committee is comprised of Gonzalo Parot Palma, Enrique Cibié Bluth and Arturo Majlis Albala.

 

The Company discloses that, with respect to the current membership of Mr. Salvador Said and Mr. Arturo Majlis Albala on the Company’s Audit Committee, it has relied on the exemption from the independence requirements provided by Rule 10A-3(b)(1)(iv)(D) of the Securities and Exchange Act of 1934, as amended . Pursuant to said rule, a director who is either an affiliate or a representative of an affiliate of the listed company may serve as a member of the audit committee to the extent the director is not a voting member or chairperson of the audit committee and to the extent that neither the director nor the affiliate the director represents is an executive officer of the listed company.

 

Mr. Arturo Majlis Albala meet, for the duration of his membership, the requirements of Rule 10A-3(b)(1)(iv)(D) because they (i) he is a representative of the controlling shareholder group of the Company; (ii) has an observer-only status on the audit committee of the Company; and (iii) is not officers of the Company.

 

The Company’s reliance on the exemption provided by Rule 10A-3of the Exchange Act, with respect to Mr. Arturo Majlis Albala, would not materially adversely affect the ability of the audit committee of the Company to act independently.

 

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

 

During 2012, the Company made the following acquisition of its own shares (treasury shares), due to the exercise of the shareholders’ dissenter’s right generated as a consequence of the merger with Polar:

 

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| **Period**       | ** ** | **Number of Shares** | ** ** | **Price (Pesos per share)** | ** ** |
|------------------|------------|--------------------------------|------------|--------------------------------------------|------------|
| August 2012 |       | 67 Series A shares        |       | $                                          | 2,165.73   |   |
| August 2012 |       | 8.065 Series B shares     |       | $                                          | 2,675.69   |   |

 

According to legislation currently in force, the shares acquired by the Company due to a shareholders’ exercise of its dissenter’s right have to be sold in the term of one year, as of the date of their acquisition, otherwise the shares and their registration at the Company’s name will be cancelled and the capital shall be reduced *ipso iure in*an amount equal to the value at which the Company acquired such shares.

 

**ITEM 16F.  CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT**

 

**Previous independent registered public accounting firm**

 

On April 25, 2013, Andina dismissed Ernst & Young Limitada as its independent registered public accounting firm, effective upon the filing of this 2012 Form 20-F which would contain Ernst & Young Limitadas’ PCAOB audit report dated April 30, 2012 on the Company’s 2012 consolidated financial statements.  Andina’s Board of Directors participated in and approved the decision to change its independent registered public accounting firm.

 

The reports of Ernst & Young Limitada on the consolidated financial statements for the past two fiscal years (specifically the years ended December 31, 2012 and 2011) contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertain, audit scope or accounting principle.

 

During the two most recent fiscal years (specifically the years ended December 31, 2012 and 2011) and through April 30, 2012, there have been no disagreements with Ernst & Young Limitada on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Ernst & Young Limitada would have caused them to make reference thereto in their reports on the consolidated financial statements for such years.

 

During the two most recent fiscal years (specifically the years ended December 31, 2012 and 2011)  and through April 30, 2013, there have been no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K).

 

Andina requested that Ernst & Young Limitada furnish it with a letter addressed to the SEC stating whether it agrees or not with the above statements.  Ernst & Young Limitadas’ letter dated April 30, 2012 is filed as Exhibit 8.2 filed herewith.

 

**New independent registered public accounting firm**

 

Andina engaged PricewaterhouseCoopers Consultores Auditores y Compañía Limitada public accountants as its new independent registered public accounting firm as of April 25, 2013. During the two most recent fiscal years and through April 25, 2013, Andina has not consulted with PricewaterhouseCoopers Consultores Auditores y Compañía Limitada regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on Andina’s financial statements, and neither a written report was provided to Andina or oral advice was provided that PricewaterhouseCoopers Consultores Auditores y Compañía Limitada concluded was an important factor considered by Andina in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K, or a reportable event, as that term is defined in Item 304(a)(I)(v) of Regulation S-K.

 

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**ITEM 16G. CORPORATE GOVERNANCE**

 

**NYSE and Chilean Corporate Governance Requirements**

 

In accordance with Section 303A.11 of the NYSE’s Listed Company Manual, the following table sets forth significant differences between Chilean corporate governance practices and those corporate governance practices followed by domestic corporations under NYSE listing standards. Significant ways in which our corporate governance practices differ from those followed by U.S. companies under NYSE listing standards are also publicly available on our website at www.embotelladoraandina.com.

 
| **ITEM**                                           | ** ** | **NYSE REQUIREMENTS**                                                                                                                                                        | ** ** | **CHILEAN LAW REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|----------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                               |       |                                                                                                                                                                              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 303A.01Independence                                |       | 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.02Independence Tests                          |       | Members of the Board of Directors must meet   the Test of Independence.                                                                                                           |       | No similar legal obligation exists under   Chilean law. However, article 50 bis of the Corporations Law require   appointing at least one independent director. Law considers independent such   director that within the last 18 months is not involved in certain   circumstances, such as: having an economic interest in the company or other   group, having a relationship with such persons, be director of nonprofit   organizations, among others, and comply with a declaration of independence. |
|                                               |       |                                                                                                                                                                              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 303A.03Executive Sessions                          |       | 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-Management 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.04Nominating/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.Andina has a Directors’ Committee whose functions are set by   Chilean Corporation Law. In addition, section 303 A regarding Controlled   Companies does not apply to our Company                                                                                                                                                                                                                                                            |
|                                               |       |                                                                                                                                                                              |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 303A.05Compensation 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.                                                                                                                                                                                                                    |

 

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| **ITEM**                               | ** ** | **NYSE REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                           | ** ** | **CHILEAN LAW REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|----------------------------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 303A.06Audit 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. |       | 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   and/or at least a 12,5% of its issued shares with voting rights are held by   individual shareholders who control or own less than 10% of such shares must   have a Directors’ Committee, formed by three members who are in their   majority independent of the controller. Andina designated an Audit Committee   in accordance with Rule 10 A.3.The functions of this committee are   described under “Item 6. Directors, Senior Management and Employees-Board   Practices” |
|                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 303A.07Internal Audit Function         |       | Listed companies must maintain an Internal   Audit Function to provide 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.                                                                                               |       | There is no similar obligation under Chilean   law. Chilean law requires that companies must have both account inspectors   and external auditors. However, Andina has an Internal Auditor who reports to   the Audit Committee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 303A.08Voting on Compensation Plans    |       | Shareholders must have the opportunity to   vote on the creation or amendment of compensation plans regarding board   members, executives and employees.                                                                                                                                                                                                                                                                                             |       | There is no similar obligation under Chilean   law, with the exception of Directors’ compensation which annually approved   during the General Shareholders’ Meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                 |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 303A.09Corporate Governance Guidelines |       | 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. However, the Superintendency of Securities and Insurance in   General Rule No. 341 requires publicly traded corporations to   report their corporate governance practices.                                                                                                                                                                                                                                                                                                                                                                        |

 

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| **ITEM**                                   | ** ** | **NYSE REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | ** ** | **CHILEAN LAW REQUIREMENTS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 303A.10Code of Ethics and 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. Andina has posted this   information on its website www.embotelladoraandina.com |
|                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 303A.11Foreign Private Issuer Disclosure   |       | 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. However, Andina has posted this information on its website   www.embotelladoraandina.com                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                       |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 303A.12Certification Requirements          |       | 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. 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. |       | 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.                                                                                                                                                                                 |

 

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| **ITEM**                | ** ** | **NYSE REQUIREMENTS**                                                                                                                                                                                         | ** ** | **CHILEAN LAW REQUIREMENTS**                                                                                                                                                                                                                                |
|-------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                    |       |                                                                                                                                                                                                               |       |                                                                                                                                                                                                                                                                  |
| 303A.13Public 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 and Insurance (SVS).                                                                                                         |
|                    |       |                                                                                                                                                                                                               |       |                                                                                                                                                                                                                                                                  |
| 307Company Website      |       | Listed Companies must have a company website   which is accessible from the United States. The website must contain its all   NYSE requirements including those referring to Corporate Governance.                 |       | Chilean law does not require listed   companies to maintain a website. However, if a listed company does have a   website, the company must make available on its website certain information   required by the rules under Chilean Company Law N° 18,046 . |

 

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**PART III**

 

**ITEM 17.****                  ****FINANCIAL STATEMENTS**

 

Reference is made to Item 18 for a list of all financial statements filed as part of this annual report.

 

**ITEM 18.****                  ****FINANCIAL STATEMENTS**

 

The following financial statements, together with the report of independent registered accounting firm, are filed as part of this Annual Report:

 
| ** **                                                                                                    | ** ** | **Page** |
|---------------------------------------------------------------------------------------------------------------|------------|----------|
|                                                                                                          |       |     |
| Index to Consolidated Statements of Financial Position                                                        |       |     |
|                                                                                                          |       |     |
| Report   of Independent Registered Public Accounting Firm                                                     |       | F-3      |
| Consolidated   Statements of Financial Position at December 31, 2012 and 2011                            |       | F-6      |
| Consolidated   Income Statements by function for the years ended December 31, 2012,   2011 and 2010      |       | F-8      |
| Consolidated   Statements of Comprehensive Income for the years ended December 31,   2012, 2011 and 2010 |       | F-9      |
| Statements of Changes in Equity for the years ended   December 31, 2012, 2011 and 2010                   |       | F-10     |
| Consolidated Statements of Cash Flows for the years   ended December 31, 2012, 2011 and 2010             |       | F-12     |
| Notes to the Consolidated Financial Statements at   December 31, 2012, 2011 and 2010                     |       | F-13     |

 

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**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

 

**Consolidated Financial Statements**

 

**INDEX**

 
| Report of Independent Registered Public Accounting   Firm                                                     |   | F-3    |
|---------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                                                                          |   |   |
| Consolidated   Statements of Financial Position at December 31, 2012 and 2011                            |   | F-6    |
|                                                                                                          |   |   |
| Consolidated   Income Statements by Function for the years ended December 31, 2012,   2011 and 2010      |   | F-8    |
|                                                                                                          |   |   |
| Consolidated   Statements of Comprehensive Income for the years ended ended December31,   2012, 2011 and 2010 |   | F-9    |
|                                                                                                          |   |   |
| Consolidated Statements of Changes in Equity at for   the years ended December 31, 2012, 2011 and 2010   |   | F-10   |
|                                                                                                          |   |   |
| Consolidated   Statements of Cash Flows for the years ended December 31, 2012, 2011 and   2010           |   | F-12   |
|                                                                                                          |   |   |
| Notes to the Consolidated Financial Statements                                                                |   | F-13   |

 

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Table of Contents

 

**Report of Independent Registered Public Accounting Firm**

 

To the Shareholders and the Board of Directors of

Embotelladora Andina S.A.:

 

We have audited the accompanying consolidated statements of financial position of Embotelladora Andina S.A. and subsidiaries (“the Company”)  as of December 31, 2012 and 2011, and the related consolidated income statements, statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Embotelladora Andina S.A. and subsidiaries at December 31, 2012 and 2011 and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with International Financial Reporting Standards, as issued by the International Accounting Standards Board.

 

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 30, 2013, expressed an unqualified opinion thereon.

 

 

/s/ERNST & YOUNG LIMITADA

 

Santiago, Chile, April 30, 2013

 

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Table of Contents

 

**Report of Independent Registered Public Accounting Firm**

 

To the Shareholders and the Board of Directors of

Embotelladora Andina S.A.:

 

We have audited Embotelladora Andina S.A. and subsidiaries’ internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“the COSO criteria”). Embotelladora Andina S.A. and subsidiaries’ management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS as issued by the IASB, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

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As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the acquired companies Embotelladoras Coca Cola Polar S.A. and its subsidiaries, Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. which are included in the 2012 consolidated financial statements of Embotelladora Andina S.A., and constituted 20% and 15% of total assets and net assets, respectively, as of December 31, 2012 and 9% and 6% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of Embotelladora Andina S.A. and subsidiaries, also did not include an evaluation of the internal control over financial reporting of Embotelladoras Coca Cola Polar S.A. and subsidiaries.

 

In our opinion, Embotelladora Andina S.A. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria.

 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States of America), the consolidated statements of financial position of Embotelladora Andina S.A. and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2012, and our report dated April 30, 2013 expressed an unqualified opinion thereon.

 

 

/s/ERNST & YOUNG LIMITADA

 

Santiago, Chile, April 30, 2013

 

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Table of Contents

 

**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

 

**Consolidated Statements of Financial Position**

**at December 31, 2012 and 2011**

(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)

 
| **ASSETS**                                      | ** ** | **NOTE**   | ** ** | **12.31.2012**    | ** ** | **12.31.2011**  | ** ** |
|-------------------------------------------------|------------|------------|------------|-------------------|------------|-----------------|------------|
| ** **                                      | ** ** | ** ** | ** ** | **ThCh$**         | ** ** | **ThCh$**       | ** ** |
|                                            |       |       |       |              |       |            |       |
| **Current Assets:**                             | ** ** | ** ** |       |              |       |            |       |
| Cash and cash equivalents                       | ** ** | **4**      |       | 55,522,255        |       | 31,297,922      |       |
| Other financial assets                          | ** ** | **5**      |       | 128,581           |       | 15,661,183      |       |
| Other non-financial assets                      | ** ** | **6.1**    |       | 18,202,838        |       | 14,760,858      |       |
| Trade and other accounts receivable, net        | ** ** | **7**      |       | 152,816,916       |       | 107,443,039     |       |
| Accounts receivable from related companies      | ** ** | **11.1**   |       | 5,324,389         |       | 6,418,993       |       |
| Inventory                                       | ** ** | **8**      |       | 89,319,826        |       | 57,486,658      |       |
| Current tax assets                              | ** ** | **9.1**    |       | 2,879,393         |       | 2,463,566       |       |
| Assets classified as available for sale         | ** ** | ** ** |       | 2,977,969         |       | —          |       |
| **Total Current Assets**                        | ** ** | ** ** | ** ** | **327,172,167**   | ** ** | **235,532,219** | ** ** |
|                                            |       |       |       |              |       |            |       |
| **Non-Current Assets:**:                        |       |       |       |              |       |            |       |
| Other non-financial, non-current assets         | ** ** | **6.2**    |       | 26,927,090        |       | 30,193,809      |       |
| Trade and other accounts receivable, net        | ** ** | **7**      |       | 6,724,077         |       | 7,175,660       |       |
| Accounts receivable from related companies, net | ** ** | **11.1**   |       | 7,197             |       | 11,187          |       |
| Equity method investments                       | ** ** | **13.1**   |       | 73,080,061        |       | 60,290,966      |       |
| Intangible assets others than goodwill, net     | ** ** | **14.1**   |       | 464,582,273       |       | 1,138,857       |       |
| Goodwill                                        | ** ** | **14.2**   |       | 64,792,741        |       | 57,552,178      |       |
| Property, plant and equipment, net              | ** ** | **10.1**   |       | 576,550,725       |       | 350,064,467     |       |
| **Total Non-Current Assets**                    | ** ** | ** ** | ** ** | **1,212,664,164** | ** ** | **506,427,124** | ** ** |
| **Total Assets**                                | ** ** | ** ** | ** ** | **1,539,836,331** | ** ** | **741,959,343** | ** ** |

 

The accompanying notes 1 to 28 form an integral part of these financial statements

 

F-6

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**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

 

**Consolidated Statements of Financial Position**

**at December 31, 2012 and 2011**

(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)

 
| **LIABILITIES AND NET EQUITY**               | ** ** | **NOTE**   | ** ** | **12.31.2012**    | ** ** | **12.31.2011**  | ** ** |
|-------------------------------------------------------------|------------|------------|------------|-------------------|------------|-----------------|------------|
| ** **                                                  | ** ** | ** ** | ** ** | **ThCh$**         | ** ** | **ThCh$**       | ** ** |
| **LIABILITIES**                                             | ** ** | ** ** | ** ** | ** **        | ** ** | ** **      | ** ** |
| **Current Liabilities:**                                    | ** ** | ** ** |       |              |       | ** **      |       |
| Other financial liabilities                                 | ** ** | **15**     |       | 106,248,019       |       | 23,093,402      |       |
| Trade and other accounts payable                            | ** ** | **16**     |       | 184,317,773       |       | 127,940,772     |       |
| Accounts payable to related companies                       | ** ** | **11.2**   |       | 32,727,212        |       | 11,359,038      |       |
| Provisions                                                  | ** ** | **17**     |       | 593,457           |       | 87,966          |       |
| Income tax payable                                          | ** ** | **9.2**    |       | 1,114,810         |       | 3,821,247       |       |
| Other non-financial liabilities                             | ** ** | **18**     |       | 20,369,549        |       | 30,341,479      |       |
| **Total Current Liabilities**                               | ** ** | ** ** | ** ** | **345,370,820**   | ** ** | **196,643,904** | ** ** |
| ** **                                                  | ** ** | ** ** | ** ** | ** **        | ** ** | ** **      | ** ** |
| **Non-Current Liabilities:**                                | ** ** | ** ** | ** ** | ** **        | ** ** | ** **      | ** ** |
| Other long - term-current financial liabilities             | ** ** | **15**     |       | 173,880,195       |       | 74,641,403      |       |
| Trade and other accounts payable, long-term                 | ** ** | ** ** |       | 1,930,233         |       | 163,738         |       |
| Provisions                                                  | ** ** | **17**     |       | 6,422,811         |       | 7,882,869       |       |
| Deferred tax liabilities                                    | ** ** | **9.4**    |       | 111,414,626       |       | 35,245,490      |       |
| Post-employment benefit liabilities                         | ** ** | **12.2**   |       | 7,037,122         |       | 5,130,015       |       |
| Other non-current liabilities                               | ** ** | **18**     |       | 175,603           |       | 273,004         |       |
| **Total Non-Current Liabilities**                           | ** ** | ** ** | ** ** | **300,860,590**   | ** ** | **123,336,519** | ** ** |
| ** **                                                  | ** ** | ** ** | ** ** | ** **        | ** ** | ** **      | ** ** |
| **Equity:**                                                 | ** ** | **19**     | ** ** | ** **        | ** ** | ** **      | ** ** |
| Issued capital                                              | ** ** | ** ** |       | 270,759,299       |       | 230,892,178     |       |
| Treasury stock                                              | ** ** | ** ** |       | (21,725           | )          | —          |       |
| Retained earnings                                           | ** ** | ** ** |       | 239,844,662       |       | 208,102,068     |       |
| Accumulated other comprehensive income and capital reserves | ** ** | ** ** |       | 363,581,513       |       | (17,024,341     | )          |
| **Equity attributable to equity holders of   the parent**   | ** ** | ** ** | ** ** | **874,163,749**   | ** ** | **421,969,905** | ** ** |
| Non-controlling interests                                   | ** ** | ** ** |       | 19,441,172        |       | 9,015           |       |
| **Total Equity**                                            | ** ** | ** ** | ** ** | **893,604,921**   | ** ** | **421,978,920** | ** ** |
| **Total Liabilities and Equity**                            | ** ** | ** ** | ** ** | **1,539,836,331** | ** ** | **741,959,343** | ** ** |

 

The accompanying notes 1 to 28 form an integral part of these financial statements

 

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**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

**Consolidated Income Statements by Function**

**for the years ended at December 31, 2012, 2011 and 2010**

(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)

 
| ** **                                              | ** ** | ** ** | ** ** | **01.01.2012**  | ** ** | **01.01.2011**  | ** ** | **01.01.2010**  | ** ** |
|---------------------------------------------------------|------------|------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| ** **                                              | ** ** | **NOTE**   | ** ** | **12.31.2012**  | ** ** | **12.31.2011**  | ** ** | **12.31.2010**  | ** ** |
| ** **                                              | ** ** | ** ** | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
|                                                    |       |       |       |            |       |            |       |            |       |
| Net sales                                               |       |       |       | 1,172,292,817   |       | 982,864,417     |       | 888,713,882     |       |
| Cost of sales                                           |       |       |       | (698,955,215    | )          | (578,581,184    | )          | (506,882,144    | )          |
| **Gross   Profit**                                      |       |       | ** ** | **473,337,602** | ** ** | **404,283,233** | ** ** | **381,831,738** | ** ** |
| Other income                                            | ** ** | **23**     |       | 3,265,998       |       | 2,909,445       |       | 1,117,879       |       |
| Distribution expenses                                   | ** ** | ** ** |       | (122,818,941    | )          | (98,807,574     | )          | (85,717,173     | )          |
| Administrative and   sales expenses                     | ** ** | ** ** |       | (196,355,000    | )          | (163,051,423    | )          | (146,880,980    | )          |
| Other expenses                                          | ** ** | **24**     |       | (15,420,008     | )          | (11,915,003     | )          | (7,775,824      | )          |
| Other income (expenses)                                 | ** ** | **26**     |       | (2,336,215      | )          | 1,494,918       |       | (484,641        | )          |
| Finance income                                          | ** ** | **25**     |       | 2,728,059       |       | 3,182,434       |       | 3,376,138       |       |
| Finance costs                                           | ** ** | **25**     |       | (11,172,753     | )          | (7,235,176      | )          | (7,401,831      | )          |
| Share in profit of equity method investees              | ** ** | **13.3**   |       | 1,769,898       |       | 2,026,158       |       | 2,314,935       |       |
| Foreign exchange difference                             | ** ** | ** ** |       | (4,471,031      | )          | 2,731           |       | (222,168        | )          |
| Loss from indexed financial assets and liabilities      | ** ** | ** ** |       | (1,753,801      | )          | (1,177,658      | )          | (217,769        | )          |
| **Net   income before taxes**                           | ** ** | ** ** | ** ** | **126,773,808** | ** ** | **131,712,085** | ** ** | **139,940,304** | ** ** |
| Income tax expense                                      | ** ** | **9.3**    |       | (38,504,636     | )          | (34,684,661     | )          | (36,340,240     | )          |
| **Net   income**                                        |       |       | ** ** | **88,269,172**  | ** ** | **97,027,424**  | ** ** | **103,600,064** | ** ** |
| ** **                                              |       |       | ** ** | ** **      | ** ** | ** **      | ** ** | ** **      | ** ** |
| **Net income attributable to**                          |       |       | ** ** | ** **      | ** ** | ** **      | ** ** | ** **      | ** ** |
| ** **                                              |       |       | ** ** | ** **      | ** ** | ** **      | ** ** | ** **      | ** ** |
| Net income attributable to equity holders of the parent |       |       |       | 87,636,961      |       | 97,024,405      |       | 103,597,372     |       |
| Net income attributable to non-controlling interests    |       |       |       | 632,211         |       | 3,019           |       | 2,692           |       |
| **Net income**                                          |       |       | ** ** | **88,269,172**  | ** ** | **97,027,424**  | ** ** | **103,600,064** | ** ** |
|                                                    |       |       |       |            |       |            |       |            |       |
| ** **                                              | ** ** | ** ** | ** ** | **Ch$**         | ** ** | **Ch$**         | ** ** | **Ch$**         | ** ** |
| **Earnings   per Share, basic and diluted**             | ** ** | ** ** | ** ** | ** **      | ** ** | ** **      | ** ** | ** **      | ** ** |
| Earnings per Series A Share                        | ** ** | **19.5**   | ** ** | **104.12**      | ** ** | **121.54**      | ** ** | **129.78**      | ** ** |
| Earnings per Series B Share                        | ** ** | **19.5**   | ** ** | **114.53**      | ** ** | **133.69**      | ** ** | **142.75**      | ** ** |

 

The accompanying notes 1 to 28 form an integral part of these financial statements

 

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Table of Contents

 

**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

 

**Consolidated Statements of Comprehensive Income**

**for the years ended December 31, 2012, 2011 and 2010**

(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)

 
| ** **                                                                                                                          | ** ** | **01.01.2012** | ** ** | **01.01.2011** | ** ** | **01.01.2010**  | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|------------|----------------|------------|----------------|------------|-----------------|------------|
| ** **                                                                                                                          | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010**  | ** ** |
| ** **                                                                                                                          | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**       | ** ** |
| Net income                                                                                                                          | ** ** | **88,269,172** | ** ** | **97,027,424** | ** ** | **103,600,064** | ** ** |
| Foreign exchange translation adjustment, before taxes                                                                               |       | (42,186,310    | )          | 601,269        |       | (11,883,798     | )          |
| Income tax effect related to losses from foreign exchange rate   translation differences included within other comprehensive income |       | 1,089,225      |       | (1,481,057     | )          | 585,028         |       |
| **Comprehensive   income**                                                                                                          | ** ** | **47,172,087** | ** ** | **96,147,636** | ** ** | **92,301,294**  | ** ** |
| **Comprehensive   income attributable to:**                                                                                         |       |           |       |           |       |            |       |
| Equity holders of the   parent                                                                                                      |       | 46,541,295     |       | 96,146,951     |       | 92,302,105      |       |
| Non-controlling interests                                                                                                           |       | 630,792        |       | 685            |       | (811            | )          |
| **Total   comprehensive income**                                                                                                    | ** ** | **47,172,087** | ** ** | **96,147,636** | ** ** | **92,301,294**  | ** ** |

 

The accompanying notes 1 to 28 form an integral part of these financial statements

 

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Table of Contents

 

**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

 

**Consolidated Statements of Changes in Equi****ty**

**For the years ended December 31, 2012, 2011 and 2010**

(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)

 
| ** **                                    | ** ** | ** **              | ** ** | ** **            | ** ** | **Other reserves**       | ** ** | ** **                               | ** ** | ** **                        | ** ** | ** **                 | ** ** | ** **                  | ** ** |
|-----------------------------------------------|------------|-------------------------|------------|-----------------------|------------|-------------------------------|------------|------------------------------------------|------------|-----------------------------------|------------|----------------------------|------------|-----------------------------|------------|
| ** **                                    | ** ** | **Issued capital** | ** ** | **Treasury   shares** | ** ** | **Translation reserves** | ** ** | **Other reserves********(various)** | ** ** | **Total********other   reserves** | ** ** | **Retained earnings** | ** ** | **Controlling Equity** | ** ** | **Non-Controlling   interests** | ** ** | **Total Equity** | ** ** |
| ** **                                    | ** ** | **ThCh$**               | ** ** | **ThCh$**             | ** ** | **ThCh$**                     | ** ** | **ThCh$**                                | ** ** | **ThCh$**                         | ** ** | **ThCh$**                  | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **Initial   balance at 01.01.2012**           | ** ** | **230,892,178**         | ** ** | **—**            | ** ** | **(22,459,879**               | **)**      | **5,435,538**                            | ** ** | **(17,024,341**                   | **)**      | **208,102,068**            | ** ** | **421,969,905**             | ** ** | **9,015** | ** ** | **421,978,920** | ** ** |
| **Changes   in Equity**                       |       |                    |       |                  |       |                          |       |                                     |       |                              |       |                       |       |                        |       |   |   |   |   |
| **Comprehensive   Income**                    |       |                    |       |                  |       |                          |       |                                     |       |                              |       |                       |       |                        |       |   |   |   |   |
| Net income                                    |       | —                  |       | —                |       | —                        |       | —                                   |       |                              |       | 87,636,961                 |       | 87,636,961                  |       | 632,211 |   | 88,269,172 |   |
| Other comprehensive   income                  |       | —                  |       | —                |       | (41,095,666                   | )          | —                                   |       | (41,095,666                       | )          | —                     |       | (41,095,666                 | )          | (1,419 | ) | (41,097,085 | ) |
| **Comprehensive   income**                    |       | —                  | ** ** | ** **            | ** ** | **(41,095,666**               | **)**      | **—**                               | ** ** | **(41,095,666**                   | **)**      | **87,636,961**             | ** ** | **46,541,295**              | ** ** | **630,792** | ** ** | **47,172,087** | ** ** |
| **Equity   Issuance —Polar acquisition** |       | 39,867,121              | ** ** | **—**            | ** ** | **—**                    | ** ** | **421,701,520**                          | ** ** | **421,701,520**                   |       | —                     |       | 461,568,641                 | ** ** | **18,801,365** |   | 480,370,006 |   |
| Dividends                                     |       | —                  | ** ** | **—**            | ** ** | **—**                    | ** ** | **—**                               | ** ** | **—**                        |       | (55,894,367                | )          | (55,894,367                 | )          | **—** |   | (55,894,367 | ) |
| **Purchase   of treasury-stock**              |       | —                  |       | (21,725               | )          | **—**                    |       | —                                   |       | —                            | ** ** | **—**                 |       | (21,725                     | )          | — |   | (21,725 | ) |
| **Total   changes in equity**                 |       | 39,867,121              | ** ** | **(21,725**           | **)**      | **(41,095,666**               | **)**      | **421,701,520**                          | ** ** | **380,605,854**                   | ** ** | **31,742,594**             | ** ** | **452,193,844**             | ** ** | **19,432,157** | ** ** | **471,626,001** | ** ** |
| **Ending   balance at 12.31.2012**            | ** ** | **270,759,299**         | ** ** | **(21,725**           | **)**      | **(63,555,545**               | **)**      | **427,137,058**                          | ** ** | **363,581,513**                   | ** ** | **239,844,662**            | ** ** | **874,163,749**             | ** ** | **19,441,172** | ** ** | **893,604,921** | ** ** |

 
| ** **                          | ** ** | ** **              | ** ** | ** **            | ** ** | **Other reserves**       | ** ** | ** **                               | ** ** | ** **                        | ** ** | ** **                 | ** ** | ** **                  | ** ** |
|-------------------------------------|------------|-------------------------|------------|-----------------------|------------|-------------------------------|------------|------------------------------------------|------------|-----------------------------------|------------|----------------------------|------------|-----------------------------|------------|
| ** **                          | ** ** | **Issued capital** | ** ** | **Treasury   shares** | ** ** | **Translation reserves** | ** ** | **Other reserves********(various)** | ** ** | **Total********other   reserves** | ** ** | **Retained earnings** | ** ** | **Controlling Equity** | ** ** | **Non-Controlling   interests** | ** ** | **Total Equity** | ** ** |
| ** **                          | ** ** | **ThCh$**               | ** ** | **ThCh$**             | ** ** | **ThCh$**                     | ** ** | **ThCh$**                                | ** ** | **ThCh$**                         | ** ** | **ThCh$**                  | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **Initial   balance at 01.01.2011** | ** ** | **230,892,178**         | ** ** | **—**            | ** ** | **(21,582,425**               | **)**      | **5,435,538**                            | ** ** | **(16,146,887**                   | **)**      | **180,110,975**            | ** ** | **394,856,266**             | ** ** | **8,330** | ** ** | **394,864,596** | ** ** |
| **Changes   in Equity**             |       |                    |       |                  |       |                          |       |                                     |       |                              |       |                       |       |                        |       |   |   |   |   |
| **Comprehensive   Income**          |       |                    |       |                  |       |                          |       |                                     |       |                              |       |                       |       |                        |       |   |   |   |   |
| Net income                          | ** ** | **—**              | ** ** | **—**            |       | —                        | ** ** | **—**                               | ** ** | **—**                        |       | 97,024,405                 |       | 97,024,405                  |       | 3,019 |   | 97,027,424 |   |
| Other comprehensive   income        | ** ** | **—**              | ** ** | **—**            |       | (877,454                      | )          | **—**                               |       | (877,454                          | )          | —                     |       | (877,454                    | )          | (2,334 | ) | (879,788 | ) |
| **Comprehensive   income**          | ** ** | **—**              | ** ** | **—**            | ** ** | **(877,454**                  | **)**      | **—**                               | ** ** | **(877,454**                      | **)**      | **97,024,405**             | ** ** | **96,146,951**              | ** ** | **685** | ** ** | **96,147,636** | ** ** |
| **Dividends**                       | ** ** | **—**              | ** ** | **—**            | ** ** | **—**                    | ** ** | **—**                               | ** ** | **—**                        | ** ** | **(69,033,312**            | **)**      | **(69,033,312**             | **)**      | **—** | ** ** | **(69,033,312** | **)** |
| **Total   changes in equity**       |       | —                  | ** ** | **—**            | ** ** | **(877,454**                  | **)**      | —                                   | ** ** | **(877,454**                      | **)**      | **27,991,093**             | ** ** | **27,113,639**              | ** ** | **685** | ** ** | **27,114,324** | ** ** |
| **Ending   balance at 12.31.2011**  | ** ** | **230,892,178**         | ** ** | **—**            | ** ** | **(22,459,879**               | **)**      | **5,435,538**                            | ** ** | **(17,024,341**                   | **)**      | **208,102,068**            | ** ** | **421,969,905**             | ** ** | **9,015** | ** ** | **421,978,920** | ** ** |

 

The accompanying notes 1 to 28 form an integral part of these financial statements

 

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Table of Contents

 

**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

**Consolidated Statements of Changes in Equi****ty**

**at December 31, 2012, 2011 and 2010**

(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)

 
| ** **                          | ** ** | ** **              | ** ** | **Other reserves**    | ** ** | ** **                               | ** ** | ** **                        | ** ** | ** **                 | ** ** | ** **                  | ** ** |
|-------------------------------------|------------|-------------------------|------------|----------------------------|------------|------------------------------------------|------------|-----------------------------------|------------|----------------------------|------------|-----------------------------|------------|
| ** **                          | ** ** | **Issued capital** | ** ** | **Translation   reserves** | ** ** | **Other reserves********(various)** | ** ** | **Total********other   reserves** | ** ** | **Retained earnings** | ** ** | **Controlling Equity** | ** ** | **Non-Controlling   interests** | ** ** | **Total Equity** | ** ** |
| ** **                          | ** ** | **ThCh$**               | ** ** | **ThCh$**                  | ** ** | **ThCh$**                                | ** ** | **ThCh$**                         | ** ** | **ThCh$**                  | ** ** | **ThCh$**                   | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **Initial   balance at 01.01.2010** | ** ** | **230,892,178**         | ** ** | **(10,287,158**            | **)**      | **5,435,538**                            | ** ** | **(4,851,620**                    | **)**      | **147,508,036**            | ** ** | **373,548,594**             | ** ** | **9,141** | ** ** | **373,557,735** | ** ** |
| **Changes   in Equity**             |       |                    |       |                       |       |                                     |       |                              |       |                       |       |                        |       |   |   |   |   |
| **Comprehensive   Income**          |       |                    |       |                       |       |                                     |       |                              |       |                       |       |                        |       |   |   |   |   |
| Net income                          | ** ** | **—**              | ** ** | **—**                 | ** ** | **—**                               | ** ** | **—**                        |       | 103,597,372                |       | 103,597,372                 |       | 2,692 |   | 103,600,064 |   |
| Other comprehensive   income        | ** ** | **—**              |       | (11,295,267                | )          | **—**                               |       | (11,295,267                       | )          | —                     |       | (11,295,267                 | )          | (3,503 | ) | (11,298,770 | ) |
| **Comprehensive   income**          | ** ** | **—**              | ** ** | **(11,295,267**            | **)**      | **—**                               | ** ** | **(11,295,267**                   | **)**      | **103,597,372**            | ** ** | **92,302,105**              | ** ** | **(811** | **)** | **92,301,294** | ** ** |
| **Dividends**                       | ** ** | **—**              | ** ** | **—**                 | ** ** | **—**                               | ** ** | **—**                        |       | (70,994,433                | )          | (70,994,433                 | )          | — |   | (70,994,433 | ) |
| **Total   changes in equity**       |       | —                  | ** ** | **(11,295,267**            | **)**      | —                                   | ** ** | **(11,295,267**                   | **)**      | **32,602,939**             | ** ** | **21,307,672**              | ** ** | **(811** | **)** | **21,306,861** | ** ** |
| **Ending   balance at 12.31.2010**  | ** ** | **230,892,178**         | ** ** | **(21,582,425**            | **)**      | **5,435,538**                            | ** ** | **(16,146,887**                   | **)**      | **180,110,975**            | ** ** | **394,856,266**             | ** ** | **8,330** | ** ** | **394,864,596** | ** ** |

 

The accompanying notes 1 to 28 form an integral part of these financial statements

 

F-11

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Table of Contents

 

**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

**Consolidated Statements of Cash Flows**

**for the years ended December 31, 2012, 2011 and 2010**

(Translation of consolidated financial statements originally issued in Spanish — See Note 2.2)

 
| ** **                                                                                                                                                                                | ** **   | ** **   | ** ** | **01.01.2012**   | ** ** | **01.01.2011**  | ** ** | **01.01.2010**  | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|--------------|------------|------------------|------------|-----------------|------------|-----------------|------------|
| ** **                                                                                                                                                                                | ** **   | **NOTE**     | ** ** | **12.31.2012**   | ** ** | **12.31.2011**  | ** ** | **12.31.2010**  | ** ** |
| ** **                                                                                                                                                                                | ** **   | ** **   | ** ** | **ThCh$**        | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
| **Cash flows provided by (used in) Operating   Activities**                                                                                                                               |         |         |       |             |       |            |       |            |       |
| ***Cash flows provided by Operating Activities***                                                                                                                                         |         |         |       |             |       |            |       |            |       |
| Receipts from customers   (including taxes)                                                                                                                                               |         |         |       | 1,557,595,968    |       | 1,383,987,572   |       | 1,197,298,500   |       |
| Charges for premiums, services, annual fees   and other policy benefits                                                                                                                   |         |         |       | —           |       | 162,979         |       | 1,490,134       |       |
| ***Cash flows used in Operating Activities***                                                                                                                                             | *** *** | *** *** |       |             |       |            |       |            |       |
| Supplier payments   (including taxes)                                                                                                                                                     |         |         |       | (1,038,437,026   | )          | (960,961,322    | )          | (819,753,947    | )          |
| Payroll                                                                                                                                                                                   |         |         |       | (109,386,885     | )          | (88,025,877     | )          | (81,670,428     | )          |
| Other payments for   operating activities (value-added taxes on   purchases and sales and others)                                                                                         |         |         |       | (188,266,514     | )          | (159,030,469    | )          | (134,723,290    | )          |
| Dividends received                                                                                                                                                                        |         |         |       | 725,000          |       | 2,061,957       |       | 1,379,837       |       |
| Interest payments   classified as from operations                                                                                                                                         |         |         |       | (7,608,496       | )          | (6,472,220      | )          | (5,876,763      | )          |
| Interest received   classified as from operations                                                                                                                                         |         |         |       | 1,874,032        |       | 2,139,339       |       | 2,406,821       |       |
| Income tax payments                                                                                                                                                                       |         |         |       | (23,229,558      | )          | (31,682,397     | )          | (32,304,059     | )          |
| Cash flows used in other   operating activities                                                                                                                                           |         |         |       | (4,409,721       | )          | (3,229,066      | )          | (2,399,096      | )          |
| **Net cash   flows provided by Operating Activities**                                                                                                                                     | ** **   | ** **   | ** ** | **188,856,800**  | ** ** | **138,950,496** | ** ** | **125,847,709** | ** ** |
| ***Cash flows provided by (used in) Investing Activities***                                                                                                                               | *** *** | *** *** |       |             |       |            |       |            |       |
| Capital decrease in   Envases CMF S.A. and Sale of 43% interest in Vital S.A., net of cash   previously held                                                                              |         |         |       | —           |       | 5,355,930       |       | —          |       |
| Capital contribution to   the associate Vital Jugos S.A.                                                                                                                                  |         |         |       | —           |       | (1,278,000      | )          | —          |       |
| Cash flows used in the   purchase of non-controlling ownership interest (purchase o Sorocaba Refrescos   S.A. and capital contribution in Vital Jugos S.A. after its proportional   sale) |         |         |       | (35,877,240      | )          | (3,249,000      | )          | —          |       |
| Other capital   contributions to equity method investments                                                                                                                                |         |         |       | —           |       | —          |       | (15,229,291     | )          |
| Other collections from   the sale of equity or debt instruments of other entities                                                                                                         |         |         |       | 1,150,000        |       | —          |       | —          |       |
| Proceeds from sale of   property, plant and equipment                                                                                                                                     |         |         |       | 611,634          |       | 2,187,364       |       | 590,074         |       |
| Purchase of property,   plant and equipment                                                                                                                                               |         |         |       | (143,763,670     | )          | (126,930,944    | )          | (95,461,555     | )          |
| Proceeds from the   maturity of marketable securities                                                                                                                                     |         |         |       | 14,864,854       |       | 75,422,008      |       | 72,746,562      |       |
| Purchase of marketable   securities                                                                                                                                                       |         |         |       | (1,455,348       | )          | (39,484,304     | )          | (47,156,718     | )          |
| Payments on forward,   term, option and financial exchange agreements                                                                                                                     |         |         |       | (1,360,880       | )          | (451,825        | )          | (2,368,356      | )          |
| Collections from   forward, term, option and financial exchange agreements                                                                                                                |         |         |       | 881,832          |       | 1,180,132       |       | 5,336,646       |       |
| Other cash inputs   (outputs) (1)                                                                                                                                                         |         |         |       | 8,778,615        |       | (2,372,559      | )          | 1,038,460       |       |
| **Net cash   flows used in Investing Activities**                                                                                                                                         | ** **   | ** **   | ** ** | **(156,170,203** | **)**      | **(89,621,198** | **)**      | **(80,504,178** | **)**      |
| ** **                                                                                                                                                                                | ** **   | ** **   | ** ** | ** **       | ** ** | ** **      | ** ** | ** **      | ** ** |
| ***Cash Flows provided by (used in) Financing Activities***                                                                                                                               | *** *** | *** *** |       |             |       |            |       |            |       |
| Long-term loans obtained                                                                                                                                                                  |         |         |       | 61,053,312       |       | —          |       | —          |       |
| Short-term loans obtained                                                                                                                                                                 |         |         |       | 197,968,578      |       | 118,456,093     |       | 30,023,277      |       |
| Loan payments                                                                                                                                                                             |         |         |       | (188,693,538     | )          | (111,722,342    | )          | (23,328,736     | )          |
| Purchase of treasury   shares                                                                                                                                                             |         |         |       | (21,725          | )          | —          |       | —          |       |
| Financial lease liability   payments                                                                                                                                                      |         |         |       | (16,438          | )          | —          |       | —          |       |
| Dividend payments by the   reporting entity                                                                                                                                               |         |         |       | (69,766,002      | )          | (70,905,803     | )          | (66,524,747     | )          |
| Other cash inputs   (outputs)                                                                                                                                                             |         |         |       | (4,075,171       | )          | (2,987,333      | )          | (2,717,533      | )          |
| **Net cash   flows used in Financing Activities**                                                                                                                                         |         |         | ** ** | **(3,550,984**   | **)**      | **(67,159,385** | **)**      | **(62,547,739** | **)**      |
| **Increase   (Decrease) in Cash and cash equivalents, before effects of variations in   foreign exchange rates**                                                                          | ** **   | ** **   | ** ** | **29,135,613**   | ** ** | **(17,830,087** | **)**      | **(17,204,208** | **)**      |
| Effects of variations in   foreign exchange rates on cash and cash equivalents                                                                                                            |         |         |       | (4,911,280       | )          | 864,929         |       | 2,676,067       |       |
| **Net   decrease in cash and cash equivalents**                                                                                                                                           | ** **   | ** **   | ** ** | **24,224,333**   | ** ** | **(16,965,158** | **)**      | **(14,528,141** | **)**      |
| Cash and cash equivalents   — beginning of year                                                                                                                                      | ** **   | **4**        |       | 31,297,922       |       | 48,263,080      |       | 62,791,221      |       |
| **Cash and   cash equivalents - end of year**                                                                                                                                             | ** **   | **4**        | ** ** | **55,522,255**   | ** ** | **31,297,922**  | ** ** | **48,263,080**  | ** ** |

 

Includes ThCh$4,760,888 in cash and cash equivalent contributed by companies incorporated as a result of the 2012 merger as described in note 1b) and ThCh$2,112,582 of the sale of 7% of Vital Jugos S.A. and 7.1% of Vital Aguas S.A. during 2012 as described in note 13.

 

The accompanying notes 1 to 28 form an integral part of these financial statements

 

F-12

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Table of Contents

 

**EMBOTELLADORA ANDINA S.A. AND SUBSIDIARIES**

 

**Notes to the Consolidated Financial Statements**

 

**NOTE 1 - CORPORATE INFORMATION**

 

**a)****       ****Securities Registration and description of business**

 

Embotelladora Andina S.A. is registered under No. 00124 of the Securities Registry and is regulated by the Chilean Superintendence of Securities and Insurance (SVS) pursuant to Law 18,046.

 

Embotelladora Andina S.A. (hereafter “Andina,” and together with its subsidiaries, the “Company”) engages mainly in the production and sale of Coca-Cola products and other Coca-Cola beverages. The Company has operations in Chile, Brazil, Argentina and Paraguay. In Chile, the geographic areas in which the Company has distribution franchises are regions II, III, IV, XI, XII, Metropolitan Region, Rancagua and San Antonio. In Brazil, the Company has distribution franchises in the states of Rio de Janeiro, Espírito Santo, Niteroi, Vitoria, and Nova Iguaçu. In Argentina, the Company has distribution franchises in the provinces of Mendoza, Córdoba, San Luis, Entre Ríos, Santa Fe, Rosario, Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro, La Pampa and the western zone of the Province of Buenos Aires. In Paraguay the franchised territory is the whole country.

 

The Company holds separate distribution licenses from The Coca-Cola Company for all of its territories.  The licenses for the territories in Chile expire in 2013 and 2018; in Argentina they expire in 2013 and 2017; in Brazil they expire in 2017; while in Paraguay it expires in 2014. All these licenses are renewable on similar terms, unless either the Company or The Coca-Cola Company choose not to do so. The Company currently expect that the licenses will be renewed upon expiration based on similar terms and conditions.

 

As of December 31, 2012 the Freire Group and related companies hold 55.35% of the outstanding shares with voting rights corresponding to the Series A shares.

 

The main offices of Embotelladora Andina S.A. are located at Avenue El Golf 40, 4th floor, municipality of Las Condes, Santiago, Chile. Its taxpayer identification number is 91.144.000-8.

 

**b)****       ****Merger with Embotelladoras Coca-Cola Polar S.A.**

 

On March 30, 2012, after completion of due-diligence procedures, the Company signed a Promissory Merger Agreement with Embotelladoras Coca-Cola Polar S.A. (“Polar”). Polar is also a Coca-Cola bottler with operations in: Chile, servicing territories in the II, III, IV, XI and XII regions; Argentina, servicing territories in Santa Cruz, Neuquén, El Chubut, Tierra del Fuego, Río Negro La Pampa and the western zone of the province of Buenos Aires; and Paraguay, servicing the whole country.  The merger was made in order to reinforce the Company’s leadership position among Coca-Cola bottlers in South America.

 

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Table of Contents

 

**NOTE 1 - CORPORATE INFORMATION (Continued)**

 

The merger is being accounted for as the acquisition of Polar by the Company.  Prior to closing, the merger was approved by the shareholders of both of the companies, as well as the Chilean Superintendence of Securities and Insurance, and the Coca-Cola Company.  The terms of the merger prescribed the exchange of newly issued Company shares at a rate of 0.33269 Series A shares and 0.33269 Series B shares, for each outstanding share of Polar.

 

The physical exchange of shares took place on October 16, 2012, with which former shareholders of Polar then having a 19.68% ownership interest in the merged Company. Based upon the terms of the executed agreements, the actual control over day-to-day operations of Polar transferred to the Company as of October 1, 2012, and the Company began consolidating Polar’s operations from that date forward. Additionally and as a result of Embotelladora Andina becoming the legal successor of Polar’s rights and obligations, the Company indirectly acquired additional ownership interest in Vital Jugos S.A., Vital Aguas S.A. and Envases Central S.A. that added to its previous ownership interest in those entities.  The Company’s current ownership enables it to exercise control over these entities, and thus incorporate them into the consolidation of the consolidated financial statements beginning October 1, 2012.

 

Under IFRS 3, because the acquisition of control over Vital Jugos S.A. and Vital Aguas S.A, and Envases Central S.A. was made in stages, the preexisting equity method investment must be valued at fair value at the time of de-recognition, with the differences between fair value and book value being recognized in the result of the period in which control is obtained. The Company has not recognized a gain (or loss) in its 2012 results, because book values of the equity method investments approximated their fair values at the date of de-recognition.

 

A total of 93,152,097 Series A shares and 93,152,097 Series B shares were issued at closing in exchange for 100% of Polar’s outstanding shares. The total purchase price was ThCh$461,568,641 based on a share price of Ch$2,220 per Series A share and Ch$2,735 per Series B share on October 1, 2012. There are no contingent purchase price provisions. Transaction related costs of Ch$4,517,661 were expensed as incurred, and recorded as a component of other expenses by function in the Company’s accompanying consolidated income statement..

 

F-14

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Table of Contents

 

**NOTE 1 - CORPORATE INFORMATION (Continued)**

 

The fair value of Polar’s net assets acquired is as follows:

 
| ** **                                                                            | ** ** | **ThCh$**        | ** ** |
|---------------------------------------------------------------------------------------|------------|------------------|------------|
| Total current assets acquired, including cash amounting to ThCh$4,760,888             |       | 66,536,012       |       |
| Property, plant and equipment                                                         |       | 153,012,024      |       |
| Other non-current assets                                                              |       | 15,221,922       |       |
| Contractual rights to distribute Coca-Cola products (“Distribution Rights”) |       | 459,393,920      |       |
| **Total Assets**                                                                      | ** ** | **694,163,878**  | ** ** |
| Indebtedness                                                                          |       | (99,924,279      | )          |
| Other liabilities (includes deferred taxes of ThCh$81,672,940)                        |       | (149,131,026     | )          |
| **Total liabilities**                                                                 | ** ** | **(249,055,305** | **)**      |
| Net Assets AcquiredAmounts attributed to non-controlling interests                    |       | 445,108,573      |       |
| Goodwill                                                                              |       | 16,460,068       |       |
| **Total consideration excluding non-controlling   interests**                         | ** ** | **461,568,641**  | ** ** |

 

Additionally, the Company allocated ThCh$18,801,365 to non-controlling interests resulting in total consideration (an aggregate purchase price) for the net assets acquired from Polar of ThCh$480,370,006.

 

The Company carried out the fair value of distribution rights, property, plant and equipment with the assistance of third-party valuations.  Distribution rights are expected to be tax deductible for income tax purposes.

 

The Company expects to recover goodwill through related synergies with the available distribution capacity.  Goodwill has been assigned to the cash generating unit of the Company in Chile (ThCh$8,503,023), Argentina (ThCh$1,041,633), and Paraguay (ThCh$6,915,412). Goodwill is not expected to be tax deductible for income tax purposes.

 

Included in the summary of net assets acquired above is ThCh$ 7,364,780 of other non-current assets related to the 15.0% equity investment in Vital previously owned by Polar.  Upon Vital’s ultimate consolidation by the Company, the current and non-current assets of the Company did not change significantly.

 

Condensed financial information of Polar for the period between October 1, 2012 and December 31, 2012 is as follows:

 
| ** **          | ** ** | **ThCh$**  | ** ** |
|---------------------|------------|------------|------------|
| Net sales           |       | 93,918,209 |       |
| Income before taxes |       | 5,465,844  |       |
| Net income          |       | 4,648,021  |       |

 

Condensed financial information of Andina as if Polar were consolidated beginning January 1, 2012 is as follows (amounts are unaudited in nature):

 
| ** **          | ** ** | **(UNAUDITED)********ThCh$** | ** ** |
|---------------------|------------|------------------------------|------------|
| Net sales           |       | 1,429,981,711                |       |
| Income before taxes |       | 133,211,027                  |       |
| Net income          |       | 95,050,027                   |       |

 

F-15

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Table of Contents

 

**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

**2.1****                    ****Periods covered**

 

**Consolidated statements of financial position****:**At December 31, 2012 and 2011.

 

**Consolidated income statements by function and comprehensive income:**For the years ended December 31, 2012, 2011 and 2010.

 

**Consolidated statements of cash flows:** For the years ended December 31, 2012, 2011 and 2010, using the “direct method”.

 

**Consolidated statements of changes in equity**:  For the years ended December 31, 2012, 2011 and 2010.

 

**Rounding**: The consolidated financial statements are presented in thousands of Chilean pesos and all values are rounded to the nearest thousand, except where otherwise indicated.

 

**2.2****                                      ****Basis of preparation**

 

The accompany consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (“IASB”).

 

The Company’s 2012 Spanish language IFRS consolidated financial statements were approved by the Company’s Board of Directors on February 28, 2013, with subsequent events first being considered through that date.  Those Spanish language IFRS consolidated financial statements consisted of consoliated statements of financial position as of December, 31 2012 and 2011 along with consolidated income statements by function, consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated statements of cash flows (and related disclosures), each for the two years then ended.  Those Spanish language IFRS consolidated financial statements were then subsequently approved by the Company’s shareholders during its April 25, 2013 meeting.

 

Included in this 2012 English language translation IFRS consolidated financial statements are consolidated statements of financial position as of December 31, 2012 and 2011, along with consolidated income statements by function, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows (and the related disclosures) for each of the three years ended December 31, 2012.  This three year presentation of operations, changes in equity and cash flows is required by the rules of the United States Securities and Exchange Commission.  Other than such three year presentation and disclosure, the accompanying English language IFRS consolidated financial statements are consistent with the previously issued Spanish language IFRS consolidated financial statements.  This three year English language IFRS consolidated financial statements were approved for issuances by the Board of

 

F-16

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Table of Contents

 

**NOTE 2 -  BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

Directors during a session held on April 30, 2013, with subsequent events considered through this later date.

 

These Consolidated Financial Statements have been prepared based on accounting records kept by the Embotelladora Andina S.A. (“Parent Company”) and by other entities forming part thereof. Each entity prepares its financial statements following the accounting principles and standards applicable in each country. Adjustments and reclassifications have been made, as necessary, in the consolidation process to align such principles and standards and then adapt them to IFRS.

 

For the convenience of the reader, these consolidated financial statements have been translated from Spanish to English, as explained above.

 

**2.3****                    ****Basis of consolidation**

 

**2.3.1****                            ****Subsidiaries**

 

The Consolidated Financial Statements include the Financial Statements of the Parent Company and the companies it controls (its subsidiaries). The Company has control when it has the power to direct the financial and operating policies of a company so as to obtain benefits from its activities. They include assets and liabilities as of December 31, 2012 and 2011 and results of operations and cash flows for the years ended December 31, 2012, 2011 and 2010. Income or losses from subsidiaries acquired or sold are included in the consolidated financial statements from the effective date of acquisition through the effective date of sale, as applicable.

 

The acquisition method is used to account for the acquisition of subsidiaries. The acquisition cost is the fair value of assets, of equity securities and of liabilities incurred or assumed on the date that control is obtained. Identifiable assets acquired and identifiable liabilities and contingencies assumed in a business combination are accounted for initially at their fair value as of the acquisition date. The excess acquisition cost plus non-controlling interest above the fair value of the Group’s share in identifiable net assets acquired is recognized as goodwill. If the acquisition cost is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in income.

 

Intra-group transactions, balances, and unrealized gains and losses, are eliminated. Whenever necessary, the accounting policies of subsidiaries are modified to ensure uniformity with the policies adopted by the Company.

 

The value of non-controlling interest in equity and the results of the consolidated subsidiaries is presented in Equity; non-controlling interests, in the Consolidated Statement of Financial Position and in “net income attributable to non-controlling interests,” in the Consolidated Income Statements by Function.

 

The consolidated financial statements include all assets, liabilities, income, expenses, and cash flows after eliminating intra-group balances and transactions.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

The list of subsidiaries included in the consolidation is detailed as follows:

 
| ** **           | ** ** | ** **                              | ** ** | **Percentage Interest** | ** ** |
|----------------------|------------|-----------------------------------------|------------|------------------------------|------------|
| ** **           | ** ** | ** **                              | ** ** | **12-31-2012**               | ** ** | **12-31-2011** | ** ** |
| **Taxpayer ID** | ** ** | **Name of the Company**  | ** ** | **Direct**                   | ** ** | **Indirect** | ** ** | **Total** | ** ** | **Direct** | ** ** | **Indirect** | ** ** | **Total** | ** ** |
| 59.144.140-K         |       | Abisa Corp S.A.                         |       | —                       |       | 99.99 |   | 99.99 |   | — |   | 99.99 |   | 99.99 |   |
| Foreign              |       | Aconcagua Investing Ltda.(2)            |       | 0.71                         |       | 99.28 |   | 99.99 |   | — |   | — |   | — |   |
| 96.842.970-1         |       | Andina Bottling Investments S.A.        |       | 99.90                        |       | 0.09 |   | 99.99 |   | 99.90 |   | 0.09 |   | 99.99 |   |
| 96.972.760-9         |       | Andina Bottling Investments Dos S.A.    |       | 99.90                        |       | 0.09 |   | 99.99 |   | 99.90 |   | 0.09 |   | 99.99 |   |
| Foreign              |       | Andina Empaques   Argentina S.A. (1)    |       | —                       |       | 99.98 |   | 99.98 |   | — |   | — |   | — |   |
| 96.836.750-1         |       | Andina Inversiones   Societarias S.A.   |       | 99.99                        |       | — |   | 99.99 |   | 99.99 |   | — |   | 99.99 |   |
| 76.070.406-7         |       | Embotelladora Andina   Chile S.A.       |       | 99.99                        |       | — |   | 99.99 |   | 99.99 |   | — |   | 99.99 |   |
| Foreign              |       | Embotelladora del   Atlántico S.A. |       | —                       |       | 99.98 |   | 99.98 |   | — |   | 99.98 |   | 99.98 |   |
| Foreign              |       | Coca-Cola Polar   Argentina S.A.        |       | 5.00                         |       | 95.00 |   | 99.99 |   | — |   | — |   | — |   |
| 96.705.990-0         |       | Envases Central S. A. (2)               |       | 59.27                        |       | — |   | 59.27 |   | 49.91 |   | — |   | 49.91 |   |
| 96.971.280-6         |       | Inversiones Los Andes Ltda.(2)          |       | 99.99                        |       | — |   | 99.99 |   | — |   | — |   | — |   |
| Foreign              |       | Paraguay Refrescos S. A. (2)            |       | 0.08                         |       | 97.75 |   | 97.83 |   | — |   | — |   | — |   |
| Foreign              |       | Rio de Janeiro Refrescos   Ltda.        |       | —                       |       | 99.99 |   | 99.99 |   | — |   | 99.99 |   | 99.99 |   |
| 78.536.950-5         |       | Servicios Multivending Ltda.            |       | 99.90                        |       | 0.09 |   | 99.99 |   | 99.90 |   | 0.09 |   | 99.99 |   |
| 78.861.790-9         |       | Transportes Andina Refrescos Ltda.      |       | 99.90                        |       | 0.09 |   | 99.99 |   | 99.90 |   | 0.09 |   | 99.99 |   |
| 96.928.520-7         |       | Transportes Polar S. A.(2)              |       | 99.99                        |       | — |   | 99.99 |   | — |   | — |   | — |   |
| 76.389.720-6         |       | Vital Aguas S. A. (2)                   |       | 66.50                        |       | — |   | 66.50 |   | 56.50 |   | — |   | 56.50 |   |
| 96.845.500-0         |       | Vital Jugos S. A. (2)                   |       | 15.00                        |       | 50.00 |   | 65.00 |   | — |   | 57.00 |   | 57.00 |   |

 

----

(1)         At a Special General Shareholders’ Meeting held November 1st 2011, Embotelladora del Atlántico S.A. decided to divide part of its equity to form a new company, Andina Empaques Argentina S.A., for the purpose of developing the design, manufacture and sale of plastic products or products derived from the industry for plastics, primarily in the packaging division. The transaction became effective January1, 2012 from an accounting and tax perspective.

(2)         Companies incorporated to the consolidation as of October 1, 2012 as a result of the merger with Embotelladoras Coca-Cola Polar S.A. explained in note 1 b).

 

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**NOTE 2 -********BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.3.2****                    ****Equity method investments**

 

Associates are all entities over which the Company exercises significant influence but does not have control. Investments in associates are accounted for using the equity method and are initially recognized at cost.

 

The Company’s share in income and losses subsequent to the acquisition of associates is recognized in income.

 

Unrealized gains in transactions between the Company and its associates are eliminated to the extent of the interest the Company holds in those associates. Unrealized losses are also eliminated unless there is evidence in the transaction of an impairment loss on the asset being transferred. Whenever necessary, the accounting policies of associates are adjusted for reporting purposes to assure uniformity with the policies adopted by the Company.

 

**2.4****                               ****Financial reporting by operating segment**

 

IFRS 8 requires that entities disclose information on the revenues of operating segments. In general, this is information that Management and the Board of Directors use internally to evaluate the profitability of segments and decide how to allocate resources to them. Therefore, the following operating segments have been determined based on geographic location:

 

·                 Chilean operations

·                 Brazilian operations

·                 Argentine operations

·                 Paraguayan operations

 

**2.5****                                      ****Foreign currency translation**

 

**2.5.1****                            ****Functional currency and currency of presentation**

 

The items included in the financial statements of each of the entities in the Company are valued using the currency of the main economic environment in which the entity does business (“functional currency”). The consolidated financial statements are presented in Chilean pesos, which is the parent company’s functional currency and presentation currency.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.5.2****                            ****Balances and transactions**

 

Foreign currency transactions are converted to the functional currency using the foreign exchange rate prevailing on the date of each transaction. The gains and losses resulting from the settlement of these transactions and the conversion of the foreign currency—denominated assets and liabilities at the closing foreign exchange rates are recognized in the income account by function.

 

The foreign exchange rates and values prevailing at the close of each of the periods presented were:

 
| ** ** | ** ** | **Exchange rate to the Chilean peso** | ** ** |
|------------|------------|----------------------------------------------------------------|------------|
| **Date**   | ** ** | **US$   dollar**                                               | ** ** | **R$ Brazilian   Real** | ** ** | **A$ Argentine   Peso** | ** ** | **UF  ̈Unidad   de Fomento** | ** ** | **Paraguayan   Guaraní** | ** ** | **€********Euro** | ** ** |
| 12.31.2012 |       | 479.96                                                         |       | 234.87 |   | 97.59 |   | 22,840.75 |   | 0.11 |   | 634.45 |   |
| 12.31.2011 |       | 519.20                                                         |       | 276.79 |   | 120.63 |   | 22,294.03 |   | 0.12 |   | 672.97 |   |
| 12.31.2010 |       | 468.01                                                         |       | 280.89 |   | 117.71 |   | 21,455.55 |   | 0.10 |   | 621.53 |   |

 

**2.5.3****                            ****Translation of foreign subsidiaries**

 

The financial position and results of operations of all entities in the Company (none of which use the currency of a hyperinflationary economy) operating under a functional currency other than the presentation currency are translated to the presentation currency as follows:

 

(i)                         Assets and liabilities in each statement of financial position are translated at the closing foreign exchange rate as of the reporting date;

(ii)                      Income and expenses of each income statement account are translated at the average foreign exchange rate for the period; and

(iii)                   All resulting translation differences are recognized as other comprehensive income.

 

The companies that use a functional currency different from the presentation currency of the parent company are:

 
| **Company**                                               | ** ** | **Functional currency**      |
|-----------------------------------------------------------|------------|-----------------------------------|
| Rio de Janeiro Refrescos Ltda. (Brazil Segment)           |       | R$ Brazilian   Real          |
| Embotelladora del Atlántico S.A. (Argentina Segment) |       | A$ Argentine   Peso          |
| Andina Empaques Argentina S. A. (Argentina Segment)       |       | A$ Argentine   Peso          |
| Paraguay Refrescos S. A. (Paraguay Segment)               |       | G$ Paraguayan   Guaraní |

 

In the consolidation, the translation differences arising from the conversion of a net investment in foreign entities are recognized in other comprehensive income. Exchange rate differences from accounts receivable which are considered to be part of an equity investment, have been recognized as comprehensive income net of deferred taxes, if applicable. On disposal of the investment, those translation differences are recognized in the income statement as part of the gain or loss on the disposal of the investment.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.6****                              ****Property, plant, and equipment**

 

The assets included in property, plant and equipment are recognized at their historical cost or the cost given as of the date of application of IFRS, less depreciation and cumulative impairment losses.

 

The cost of property, plant and equipment includes expenses directly attributable to the acquisition of the items less government subsidies resulting from the difference between the market interest rates of the financial liabilities and the preferential government credit rates. The historical cost also includes revaluations and price-level restatement of opening balances (attributed cost) at January 1, 2009, due to first-time exemptions in IFRS.

 

Subsequent costs are included in the value of the original asset or recognized as a separate asset only when it is likely that the future economic benefit associated with the elements of property, plant and equipment will flow to the Company and the cost of the element can be dependably determined. The value of the component that is substituted is derecognized. The remaining repairs and maintenance are charged to the income statement in the fiscal period in which they incurred.

 

Land is not depreciated. Other assets, net of residual value, are depreciated by distributing the cost of the different components on a straight line basis over the estimated useful life, which is the period during which the Company expects to use them.

 

The estimated useful lives by asset category are:

 
| **Assets**                              | ** ** | **Range in years** | ** ** |
|-----------------------------------------|------------|------------------------------|------------|
| Buildings                               |       | 30-50                        |       |
| Plant and equipment                     |       | 10-20                        |       |
| Warehouse installations and accessories |       | 10-30                        |       |
| Other accessories                       |       | 4-5                          |       |
| Motor vehicles                          |       | 5-7                          |       |
| Other property, plant and equipment     |       | 3-8                          |       |
| Bottles and containers                  |       | 2-8                          |       |

 

The residual value and useful lives of assets are revised and adjusted at each reporting date, if necessary,

 

When the value of an asset is higher than its estimated recoverable amount, the value is reduced immediately to the recoverable amount.

 

Gains and losses on the disposal of property, plant, and equipment are calculated by comparing the disposal proceeds to the carrying amount, and are charged to the income statement.

 

Items available for sale and that fulfill the conditions under IFRS 5 “Non-Current Assets Available for Sale” are separate from property, plant and equipment are presented under current assets as the lower value between book value and fair value less costs of sale

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.7****                              ****Intangible assets and Goodwill**

 

**2.7.1****                    ****Goodwill**

 

Goodwill represents the excess cost of acquisition and non-controlling interest over the fair value of the Company’s share in identifiable net assets of the subsidiary on the acquisition date.  The goodwill is recognized separately and tested annually for impairment. Goodwill is carried at cost, less accumulated impairment losses.

 

Gains and losses on the sale of an entity include the carrying amount of the goodwill related to that entity.

 

The goodwill is allocated to cash-generating units (CGU) in order to test for impairment losses. The allocation is made to CGUs that are expected to benefit from the business combination that generated the goodwill.

 

**2.7.2****                    ****Distribution rights**

 

Distribution rights correspond to contractual rights to produce and distribute products under the Coca-Cola brand in certain territories in Argentina, Chile and Paraguay acquired during the Polar merger discussed in Note 1 b).  Distribution rights have an indefinite useful life and are not amortized, given that that the Company believes that the bottling agreements will be indefinitely renewed by the Coca-Cola Company upon similar terms and conditions.  They are subject to impairment tests on a yearly basis.

 

**2.7.3****                    ****Water rights**

 

Water rights that have been paid for are included in the group of intangible assets, carried at acquisition cost. They are not amortized since they have no expiration date, but are annually tested for impairment.

 

**2.8****                              ****Impairment losses**

 

Assets that have an indefinite useful life, such as intangibles related to distribution rights and goodwill, are not amortized and are annually tested for impairment loss. Amortizable assets and property, plant and equipment are tested for impairment whenever there is an event or change in circumstances indicating that the carrying amount might not be recoverable. The carrying value of the asset exceeding its recoverable amount is recognized as an impairment loss. The recoverable amount is the higher of an asset’s fair value less costs to sell or its value in use.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

In order to evaluate impairment, assets are grouped at the lowest level for which there are separately identifiable cash flows (cash generating units). Non-financial assets other than goodwill that were impaired are reviewed at each reporting date to determine if the impairment loss should be reversed.

 

**2.9****                              ****Financial assets**

 

The Company classifies its financial assets into the following categories: financial assets at fair value through profit or loss, loans and accounts receivable, and assets held until maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at the time of initial recognition.

 

**2.9.1****                    ****Financial assets at fair value through profit or loss**

 

Financial assets at fair value through profit or loss are financial assets available for sale. A financial asset is classified in this category if it is acquired mainly for the purpose of being sold in the short term. Assets in this category are classified as current assets.

 

Losses or gains from changes in fair value of financial assets at fair value through profit and loss are recognized in the income statement under finance income or expenses during the year in which they occur.

 

**2.9.2****                    ****Loans and accounts receivable**

 

Loans and accounts receivable are not quoted in an active market. They are recorded in current assets, unless they are due more than 12 months from the reporting date, in which case they are classified as non-current assets. Loans and accounts receivable are included in trade and other accounts receivable in the consolidated statement of financial position and they are presented at their amortized cost.

 

**2.9.3****                    ****Financial assets held to maturity**

 

Other financial assets corresponds to bank deposits that the Company’s management has the positive intention and ability to hold until their maturity. They are recorded in current assets because they mature in less than 12 months from the reporting date and are presented at their amortized cost, less impairment.

 

Accrued interest is recognized in the consolidated income statement under finance income during the year in which it occurs.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.10****                       ****Derivatives and hedging**

 

The derivatives held by the Company correspond to transactions hedged against foreign currency exchange rate risk and the price of raw materials, property, plant and equipment, loan obligations and materially offset the risks that are hedged.

 

The method to recognize the resulting loss or gain, as well as its classification within the balance, depends on if the derivative has been appointed as a hedging instrument and of the item being hedged.

 

**2.10.1****             ****Hedging derivative instruments**

 

Hedging derivative instruments are recorded at fair value and the effect is recorded under assets, liabilities, income and expenses, along with any change in the reasonable value of the hedged asset or liability attributable to the risk covered.

 

**2.10.2****             ****Non-hedging derivative instruments**

 

The derivatives are accounted for at fair value. If positive, they are recorded under “other current financial assets”. If negative, they are recorded under “other current financial liabilities.”

 

The Company’s derivatives agreements do not qualify as hedges pursuant to IFRS requirements.  Therefore, the changes in fair value are immediately recognized in the income statement under “other income and losses”

 

The Company does not use hedge accounting for its foreign investments.

 

The Company has also evaluated the derivatives implicit in financial contracts and instruments to determine whether their characteristics and risks are closely related to the master agreement, as stipulated by IAS 39.

 

**Fair value hierarchy**

 

The Company has recorded a liability as of December 31, 2012 and 2011 foreign exchange derivatives contracts classified within the other current financial liabilities (current financial liabilities). These contracts are carried at fair value in the statement of financial position. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

Level 1:    Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2:    Assumptions different to quoted prices included in Level 1 and that are applicable to assets and liabilities, be it directly (as price) or indirectly (i.e. derived from a price).

Level 3:    Assumptions for assets and liabilities that are not based on information observed directly in the market.

 

During the years ended December 31, 2012, 2011 and 2010, there were no transfers of items between fair value measurements categories all of which were valued during the period using Level 2.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.11****                       ****Inventory**

 

Inventories are valued at the lower of cost and net realizable value. Cost is determined by using the weighted average cost method. The cost of finished products and of work in progress includes raw materials, direct labor, other direct costs and manufacturing overhead (based on operating capacity) to bring the goods to marketable condition, but it excludes interest expense. The net realizable value is the estimated selling price in the ordinary course of business, less any variable cost of sale.

 

Estimates are also made for obsolescence of raw materials and finished products based on turnover and ageing of the items involved.

 

**2.12**                        **Trade receivable**

 

Trade accounts receivable are recognized initially at amortized cost, given the short term in which they are recovered, less any impairment loss. A provision is made for impairment losses on trade accounts receivable when there is objective evidence that the Company will be incapable of collecting all sums owed according to the original terms of the receivable, based either on individual analyses or on global aging analyses. The carrying amount of the asset is reduced as the provision is used and the loss is recognized in administrative and sales expenses in the consolidated income statement by function.

 

**2.13****                       ****Cash and cash equivalents**

 

Cash and cash equivalents include cash at banks and on hand, time deposits in banks and other short-term, highly liquid investments and low risk of change in value with purchased original maturities of three months or less.

 

**2.14****                       ****Other financial liabilities**

 

Bank funding such as debt securities issued are initially recognized at fair value, net of transaction costs. Liabilities with third parties are later valued at amortized cost. Any difference between the funding obtained (net of the costs required to obtain it) and the reimbursement amount is recognized in the income statement during the term of the debt using the effective interest rate method.

 

**2.15****                       ****Government subsidies**

 

Government subsidies are recognized at their fair value when it is sure that the subsidy will be received and that the Company will meet all the established conditions.

 

Operating cost-related subsidies are deferred and recognized on the income statement in the period of the corresponding operating cost.

 

Subsidies for the purchase of property, plant and equipment are deducted from the cost of the related asset in property, plant and equipment and recognized on the income statement, on a straight-line basis during the estimated useful life of the related asset.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.16****                       ****Income tax**

 

The Company and its subsidiaries in Chile account for income tax according to the net taxable income calculated by the rules in the Income Tax Law. Subsidiaries abroad account for income taxes according to the regulations of the country in which they operate.

 

Deferred taxes are calculated using the balance sheet - liability method on the temporary differences between the tax basis of assets and liabilities and their carrying amounts in the consolidated financial statements, using the tax rate in the year of reversal of the difference.

 

Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be offset.

 

The Company does not recognize deferred taxes for temporary differences from investments in subsidiaries and associates in which the Company can control the timing of reversal and it is likely that they will not be reversed in the foreseeable future.

 

**2.17****                       ****Employee benefits**

 

The Company has established a provision for post-retirement compensation according to years of service that will be paid to its employees according to the individual and collective contracts in place. This provision is accounted for at the actuarial value in accordance with IAS 19. The positive or negative effect on compensation because of changes in estimates (turnover, mortality, retirement, and other rates) is recorded directly in income.

 

The Company also has an executive retention plan. It is accounted for as a liability according to the guidelines of the plan. This plan grants certain executives the right to receive a fixed cash payment on a pre-set date once they have completed the required years of employment.

 

The Company and its subsidiaries have made a provision account for the cost of vacation and other employee benefits on an accrual basis. This liability is recorded under provisions.

 

**2.18****                       ****Provisions**

 

Provisions for litigation and other contingencies are recognized when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.

 

**2.19****                       ****Leases**

 

**a)****       ****Operating**

 

Operating lease payments are recognized as an expense on a straight-line basis over the term of the lease.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**b)****       ****Financial**

 

Property, plant and equipment assets where the Company substantially maintains all the risks and benefits derived from them are classified as financial leases. Financial leases are capitalized at the inception of the lease at the lesser of the fair value of property plant and equipment asset leased and the present value of the minimum lease payments.

 

**2.20****                       ****Deposits for returnable containers**

 

This is a liability comprised of cash collateral received from customers for bottles and other returnable containers made available to them.

 

The liability pertains to the deposit amount that is reimbursed if the customer or distributor returns the bottles and cases in good condition, together with the original invoice. Estimation of the liability is based on the inventory of bottles given as a loan to clients and distributors, the estimated amount of bottles in circulation, and a historical average weighted value per bottle or case.

 

Deposits for returnable containers are presented as a current liability because the Company does not have a legal right to defer settlement for a period in excess of one year.  However, the Company does not anticipate any material cash settlements for such amounts during the upcoming year.

 

**2.21****                       ****Revenue recognition**

 

Revenue is measured at fair value of the consideration received or receivable for the sale of goods in the ordinary course of the Company’s business. Revenue is presented net of value-added tax, returns, rebates, and discounts and net of sales between the companies that are consolidated.

 

The Company recognizes revenue when earned and the amount of revenue can be reliably measured and it is probable that the future economic benefits will flow to the Company.

 

Revenues are recognized once the products are physically delivered to clients.

 

**2.22****                       ****Contributions of The Coca-Cola Company**

 

The Company receives certain discretionary contributions from The Coca-Cola Company, related to the financing of advertising and promotional programs for its products in the territories where it has distribution licensing. The resources received are recorded as a reduction in marketing expenses in the consolidated income statement. Given its discretionary nature, the portion of contributions received in one period does not imply it will be repeated in the following period.

 

In certain limited situations there is a legally binding agreement with The Coca-Cola Company through which the Company receives contributions for the building and acquisition of specific elements of property, plant and equipment.  In those situations, payments received pursuant to these agreements are recorded as a reduction of the cost of the respective assets acquired.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.23****                                 ****Dividend payments**

 

Dividend payments to the Company’s shareholders are recognized as a liability in the consolidated financial statements of the Company, based on the obligatory 30% minimum in accordance with the Corporations Law.

 

**2.24****                                 ****Critical accounting estimates and judgments**

 

The Company makes estimates and judgments about the future. Actual results may differ from previously estimated amounts. The estimates and judgments that might have a material impact on future financial statements are explained below:

 

**2.24.1****                       ****Impairment of goodwill and intangible assets of indefinite useful life**

 

The Company tests if goodwill and intangible assets of indefinite useful life (such as distribution rights) have suffered impairment loss on an annual basis or whenever there are indicators of impairment. The recoverable amounts of cash generating units are determined based on calculations of the value in use.  The key variables that management calculates include the volume of sales, prices, marketing expenses and other economic factors.  The estimation of these variables requires a material administrative judgment as those variables imply inherent uncertainties.  However, the assumptions are consistent with our internal planning. Therefore, management evaluates and updates estimates according to the conditions affecting the variables.  If these assets are deemed to have become impaired, they will be written off at their estimated fair value or future recovery value according to discounted cash flows.

 

**2.24.2****                       ****Fair Value of Assets and Liabilities**

 

IFRS requires in certain cases that assets and liabilities be recorded at their fair value.  Fair value is the amount at which an asset can be purchased or sold or the amount at which a liability can be incurred or liquidated in an actual transaction among parties duly informed under conditions of mutual independence, different from a forced liquidation.

 

The basis for measuring assets and liabilities at fair value are the current prices in the active market.  Lacking such an active market, the Company estimates said values based on the best information available, including the use of models or other valuation techniques.

 

The Company estimated the fair value of the intangible assets acquired as a result of the Polar merger based on the multiple period excess earning method, which implies the estimation of future cash flows generated by the intangible asset, adjusted by cash flows that do not come from the intangible asset, but from other assets.  For this, the Company estimated the time during which the intangible asset will generate cash flows, the cash flows themselves, cash flows from other assets and a discount rate.

 

Other assets acquired and implicit liabilities in the business combination are carried at fair value using valuation methods that are considered appropriate under the circumstances including the cost of depreciated recovery and recent transaction values for comparable assets, among others. These methodologies require certain inputs to be estimated, including the estimation of future cash flows.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.24.3****                       ****Allowances for doubtful accounts**

 

The Company evaluates the possibility of collecting trade accounts receivable using several factors. When the Company becomes aware of a specific inability of a customer to fulfill its financial commitments, a specific provision for doubtful accounts is estimated and recorded, which reduces the recognized receivable to the amount that the Company estimates will ultimately be collected. In addition to specifically identifying potential uncollectible customer accounts, allowances for doubtful accounts are determined based on historical collection history and a general assessment of trade accounts receivable, both outstanding and past due, among other factors. The balance of the Company’s trade accounts receivable was ThCh$159,540,993 at December 31, 2012 (ThCh$114,618,699 at December 31, 2011), net of an allowance for doubtful accounts provision of ThCh$1,486,749 at December 31, 2012 (ThCh$1,544,574 at December 31, 2011).

 

**2.24.4****                       ****Useful life, residual value and impairment of property, plant, and equipment**

 

Property, plant, and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful life of those assets. Changes in circumstances, such as technological advances, changes to the Company’s business model, or changes in its capital strategy might modify the effective useful lives as compared to our estimates. Whenever the Company determines that the useful life of property, plant and equipment might be shortened, it depreciates the excess between the net book value and the estimated recoverable amount according to the revised remaining useful life. Factors such as changes in the planned use of manufacturing equipment, dispensers, and transportation equipment or computer software could make the useful lives of assets shorter. The Company reviews the impairment of long-lived assets each time events or changes in circumstances indicate that the book value of any of those assets might not be recovered. The estimate of future cash flows is based, among other things, on certain assumptions about the expected operating profits in the future. Company estimates of non-discounted cash flows may differ from real cash flows because of, among other reasons, technological changes, economic conditions, changes in the business model, or changes in the operating profit. If the sum of non-discounted cash flows that have been projected (excluding interest) is less than the carrying value of the asset, the asset will be written down to its estimated fair value.

 

**2.24.5****                       ****Liabilities for returnable container collateral**

 

The Company records a liability for deposits received in exchange for bottles and cases provided to its customers and distributors. This liability represents the amount of the deposit that must be returned if the client or distributor returns the bottles and cases in good condition, together with the original invoice. This liability is estimated on the basis of an inventory of bottles given on loan to customers and distributors, estimates of bottles in circulation and the weighted average historical cost per bottle or case. Management must make several assumptions in relation to this liability in order to estimate the number of bottles in circulation, the amount of the deposit that must be reimbursed and the timing of disbursements.

 

F-29

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Table of Contents

 

**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**2.25****                                 ****New IFRS and interpretations of the IFRS Interpretations Committee (IFRSIC)**

 

The following IFRS and Interpretations of the IFRSIC have been published:

 
| **New Standards**                                         | ** ** | **Mandatory   Effective Date** |
|----------------------------------------------------------------|------------|-------------------------------------|
| IFRS 9 Financial   instruments: Classification and measurement |       | January 1, 2015                     |
| IFRS 10 Consolidated   Financial Statements                    |       | January 1, 2013                     |
| IFRS 11 Joint   Arrangements                                   |       | January 1, 2013                     |
| IFRS 12 Disclosure of   Interests in Other Entities            |       | January 1, 2013                     |
| IFRS 13 Fair Value   Measurement                               |       | January 1, 2013                     |

 

**IFRS 9 “Financial Instruments”**

 

This Standard introduces new requirements for the classification and measurement of financial assets and early application is permitted.  All financial assets must be classified in their entirety on the basis of the Company’s business model for financial asset management and the characteristics of contractual cash flows of financial assets.  Under this standard, financial assets are measured at the amortized cost or fair value.  Only financial assets classified as measured at the amortized cost must be impairment-tested.  This standard applies to years beginning on or after January 1, 2015, and it can be adopted earlier.

 

**IFRS 10 “Consolidated Financial Statements” / IAS 27 “Separate Financial Statements”**

 

This Standard supersedes the part of IAS 27 on Separate and Consolidated Financial Statements that spoke of accounting for consolidated financial statements.  It also includes matters in SIC-12, Special-Purpose Entities. IFRS 10 establishes one single control model that applies to all entities (including special purpose or structured entities).  The changes made by IFRS 10 will require that management exercise significant professional judgment in determining which entity is controlled and which must be consolidated.

 

**IFRS 11 “Joint Arrangements”/ IAS 28 “Investments in Associates and Joint Ventures”**

 

IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC 13 Jointly Controlled Entities — Non-Monetary Contributions by Joint Ventures.  IFRS 11 uses some of the terms used in IAS 31, but with different meanings.  IAS 31 identifies three types of joint ventures, but IFRS 11 only considers of two types (joint ventures and joint operations) when there is a joint control.  Since IFRS 11 uses the IFRS 10 principle of control to identify control, determining whether there is a joint control can change.  Moreover, IFRS 11 takes away the alternative of accounting for jointly controlled entities (JCEs) using a proportional consolidation.  Instead, JCEs meeting the definition of joint ventures must be accounted for using the equity method. An entity must recognize the assets, liabilities, income and expenses, if any, of joint operations, which include jointly controlled assets, former jointly controlled operations and former JCEs.

 

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**IFRS 12 “Disclosure of Interests in Other Entities”**

 

IFRS 12 includes all consolidation-related disclosures that were previously in IAS 27 as well as all disclosures previously included in IAS 31 and IAS 28.  These disclosures relate to the interests in related companies, joint arrangements, associates and structured entities. A number of new disclosures are also required.

 

**IFRS 13 “Fair Value Measurement”**

 

IFRS 13 establishes a new guide on how to measure fair value, when required or permitted by IFRS.  When an entity must use the fair value remains the same.  The standard changes the definition of fair value—Fair Value:  The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price).  Some new disclosures are also added.

 

Additionally it incorporates some new disclosures

 
| **Improvements and amendments**                                 | ** ** | **Mandatory application********date** |
|---------------------------------------------------------------------------|------------|--------------------------------------------|
|                                                                      |       |                                       |
| IFRS 7    Financial Instruments:   Disclosure              |       | January 1, 2013                            |
| IFRS 10  Consolidated Financial   Statements                         |       | January 1, 2013                            |
| IFRS 11  Joint Arrangements                                          |       | January 1, 2013                            |
| IFRS 12  Disclosure of Interests   in Other Entities                 |       | January 1, 2013                            |
| IAS 1      Presentation of Financial Statements  |       | January 1, 2013                            |
| IAS 16    Property, Plant and   Equipment                  |       | January 1, 2013                            |
| IAS 19    Employee Benefits                                |       | January 1, 2013                            |
| IAS 27    Consolidated and   Separate Financial Statements |       | January 1, 2013                            |
| IAS 28    Investments in   Associates and Joint Ventures   |       | January 1, 2013                            |
| IAS 32    Financial Instruments —   Presentation      |       | January 1, 2013                            |
| IAS 34    Interim Financial   Reporting                    |       | January 1, 2013                            |

 

**IFRS 7 Financial Instruments: Disclosure**

 

An amendment to IAS 7 was issued in December 2011 that requires entities to disclose under financial information the effects or possible effects of the compensation agreements of the financial instruments over the entity’s financial position. The rule is applicable beginning January 1, 2013.

 

**IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities**

 

June 28, 2012 the IASB issued amendments to clarify the transition guidance to IFRS 10 Consolidated Financial Statements. The amendments also provide additional transition exceptions in the application of IFRS 10, IFRS 11 Joint Arrangements and IFRS 12 Disclosure of Interests in other Entities, limiting the requirement to provide restated comparative information only for the preceding comparative period. On the other hand, for the first year that IFRS 12 is applied, the requirement to present comparative information for the disclosures related to unconsolidated structured entities is removed. Effective date for the amendments are the annual periods beginning on or after January 1, 2013, also aligned with the effective date of IFRS 10, 11 and 12.

 

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Table of Contents

 

**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**IAS 1 “Presentation of Financial Statements”**

 

Annual Improvements 2009-2011 Cycle issued in May 2012, amended paragraphs 10, 38 and 41, eliminated paragraphs 39-40 and added paragraphs 38A-38D and 40A-40D, clarifying the difference between voluntary additional comparative information and the minimum required comparative information.  Generally the minimum comparative period required is the previous period.  An entity must include comparative information in the notes related to the financial statements when the entity voluntarily supplies comparative information beyond the minimum comparative period required.  The additional comparative period does not need to contain a complete set of financial statements. Also, opening balances of the financial statements (known as the third balance sheet) must be presented in the following circumstances: when the entity changes its accounting policies; carries out retroactive restatements or reclassifications, and that this change has a material effect on the financial statement. The initial balance of the financial statement would be as of the previous period.  However, contrary to voluntary comparative information, the related notes are not required to accompany the third balance sheet. An entity will apply these amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors for annual periods beginning on January 1, 2013.  Early adoption is permitted as long as it is disclosed.

 

**IAS 16 “Property, Plant and Equipment”**

 

Annual Improvements 2009-2011 Cycle issued in May 2012, amended paragraph 8. The amendment clarifies that spare parts and auxiliary equipment that fulfill the definition of property, plant and equipment are not considered inventory. An entity will apply this amendment retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors for annual periods beginning on January 1, 2013.  Early adoption is permitted as long as it is disclosed.

 

**IAS 19 — “Employee Benefits”**

 

On June 16 2011, the IASB published an amended IAS 19 — Employee Benefits that change accounting for defined benefit plans and termination benefits.  The amendments require recognition of changes in the defined benefit liability (asset) plan, eliminating the use of the corridor approach and accelerating the recognition of past service costs.  Changes in the defined benefit liability (asset) plan are separated in three components: service cost, net interest on liability (asset) for defined benefits and re-measurements of liability (asset) for defined benefits.

 

Net interest is calculated using the rate of return for high-quality corporate bonds.  This could be lower than the rate currently used to calculate the expected return over plan assets, resulting in a decrease of earnings for the period.  The amendments are effective for annual periods beginning on or after January 1, 2013, early adoption is permitted. Retrospective application is required with certain exceptions.

 

**IAS 27 — Consolidated and Separate Financial Statements**

 

In May 2011, IASB issued a revised IAS 27 with an amended title — Separate Financial Statements. IFRS 10 Consolidated Financial Statements establishes a single control model that applies to all entities and the requirements relating the preparation of consolidated financial statements.

 

F-32

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**NOTE 2 - BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)**

 

**IAS 28 – Investments in Associates and Joint Ventures**

 

Issued in May 2011, IAS 28 Investments in Associates and Joint Ventures, prescribes accounting of investments in associates and establishes the requirements of application on the equity method to investments in associates and joint ventures.

 

**IAS 32 “Financial Instruments — Presentation”**

 

Annual Improvements 2009-2011 Cycle issued in May 2012, amended paragraphs 35, 37 and 39 and added paragraph 35A, that clarifies that income taxes arising from distributions to equity holders are accounted for in accordance with IAS 12 Income Taxes. The amendment removes existing income tax requirements from IAS 32 and requires entities to apply the requirements in IAS 12 to any income tax arising from distributions to equity holders. An entity will apply these amendments retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and applies to annual periods beginning on January 1, 2013.  Early adoption is permitted as long as it disclosed.

 

IAS 32 amendments issued in December 2011 clarify the differences in the application regarding compensation and reduce the diversity in the current application. The rule is applicable beginning January 1, 2014 and early application is permitted.

 

**IAS 34 “Interim Financial Reporting”**

 

Annual Improvements 2009-2011 Cycle issued in May 2012, amended paragraph 16A.  The amendment clarifies the requirements in IAS 34 relating to segment information for total assets and liabilities for each reportable segment to enhance consistency with the requirements in IFRS 8 Operating Segments. Amended paragraph 16A establishes that total assets and liabilities for a particular reportable segment need to be disclosed only when the amounts are regularly provided to the chief operating decision maker and there has been a material change in the total amount disclosed in the entity’s previous annual financial statements for that reportable segment.

 

An entity will apply this amendment retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and applies to annual periods beginning on January 1, 2013.  Early adoption is permitted as long as it disclosed.

 

Management of the Company and its subsidiaries have studied the impact of these new standards and have asserted they do not materially impact these consolidated financial statements.

 

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**NOTE 3 —  REPORTING BY SEGMENT**

 

The Company provides information by segments according to IFRS 8 “Operating Segments,” which establishes standards for reporting by operating segment and related disclosures for products, services, and geographic areas.

 

The Company’s Board of Directors and Management measures and evaluates performance of segments according to the operating income of each of the countries where there are franchises.

 

The operating segments are determined based on the presentation of internal reports to the senior officer in charge of operating decisions. That officer has been identified as the Company Board of Directors as the board makes strategic decisions.

 

The segments defined by the Company for strategic decision-making are geographic. Therefore, the reporting segments correspond to:

 

·                  Chilean operations

·                  Brazilian operations

·                  Argentine operations

·                  Paraguayan operations

 

The four operating segments conduct their business through the production and sale of soft drinks, other beverages, and packaging.

 

The income and expense related to corporate management are assigned to the Chilean operation in the operating segment.

 

The total income by segment includes sales to unrelated customers and inter-segment sales, as indicated in the Company’s consolidated statement of income.

 

A summary of the operations by segment of the Company is detailed as follows, according to IFRS:

 

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**NOTE 3 —  REPORTING BY SEGMENT (Continued)**

 

A summary of the Company’s segment operations in accordance to IFRS is as follows:

 
| **For the year ended December 31,   2012**                             | ** ** | **Chile   Operation** | ** ** | **Argentina   Operation** | ** ** | **Brazil   Operation** | ** ** | **Paraguay********Operation** | ** ** | **Consolidated Total** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|-----------------------|------------|---------------------------|------------|------------------------|------------|-------------------------------|------------|-----------------------------|------------|
| ** **                                                                                      | ** ** | **ThCh$**             | ** ** | **ThCh$**                 | ** ** | **ThCh$**              | ** ** | **ThCh$**                     | ** ** | **ThCh$**                   | ** ** |
|                                                                                            |       |                  | ** ** | ** **                |       |                   |       |                          |       |                        |       |
| Operating revenue from   external customers                                                     |       | 373,744,135           |       | 314,923,641               |       | 451,596,741            |       | 32,028,300                    |       | 1,172,292,817               |       |
| Interest income                                                                                 |       | 803,029               |       | 301,025                   |       | 1,602,098              |       | 21,907                        |       | 2,728,059                   |       |
| Interest expense                                                                                |       | (7,540,887            | )          | (2,277,362                | )          | (1,231,153             | )          | (123,351                      | )          | (11,172,753                 | )          |
| **Interest   income, net**                                                                      | ** ** | **(6,737,858**        | )          | **(1,976,337**            | **)**      | **370,945**            | ** ** | **(101,444**                  | **)**      | **(8,444,694**              | **)**      |
|                                                                                            |       |                  |       |                      |       |                   |       |                          |       |                        |       |
| Depreciation and   amortization                                                                 |       | (24,290,171           | )          | (11,201,323               | )          | (16,064,773            | )          | (2,267,871                    | )          | (53,824,138                 | )          |
| Total significant expenses   items                                                              |       | (319,517,173          | )          | (284,142,437              | )          | (392,538,658           | )          | (25,556,545                   | )          | (1,021,754,813              | )          |
| Net income of the segment   reported                                                            | ** ** | **23,198,933**        | ** ** | **17,603,544**            | ** ** | **43,364,255**         | ** ** | **4,102,440**                 | ** ** | **88,269,172**              | ** ** |
| ** **                                                                                      | ** ** | ** **            | ** ** | ** **                | ** ** | ** **             | ** ** | ** **                    | ** ** | ** **                  | ** ** |
| Share of the entity in   income of associatesaccounted   for using the equity method, total     |       | 1,120,893             |       | —                    |       | 649,005                |       | —                        |       | 1,769,898                   |       |
| Income tax expense   (income)                                                                   |       | (7,378,459            | )          | (10,204,847               | )          | (20,365,279            | )          | (556,051                      | )          | (38,504,636                 | )          |
|                                                                                            |       |                  |       |                      |       |                   |       |                          |       |                        |       |
| **Segment   assets, total**                                                                     | ** ** | **756,203,625**       | ** ** | **200,769,953**           | ** ** | **324,432,040**        | ** ** | **258,430,713**               | ** ** | **1,539,836,331**           | ** ** |
| Carrying amount in   associates and joint ventures accounted for using the equity method, total |       | 17,848,009            |       | —                    |       | 55,232,052             |       | —                        |       | 73,080,061                  |       |
| Capital expenditures and   other                                                                |       | 57,115,820            |       | 46,833,922                |       | 69,605,956             |       | 6,085,212                     |       | 179,640,910                 |       |
| **Liabilities   of the segments, total**                                                        | ** ** | **367,012,519**       | ** ** | **108,896,064**           | ** ** | **130,102,661**        | ** ** | **40,220,166**                | ** ** | **646,231,410**             | ** ** |
| ** **                                                                                      | ** ** | ** **            | ** ** | ** **                | ** ** | ** **             | ** ** | ** **                    | ** ** | ** **                  | ** ** |
| Cash flows provided by in Operating Activities                                                  |       | 62,059,810            |       | 42,711,789                |       | 74,224,089             |       | 9,861,112                     |       | 188,856,800                 |       |
| Cash flows used in Investing Activities                                                         |       | (39,707,483           | )          | (43,996,852               | )          | (69,604,445            | )          | (2,861,423                    | )          | (156,170,203                | )          |
| Cash flows used in Financing Activities                                                         |       | (38,808,788           | )          | 2,720,303                 |       | 32,537,501             |       | -                             |       | (3,550,984                  | )          |

 

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**NOTE 3 —  REPORTING BY SEGMENT (Continued)**

 
| **For the year ended December 31, 2011**                          | ** ** | **Chile   Operation** | ** ** | **Argentina   Operation** | ** ** | **Brazil   Operation** | ** ** | **Consolidated   Total** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|-----------------------|------------|---------------------------|------------|------------------------|------------|--------------------------|------------|
| ** **                                                                                      | ** ** | **ThCh$**             | ** ** | **ThCh$**                 | ** ** | **ThCh$**              | ** ** | **ThCh$**                | ** ** |
|                                                                                            |       |                  |       |                      |       |                   |       |                     |       |
| Operating revenue from   external customers                                                     |       | 304,948,177           |       | 232,222,929               |       | 445,693,311            |       | 982,864,417              |       |
| Interest income                                                                                 |       | 1,490,143             |       | 140,622                   |       | 1,551,669              |       | 3,182,434                |       |
| Interest expense                                                                                |       | (5,513,503            | )          | (1,063,755                | )          | (657,918               | )          | (7,235,176               | )          |
| **Interest   income, net**                                                                      | ** ** | **(4,023,360**        | **)**      | **(923,133**              | **)**      | **893,751**            | ** ** | **(4,052,742**           | **)**      |
| Depreciation and   amortization                                                                 |       | (15,894,245           | )          | (7,780,619                | )          | (15,822,662            | )          | (39,497,526              | )          |
| Total significant expenses   items                                                              |       | (245,290,025          | )          | (209,078,941              | )          | (387,917,759           | )          | (842,286,725             | )          |
| Net income of the segment   reported                                                            | ** ** | **39,740,547**        | ** ** | **14,440,236**            | ** ** | **42,846,641**         | ** ** | **97,027,424**           | ** ** |
| ** **                                                                                      | ** ** | ** **            | ** ** | ** **                | ** ** | ** **             | ** ** | ** **               | ** ** |
| Share of the entity in   income of associates accounted for using the equity method, total      |       | 2,663,439             |       | —                    |       | (637,281               | )          | 2,026,158                |       |
| Income tax expense   (income)                                                                   |       | (7,539,223            | )          | (7,766,215                | )          | (19,379,223            | )          | (34,684,661              | )          |
|                                                                                            |       |                  |       |                      |       |                   |       |                     |       |
| **Segment   assets, total**                                                                     | ** ** | **320,036,934**       | ** ** | **121,366,676**           | ** ** | **300,555,733**        | ** ** | **741,959,343**          | ** ** |
| Carrying amount in   associates and joint ventures accounted for using the equity method, total |       | 36,568,610            |       | —                    |       | 23,722,356             |       | 60,290,966               |       |
| Capital expenditures and   other                                                                |       | 77,195,636            |       | 25,311,303                |       | 28,951,005             |       | 131,457,944              |       |
| **Liabilities   of the segments, total**                                                        | ** ** | **146,195,277**       | ** ** | **78,344,985**            | ** ** | **95,440,161**         | ** ** | **319,980,423**          | ** ** |
| ** **                                                                                      |       |                  |       |                      |       |                   |       |                     |       |
| Cash flows provided by in Operating Activities                                                  |       | 60,517,314            |       | 23,655,598                |       | 54,777,584             |       | 138,950,496              |       |
| Cash flows used in Investing Activities                                                         |       | (35,007,230           | )          | (25,668,834               | )          | (28,945,134            | )          | (89,621,198              | )          |
| Cash flows used in Financing Activities                                                         |       | (71,802,207           | )          | 4,925,725                 |       | (282,903               | )          | (67,159,385              | )          |

 

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**NOTE 3 —  REPORTING BY SEGMENT (Continued)**

 
| **For the year ended December 31, 2010**                          | ** ** | **Chile   Operation** | ** ** | **Argentina   Operation** | ** ** | **Brazil   Operation** | ** ** | **Consolidated   Total** | ** ** |
|-------------------------------------------------------------------------------------------------|------------|-----------------------|------------|---------------------------|------------|------------------------|------------|--------------------------|------------|
| ** **                                                                                      | ** ** | **ThCh$**             | ** ** | **ThCh$**                 | ** ** | **ThCh$**              | ** ** | **ThCh$**                | ** ** |
|                                                                                            |       |                  |       |                      |       |                   |       |                     |       |
| Operating revenue from   external customers, total                                              |       | 295,658,591           |       | 185,273,657               |       | 407,781,634            |       | 888,713,882              |       |
| Interest income, total for   segments                                                           |       | 1,176,029             |       | 253,667                   |       | 1,946,442              |       | 3,376,138                |       |
| Interest expense, total   for segments                                                          |       | (5,256,730            | )          | (1,069,665                | )          | (1,075,436             | )          | (7,401,831               | )          |
| **Interest   income, net, total for segments**                                                  | ** ** | **(4,080,701**        | **)**      | **(815,998**              | **)**      | **871,006**            | ** ** | **(4,025,693**           | **)**      |
| Depreciation and   amortization, total for segments                                             |       | (15,958,801           | )          | (7,204,876                | )          | (13,850,832            | )          | (37,014,509              | )          |
| Total significant expense   items, total                                                        |       | (235,729,184          | )          | (164,371,271              | )          | (343,973,161           | )          | (744,073,616             | )          |
| **Net   income of the segment reported, total**                                                 | ** ** | **39,889,905**        | ** ** | **12,881,512**            | ** ** | **50,828,647**         | ** ** | **103,600,064**          | ** ** |
| ** **                                                                                      | ** ** | ** **            | ** ** | ** **                | ** ** | ** **             | ** ** | ** **               | ** ** |
| Share of the entity in   income of associates accounted for using the equity method, total      |       | 519,441               |       | —                    |       | 1,795,494              |       | 2,314,935                |       |
| Income tax expense   (income), total                                                            |       | (7,632,006            | )          | (6,963,258                | )          | (21,744,976            | )          | (36,340,240              | )          |
|                                                                                            |       |                  |       |                      |       |                   |       |                     |       |
| **Segment   assets, total**                                                                     | ** ** | **323,554,334**       | ** ** | **83,040,700**            | ** ** | **281,719,061**        | ** ** | **688,314,095**          | ** ** |
| Carrying amount in   associates and joint ventures accounted for using the equity method, total |       | 25,772,670            |       | —                    |       | 24,981,498             |       | 50,754,168               |       |
| Capital expenditures and   other                                                                |       | 49,987,257            |       | 9,867,356                 |       | 50,836,233             |       | 110,690,846              |       |
| **Liabilities   of the segments, total**                                                        | ** ** | **126,524,439**       | ** ** | **43,281,287**            | ** ** | **123,643,773**        | ** ** | **293,449,499**          | ** ** |
| ** **                                                                                      | ** ** | ** **            | ** ** | ** **                | ** ** | ** **             | ** ** | ** **               | ** ** |
| Cash flows provided by in Operating Activities                                                  |       | 78,434,713            |       | 5,015,778                 |       | 42,397,218             |       | 125,847,709              |       |
| Cash flows used in Investing Activities                                                         |       | (22,799,185           | )          | (9,647,402                | )          | (48,057,591            | )          | (80,504,178              | )          |
| Cash flows used in Financing Activities                                                         |       | (69,108,280           | )          | 6,149,280                 |       | 411,261                |       | (62,547,739              | )          |

 

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**NOTE 4 —  CASH AND CASH EQUIVALENTS**

 

Cash and cash equivalents are detailed as follows as of December 31, 2012 and 2011

** **
| **Description**                 | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|---------------------------------|------------|----------------|------------|----------------|------------|
| ** **                      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| **By item**                     |       |           |       |           |       |
| Cash                            |       | 871,173        |       | 138,410        |       |
| Bank balances                   |       | 24,171,486     |       | 16,326,710     |       |
| Time deposits                   |       | 783,223        |       | 243,991        |       |
| Money market funds              |       | 29,696,373     |       | 14,588,811     |       |
| **Cash and   cash equivalents** | ** ** | **55,522,255** | ** ** | **31,297,922** | ** ** |

 
| ** **                      | ** ** | **M$**         | ** ** | **ThCh$**      | ** ** |
|---------------------------------|------------|----------------|------------|----------------|------------|
| **By   currency**               |       |           |       |           |       |
| Dollar                          |       | 5,067,208      |       | 2,724,252      |       |
| Euro                            |       | —         |       | 243,991        |       |
| Argentine Peso                  |       | 5,181,955      |       | 5,020,278      |       |
| Chilean Peso                    |       | 14,089,380     |       | 6,340,907      |       |
| Paraguayan Guaraní         |       | 6,112,524      |       | —         |       |
| Brazilian Real                  |       | 25,071,188     |       | 16,968,494     |       |
| **Cash and   cash equivalents** | ** ** | **55,522,255** | ** ** | **31,297,922** | ** ** |

 

**4.1****                                        ****Time deposits**

 

Time deposits defined as Cash and cash equivalents are detailed as follows at December 31, 2012 and 2011:

 
| **Issuance** | ** ** | **Entity**                             | ** ** | **Currency**              | ** ** | **Capital** | ** ** | **Annual   rate** | ** ** | **12.31.2012** | ** ** |
|--------------|------------|----------------------------------------|------------|---------------------------|------------|-------------|------------|-------------------|------------|----------------|------------|
| ** **   | ** ** | ** **                             | ** ** | ** **                | ** ** | **THCH$**   | ** ** | **%**             | ** ** | **THCH$**      | ** ** |
| 12.28.2012   |       | Banco Regional   SAECA – Paraguay |       | Paraguayan   Guaraní |       | 783,223     |       | 3.50              |       | 783,223        |       |
|         |       |                                   | ** ** | **Total**                 |       |        |       |              | ** ** | **783,223**    | ** ** |
|         |       |                                   | ** ** | ** **                |       |        |       |              | ** ** | ** **     | ** ** |
| **Issuance** | ** ** | **Entity**                             | ** ** | **Currency**              | ** ** | **Capital** | ** ** | **Annual   Rate** | ** ** | **12.31.2011** | ** ** |
| ** **   | ** ** | ** **                             | ** ** | ** **                | ** ** | **THCH$**   | ** ** | **%**             | ** ** | **THCH$**      | ** ** |
| 12.29.2011   |       | Banco BBVA – Chile                |       | Euros                     |       | 243,449     |       | 0.35              |       | 243,991        |       |
|         | ** ** |                                   |       | **Total**                 |       |        |       |              | ** ** | **243,991**    | ** ** |

 

F-38

----

Table of Contents

 

**NOTE 4 —  CASH AND CASH EQUIVALENTS (Continued)**

 

**4.2****                                       ****Money Market**

 

Money market mutual fund shares are valued at the share value at the close of each fiscal period. Below is a description for the end of each period:

 
| **Institution**                                                    | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|--------------------------------------------------------------------|------------|----------------|------------|----------------|------------|
| ** **                                                         | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Mutual fund Select   Banco Itaú — Chile                  |       | 1,989,833      |       | 2,093,339      |       |
| Mutual fund Soberano Banco Itaú — Brasil                 |       | 18,235,213     |       | 6,281,070      |       |
| Mutual fund Corporativo Banco BBVA —   Chile                  |       | 2,081,666      |       | 770,000        |       |
| Western Assets   Institutional Cash                                |       | 3,472,196      |       | 2,877,501      |       |
| Mutual fund Banco   Galicia                                        |       | 946,885        |       | 2,566,901      |       |
| Mutual fund Patrimonio Banco Caixa Económica Federal - Brasil |       | 2,833,080      |       | —         |       |
| Mutual fund Wells Fargo   Bank                                     |       | 137,500        |       | —         |       |
|                                                               |       |           |       |           |       |
| **Total   mutual fund**                                            | ** ** | **29,696,373** | ** ** | **14,588,811** | ** ** |

 

**NOTE 5 —  OTHER CURRENT FINANCIAL ASSETS**

 

Below are the financial instruments held by the Company at December 31, 2012 and 2011, other than cash and cash equivalents.  They consist of time deposits expiring in the short term (more than three months), restricted mutual funds and derivative contracts. The detail of financial instruments is detailed as follows:

 

**Time deposits**

 
| **Placement** | ** ** | **Maturity** | ** ** | **Maturity**              | ** ** | ** **   | ** ** | ** **    | ** ** | **Annual** | ** ** | ** **     | ** ** |
|---------------|------------|--------------|------------|---------------------------|------------|--------------|------------|---------------|------------|------------|------------|----------------|------------|
| **date**      | ** ** | **date**     | ** ** | **date**                  | ** ** | **Currency** | ** ** | **Principal** | ** ** | **Rate**   | ** ** | **12.31.2012** | ** ** |
| ** **    | ** ** | ** **   | ** ** | ** **                | ** ** | ** **   | ** ** | **ThCh$**     | ** ** | **%**      | ** ** | **ThCh$**      | ** ** |
| ** **    | ** ** | ** **   | ** ** | ** **                | ** ** | ** **   | ** ** | ** **    | ** ** | ** ** | ** ** | ** **     | ** ** |
| 03.25.2012    |       | 03.20.2013   |       | Banco Votorantim - Brasil |       | R$           |       | 16,480        |       | 8.82       |       | 17,280         |       |
| **Total**     |       |         |       |                      |       |         |       |          |       |       | ** ** | **17,280**     | ** ** |

 

**Mutual Funds**

 
| ** **                                 | ** ** | **ThCh$**   | ** ** |
|--------------------------------------------|------------|-------------|------------|
| **Institution**                            |       |        |       |
| Mutual Fund Banco   Galicia (1)            |       | 111,301     |       |
| **Subtotal**                               | ** ** | **111,301** | ** ** |
| ** **                                 | ** ** | ** **  | ** ** |
| **Total   other current financial assets** | ** ** | **128,581** | ** ** |

 

F-39

----

Table of Contents

 

**NOTE 5 —  OTHER CURRENT FINANCIAL ASSETS (Continued)**

 

**Time deposits**

 
| **Placement** | ** ** | **Maturity** | ** ** | ** **                   | ** ** | ** **   | ** ** | ** **    | ** ** | **Annual** | ** ** | ** **     | ** ** |
|---------------|------------|--------------|------------|------------------------------|------------|--------------|------------|---------------|------------|------------|------------|----------------|------------|
| **date**      | ** ** | **date**     | ** ** | **Entity**                   | ** ** | **Currency** | ** ** | **Principal** | ** ** | **Rate**   | ** ** | **12.31.2011** | ** ** |
| ** **    | ** ** | ** **   | ** ** | ** **                   | ** ** | ** **   | ** ** | **ThCh$**     | ** ** | **%**      | ** ** | **ThCh$**      | ** ** |
| 08.04.2011    |       | 01.18.2012   |       | Banco BBVA- Chile            |       | UF           |       | 4,000,000     |       | 3.44       |       | 4,119,995      |       |
| 08.04.2011    |       | 01.18.2012   |       | Banco Estado — Chile    |       | UF           |       | 4,000,000     |       | 3.48       |       | 4,138,046      |       |
| 12.21.2011    |       | 05.09.2012   |       | Banco Corpbanca — Chile |       | UF           |       | 2,500,000     |       | 5.00       |       | 2,505,892      |       |
| 12.21.2011    |       | 05.09.2012   |       | Banco Chile — Chile     |       | UF           |       | 2,500,000     |       | 4.70       |       | 2,505,684      |       |
| 12.16.2011    |       | 02.20.2012   | (1)        | Banco Galicia - Argentina    |       | Ar$          |       | 711,717       |       | 20.00      |       | 716,403        |       |
| 03.25.2011    |       | 03.20.2012   |       | Banco Votorantin - Brasil    |       | R$           |       | 17,759        |       | 8.82       |       | 19,007         |       |
|          |       |         |       |                         | ** ** | ** **   | ** ** | **Subtotal**  |       |       | ** ** | **14,005,027** | ** ** |

 

**Mutual Funds**

 
| ** **                                 | ** ** | ** ** |       |       | ** ** | **ThCh$**      | ** ** |
|--------------------------------------------|------------|------------|------------|------------|------------|----------------|------------|
| **Institution**                            | ** ** | ** ** |       |       | ** ** |           | ** ** |
| Mutual Fund Banco   Galicia (1)            | ** ** | ** ** |       |       | ** ** | 1,656,156      | ** ** |
| **Subtotal**                               | ** ** | ** ** |       |       | ** ** | **1,656,156**  | ** ** |
| ** **                                 | ** ** | ** ** |       |       | ** ** | ** **     | ** ** |
| **Total   other current financial assets** | ** ** | **Total**  | ** ** | ** ** | ** ** | **15,661,183** | ** ** |

 

----

**(1) **These are financial investments the use of which is restricted because they were made to comply with the guarantees of derivatives transactions performed by the Company

 

**NOTE 6 — CURRENT AND NON-CURRENT NON-FINANCIAL ASSETS**

 

**Note 6.1  ****Other current non-financial assets**

 
| **Descrption**       | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|----------------------|------------|----------------|------------|----------------|------------|
| ** **           | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Prepaid insurance    |       | 182,015        |       | 77,228         |       |
| Prepaid expenses     |       | 3,513,515      |       | 2,933,946      |       |
| Fiscal credits       |       | 14,118,736     |       | 11,704,342     |       |
| Other current assets |       | 388,572        |       | 45,342         |       |
| **Total**            | ** ** | **18,202,838** | ** ** | **14,760,858** | ** ** |

 

**Note 6.2  ****Other non-current, non-financial assets**

 
| **Description**       | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|-----------------------|------------|----------------|------------|----------------|------------|
| ** **            | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Prepaid expenses      |       | 2,515,235      |       | 2,275,128      |       |
| Fiscal credits        |       | 5,880,191      |       | 6,529,944      |       |
| Judicial deposits (1) |       | 18,002,490     |       | 19,989,604     |       |
| Others                |       | 529,174        |       | 1,399,133      |       |
| **Total**             | ** ** | **26,927,090** | ** ** | **30,193,809** | ** ** |

 

----

(1)             See note 21.1 2)

 

F-40

----

Table of Contents

 

**NOTE 7 — ****TRADE AND OTHER ACCOUNTS RECEIVABLE**

 

The composition of trade and other accounts receivable is detailed as follows:

 
| ** **                                                     | ** ** | **12.31.2012**                      | ** ** | **12.31.2011**                               | ** ** |
|----------------------------------------------------------------|------------|-------------------------------------|------------|----------------------------------------------|------------|
| **Trade and other accounts receivable**    | ** ** | **Assets before   provisions** | ** ** | **Allowance   for doubtful   accounts** | ** ** | **Commercial   debtors net   assets** | ** ** | **Assets   before   provisions** | ** ** | **Allowance   for doubtful   accounts** | ** ** | **Commercial   debtors net   assets** | ** ** |
| ** **                                                     | ** ** | **ThCh$**                           | ** ** | **ThCh$**                                    | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **Current commercial debtors**                                 |       |                                |       |                                         |       |   |   |   |   |   |   |   |   |
| Trade debtors                                                  |       | 115,998,388                         |       | (1,458,801                                   | )          | 114,539,587 |   | 86,732,234 |   | (1,516,817 | ) | 85,215,417 |   |
| Other current debtors                                          |       | 15,782,069                          |       | —                                       |       | 15,782,069 |   | 11,711,426 |   | — |   | 11,711,426 |   |
| **Current commercial debtors**                                 | ** ** | **131,780,457**                     | ** ** | **(1,458,801**                               | **)**      | **130,321,656** | ** ** | **98,443,660** | ** ** | **(1,516,817** | **)** | **96,926,843** | ** ** |
| Prepayments suppliers                                          |       | 4,021,021                           |       | —                                       |       | 4,021,021 |   | 1,641,953 |   | — |   | 1,641,953 |   |
| Other current accounts receivable                              |       | 18,502,187                          |       | (27,948                                      | )          | 18,474,239 |   | 8,902,000 |   | (27,757 | ) | 8,874,243 |   |
| **Commercial debtors and other current accounts   receivable** | ** ** | **154,303,665**                     | ** ** | **(1,486,749**                               | **)**      | **152,816,916** | ** ** | **108,987,613** | ** ** | **(1,544,574** | **)** | **107,443,039** | ** ** |
| ** **                                                     | ** ** | ** **                          | ** ** | ** **                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Non-current accounts receivable**                            | ** ** | ** **                          | ** ** | ** **                                   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Trade debtors                                                  |       | 6,599,310                           |       | —                                       |       | 6,599,310 |   | 7,175,559 |   | — |   | 7,175,559 |   |
| Other non-current debtors                                      |       | 124,767                             |       | —                                       |       | 124,767 |   | 101 |   | — |   | 101 |   |
| **Non-current accounts receivable**                            | ** ** | **6,724,077**                       | ** ** | **—**                                   | ** ** | **6,724,077** | ** ** | **7,175,660** | ** ** | **—** | ** ** | **7,175,660** | ** ** |
| **Trade and other accounts receivable**                        | ** ** | **161,027,742**                     | ** ** | **(1,486,749**                               | **)**      | **159,540,993** | ** ** | **116,163,273** | ** ** | **(1,544,574** | **)** | **114,618,699** | ** ** |

 
| **Aging of debtor portfolio** | ** ** | **Number of   clients** | ** ** | **12.31.2012**  | ** ** | **N°   Number of   clients** | ** ** | **12.31.2011** | ** ** |
|----------------------------------------------|------------|------------------------------|------------|-----------------|------------|----------------------------------------|------------|----------------|------------|
| ** **                                   | ** ** | ** **                   | ** ** | **ThCh$**       | ** ** | ** **                             | ** ** | **ThCh$**      | ** ** |
| Up to date non-securitized portfolio         |       | 8,514                        |       | 59,686,698      |       | 1,518                                  |       | 24,710,250     |       |
| 1 and 30 days                                |       | 30,523                       |       | 51,451,804      |       | 35,875                                 |       | 58,528,014     |       |
| 31 and 60 days                               |       | 484                          |       | 784,192         |       | 390                                    |       | 344,270        |       |
| 61 and 90 days                               |       | 346                          |       | 951,083         |       | 336                                    |       | 526,403        |       |
| 91 and 120 days                              |       | 273                          |       | 316,787         |       | 242                                    |       | 429,241        |       |
| 121 and 150 days                             |       | 282                          |       | 34,370          |       | 226                                    |       | 360,202        |       |
| 151 and 180 days                             |       | 264                          |       | 307,727         |       | 192                                    |       | 149,929        |       |
| 181 and 210 days                             |       | 280                          |       | 176,493         |       | 141                                    |       | 141,115        |       |
| 211 and 250 days                             |       | 276                          |       | 251,247         |       | 206                                    |       | 148,033        |       |
| More than 250 days                           |       | 1,362                        |       | 8,637,297       |       | 527                                    |       | 8,570,336      |       |
| **Total**                                    | ** ** | **42,604**                   | ** ** | **122,597,698** | ** ** | **39,653**                             | ** ** | **93,907,793** | ** ** |

 
| ** **                    | ** ** | ** ** | ** ** | **12.31.2012**  | ** ** | ** ** |   | **12.31.2011** |   |
|-------------------------------|------------|------------|------------|-----------------|------------|------------|--------|----------------|--------|
| ** **                    | ** ** | ** ** | ** ** | **ThCh$**       | ** ** | ** ** |   | **ThCh$**      |   |
| Current comercial debtors     |       |       |       | 115,998,388     |       |       |   | 86,732,234     |   |
| Non-current comercial debtors |       |       |       | 6,599,310       |       |       |   | 7,175,559      |   |
| **Total**                     | ** ** | ** ** | ** ** | **122,597,698** | ** ** | ** ** |   | **93,907,793** |   |

 

F-41

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Table of Contents

 

**NOTE 7 — ****TRADE AND OTHER ACCOUNTS RECEIVABLE (Continued)**

 

The change in the allowance for uncollectible receivables between January 1 and December 31, 2012, 2011 and 2010 is presented below:

 
| **Item**                                        | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
|-------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| ** **                                      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| **Initial balance**                             | ** ** | **1,544,574**  | ** ** | **1,225,556**  | ** ** | **1,688,988**  | ** ** |
| Bad debt expense                                |       | 976,331        |       | 1,610,540      |       | 629,409        |       |
| Write-off of accounts receivable                |       | (843,766       | )          | (1,368,084     | )          | (970,352       | )          |
| Increase (decrease) because of foreign exchange |       | (190,390       | )          | 76,562         |       | (122,489       | )          |
| **Movement**                                    | ** ** | **(57,825**    | **)**      | **319,018**    | ** ** | **(463,432**   | **)**      |
| **Ending balance**                              | ** ** | **1,486,749**  | ** ** | **1,544,574**  | ** ** | **1,225,556**  | ** ** |

 

**NOTE 8 —  INVENTORY**

 

The composition of inventory balances is detailed as follows:

 
| **Description**            | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|----------------------------|------------|----------------|------------|----------------|------------|
| ** **                 | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Raw materials              |       | 41,942,176     |       | 29,518,840     |       |
| Merchandise                |       | 8,797,194      |       | 6,949,830      |       |
| Production inputs          |       | 1,125,276      |       | 1,386,122      |       |
| Products in progress       |       | 705,637        |       | 256,273        |       |
| Finished goods             |       | 22,792,255     |       | 11,215,868     |       |
| Spare parts                |       | 14,479,488     |       | 8,136,491      |       |
| Other inventory            |       | 1,504,926      |       | 765,020        |       |
| Obsolescence provision (1) |       | (2,027,126     | )          | (741,786       | )          |
| **Total**                  | ** ** | **89,319,826** | ** ** | **57,486,658** | ** ** |

 

The cost of inventory recognized as a cost of sales totaled ThCh$698,955,215, ThCh$578,581,184  and ThCh$506,882,144 at December 31, 2012, 2011 and 2010 respectively.

 

----

(1)             The provision for obsolescence is primarily related to the obsolescence of parts classified as inventories and less finished goods and raw materials.

 

F-42

----

Table of Contents

 

**NOTE 9 —  INCOME TAX AND DEFERRED TAXES**

 

**9.1****                                      ****Current tax assets**

 

Current tax receivables break down as follows:

 
| **Description**                | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|--------------------------------|------------|----------------|------------|----------------|------------|
| ** **                     | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Monthly provisional   payments |       | 2,319,627      |       | 1,646,502      |       |
| Tax credits (1)                |       | 559,766        |       | 817,064        |       |
| **Total**                      | ** ** | **2,879,393**  | ** ** | **2,463,566**  | ** ** |

 

----

(1)    That item corresponds to income tax credits on account of training expenses, purchase of property, plant and equipment and donations.

 

**9.2****                                      ****Current tax liabilities**

 

Current tax payables correspond to the following items:

 
| **Description** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|-----------------|------------|----------------|------------|----------------|------------|
| ** **      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Income tax      |       | 355,363        |       | 3,459,329      |       |
| Other           |       | 759,447        |       | 361,918        |       |
| **Balance**     | ** ** | **1,114,810**  | ** ** | **3,821,247**  | ** ** |

 

F-43

----

Table of Contents

 

**NOTE 9 —  INCOME TAX AND DEFERRED TAXES (Continued)**

 

**9.3****                                      ****Tax expense**

 

The current and deferred income tax expenses for the periods ended December 31, 2012,2011 and 2010 are detailed as follows:

 
| **Item**                                       | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
|------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| ** **                                     | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Current tax expense                            |       | 31,849,744     |       | 31,384,666     |       | 31,847,824     |       |
| Adjustment to current tax   from previous year |       | 172,055        |       | 371,547        |       | 114,521        |       |
| Other current tax expenses                     |       | 823,616        |       | 396,319        |       | 10,276         |       |
| **Total net current tax expense**              | ** ** | **32,845,415** | ** ** | **32,152,532** | ** ** | **31,972,621** | ** ** |
| Deferred tax expenses                          |       | 5,659,221      |       | 2,532,129      |       | 4,367,619      |       |
| **Total   deferred tax expenses**              | ** ** | **5,659,221**  | ** ** | **2,532,129**  | ** ** | **4,367,619**  | ** ** |
| **Income   tax expense**                       | ** ** | **38,504,636** | ** ** | **34,684,661** | ** ** | **36,340,240** | ** ** |

 

F-44

----

Table of Contents

 

**NOTE 9 —  INCOME TAX AND DEFERRED TAXES (Continued)**

 

**9.4****                                        ****Deferred taxes**

 

The net cumulative balances of temporary differences created deferred tax assets and liabilities, which are shown below:

 
| ** **                                                    | ** ** | **12.31.2012** | ** ** | **12.31.2011**  | ** ** |
|---------------------------------------------------------------|------------|----------------|------------|-----------------|------------|
| **Temporary differences**                                | ** ** | **Assets**     | ** ** | **Liabilities** | ** ** | **Assets** | ** ** | **Liabilities** | ** ** |
| ** **                                                    | ** ** | **ThCh$**      | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                                                          |       |           |       |            |       |   |   |   |   |
| Property, plant and   equipment                               |       | 432,181        |       | 29,494,188      |       | 897,101 |   | 22,769,301 |   |
| Obsolescence provision                                        |       | 637,675        |       | —          |       | 865,769 |   | — |   |
| Employee benefits                                             |       | 1,807,163      |       | —          |       | 1,462,239 |   | — |   |
| Post-employment benefits                                      |       | —         |       | 277,510         |       | — |   | 510,613 |   |
| Tax loss carry-forwards   (1) and (2)                         |       | 9,026,314      |       | —          |       | 705,861 |   | — |   |
| Contingency provision                                         |       | 2,020,821      |       | —          |       | 2,215,553 |   | — |   |
| Foreign exchange rate   difference (Foreign Subsidiaries) (4) |       | —         |       | 9,145,349       |       | — |   | 11,698,815 |   |
| Allowance for doubtful   accounts                             |       | 350,319        |       | —          |       | 368,947 |   | — |   |
| Tax incentives (Brazil)   (3)                                 |       | —         |       | 10,930,694      |       | — |   | 7,900,864 |   |
| Assets and liabilities   for placement of bonds               |       | 370,245        |       | 77,316          |       | — |   | — |   |
| Leasing liabilities                                           |       | 430,476        |       | —          |       | — |   | — |   |
| Inventories                                                   |       | 150,486        |       | 127,550         |       | 1,066,527 |   | — |   |
| Distribution rights                                           |       | —         |       | 76,559,423      |       | — |   | — |   |
| Other                                                         |       | 997,372        |       | 1,025,648       |       | 478,230 |   | 426,124 |   |
| **Subtotal**                                                  | ** ** | **16,223,052** | ** ** | **127,637,678** | ** ** | **8,060,227** | ** ** | **43,305,717** | ** ** |
| **Net   Liabilities**                                         | ** ** | **—**     | ** ** | **111,414,626** | ** ** | **—** | ** ** | **35,245,490** | ** ** |

 

----

(1)    Corresponding to our subsidiary in Chile, Embotelladora Andina Chile S.A., that is in the start-up process of its manufacturing and commercial operations. Tax losses in Chile do not have an expiration date.

 

(2)    Tax losses related to Coca-Cola Polar Argentina S.A. amount of ThCh$5,280,865. The following table breaks down the expiration dates of these tax loss carryforwards:

 
| **Year of expiration** | ** ** | **Amount********ThCh$** | ** ** |
|----------------------------------|------------|-------------------------|------------|
| 2014                             |       | 241,128                 |       |
| 2015                             |       | 2,191,633               |       |
| 2016                             |       | 1,111,720               |       |
| 2017                             |       | 1,735,784               |       |
| **Total tax loss carryforwards** | ** ** | **5,280,265**           | ** ** |

 

(3)    Corresponds to tax incentives in Brazil that consist of a tax withholding reduction that are financially recorded under results, but under tax rules they must be controlled in equity accounts, and cannot be distributed as dividends.

 

(4)    Deferred tax generated by exchange rate difference upon translation of intercompany accounts with the Brazilian subsidiary Rio de Janeiro Refrescos Ltda. that financially are carried to comprehensive results, but under tax rules they are taxable in Brazil at the moment they are received.

 

F-45

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Table of Contents

 

**NOTE 9 —  INCOME TAX AND DEFERRED TAXES (Continued)**

 

**9.5****                                        ****Deferred tax liability movement**

 

Movement in deferred accounts is detailed as follows:

 
| **Item**                                     | ** ** | **12.31.2012**  | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
|----------------------------------------------|------------|-----------------|------------|----------------|------------|----------------|------------|
| ** **                                   | ** ** | **ThCh$**       | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
|                                         |       |            |       |           |       |           |       |
| **Initial Balance**                          | ** ** | **35,245,490**  | ** ** | **35,600,739** | ** ** | **33,182,644** | ** ** |
| Increase due to merger                       |       | 76,544,806      |       | —         |       | —         |       |
| Increase in deferred tax liabilities         |       | 4,453,994       |       | 2,309,907      |       | 3,724,526      |       |
| Sale of ownership   interest in Vital S.A.   |       | —          |       | (947,445       | )          | —         |       |
| Decrease due to foreign currency translation |       | (4,829,664      | )          | (1,717,711     | )          | (1,306,431     | )          |
| **Movements**                                | ** ** | **76,169,136**  | ** ** | **(355,249**   | **)**      | **2,418,095**  | ** ** |
| **Ending balance**                           | ** ** | **111,414,626** | ** ** | **35,245,490** | ** ** | **35,600,739** | ** ** |

 

**9.6****                                        ****Distribution of domestic and foreign tax expenses**

 

As of December 31, 2012, 2011 and 2010, domestic and foreign tax expenses are detailed as follows:

 
| **Income tax**      | ** ** | **12.31.2012**  | ** ** | **12.31.2011**  | ** ** | **12.31.2010**  | ** ** |
|--------------------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| ** **               | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
| **Current taxes**        |       |            |       |            |       |            |       |
| Foreign                  |       | (25,054,795     | )          | (24,138,759     | )          | (26,000,138     | )          |
| Domestic                 |       | (7,790,620      | )          | (8,013,773      | )          | (5,972,483      | )          |
| **Current tax expense**  | ** ** | **(32,845,415** | **)**      | **(32,152,532** | **)**      | **(31,972,621** | **)**      |
|                     |       |            |       |            |       |            |       |
| **Deferred   taxes**     |       |            |       |            |       |            |       |
| Foreign                  |       | (6,071,382      | )          | (3,006,679      | )          | (3,293,124      | )          |
| Domestic                 |       | 412,161         |       | 474,550         |       | (1,074,495      | )          |
| **Deferred tax expense** | ** ** | **(5,659,221**  | **)**      | **(2,532,129**  | **)**      | **(4,367,619**  | **)**      |
| **Income tax expense**   | ** ** | **(38,504,636** | **)**      | **(34,684,661** | **)**      | **(36,340,240** | **)**      |

 

F-46

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Table of Contents

 

**NOTE 9 —  INCOME TAX AND DEFERRED TAXES (Continued)**

 

**9.7****                                        ****Reconciliation of effective rate**

 

Below is the reconciliation of tax expenses at the legal rate and tax expenses at the effective rate:

 
| **Reconciliation of effective rate**         | ** ** | **12.31.2012**  | ** ** | **12.31.2011**  | ** ** | **12.31.2010**  | ** ** |
|-------------------------------------------------------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| ** **                                                  | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
| **Income before taxes**                                     | ** ** | **126,773,808** | ** ** | **131,712,085** | ** ** | **139,940,304** | ** ** |
| **Tax expense at legal rate****(20%)**                      | ** ** | **(25,354,762** | **)**      | **(26,342,417** | **)**      | **—**      | ** ** |
| **Tax expense at legal rate****(17%)**                      | ** ** | **—**      | ** ** | **—**      | ** ** | **(23,789,852** | **)**      |
| **Effect   of a different tax rate in other jurisdictions** | ** ** | **(12,034,351** | **)**      | **(11,459,545** | **)**      | **(15,161,635** | **)**      |
| ** **                                                  | ** ** | ** **      | ** ** | ** **      | ** ** | ** **      | ** ** |
| **Permanent differences****:**                              |       |            |       |            |       |            |       |
| Non-taxable revenues                                        |       | 3,302,249       |       | 4,190,331       |       | 4,754,092       |       |
| Non-deductible expenses                                     |       | (3,154,544      | )          | (868,025        | )          | (213,192        | )          |
|                                                        |       |            |       |            |       |            |       |
| Tax effect over changes   in the tax rate in Chile          |       | (826,898        | )          | —          |       | —          |       |
| Tax provision in excess   of preceding periods              |       | (227,343        | )          | —          |       | —          |       |
| Other increases   (decreases) in charge for legal taxes     |       | (208,987        | )          | (205,005        | )          | (1,929,653      | )          |
| **Adjustments   to tax expenses**                           | ** ** | **(1,115,523**  | **)**      | **3,117,301**   | ** ** | **2,611,247**   | ** ** |
| ** **                                                  | ** ** | ** **      | ** ** | ** **      | ** ** | ** **      | ** ** |
| **Tax   expense at the effective rate**                     | ** ** | **(38,504,636** | **)**      | **(34,684,661** | **)**      | **(36,340,240** | **)**      |
| **Effective rate**                                          | ** ** | **30.4**        | **%**      | **26.3**        | **%**      | **26.0**        | **%**      |

 

Below are the income tax rates applicable in each jurisdiction where the Company does business:

 
| ** **    | ** ** | **Rate** | ** ** |
|---------------|------------|----------|------------|
| **País** | ** ** | **2012** | ** ** | **2011** | ** ** | **2010** | ** ** |
| Chile         |       | 20       | %          | 20 | % | 17 | % |
| Brasil        |       | 34       | %          | 34 | % | 34 | % |
| Argentina     |       | 35       | %          | 35 | % | 35 | % |
| Paraguay      |       | 10       | %          | — |   | — |   |

 

F-47

----

Table of Contents

 

**NOTE 10 —  PROPERTY, PLANT AND EQUIPMENT**

 

**10.1****                               ****Balances**

Property, plant and equipment are itemized below for the close of each fiscal period:

 
| ** **                                | ** ** | **Property, plant and equipment,   gross** | ** ** | **Cumulative depreciation and   impairment** | ** ** | **Property, plant and equipment, net** | ** ** |
|-------------------------------------------|------------|-----------------------------------------------------------|------------|--------------------------------------------------------|------------|------------------------------------------------------------|------------|
| **Item**                                  | ** ** | **12.31.2012**                                            | ** ** | **12.31.2011**                                         | ** ** | **12.31.2012**                                             | ** ** | **12.31.2011** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
| ** **                                | ** ** | **ThCh$**                                                 | ** ** | **ThCh$**                                              | ** ** | **ThCh$**                                                  | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Construction in   progress                |       | 61,735,710                                                |       | 47,924,160                                             |       | —                                                     |       | — |   | 61,735,710 |   | 47,924,160 |   |
| Land                                      |       | 57,134,715                                                |       | 34,838,977                                             |       | —                                                     |       | — |   | 57,134,715 |   | 34,838,977 |   |
| Buildings                                 |       | 163,759,761                                               |       | 93,603,989                                             |       | (31,980,362                                                | )          | (28,249,427 | ) | 131,779,399 |   | 65,354,562 |   |
| Plant and equipment                       |       | 346,179,261                                               |       | 264,342,629                                            |       | (169,999,912                                               | )          | (155,026,259 | ) | 176,179,349 |   | 109,316,370 |   |
| Information technology                    |       | 12,429,618                                                |       | 11,416,373                                             |       | (6,629,395                                                 | )          | (9,273,033 | ) | 5,800,223 |   | 2,143,340 |   |
| Fixed facilities and   accessories        |       | 40.282.483                                                |       | 29,878,815                                             |       | (15,443,891                                                | )          | (14,428,606 | ) | 24,838,592 |   | 15,450,209 |   |
| Vehicles                                  |       | 11,134,161                                                |       | 4,871,319                                              |       | (3,298,464                                                 | )          | (2,932,515 | ) | 7,835,697 |   | 1,938,804 |   |
| Improvements to leased   property         |       | 130,240                                                   |       | 153,483                                                |       | (120,818                                                   | )          | (129,503 | ) | 9,422 |   | 23,980 |   |
| Other property, plant   and equipment (1) |       | 294.974.382                                               |       | 250,672,995                                            |       | (183,736,764                                               | )          | (177,598,930 | ) | 111,237,618 |   | 73,074,065 |   |
| **Item**                                  | ** ** | **987,760,331**                                           | ** ** | **737,702,740**                                        | ** ** | **(411,209,606**                                           | **)**      | **(387,638,273** | **)** | **576,550,725** | ** ** | **350,064,467** | ** ** |

 

----

(1)        Other property, plant and equipment is composed of bottles, market assets, furniture and other minor goods.

(2)        As of December 31, 2012 there were financial lease agreements for the purchase of vehicles in the subsidiary Rio de Janeiro Refrescos Ltda., and Tetrapak equipment in Argentina

 

The net balance of each of these categories at December 31, 2012 and December 31, 2011 is detailed as follows:

 
| **Other property, plant and equipment** | ** ** | **12.31.2012**  | ** ** | **12.31.2011** | ** ** |
|-------------------------------------------------------------|------------|-----------------|------------|----------------|------------|
| ** **                                                  | ** ** | **ThCh$**       | ** ** | **ThCh$**      | ** ** |
| Bottles                                                     |       | 59,983,147      |       | 43,138,347     |       |
| Marketing and   promotional assets                          |       | 40,251,550      |       | 23,218,456     |       |
| Other property, plant and equipment                         |       | 11,002,921      |       | 6,717,262      |       |
| **Total**                                                   | ** ** | **111,237,618** | ** ** | **73,074,065** | ** ** |

 

The Company has insurance to protect its property, plant and equipment and its inventory from potential losses. The geographic distribution of those assets is detailed as follows:

 
| Chile     |                                                                   | : Santiago, Puente   Alto, Maipú, Renca, Rancagua y San Antonio, Antofagasta, Coquimbo y Punta   Arenas.                                          |
|-----------|------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
| Argentina |                                                                   | : Buenos Aires,   Mendoza, Córdoba y Rosario, Bahía Blanca, Chacabuco, La Pampa, Neuqén,   Comodoro Rivadavia, Trelew, Tierra del Fuego |
| Brazil    |                                                                   | : Río de Janeiro,   Niteroi, Campos, Cabo Frío, Nova Iguazú, Espirito Santo and Vitoria.                                                |
| Paraguay: | Asunción, Coronel   Oviedo, Ciudad del Este and Encarnación. |

 

F-48

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Table of Contents

 

**NOTE 10 —  PROPERTY, PLANT AND EQUIPMENT (Continued)**

 

**10.2        Movements**

 

Movements in property, plant and equipment are detailed as follows between January 1 and December 31, 2012, 2011 and 2010

 
| **For the year ended**** 12.31.2012**  | ** ** | **Construction in   progress** | ** ** | **Land**       | ** ** | **Buildings, net** | ** ** | **Plant and   equipment,   net** | ** ** | **IT Equipment, net** | ** ** | **Fixed facilities and   accessories, net** | ** ** | **Vehicles, net** | ** ** | **Improvements   to leased   property, net** | ** ** | **Other property,   plant and   equipment, net** | ** ** | **Property, plant   and equipment,   net** | ** ** |
|------------------------------------------------------------|------------|-------------------------------------|------------|----------------|------------|-------------------------|------------|---------------------------------------|------------|---------------------------------|------------|------------------------------------------------------------|------------|------------------------|------------|--------------------------------------------------------|------------|-----------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                 | ** ** | **ThCh$**                           | ** ** | **ThCh$**      | ** ** | **ThCh$**               | ** ** | **ThCh$**                             | ** ** | **ThCh$**                       | ** ** | **ThCh$**                                                  | ** ** | **ThCh$**              | ** ** | **ThCh$**                                              | ** ** | **ThCh$**                                                       | ** ** | **ThCh$**                                            | ** ** |
|                                                       |       |                                |       |           |       |                    |       |                                  |       |                            |       |                                                       |       |                   |       |                                                   |       |                                                            |       |                                                 |       |
| **Initial   balance**                                      | ** ** | **47,924,160**                      | ** ** | **34,838,977** | ** ** | **65,354,562**          | ** ** | **109,316,370**                       | ** ** | **2,143,340**                   | ** ** | **15,450,209**                                             | ** ** | **1,938,804**          | ** ** | **23,980**                                             | ** ** | **73,074,065**                                                  | ** ** | **350,064,467**                                      | ** ** |
| Additions                                                  |       | 59,622,568                          |       | —         |       | 163,015                 |       | 16,253,430                            |       | 590,141                         |       | 33,027                                                     |       | 1,623,662              |       | —                                                 |       | 50,800,843                                                      |       | 129,086,686                                          |       |
| Disposals                                                  |       | —                              |       | —         |       | —                  |       | (425,844                              | )          | (32,575                         | )          | —                                                     |       | —                 |       | —                                                 |       | (712,471                                                        | )          | (1,170,890                                           | )          |
| Transfers between   items of property, plant and equipment |       | (62,379,694                         | )          | (263,320       | )          | 33,207,590              |       | 20,739,334                            |       | 2,326,639                       |       | 11,403,778                                                 |       | 4,676,401              |       | —                                                 |       | (9,710,728                                                      | )          | —                                               |       |
| Transfers to   assets held for sale, current               |       | —                              |       | —         |       | (2,977,969              | )          | —                                |       | —                          |       | —                                                     |       | —                 |       | —                                                 |       | —                                                          |       | (2,977,969                                           | )          |
| Additions due to merger(1)                                 |       | 18,267,801                          |       | 25,288,317     |       | 46,717,142              |       | 58,602,133                            |       | 2,068,712                       |       | 24,765                                                     |       | 591,579                |       | —                                                 |       | 40,370,384                                                      |       | 191,930,833                                          |       |
| Depreciation   expense                                     |       | —                              |       | —         |       | (2,958,099              | )          | (20,058,072                           | )          | (1,043,395                      | )          | (1,645,825                                                 | )          | (728,228               | )          | (11,624                                                | )          | (26,831,414                                                     | )          | (53,276,657                                          | )          |
| Increase   (decrease) in foreign currency translation      |       | (1,699,125                          | )          | (2,729,259     | )          | (7,833,909              | )          | (8,547,363                            | )          | (236,756                        | )          | (422,406                                                   | )          | (133,634               | )          | (2,934                                                 | )          | (13,619,288                                                     | )          | (35,224,674                                          | )          |
| Other increases   (decreases)                              | ** ** | **—**                          | ** ** | **—**     |       | 107,067                 |       | 299,361                               |       | (15,883                         | )          | (4,956                                                     | )          | (132,887               | )          | —                                                 |       | (2,133,773                                                      | )          | (1,881,071                                           | )          |
| **Total   movements**                                      | ** ** | **13,811,550**                      | ** ** | **22,295,738** | ** ** | **66,424,837**          | ** ** | **66,862,979**                        | ** ** | **3,656,883**                   | ** ** | **9,388,383**                                              | ** ** | **5,896,893**          | ** ** | **(14,558**                                            | **)**      | **38,163,553**                                                  | ** ** | **226,486,258**                                      | ** ** |
| **Ending   balance**                                       | ** ** | **61,735,710**                      | ** ** | **57,134,715** | ** ** | **131,779,399**         | ** ** | **176,179,349**                       | ** ** | **5,800,223**                   | ** ** | **24,838,592**                                             | ** ** | **7,835,697**          | ** ** | **9,422**                                              | ** ** | **111,237,618**                                                 | ** ** | **576,550,725**                                      | ** ** |

 

----

(1)         Corresponds to balances incorporated as of October 1, 2012 as a result of the consolidation of Embotellaoras Coca-Cola Polar S.A. and certain other companies explained in note 1 b).

 

F-49

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Table of Contents

 

**NOTE 10 —  PROPERTY, PLANT AND EQUIPMENT (Continued)**

 
| **For the period ended**** 12.31.2011** | ** ** | **Construction in   progress** | ** ** | **Land**       | ** ** | **Buildings,   net** | ** ** | **Plant and   equipment,   net** | ** ** | **IT********Equipment, net** | ** ** | **Fixed   installations   and accessories,   net** | ** ** | **Motor   vehicles, net** | ** ** | **Improvements   to leased   property, net** | ** ** | **Other   property,   plant and   equipment,   net** | ** ** | **Property, plant   and equipment,   net** | ** ** |
|-------------------------------------------------------------|------------|-------------------------------------|------------|----------------|------------|----------------------|------------|---------------------------------------|------------|-----------------------------------|------------|---------------------------------------------------------|------------|--------------------------------|------------|--------------------------------------------------------|------------|-----------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                  | ** ** | **ThCh$**                           | ** ** | **ThCh$**      | ** ** | **ThCh$**            | ** ** | **ThCh$**                             | ** ** | **ThCh$**                         | ** ** | **ThCh$**                                               | ** ** | **ThCh$**                      | ** ** | **ThCh$**                                              | ** ** | **ThCh$**                                                 | ** ** | **ThCh$**                                            | ** ** |
|                                                        |       |                                |       |           |       |                 |       |                                  |       |                              |       |                                                    |       |                           |       |                                                   |       |                                                      |       |                                                 |       |
| **Initial   balance**                                       | ** ** | **23,506,510**                      | ** ** | **36,523,803** | ** ** | **62,981,926**       | ** ** | **77,875,846**                        | ** ** | **2,069,335**                     | ** ** | **16,284,154**                                          | ** ** | **1,870,048**                  | ** ** | **44,923**                                             | ** ** | **70,325,635**                                            | ** ** | **291,482,180**                                      | ** ** |
| Deconsolidation of Vital S.A. because control was   lost    |       | —                              |       | (1,789,538     | )          | (5,234,227           | )          | (6,749,334                            | )          | —                            |       | —                                                  |       | —                         |       | —                                                 |       | (732,167                                                  | )          | (14,505,266                                          | )          |
| Additions                                                   |       | 52,845,762                          |       | (973           | )          | 2,076,108            |       | 30,838,285                            |       | 601,044                           |       | 45,516                                                  |       | 499,615                        |       | —                                                 |       | 31,524,654                                                |       | 118,430,011                                          |       |
| Disposals                                                   |       | (13,506                             | )          | (120,727       | )          | (762,174             | )          | (17,571                               | )          | (185                              | )          | (30,395                                                 | )          | —                         |       | —                                                 |       | (49,852                                                   | )          | (994,410                                             | )          |
| Transfers between   items of property, plant and equipment  |       | (28,409,020                         | )          | 283,495        |       | 8,785,405            |       | 21,589,748                            |       | 398,449                           |       | 1,810,434                                               |       | 14,956                         |       | —                                                 |       | (4,473,467                                                | )          | —                                               |       |
| Depreciation   expense                                      |       | —                              |       | —         |       | (2,022,571           | )          | (13,713,542                           | )          | (931,282                          | )          | (1,117,400                                              | )          | (379,172                       | )          | (21,250                                                | )          | (20,650,320                                               | )          | (38,835,537                                          | )          |
| Increase   (decrease) in foreign currency translation       |       | (24,574                             | )          | (67,205        | )          | (179,705             | )          | (542,938                              | )          | 6,023                             |       | 26,995                                                  |       | (1,980                         | )          | 307                                                    |       | (280,024                                                  | )          | (1,063,101                                           | )          |
| Other increases   (decreases)                               |       | 18,988                              |       | 10,122         |       | (290,200             | )          | 35,876                                |       | (44                               | )          | (1,569,095                                              | )          | (64,663                        | )          | —                                                 |       | (2,590,394                                                | )          | (4,449,410                                           | )          |
| **Total   movements**                                       | ** ** | **24,417,650**                      | ** ** | **(1,684,826** | **)**      | **2,372,636**        | ** ** | **31,440,524**                        | ** ** | **74,005**                        | ** ** | **(833,945**                                            | **)**      | **68,756**                     | ** ** | **(20,943**                                            | **)**      | **2,748,430**                                             | ** ** | **58,582,287**                                       | ** ** |
| **Ending   balance**                                        | ** ** | **47,924,160**                      | ** ** | **34,838,977** | ** ** | **65,354,562**       | ** ** | **109,316,370**                       | ** ** | **2,143,340**                     | ** ** | **15,450,209**                                          | ** ** | **1,938,804**                  | ** ** | **23,980**                                             | ** ** | **73,074,065**                                            | ** ** | **350,064,467**                                      | ** ** |

 

F-50

----

Table of Contents

 

**NOTE 10 —  PROPERTY, PLANT AND EQUIPMENT (Continued)**

** **
| **For the year ended 1****2****.31.2010** | ** ** | **Construction in   progress** | ** ** | **Land**       | ** ** | **Buildings,   net** | ** ** | **Plant and   equipment,   net** | ** ** | **IT Equipment,   net** | ** ** | **Fixed   installations   and   accessories,   net** | ** ** | **Motor   vehicles, net** | ** ** | **Improvements   to leased   property, net** | ** ** | **Other   property, plant   and equipment,   net** | ** ** | **Property, plant   and equipment,   net** | ** ** |
|---------------------------------------------------------------|------------|-------------------------------------|------------|----------------|------------|----------------------|------------|---------------------------------------|------------|------------------------------|------------|------------------------------------------------------|------------|--------------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------------|------------|------------------------------------------------------|------------|
| ** **                                                    | ** ** | **ThCh$**                           | ** ** | **ThCh$**      | ** ** | **ThCh$**            | ** ** | **ThCh$**                             | ** ** | **ThCh$**                    | ** ** | **ThCh$**                                            | ** ** | **ThCh$**                      | ** ** | **ThCh$**                                              | ** ** | **ThCh$**                                                    | ** ** | **ThCh$**                                            | ** ** |
|                                                          |       |                                |       |           |       |                 |       |                                  |       |                         |       |                                                 |       |                           |       |                                                   |       |                                                         |       |                                                 |       |
| **Initial balance**                                           | ** ** | **5,487,011**                       | ** ** | **37,046,146** | ** ** | **61,570,532**       | ** ** | **72,648,457**                        | ** ** | **2,139,891**                | ** ** | **16,664,567**                                       | ** ** | **1,416,740**                  | ** ** | **79,336**                                             | ** ** | **50,816,411**                                               | ** ** | **247,869,091**                                      | ** ** |
|                                                          |       |                                |       |           |       |                 |       |                                  |       |                         |       |                                                 |       |                           |       |                                                   |       |                                                         |       |                                                 |       |
| Additions                                                     |       | 32,097,391                          |       | 501,788        |       | 1,834,762            |       | 21,923,605                            |       | 669,553                      |       | 60,376                                               |       | 895,781                        |       | —                                                 |       | 32,592,914                                                   |       | 90,576,170                                           |       |
| Disposals                                                     | ** ** | **—**                          |       | (10,039        | )          | (71,333              | )          | (225,383                              | )          | (350                         | )          | —                                               |       | (4,342                         | )          | —                                                 |       | (206,873                                                     | )          | (518,320                                             | )          |
| Transfers between items of property, plant and equipment      |       | (13,807,070                         | )          | **—**     |       | 3,515,683            |       | 2,022,179                             |       | 258,089                      |       | 661,830                                              |       | 1,324                          |       | —                                                 |       | 7,347,965                                                    |       | —                                               |       |
| Depreciation expense                                          |       | —                              |       | **—**     |       | (1,829,939           | )          | (13,445,509                           | )          | (938,545                     | )          | (985,366                                             | )          | (355,283                       | )          | (32,584                                                | )          | (18,519,806                                                  | )          | (36,107,032                                          | )          |
| Increase (decrease) in foreign currency translation           |       | (270,822                            | )          | (1,014,092     | )          | (2,048,206           | )          | (4,838,392                            | )          | (58,043                      | )          | (119,494                                             | )          | (60,895                        | )          | (1,829                                                 | )          | (606,776                                                     | )          | (9,018,549                                           | )          |
| Other increases (decreases)                                   |       | **—**                          |       | **—**     |       | 10,427               |       | (209,111                              | )          | (1,260                       | )          | 2,241                                                |       | (23,277                        | )          | —                                                 |       | (1,098,200                                                   | )          | (1,319,180                                           | )          |
| **Total movements**                                           | ** ** | **18,019,499**                      | ** ** | **(522,343**   | **)**      | **1,411,394**        | ** ** | **5,227,389**                         | ** ** | **(70,556**                  | **)**      | **(380,413**                                         | **)**      | **453,308**                    | ** ** | **(34,413**                                            | **)**      | **19,509,224**                                               | ** ** | **43,613,089**                                       | ** ** |
| **Ending balance**                                            | ** ** | **23,506,510**                      | ** ** | **36,523,803** | ** ** | **62,981,926**       | ** ** | **77,875,846**                        | ** ** | **2,069,335**                | ** ** | **16,284,154**                                       | ** ** | **1,870,048**                  | ** ** | **44,923**                                             | ** ** | **70,325,635**                                               | ** ** | **291,482,180**                                      | ** ** |

 

F-51

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**NOTE 11 —  RELATED PARTY DISCLOSURES**

 

Balances and transactions with related parties as of  December 31, 2012 and December 31, 2011 are detailed as follows:

 

**11.1           Accounts receivable:**

 

**11.1.1       Current:**

 
| **Taxpayer ID** | ** ** | **Company**                           | ** ** | **Relationship**    | ** ** | **Country   of origin** | ** ** | **Currency**  | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|----------------------|------------|---------------------------------------|------------|---------------------|------------|------------------------------|------------|---------------|------------|----------------|------------|----------------|------------|
| ** **           | ** ** | ** **                            | ** ** | ** **          | ** ** | ** **                   | ** ** | ** **    | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| 96.891.720-K         |       | Embonor S.A.                          |       | Shareholder         |       | Chile                        |       | Chilean pesos |       | 4,893,956      |       | —         |       |
| 96.714.870-9         |       | Coca-Cola de Chile S.   A.            |       | Shareholder         |       | Chile                        |       | Chilean pesos |       | —         |       | 6,014,176      |       |
| 86.881.400-4         |       | Envases CMF S. A.                     |       | Associate           |       | Chile                        |       | Chilean pesos |       | —         |       | 338,765        |       |
| 96.517.210-2         |       | Embotelladora Iquique S.A.            |       | Shareholder         |       | Chile                        |       | Chilean pesos |       | 358,859        |       | —         |       |
| Foreign              |       | Montevideo Refrescos S.A.             |       | Shareholder         |       | Uruguay                      |       | Dollars       |       | 51,215         |       | —         |       |
| 96.919.980-7         |       | Cervecería Austral S.A.          |       | Related to director |       | Chile                        |       | Dollars       |       | 20,058         |       |           |       |
| 77.755.610-k         |       | Comercial Patagona Ltda.              |       | Related to director |       | Chile                        |       | Chilean pesos |       | 301            |       | —         |       |
| 93.473.000-3         |       | Embotelladoras   Coca-Cola Polar S.A. |       | Shareholder         |       | Chile                        |       | Chilean pesos |       | —         |       | 66,052         |       |
| ** **           | ** ** | ** **                            | ** ** | **Total**           | ** ** | ** **                   | ** ** | ** **    | ** ** | **5,324,389**  | ** ** | **6,418,993**  | ** ** |

 

**11.1.2       Non current:**

 
| **Taxpayer ID** | ** ** | **Company**               | ** ** | **Relationship** | ** ** | **Country   of origin** | ** ** | **Currency**  | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|----------------------|------------|---------------------------|------------|------------------|------------|------------------------------|------------|---------------|------------|----------------|------------|----------------|------------|
| ** **           | ** ** | ** **                | ** ** | ** **       | ** ** | ** **                   | ** ** | ** **    | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| 96.714.870-9         |       | Coca-Cola de Chile   S.A. |       | Shareholder      |       | Chile                        |       | Chilean pesos |       | 7,197          |       | 11,187         |       |
|                 |       |                      |       |             |       |                         |       |          |       |           |       |           |       |
| ** **           | ** ** | ** **                | ** ** | **Total**        | ** ** | ** **                   | ** ** | ** **    | ** ** | **7,197**      | ** ** | **11,187**     | ** ** |

 

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**NOTE 11 —  RELATED PARTY DISCLOSURES (Continued)**

 

**11.2           Accounts Payable:**

 

**11.2.1       Current:**

 
| **Taxpayer ID** | ** ** | **Company**                                             | ** ** | **Relationship**       | ** ** | **Country   of origin** | ** ** | **Currency**    | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|----------------------|------------|---------------------------------------------------------|------------|------------------------|------------|------------------------------|------------|-----------------|------------|----------------|------------|----------------|------------|
| ** **           | ** ** | ** **                                              | ** ** | ** **             | ** ** | ** **                   | ** ** | ** **      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
|                 |       |                                                    |       |                   |       |                         |       |            |       |           |       |           |       |
| 96.714.870-9         |       | Coca Cola de Chile   S.A.                               |       | Shareholder            |       | Chile                        |       | Chilean pesos   |       | 8,680,945      |       | —         |       |
| Foreign              |       | Servicio y Productos   para Bebidas Refrescantes S.R.L. |       | Shareholder            |       | Argentina                    |       | Argentine peso  |       | 11,624,070     |       | 962,725        |       |
| Foreign              |       | Recofarma do   Industrias Amazonas Ltda.                |       | Related to Shareholder |       | Brazil                       |       | Brazilian Reais |       | 6,721,378      |       | 6,287,520      |       |
| 96.705.990-0         |       | Envases Central S.A. (1)                                |       | Equity Investee        |       | Chile                        |       | Chilean pesos   |       | —         |       | 2,200,977      |       |
| 86.881.400-4         |       | Envases CMF S.A.                                        |       | Associate              |       | Chile                        |       | Chilean pesos   |       | 5,441,206      |       | —         |       |
| 76.389.720-6         |       | Vital Aguas S.A. (1)                                    |       | Associate              |       | Chile                        |       | Chilean pesos   |       | —         |       | 732,249        |       |
| 93.899.000-K         |       | Vital Jugos S.A. (1)                                    |       | Associate              |       | Chile                        |       | Chilean pesos   |       | —         |       | 1,175,567      |       |
| 89.996.200-1         |       | Envases del Pacifico   S.A.                             |       | Related to director    |       | Chile                        |       | Chilean pesos   |       | 259,613        |       | —         |       |
|                 |       |                                                    | ** ** | **Total**              |       |                         |       |            | ** ** | **32,727,212** | ** ** | **11,359,038** | ** ** |

 

----

(1)         As of December 31, 2012 they do not present balances, given they have been incorporated to the consolidation as of October 1, 2012, as a result of the merger with Embotellaoras Coca-Cola Polar S.A. explained in note 1 b).

 

F-53

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**NOTE 11 —  RELATED PARTY DISCLOSURES (Continued)**

 

**11.3           Transactions:**

 
| **Taxpayer ID** | ** ** | **Company**                                             | ** ** | **Relationship**       | ** ** | **Country   of origin** | ** ** | **Description of transaction**        | ** ** | **Currency**    | ** ** | **Cumulative****12.31.2012** | ** ** |
|----------------------|------------|---------------------------------------------------------|------------|------------------------|------------|------------------------------|------------|-------------------------------------------------|------------|-----------------|------------|------------------------------|------------|
| ** **           | ** ** | ** **                                              | ** ** | ** **             | ** ** | ** **                   | ** ** | ** **                                      | ** ** | ** **      | ** ** | **ThCh$**                    | ** ** |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            | ** ** | Chile                        | ** ** | Concentrate purchase                            | ** ** | Chilean pesos   | ** ** | 76,756,589                   | ** ** |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Purchase of advertising services                |       | Chilean pesos   |       | 3,184,671                    |       |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Lease of water fountain                         |       | Chilean pesos   |       | 2,731,636                    |       |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Sale of finished products                       |       | Chilean pesos   |       | 1,245,309                    |       |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Sale of services and others                     |       | Chilean pesos   |       | 1,016,520                    |       |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Sale of raw materials  and others          |       | Chilean pesos   |       | 3,686,498                    |       |
| 86.881.400-4         |       | Envases CMF S.A.                                        |       | Associate              |       | Chile                        |       | Purchase of bottles                             |       | Chilean pesos   |       | 28,986,747                   |       |
| 86.881.400-4         |       | Envases CMF S.A.                                        |       | Associate              |       | Chile                        |       | Sale of    packaging materials             |       | Chilean pesos   |       | 2,722,611                    |       |
| 96.891.720-K         |       | Embonor S.A.                                            |       | Related to shareholder |       | Chile                        |       | Sale of finished products                       |       | Chilean pesos   |       | 10,293,435                   |       |
| 96.517.310-2         |       | Embotelladora Iquique S.A.                              |       | Related to shareholder |       | Chile                        |       | Sale of finished products dos                   |       | Chilean pesos   |       | 2,244,302                    |       |
| Foreign              |       | Recofarma do Industrias   Amazonas Ltda.                |       | Related to shareholder |       | Brasil                       |       | Concentrate purchase                            |       | Brazilian Reais |       | 78,524,183                   |       |
| Foreign              |       | Recofarma do Industrias   Amazonas Ltda.                |       | Related to shareholder |       | Brasil                       |       | Reimbursement and other purchases               |       | Brazilian Reais |       | 1,335,869                    |       |
| Foreign              |       | Recofarma do Industrias   Amazonas Ltda.                |       | Related to shareholder |       | Brasil                       |       | Advertising participation payment               |       | Brazilian Reais |       | 14,502,915                   |       |
| Foreign              |       | Servicio y Productos   para Bebidas Refrescantes S.R.L. |       | Shareholder            |       | Argentina                    |       | Concentrate purchase                            |       | Argentine pesos |       | 68,569,280                   |       |
| Foreign              |       | Servicio y Productos   para Bebidas Refrescantes S.R.L. |       | Shareholder            |       | Argentina                    |       | Advertising rights, rewards and others          |       | Argentine pesos |       | 2,624,656                    |       |
| Foreign              |       | Servicio y Productos   para Bebidas Refrescantes S.R.L. |       | Shareholder            |       | Argentina                    |       |  Collection of   advertising participation |       | Argentine pesos |       | 5,419,055                    |       |
| 89.996.200-1         |       | Envases del Pacífico   S.A.                        |       | Related to director    |       | Chile                        |       | Raw materials purchased                         |       | Chilean pesos   |       | 1,873,336                    |       |
| 97.032.000-8         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Investment in mutual funds                      |       | Chilean pesos   |       | 61,042,686                   |       |
| 97.032.000-8         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Redemption of mutual funds                      |       | Chilean pesos   |       | 59,455,046                   |       |
| 97.032.000-8         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Redemption of time deposits                     |       | Chilean pesos   |       | 223,027                      |       |
| 84.505.800-8         |       | Vendomatica S.A.                                        |       | Related to director    |       | Chile                        |       | Sale of finished products                       |       | Chilean pesos   |       | 1,358,380                    |       |
| 79.753.810-8         |       | Claro y Cía.                                       |       | Related to partner     |       | Chile                        |       | Legal Counseling                                |       | Chilean pesos   |       | 349,211                      |       |
| 93.899.000-K         |       | Vital Jugos S.A. (1)                                    |       | Associate              |       | Chile                        |       | Sale of raw material and materials              |       | Chilean pesos   |       | 4,697,898                    |       |
| 93.899.000-K         |       | Vital Jugos S.A.(1)                                     |       | Associate              |       | Chile                        |       | Purchase of finished products                   |       | Chilean pesos   |       | 18,656,191                   |       |
| 96.705.990-0         |       | Envases Central S.A. (1)                                |       | Associate              |       | Chile                        |       | Purchase of finished products                   |       | Chilean pesos   |       | 14,618,933                   |       |
| 96.705.990-0         |       | Envases Central S.A. (1)                                |       | Associate              |       | Chile                        |       | Sale of raw materials and materials             |       | Chilean pesos   |       | 2,479,381                    |       |
| 76.389.720-6         |       | Vital Aguas S.A. (1)                                    |       | Associate              |       | Chile                        |       | Purchase of finished products                   |       | Chilean pesos   |       | 4,065,125                    |       |

 

----

(1)         Corresponds to transactions generated with Vital Aguas S.A:, Vital Jugos S.A. and Envases Central S.A. up until before taking control over those companies as a result of what has been described in Note 1b)

 

F-54

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Table of Contents

 

**NOTE 11 —  RELATED PARTY DISCLOSURES (Continued)**

 
| **Taxpayer ID** | ** ** | **Company**                                             | ** ** | **Relationship**       | ** ** | **Country   of origin** | ** ** | **Description of transaction**        | ** ** | **Currency**    | ** ** | **Cumulative****12.31.2011** | ** ** |
|----------------------|------------|---------------------------------------------------------|------------|------------------------|------------|------------------------------|------------|-------------------------------------------------|------------|-----------------|------------|------------------------------|------------|
| ** **           | ** ** | ** **                                              | ** ** | ** **             | ** ** | ** **                   | ** ** | ** **                                      | ** ** | ** **      | ** ** | **ThCh$**                    | ** ** |
| 93.899.000-K         |       | Vital Jugos S.A.                                        |       | Associate              |       | Chile                        |       | Sale of raw materials                           |       | Chilean pesos   |       | 5,589,681                    |       |
| 93.899.000-K         |       | Vital Jugos S.A.                                        |       | Associate              |       | Chile                        |       | Collection of loans                             |       | Chilean pesos   |       | 3,102,400                    |       |
| 93.899.000-K         |       | Vital Jugos S.A.                                        |       | Associate              |       | Chile                        |       | Purchase of finished products                   |       | Chilean pesos   |       | 21,687,373                   |       |
| 93.899.000-K         |       | Vital Jugos S.A.                                        |       | Associate              |       | Chile                        |       | Loan granted                                    |       | Chilean pesos   |       | 2,600,000                    |       |
| 96.705.990-0         |       | Envases Central S. A.                                   |       | Associate              |       | Chile                        |       | Purchase of finished products                   |       | Chilean pesos   |       | 19,170,427                   |       |
| 96.705.990-0         |       | Envases Central S. A.                                   |       | Associate              |       | Chile                        |       | Sale of raw materials                           |       | Chilean pesos   |       | 3,345,527                    |       |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Concentrate purchase                            |       | Chilean pesos   |       | 66,279,629                   |       |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Purchase of advertising services                |       | Chilean pesos   |       | 2,300,351                    |       |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Sale of marketing services                      |       | Chilean pesos   |       | 791,098                      |       |
| 96.714.870-9         |       | Coca Cola de Chile S.A.                                 |       | Shareholder            |       | Chile                        |       | Sale of raw materials  and others          |       | Chilean pesos   |       | 6,147,836                    |       |
| 86.881.400-4         |       | Envases CMF S.A.                                        |       | Associate              |       | Chile                        |       | Purchase of bottles                             |       | Chilean pesos   |       | 10,574,791                   |       |
| 86.881.400-4         |       | Envases CMF S.A.                                        |       | Associate              |       | Chile                        |       | Purchase of    packaging materials         |       | Chilean pesos   |       | 1,294,064                    |       |
| 76.389.720-6         |       | Vital Aguas S.A.                                        |       | Associate              |       | Chile                        |       | Purchase of finished products                   |       | Chilean pesos   |       | 6,191,936                    |       |
| Foreign              |       | Recofarma do Industrias   Amazonas Ltda.                |       | Related to shareholder |       | Brasil                       |       | Concentrate purchase                            |       | Brazilian Reais |       | 83,833,396                   |       |
| Foreign              |       | Recofarma do Industrias   Amazonas Ltda.                |       | Related to shareholder |       | Brasil                       |       | Reimbursement and other purchases               |       | Brazilian Reais |       | 1,371,278                    |       |
| Foreign              |       | Recofarma do Industrias   Amazonas Ltda.                |       | Related to shareholder |       | Brasil                       |       | Advertising participation payment               |       | Brazilian Reais |       | 18,489,621                   |       |
| Foreign              |       | Servicio y Productos   para Bebidas Refrescantes S.R.L. |       | Shareholder            |       | Argentina                    |       | Concentrate purchase                            |       | Argentine pesos |       | 50,482,708                   |       |
| Foreign              |       | Servicio y Productos   para Bebidas Refrescantes S.R.L. |       | Shareholder            |       | Argentina                    |       | Advertising rights, rewards and others          |       | Argentine pesos |       | 2,099,957                    |       |
| Foreign              |       | Servicio y Productos   para Bebidas Refrescantes S.R.L. |       | Shareholder            |       | Argentina                    |       |  Collection of   advertising participation |       | Argentine pesos |       | 5,078,692                    |       |
| 96.815.680-2         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Investment in mutual funds                      |       | Chilean pesos   |       | 33,625,000                   |       |
| 96.815.680-2         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Redemption of mutual funds                      |       | Chilean pesos   |       | 33,625,000                   |       |
| 96.815.680-2         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Investments in time deposits                    |       | Chilean pesos   |       | 723,921                      |       |
| 96.815.680-2         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Bank loans                                      |       | Chilean pesos   |       | 3,498,249                    |       |
| 96.815.680-2         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Redemption of time deposits                     |       | Chilean pesos   |       | 1,434,234                    |       |
| 96.815.680-2         |       | BBVA Administradora  General de Fondos             |       | Related to director    |       | Chile                        |       | Payment of bank loans                           |       | Chilean pesos   |       | 3,498,249                    |       |
| 84.505.800-8         |       | Vendomática S. A.                                  |       | Related to director    |       | Chile                        |       | Sale of finished products                       |       | Chilean pesos   |       | 1,330,544                    |       |
| 79.753.810-8         |       | Claro y Cía.                                       |       | Related to partner     |       | Chile                        |       | Legal Counseling                                |       | Chilean pesos   |       | 246,548                      |       |
| 89.996.200-1         |       | Envases del Pacífico   S.A.                        |       | Related to director    |       | Chile                        |       | Raw materials purchased                         |       | Chilean pesos   |       | 355,460                      |       |

 

F-55

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**NOTE 11 —  RELATED PARTY DISCLOSURES (Continued)**

 
| **Taxpayer ID** | ** ** | **Company**                                             | ** ** | **Relationship**       | ** ** | **Country   of origin** | ** ** | **Description of transaction** | ** ** | **Currency**   | ** ** | **Cumulative****12.31.2010********ThCh$** | ** ** |
|----------------------|------------|---------------------------------------------------------|------------|------------------------|------------|------------------------------|------------|------------------------------------------|------------|----------------|------------|-------------------------------------------|------------|
| 96.705.990-0         |       | Envases Central   S.A.                                  |       | Associate              |       | Chile                        |       | Purchase of finished products            |       | Chilean peso   |       | 17,810,345                                |       |
| 96.705.990-0         |       | Envases Central   S.A.                                  |       | Associate              |       | Chile                        |       | Sale of raw materials                    |       | Chilean peso   |       | 2,542,071                                 |       |
| 96.714.870-9         |       | Coca Cola de Chile   S.A.                               |       | Associate              |       | Chile                        |       | Concentrate purchase                     |       | Chilean peso   |       | 64,448,337                                |       |
| 96.714.870-9         |       | Coca Cola de Chile   S.A.                               |       | Associate              |       | Chile                        |       | Advertising payment                      |       | Chilean peso   |       | 1,857,135                                 |       |
| 96.714.870-9         |       | Coca Cola de Chile   S.A.                               |       | Associate              |       | Chile                        |       | Services rendered                        |       | Chilean peso   |       | 3,292,507                                 |       |
| 96.714.870-9         |       | Coca Cola de Chile   S.A.                               |       | Associate              |       | Chile                        |       | Advertising collection                   |       | Chilean peso   |       | 989,554                                   |       |
| Foreign              |       | Recofarma do   Industrias Amazonas Ltda.                |       | Related to shareholder |       | Brazil                       |       | Concentrate purchase                     |       | Real           |       | 61,827,392                                |       |
| Foreign              |       | Recofarma do   Industrias Amazonas Ltda.                |       | Related to shareholder |       | Brazil                       |       | Reimbursement and other purchases        |       | Real           |       | 1,188,468                                 |       |
| Foreign              |       | Recofarma do   Industrias Amazonas Ltda.                |       | Related to shareholder |       | Brazil                       |       | Advertising participation payment        |       | Real           |       | 13,851,240                                |       |
| 86.881.400-4         |       | Envases CMF S.A.                                        |       | Associate              |       | Chile                        |       | Purchase of bottles                      |       | Chilean peso   |       | 7,636,480                                 |       |
| 86.881.400-4         |       | Envases CMF S.A.                                        |       | Associate              |       | Chile                        |       | Purchase of packaging materials          |       | Chilean peso   |       | 409,929                                   |       |
| 84.505.800-8         |       | Vendomática S.A                                    |       | Related to director    |       | Chile                        |       | Sale of finished products                |       | Chilean peso   |       | 1,401,691                                 |       |
| 84.505.800-8         |       | Vendomática S.A                                    |       | Related to director    |       | Chile                        |       | Supply and advertising agreement         |       | Chilean peso   |       | 250,000                                   |       |
| 96.815.680-2         |       | BBVA   Administración General de Fondos            |       | Related to director    |       | Chile                        |       | Investment in mutual funds               |       | Chilean peso   |       | 34,148,000                                |       |
| 96.815.680-2         |       | BBVA   Administración General de Fondos            |       | Related to director    |       | Chile                        |       | Redemption of mutual funds               |       | Chilean peso   |       | 36,992,000                                |       |
| 76.389.720-6         |       | Vital Aguas S.A.                                        |       | Associate              |       | Chile                        |       | Purchase of finished products            |       | Chilean peso   |       | 5,676,978                                 |       |
| 76.389.720-6         |       | Vital Aguas S.A.                                        |       | Associate              |       | Chile                        |       | Services rendered                        |       | Chilean peso   |       | 254,909                                   |       |
| Foreign              |       | Servicio y   Productos para Bebidas Refrescantes S.R.L. |       | Related to shareholder |       | Argentina                    |       | Concentrate purchase                     |       | Argentine peso |       | 39,404,175                                |       |
| Foreign              |       | Servicio y   Productos para Bebidas Refrescantes S.R.L. |       | Related to shareholder |       | Argentina                    |       | Advertising rights, rewards and others   |       | Argentine peso |       | 1,587,201                                 |       |
| Foreign              |       | Servicio y   Productos para Bebidas Refrescantes S.R.L. |       | Related to shareholder |       | Argentina                    |       | Collection of advertising participation  |       | Argentine peso |       | 6,218,762                                 |       |
| 96.891.720-K         |       | Coca-Cola Embonor   S. A.                               |       | Related to shareholder |       | Chile                        |       | Sale of finished products                |       | Chilean peso   |       | 8,236,127                                 |       |
| 96.517.310-2         |       | Embotelladora  Iquique S.A.                        |       | Related to shareholder |       | Chile                        |       | Sale of finished products                |       | Chilean peso   |       | 689,551                                   |       |
| 93.473.000-3         |       | Embotelladora   Coca-Cola  Polar S.A.              |       | Related to shareholder |       | Chile                        |       | Sale of finished products                |       | Chilean peso   |       | 5,243,772                                 |       |
| 89.996.200-1         |       | Envases del   Pacífico S.A.                        |       | Related to shareholder |       | Chile                        |       | Raw materials purchased                  |       | Chilean peso   |       | 481,592                                   |       |

 

F-56

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Table of Contents

 

**NOTE 11 —  RELATED PARTY DISCLOSURES (Continued)**

 

**11.4****                               ****Payroll and benefits of the Company’s key employees**

 

Salary and benefits paid to the Company’s key employees, corresponding to directors and managers, are detailed as follows:

** **
| **Full description**                                            | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
|----------------------------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| ** **                                                           | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Executive wages, salaries   and benefits                             |       | 4,511,609      |       | 4,324,205      |       | 4,198,174      |       |
| Director allowances                                                  |       | 1,302,000      |       | 1,104,000      |       | 1,016,124      |       |
| Termination benefits                                                 |       | —         |       | 2,289,610      |       | 1,643,749      |       |
| Accrued benefits in the   last five years and paid during the period |       | 723,298        |       | 1,338,675      |       | 981,635        |       |
| **Total**                                                            | ** ** | **6,536,907**  | ** ** | **9,056,490**  | ** ** | **7,839,682**  | ** ** |

 

**NOTE 12 —  EMPLOYEE BENEFITS**

 

As of December 31, 2012 and 2011, the Company had recorded reserves for profit sharing and for bonuses totaling ThCh 8,240,460 and ThCh$6,354,816, respectively.

 

This liability is shown in accrued other non-current non-financial liabilities in the statement of financial position.

 

The charge against income in the statement of comprehensive income is allocated between the cost of sales, the cost of marketing, distribution costs and administrative expenses.

 

**12.1           Personnel expenses**

 

Personnel expenses included in the statement of consolidated income statement were:

 
| **Description**                        | ** ** | **12.31.2012**  | ** ** | **12.31.2011**  | ** ** | **12.31.2010**  | ** ** |
|----------------------------------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| ** **                             | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
|                                   |       |            |       |            |       |            |       |
| Wages and salaries                     |       | 116,549,091     |       | 85,266,348      |       | 78,616,848      |       |
| Employee benefits                      |       | 29,023,263      |       | 19,336,845      |       | 20,084,397      |       |
| Severance and post-employment benefits |       | 2,474,611       |       | 2,307,187       |       | 1,580,085       |       |
| Other personnel expenses               |       | 7,218,448       |       | 5,135,492       |       | 4,549,669       |       |
| **Total**                              | ** ** | **155,265,413** | ** ** | **112,045,872** | ** ** | **104,830,999** | ** ** |

 

F-57

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Table of Contents

 

**NOTE 12 —  EMPLOYEE BENEFITS (Continued)**

 

**12.2           Post-employment benefits**

 

This item represents the post employment benefits valued pursuant to Note 2.17.

 
| **Post-employment benefits** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|-----------------------------------|------------|----------------|------------|----------------|------------|
| ** **                        | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
|                              |       |           |       |           |       |
| Non-current provision             |       | 7,037,122      |       | 5,130,015      |       |
| **Total**                         | ** ** | **7,037,122**  | ** ** | **5,130,015**  | ** ** |

 

**12.3           Post-employment benefit movement**

 

The movements of post-employment benefits for the year ended December 31, 2012, 2011 and 2010 are detailed as follows:

 
| **Movements**          | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
|------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| ** **             | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| **Initial balance**    | ** ** | **5,130,015**  | ** ** | **7,256,590**  | ** ** | **8,401,791**  | ** ** |
| Increase due to merger |       | 189,921        |       | —         |       | —         |       |
| Service costs          |       | 1,500,412      |       | 288,386        |       | 359,798        |       |
| Interest costs         |       | 158,235        |       | 471,678        |       | 213,927        |       |
| Net actuarial losses   |       | 1,010,136      |       | 1,310,764      |       | 569,707        |       |
| Benefits paid          |       | (951,597       | )          | (4,197,403     | )          | (2,288,633     | )          |
| **Total**              | ** ** | **7,037,122**  | ** ** | **5,130,015**  | ** ** | **7,256,590**  | ** ** |

 

**12.4           Assumptions**

 

The actuarial assumptions used at December 31, 2012, 2011 and 2010    were::

** **
| **Assumption**                    | ** ** | **2012**   | ** ** | **2011**   | ** ** | **2010**   | ** ** |
|-----------------------------------|------------|------------|------------|------------|------------|------------|------------|
| ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Discount rate (1)                 |       | 5.1%       |       | 6.5%       |       | 6.7%       |       |
| Expected salary increase rate (1) |       | 4.4%       |       | 5.0%       |       | 4.7%       |       |
| Turnover rate                     |       | 5.4%       |       | 6.6%       |       | 6.6%       |       |
| Mortality rate (2)                |       | RV-2009    |       | RV-2009    |       | RV-2004    |       |
| Retirement age of women           |       | 60 years   |       | 60 years   |       | 60 years   |       |
| Retirement age of men             |       | 65 years   |       | 65 years   |       | 65 years   |       |

 

----

(1) The discount rate and the expected salary increase rate are calculated in real terms, which do not include an inflation adjustment.  The rates shown above are presented in nominal terms to facilitate a better understanding by the reader.

 

(2) Mortality assumption tables prescribed for use by the Chilean Superintendence of Securities and Insurance.

 

F-58

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**NOTE 13 —  INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY  METHOD**

 

**13.1           Balances**

 

Investments in associates recorded using the equity method are detailed as follows:

 
| ** **           | ** ** | ** **                                            | ** ** | **Country of** | ** ** | **Functional** | ** ** | **Carrying Value** | ** ** | **Percentage interest** | ** ** |
|----------------------|------------|-------------------------------------------------------|------------|---------------------|------------|----------------|------------|-------------------------|------------|------------------------------|------------|
| **Taxpayer ID** | ** ** | **Name**                                              | ** ** | **Incorporation**   | ** ** | **Currency**   | ** ** | **12.31.2012**          | ** ** | **12.31.2011**               | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
| ** **           | ** ** | ** **                                            | ** ** | ** **          | ** ** | ** **     | ** ** | **ThCh$**               | ** ** | **ThCh$**                    | ** ** | **%** | ** ** | **%** | ** ** |
| 86.881.400-4         |       | Envases CMF S.A. (1)                                  |       | Chile               |       | Pesos          |       | 17,848,010              |       | 16,824,399                   |       | 50.00 | % | 50.00 | % |
| 93.899.000-K         |       | Vital Jugos S.A. (1) and (2)                     |       | Chile               |       | Pesos          |       | —                  |       | 12,568,269                   |       | — |   | 57.00 | % |
| 76.389.720-6         |       | Vital Aguas S.A. (1) and (2)                     |       | Chile               |       | Pesos          |       | —                  |       | 2,952,050                    |       | — |   | 56.50 | % |
| 96.705.990-0         |       | Envases Central S.A.   (1) and (2)               |       | Chile               |       | Pesos          |       | —                  |       | 4,223,890                    |       | — |   | 49.91 | % |
| Foreign              |       | Kaik Participacoes Ltda. (3)                          |       | Brasil              |       | Brazilian Real |       | 1,172,641               |       | 1,304,027                    |       | 11.31 | % | 11.31 | % |
| Foreign              |       | Sistema de Alimentos   de Bebidas Do Brasil Ltda. (3) |       | Brasil              |       | Brazilian Real |       | 9,587,589               |       | 9,766,182                    |       | 5.74 | % | 5.74 | % |
| Foreign              |       | Sorocaba Refrescos S.A.(4)                            |       | Brasil              |       | Brazilian Real |       | 34,709,914              |       | —                       |       | 40.00 | % | — |   |
| Foreign              |       | Holdfab2 Participacoes Societarias Ltda.              |       | Brasil              |       | Brazilian Real |       | 9,761,907               |       | 12,652,149                   |       | 36.40 | % | 36.40 | % |
|                 |       |                                                  |       |                |       |           |       |                    |       |                         |       |   |   |   |   |
|                 | ** ** | **Total**                                             |       |                |       |           | ** ** | **73,080,061**          | ** ** | **60,290,966**               |       |   |   |   |   |

 

----

(1)             In these companies, regardless of the percentage of ownership interest held in 2011, was determined that no controlling interest was held, only a significant influence, given that there was not a majority vote of the Board of Directors to make strategic business decisions.

(2)             The mentioned companies do not present balances as of December 31, 2012, as a result of the merger with Embotellaoras Coca-Cola Polar S.A. explained in note 1 b)

(3)             In these companies, regardless of the percentage of ownership interest held,it has been determined that no controlling interest was held, only a significant influence, given that there was not a majority vote of the Board of Directors to make strategic business decisions.

(4)             Corresponds to the purchase of a 40% ownership interest in the Brazilian company for an amount of ThCh33,496,920 during the last quarter of 2012.

 

F-59

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**NOTE 13 —  INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY  METHOD (Continued)**

 

**13.2           Movement**

 

The movement of investments in associates recorded using the equity method is shown below, for the year ended December 31, 2012, 2011 and 2010:

** **
| **Details**                                                                | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
|----------------------------------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| ** **                                                                 | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| **Initial   Balance**                                                      | ** ** | **60,290,966** | ** ** | **50,754,168** | ** ** | **34,731,218** | ** ** |
| Incorporation of Vital   Jugos S.A.                                        |       | —         |       | 13,114,268     |       | —         |       |
| Capital increases in   equity investees                                    |       | 2,380,320      |       | 4,527,000      |       | 15,229,291     |       |
| Acquisition of Sorocaba   Refrescos S.A. (40%)                             |       | 34,513,444     |       | —         |       | —         |       |
| Sale of 43% ownership   interest in Vital Jugos S.A.                       |       | —         |       | (6,188,675     | )          | —         |       |
| Dividends received                                                         |       | (402,148       | )          | (2,786,957     | )          | (1,379,837     | )          |
| Share in operating income   (a)                                            |       | 2,409,110      |       | 2,541,186      |       | 2,984,544      |       |
| Goodwill in sale of   property plant and equipment to Envases CMF          |       | 85,266         |       | 85,266         |       | 85,266         |       |
| Amortization Fair Value   Vital Jugos S. A. (a)                            |       | (77,475        | )          | —         |       | —         |       |
| Decrease in foreign   currency translation                                 |       | (3,652,740     | )          | (621,861       | )          | (624,004       | )          |
| Capital decrease   (return of capital) in Envases CMF S.A.                 |       | —         |       | (1,150,000     | )          | —         |       |
| Deconsolidation of   certain equity method investments due to Polar merger |       | (22,466,682    | )          | —         |       | —         |       |
| Other, nets                                                                |       | —         |       | 16,571         |       | (272,310       | )          |
| **Ending   balance**                                                       | ** ** | **73,080,061** | ** ** | **60,290,966** | ** ** | **50,754,168** | ** ** |

 

----

(a)         Refer to table below for a reconciliation of these amounts to those recorded in the accompanying consolidated income statement.

 

F-60

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**NOTE 13 —  INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD (Continued)**

 

The main movements for the periods ended 2012, 2011 and 2010 are detailed as follows:

 

·             A special shareholders meeting of Vital S.A., a Company subsidiary, held on January 5, 2011, approved a capital increase of ThCh$1,278,000, which was paid in full on January 7, 2011.  It also approved changing the name of the company to Vital Jugos S.A.

 

·             On January 21, 2011, subsidiaries Andina Bottling Investments S.A. and Andina Inversions Societarias S.A. together sold a 43% ownership interest in Vital Jugos S.A. to Embotelladoras Coca-Cola Polar S.A., (15%) and Coca-Cola Embonor S.A. (28%), for an amount of ThCh$6,841,889, resulting in a gain of ThCh$ 653,214 which is presented as other gains (losses) in the income statement.

 

As a result of the transactions,  the Andina Company lost control of Vital Jugos S.A., given that despite maintaining 57% ownership, substantive participating rights existed on behalf of the other shareholders (in the then shareholders agreement) in that at least one vote is required from the rest of the bottlers of Coca-Cola system for decision-making of financial policies and operation of the business. Accordingly, beginning on January 21, 2011, Vital Jugos S.A., was thus treated as investments accounted for using the equity method, being excluded from the consolidation.  Additionally, because of the loss of control of Vital Jugos S.A., according to the guidelines of IAS 27 “Consolidated and Separate Financial Statements”, the difference between the estimated fair value and the book value of the investment remaining in the Company’s possession (amounting to ThCh$867,414) was recognized as a component of “Share in profit (loss) of equity method investees” within the income statement, at December 31, 2011.

 

·             During the months of March and April 2011, capital contributions were made to Vital Jugos S.A., for a total amount of ThCh$3,249,000.

 

·             Holdfab2 Participacoes Societarias Ltda. was established in Brazil on March 23, 2010, along with the Coca-Cola bottlers for the purpose of concentrating their investments in the company Leon Junior S.A., in which our subsidiary Rio de Janeiro Refrescos Ltda. has a 36.40% ownership interest, capital contributions amounted to ThCh$15,229,291 and were carried out on August 23, 2010.   These amounts are included as a component of the “capital increases in equity investees” disclosed above.  In turn, Holdfab 2 Participações Societárias Ltda. holds a 50% ownership interest in Leão Junior, hence the Company indirectly controls 18.2% of the latter.

 

·             During 2011, Sucos del Valle do Brasil Ltda. changed its name to Sistema de Alimentos de Bebidas do Brasil Ltda. and merged with Mais Industrias de Alimentos S.A. that same year. Rio de Janeiro Refrescos Ltda. held an interest of 6.16% in both companies, but after the corporate restructuring, basically to capitalize income, that share fell to 5.74%.

 

·             During the period ended December 31, 2011 and 2010, the Company has received dividends from its equity investee, Envases CMF S.A. in the amount of ThCh$2,061,957 and ThCh$1,379,837 respectively . During the year 2012 said Company has not distributed dividends, however, the minimum dividend established by IFRS has been recognized in the amount of ThCh$402,148.

 

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**NOTE 13 —  INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD (Continued)**

 

·             In accordance with the Special Shareholders’ Meeting of Envases CMF S.A., held during December 2011, a capital reduction was agreed in the amount of ThCh$2,300,000, of which the Company shall receive ThCh$1,150,000, which was paid during the month of January 2012.

 

·             In accordance with the Special Shareholders’ Meeting of our equity investee, Vital Jugos S.A., held April 10, 2012, a capital increase was agreed in the amount of ThCh$6,960,000, with 60% of the increase being paid on May 15, 2012 and the balance thereof will be paid during the course of the year. The Andina Company met that capital increase in the percentage of the outstanding ownership at that date of 57% contributing ThCh$2,380,320.

 

·             After the merger with Embotelladoras Coca-Cola Polar, identified in Note 1b) the Andina Company acquired control in Vital Jugos S.A., Vital Aguas S.A. and Envases Central as of October 1, 2012, since it now holds an ownership interest of 72.0%, 73.6% and 59.27% respectively, and the substantive participating rights of other shareholders that previously existed are no longer in effect.

 

·             In November of 2012 and exercising the faculties given by the Shareholders’ Agreements, Coca-Cola Embonor S.A., purchased at book value 7.1% ownership interest in Vital Aguas S.A. and 7.0% ownership interest in Vital Jugos S.A. The disbursements received for these transactions amounted to ThCh$2,112,582.

 

·             On August 30, 2012, Rio de Janeiro Refrescos Ltda. (“RJR”), a subsidiary of Embotelladora Andina S.A. in Brazil, on one part; and, on the other, Renosa Industria Brasileira de Bebidas S.A. have signed a promissory purchase agreement containing the conditions leading to the acquisition by RJR of 100% of the equity interest held by Renosa in Sorocaba Refrescos S.A. which is equivalent to 40% of the total shares of Sorocaba.  The promissory agreement should be fulfilled within a period of 180 days. The agreement was materialized during the month of October with a payment of 146.9 million reais.   The Company is still in the process of completing its equity method purchase price allocation for this transaction.   Specifically, it is in the process of finalizing amounts to be assigned to non-monetary assets at the investee level.

 

**13.3 Reconciliation of Income by Investment in Associates:**

 
| **Details**                                                                                                                                                                                  | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| ** **                                                                                                                                                                                   | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Equity in income of associates                                                                                                                                                               |       | 2,409,110      |       | 2,541,186      |       | 2,984,544      |       |
|                                                                                                                                                                                         |       |           |       |           |       |           |       |
| Non-realized earnings   in inventory acquired from associates and not sold at the end of period,   presented as a discount in the respective asset account (containers and/or   inventories) |       | (647,003       | )          | (600,294       | )          | (754,875       | )          |
| Amortization of gain   sale of property plant and equipment Envases CMF                                                                                                                      |       | 85,266         |       | 85,266         |       | 85,266         |       |
| Amortization of fair   value adjustments related to Vital acquisition                                                                                                                        |       | (77,475        | )          | **—**     | ** ** | **—**     | ** ** |
| **Income   Statement Balance**                                                                                                                                                               | ** ** | **1,769,898**  | ** ** | **2,026,158**  | ** ** | **2,314,935**  | ** ** |

 

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**NOTE 13 — INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD (Continued)**

 

**13.4****    ****Summary financial information of associates:**

 

The attached table presents summarized information regarding the Company ́s equity investees as of December 31, 2012:

 
| ** **                     | ** ** | **Envases CMF   S.A.** | ** ** | **Sorocaba********Refrescos   S.A.** | ** ** | **Kaik   Participacoes   Ltda.** | ** ** | **Sistema de   Alimentos de   Bebidas do   Brasil Ltda.** | ** ** | **Holdfab 2   Participacoes   Societarias   Ltda.** | ** ** |
|--------------------------------|------------|-----------------------------|------------|--------------------------------------|------------|----------------------------------|------------|-------------------------------------------------------------------------------|------------|----------------------------------------------------------|------------|
| ** **                     | ** ** | **ThCh$**                   | ** ** | **ThCh$**                            | ** ** | **ThCh$**                        | ** ** | **ThCh$**                                                                     | ** ** | **ThCh$**                                                | ** ** |
| Total assets                   |       | 58,188,207                  |       | 42,451,865                           |       | 10,359,341                       |       | 272,181,209                                                                   |       | 27,343,843                                               |       |
| Total liabilities              |       | 21,042,658                  |       | 22,140,900                           |       | 318                              |       | 105,150,047                                                                   |       | 522,262                                                  |       |
| Total revenue                  |       | 44,520,824                  |       | 5,908,245                            |       | —                           |       | 235,093,886                                                                   |       | —                                                   |       |
| Net income (loss) of associate |       | 2,680,985                   |       | 491,176                              |       | 543,050                          |       | 18,486,920                                                                    |       | (2,605,025                                               | )          |
|                           |       |                        |       |                                 |       |                             |       |                                                                          |       |                                                     |       |
| Reporting date                 |       | 12/31/2012                  |       | 11/30/2012                           |       | 11/30/2012                       |       | 11/30/2012                                                                    |       | 11/30/2012                                               |       |

 

**NOTE 14 —  INTANGIBLE ASSETS AND GOODWILL**

 

**14.1****          ****Intangible assets not considered goodwill**

 

Intangible assets not considered as goodwill as of the end of each period are detailed as follows:

 
| ** **          | ** ** | **December 31, 2012** | ** ** | **December 31, 2011** | ** ** |
|---------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **          | ** ** | **Gross**                       | ** ** | **Cumulative**                  | ** ** | **Net** | ** ** | **Gross** | ** ** | **Cumulative** | ** ** | **Net** | ** ** |
| **Description**     | ** ** | **Amount**                      | ** ** | **Amortization**                | ** ** | **Amount** | ** ** | **Amount** | ** ** | **Amortization** | ** ** | **Amount** | ** ** |
| ** **          | ** ** | **ThCh$**                       | ** ** | **ThCh$**                       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Water rights        |       | 497,998                         |       | (90,041                         | )          | 407,957 |   | 526,342 |   | (103,879 | ) | 422,463 |   |
| Distribution rights |       | 459,320,270                     |       | —                          |       | 459,320,270 |   | — |   | — |   | — |   |
| Software            |       | 13,597,796                      |       | (8,743,750                      | )          | 4,854,046 |   | 8,974,534 |   | (8,258,140 | ) | 716,394 |   |
| **Total**           | ** ** | **473,416,064**                 | ** ** | **(8,833,791**                  | **)**      | **464,582,273** | ** ** | **9,500,876** | ** ** | **(8,362,019** | **)** | **1,138,857** | ** ** |

 

F-63

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Table of Contents

 

**NOTE 14 —  INTANGIBLE ASSETS AND GOODWILL (Continued)**

 

The movement and balances of identifiable intangible assets are detailed as follows for the period January 1 to December 31, 2012, 2011 and 2010:

 
| ** **                    | ** ** | **December 31, 2012** | ** ** | **December 31, 2011** | ** ** | **December 31, 2010** | ** ** |
|-------------------------------|------------|---------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| ** **                    | ** ** | **Distribution**                | ** ** | **Water**                       | ** ** | ** **                      | ** ** | ** ** | ** ** | **Water** | ** ** | ** ** | ** ** | ** ** | ** ** | **Water** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Description**               | ** ** | **Rights**                      | ** ** | **rights**                      | ** ** | **Software**                    | ** ** | **Total** | ** ** | **rights** | ** ** | **Software** | ** ** | **Total** | ** ** | **rights** | ** ** | **Software** | ** ** | **Total** | ** ** |
| ** **                    | ** ** | **ThCh$**                       | ** ** | ** **                      | ** ** | **ThCh$**                       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Initial balance               |       | —                          |       | 422,463                         |       | 716,394                         |       | 1,138,857 |   | 428,626 |   | 936,969 |   | 1,365,595 |   | 426,902 |   | 1,690,431 |   | 2,117,333 |   |
| Additions                     |       | —                          |       | —                          |       | 3,506,266                       |       | 3,506,266 |   | — |   | 418,182 |   | 418,182 |   | 16,710 |   | 181,123 |   | 197,833 |   |
| Increase due to merger   (1)  |       | 459,393,920                     |       | —                          |       | 1,083,184                       |       | 460,477,104 |   | — |   | — |   | — |   | — |   | — |   | — |   |
| Amortization                  |       | —                          |       | (6,585                          | )          | (547,481                        | )          | (554,066 | ) | (7,207 | ) | (661,989 | ) | (669,196 | ) | (8,024 | ) | (907,477 | ) | (915,501 | ) |
| Other increases   (decreases) |       | (73,650                         | )          | (7,921                          | )          | 95,683                          |       | 14,112 |   | 1,044 |   | 23,232 |   | 24,276 |   | (6,962 | ) | (27,108 | ) | (34,070 | ) |
| **Final   balance**           | ** ** | **459,728,227**                 | ** ** | **407,957**                     | ** ** | **4,854,046**                   | ** ** | **464,582,273** | ** ** | **422,463** | ** ** | **716,394** | ** ** | **1,138,857** | ** ** | **428,626** | ** ** | **936,969** | ** ** | **1,365,595** | ** ** |

 

----

(1)         In accordance with what has been described in note 1b) corresponds to the rights to produce and distribute products under the Brand of Coca-Cola in the franchise territories maintained by Embotelladoras Coca-Cola Polar S.A. in Chile, Argentina and Paraguay.  Said distribution rights are not subject to amortization and are composed as follows:

 
| ** ** | ** ** | **M$**          | ** ** |
|------------|------------|-----------------|------------|
| Chile      |       | 300,305,727     |       |
| Paraguay   |       | 156,627,248     |       |
| Argentina  |       | 2,387,295       |       |
| **Total**  | ** ** | **459,320,270** | ** ** |

 

F-64

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Table of Contents

 

**NOTE 14 —  INTANGIBLE ASSETS AND GOODWILL (Continued)**

** **

**14.2****       ****Goodwill**

 

Movement in goodwill is detailed as follows:

 

**Year ended December 31, 2012**

 
| **Cash generating unit** | ** ** | **01.01.2012** | ** ** | **Additions   (1)** | ** ** | **Disposals or   impairments** | ** ** | **Foreign currency   translation difference —   functional currency   different from currency of   presentation** | ** ** | **12.31.2012** | ** ** |
|------------------------------------|------------|----------------|------------|---------------------|------------|-------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------|------------|
| ** **                         | ** ** | **ThCh$**      | ** ** | **ThCh$**           | ** ** | **ThCh$**                           | ** ** | **ThCh$**                                                                                                                                                 | ** ** | **ThCh$**      | ** ** |
| Chile operation                    |       | —         |       | 8,503,023           |       | —                              |       | —                                                                                                                                                    |       | 8,503,023      |       |
| Brazilian operation                |       | 41,697,004     |       | —              |       | —                              |       | (6,160,037                                                                                                                                                | )          | 35,536,967     |       |
| Argentine operation                |       | 15,855,174     |       | 1,041,633           |       | —                              |       | (3,059,468                                                                                                                                                | )          | 13,837,339     |       |
| Paraguayan operation               |       | —         |       | 6,915,412           |       | —                              |       | —                                                                                                                                                    |       | 6,915,412      |       |
| **Total**                          | ** ** | **57,552,178** | ** ** | **16,460,068**      | ** ** | **—**                          | ** ** | **(9,219,505**                                                                                                                                            | **)**      | **64,792,741** | ** ** |

 

----

(1)         As explained in note 1b), corresponds to goodwill generated in the fair value valuation of assets and liabilities stemming from the merger with Embotelladoras Coca-Cola Polar S.A.

 

**Year ended December 31, 2011**

 
| **Cash generating unit** | ** ** | **01.01.2011** | ** ** | **Additions** | ** ** | **Disposals or   impairments** | ** ** | **Foreign currency   translation difference —   functional currency   different from currency of   presentation** | ** ** | **12.31.2011** | ** ** |
|------------------------------------|------------|----------------|------------|---------------|------------|-------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------|------------|
| ** **                         | ** ** | **ThCh$**      | ** ** | **ThCh$**     | ** ** | **ThCh$**                           | ** ** | **ThCh$**                                                                                                                                                 | ** ** | **ThCh$**      | ** ** |
| Brazilian operation                |       | 42,298,955     |       | —        |       | —                              |       | (601,951                                                                                                                                                  | )          | 41,697,004     |       |
| Argentine operation                |       | 15,471,380     |       | —        |       | —                              |       | 383,794                                                                                                                                                   |       | 15,855,174     |       |
| **Total**                          | ** ** | **57,770,335** |       | —        | ** ** | **—**                          | ** ** | **(218,157**                                                                                                                                              | **)**      | **57,552,178** | ** ** |

 

**Year ended December 31, 2010**

 
| **Cash generating unit** | ** ** | **01.01.2010** | ** ** | **Additions** | ** ** | **Disposals or   impairments** | ** ** | **Foreign currency   translation difference —   functional currency   different from currency of   presentation** | ** ** | **12.31.2010** | ** ** |
|------------------------------------|------------|----------------|------------|---------------|------------|-------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------------|------------|
| ** **                         | ** ** | **ThCh$**      | ** ** | **ThCh$**     | ** ** | **ThCh$**                           | ** ** | **ThCh$**                                                                                                                                                 | ** ** | **ThCh$**      | ** ** |
| Brazilian operation                |       | 43,820,310     |       | —        |       | —                              |       | (1,521,355                                                                                                                                                | )          | 42,298,955     |       |
| Argentine operation                |       | 17,540,035     |       | —        |       | —                              |       | (2,068,655                                                                                                                                                | )          | 15,471,380     |       |
| **Total**                          | ** ** | **61,360,345** |       | —        | ** ** | **—**                          | ** ** | **(3,590,010**                                                                                                                                            | **)**      | **57,770,335** | ** ** |

 

F-65

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Table of Contents

 

**NOTE 15 —  OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES**

 

Liabilities are detailed as follows:

 
| **Current**                                  | ** ** | **12.31.2012**  | ** ** | **12.31.2011** | ** ** |
|----------------------------------------------|------------|-----------------|------------|----------------|------------|
| ** **                                   | ** ** | **ThCh$**       | ** ** | **ThCh$**      | ** ** |
| Bank loans                                   |       | 87,278,613      |       | 8,689,670      |       |
| Bonds payable                                |       | 4,376,648       |       | 3,426,922      |       |
| Deposits in guarantee                        |       | 13,851,410      |       | 10,813,092     |       |
| Forward contract   obligations (see note 20) |       | 394,652         |       | 163,718        |       |
| Leasing agreements                           |       | 346,696         |       | —         |       |
| **Total**                                    | ** ** | **106,248,019** | ** ** | **23,093,402** | ** ** |

 
| **Non-current**    | ** ** | **12.31.2012**  | ** ** | **12.31.2011** | ** ** |
|--------------------|------------|-----------------|------------|----------------|------------|
| ** **         | ** ** | **ThCh$**       | ** ** | **ThCh$**      | ** ** |
| Bank loans         |       | 46,353,758      |       | 5,081,986      |       |
| Bonds payable      |       | 126,356,040     |       | 69,559,417     |       |
| Leasing agreements |       | 1,170,397       |       | —         |       |
| **Total**          | ** ** | **173,880,195** | ** ** | **74,641,403** | ** ** |

 

F-66

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Table of Contents

 

**NOTE 15 —  OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)**

 

**15.1.1       Bank loans, current**

 
| ** **               | ** ** | ** **                              | ** ** | ** **  | ** ** | ** **       | ** ** | ** **                     | ** ** | ** **  | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | **Maturity**     | ** ** | **Total**                       | ** ** |
|--------------------------|------------|-----------------------------------------|------------|-------------|------------|------------------|------------|--------------------------------|------------|-------------|------------|----------------|------------|------------------|------------|------------|------------|------------|------------|------------------|------------|---------------------------------|------------|
| **Indebted Entity** | ** ** | **Creditor Entity**                | ** ** | ** **  | ** ** | **Amortization** | ** ** | **Effective**                  | ** ** | **Nominal** | ** ** | **Up to** | ** ** | **90 days** | ** ** | **At**     | ** ** | **At**     | ** ** |
| **Tax ID,**         | ** ** | **Name**                                | ** ** | **Country** | ** ** | **Tax ID,** | ** ** | **Name**                       | ** ** | **Country** | ** ** | **Currency**   | ** ** | **Year**         | ** ** | **Rate**   | ** ** | **Rate**   | ** ** | **90 days** | ** ** | **up to 1 year** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
| ** **               | ** ** | ** **                              | ** ** | ** **  | ** ** | ** **       | ** ** | ** **                     | ** ** | ** **  | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** | ** ** | ** ** | ** **       | ** ** | ** **                      | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Foreign                  |       | Embotelladora del   Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco Nación Bicentenario |       | Argentina   |       | Argentine Peso |       | Monthly          |       | 14.80      | %          | 9.90       | %          | 243,782          |       | 705,763                         |       | 949,545 |   | 739,966 |   |
| Foreign                  |       | Embotelladora del   Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco Santa Fe                 |       | Argentina   |       | Argentine Peso |       | Monthly          |       | 15.00      | %          | 15.00      | %          | —           |       | 96,370                          |       | 96,370 |   | — |   |
| Foreign                  |       | Embotelladora del   Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco Galicia                  |       | Argentina   |       | Argentine Peso |       | Monthly          |       | 15.00      | %          | 15.00      | %          | —           |       | 27,447                          |       | 27,447 |   | — |   |
| Foreign                  |       | Embotelladora del   Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco Santa Fe                 |       | Argentina   |       | Argentine Peso |       | At maturity      |       | 12.85      | %          | 12.85      | %          | 6,500,755        |       | —                          |       | 6,500,755 |   | — |   |
| Foreign                  |       | Embotelladora del   Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco Galicia                  |       | Argentina   |       | Argentine Peso |       | At maturity      |       | 14.50      | %          | 14.50      | %          | 645,870          |       | —                          |       | 645,870 |   | — |   |
| Foreign                  |       | Embotelladora del   Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco Nación              |       | Argentina   |       | Argentine Peso |       | Monthly          |       | 18.85      | %          | 18.85      | %          | —           |       | —                          |       | — |   | 5,537,442 |   |
| Foreign                  |       | Embotelladora del   Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco Patagonia                |       | Argentina   |       | Argentine Peso |       | At maturity      |       | 12.50      | %          | 12.50      | %          | 3,896,499        |       | —                          |       | 3,896,499 |   | — |   |
| Foreign                  |       | Embotelladora del   Atlántico S.A. |       | Argentina   |       | Foreign          |       | Standard Bank                  |       | Argentina   |       | Argentine Peso |       | At maturity      |       | 15.50      | %          | 15.50      | %          | 913              |       | —                          |       | 913 |   | — |   |
| Foreign                  |       | Rio de Janeiro Refrescos   Ltda.        |       | Brasil      |       | Foreign          |       | Banco Votorantim               |       | Brasil      |       | Brazilian Real |       | Monthly          |       | 9.40       | %          | 9.40       | %          | 134,864          |       | —                          |       | 134,864 |   | 187,334 |   |
| Foreign                  |       | Rio de Janeiro   Refrescos Ltda.        |       | Brasil      |       | Foreign          |       | Banco Itaú                |       | Brasil      |       | Brazilian Real |       | Monthly          |       | 6.63       | %          | 6.63       | %          | 941,997          |       | —                          |       | 941,997 |   | — |   |
| Foreign                  |       | Rio de Janeiro   Refrescos Ltda.        |       | Brasil      |       | Foreign          |       | Banco Santander                |       | Brasil      |       | Brazilian Real |       | Monthly          |       | 7.15       | %          | 7.15       | %          | 328,872          |       | —                          |       | 328,872 |   | — |   |
| Foreign                  |       | Rio de Janeiro   Refrescos Ltda.        |       | Brasil      |       | Foreign          |       | Banco Santander                |       | Brasil      |       | Brazilian Real |       | Monthly          |       | 2.99       | %          | 3.52       | %          | 525,091          |       | —                          |       | 525,091 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.84       | %          | 6.84       | %          | —           |       | 2,828,742                       |       | 2,828,742 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Chilean pesos  |       | Semiannually     |       | 5.76       | %          | 5.76       | %          | —           |       | 671,827                         |       | 671,827 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.60       | %          | 6.60       | %          | —           |       | 9,171,557                       |       | 9,171,557 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.82       | %          | 6.82       | %          | —           |       | 2,323,515                       |       | 2,323,515 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.84       | %          | 6.84       | %          | —           |       | 2,695,242                       |       | 2,695,242 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.39       | %          | 6.39       | %          | 32,069           |       | —                          |       | 32,069 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Dollars        |       | At maturity      |       | 3.36       | %          | 3.36       | %          | —           |       | 1,452,145                       |       | 1,452,145 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.036.000-k     |       | Banco Santander                |       | Chile       |       | Dollars        |       | At maturity      |       | 2.20       | %          | 2.20       | %          | 32,661           |       | 4,799,600                       |       | 4,832,261 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.036.000-k     |       | Banco Santander                |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.80       | %          | 6.80       | %          | —           |       | 7,018,620                       |       | 7,018,620 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.49       | %          | 6.49       | %          | 384,618          |       | —                          |       | 384,618 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.032.000-8     |       | Banco BBVA                     |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.25       | %          | 6.25       | %          | 7,521,185        |       | —                          |       | 7,521,185 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.004.000-5     |       | Banco Chile                    |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.83       | %          | 6.83       | %          | —           |       | 10,335,540                      |       | 10,335,540 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.951.000-4     |       | Banco HSBC                     |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.80       | %          | 6.80       | %          | —           |       | 7,562,333                       |       | 7,562,333 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.036.000-k     |       | Banco Santander                |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.85       | %          | 6.85       | %          | —           |       | 10,694,653                      |       | 10,694,653 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.036.000-k     |       | Banco Santander                |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 4.30       | %          | 4.30       | %          | —           |       | 5,031,567                       |       | 5,031,567 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.036.000-k     |       | Banco BBVA                     |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 6.25       | %          | 6.25       | %          | —           |       | —                          |       | — |   | 1,827,000 |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.               |       | Chile       |       | 97.036.000-k     |       | Banco BBVA                     |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 8.88       | %          | 8.88       | %          | —           |       | —                          |       | — |   | 397,928 |   |
| 96.705.990-0             |       | Envases Central S.A.                    |       | Chile       |       | 97.080.000-K     |       | Banco Bice                     |       | Chile       |       | Chilean pesos  |       | At maturity      |       | 4.680      | %          | 4.68       | %          | —           |       | 674,516                         |       | 674,516 |   | — |   |
|                     |       |                                    |       |        |       |             |       |                           |       |        |       |           |       |             |       |       |       |       | ** ** | ** **       | ** ** | **Total**                       | ** ** | **87,278,613** | ** ** | **8,689,670** | ** ** |

 

F-67

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Table of Contents

 

**NOTE 15 —  OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)**

 

**15.1.2  Bank loans, non current**

 
| ** **               | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **       | ** ** | ** **                              | ** ** | ** **  | ** ** | ** **      | ** ** | ** **       | ** ** | ** **      | ** ** | ** ** | ** ** | **Maturity**                     | ** ** | **T****otal**                    | ** ** |
|--------------------------|------------|---------------------------------------|------------|-------------|------------|------------------|------------|-----------------------------------------|------------|-------------|------------|-----------------|------------|------------------|------------|-----------------|------------|------------|------------|----------------------------------|------------|----------------------------------|------------|
| **Indebted Entity** | ** ** | **Creditor Entity**              | ** ** | ** **  | ** ** | **Amortization** | ** ** | **Effective**                           | ** ** | **Nominal** | ** ** | **1 year** | ** ** | **3 years** | ** ** | **More   than** | ** ** | **at**     | ** ** | **at**                           | ** ** |
| **Tax ID,**         | ** ** | **Name**                              | ** ** | **Country** | ** ** | **Tax ID,** | ** ** | **Name**                                | ** ** | **Country** | ** ** | **Currency**    | ** ** | **Year**         | ** ** | **Rate**        | ** ** | **Rate**   | ** ** | **up to 3 years** | ** ** | **up to 5 years** | ** ** | **5 years** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
| ** **               | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **       | ** ** | ** **                              | ** ** | ** **  | ** ** | ** **      | ** ** | ** **       | ** ** | ** **      | ** ** | ** ** | ** ** | **ThCh$**                        | ** ** | **ThCh$**                        | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Foreign                  |       | Embotelladora del Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco  Nación Bicentenario(1) |       | Argentina   |       | Argentine Peso  |       | At maturity      |       | 14.80           | %          | 9.90       | %          | 2,044,208                        |       | 851,753                          |       | — |   | 2,895,961 |   | 4,684,408 |   |
| Foreign                  |       | Embotelladora del Atlántico S.A. |       | Argentina   |       | Foreign          |       | Nuevo Banco Santa Fe                    |       | Argentina   |       | Argentine Peso  |       | At maturity      |       | 15.00           | %          | 15.00      | %          | 674,591                          |       | —                           |       | — |   | 674,591 |   | — |   |
| Foreign                  |       | Embotelladora del Atlántico S.A. |       | Argentina   |       | Foreign          |       | Banco Galicia                           |       | Argentina   |       | Argentine Peso  |       | At maturity      |       | 15.00           | %          | 15.00      | %          | 192,130                          |       | —                           |       | — |   | 192,130 |   | — |   |
| Foreign                  |       | Rio de Janeiro Refrescos Ltda.        |       | Brasil      |       | Foreign          |       | Banco Votorantim                        |       | Brasil      |       | Brazilian Real  |       | Monthly          |       | 9.40            | %          | 9.40       | %          | 202,358                          |       | —                           |       | — |   | 202,358 |   | 397,578 |   |
| Foreign                  |       | Rio de Janeiro Refrescos Ltda.        |       | Brasil      |       | Foreign          |       | Banco Itaú                         |       | Brasil      |       | Brazilian Real  |       | Monthly          |       | 6.63            | %          | 6.63       | %          | 3,629,576                        |       | 440,001                          |       | — |   | 4,069,577 |   | — |   |
| Foreign                  |       | Rio de Janeiro Refrescos Ltda.        |       | Brasil      |       | Foreign          |       | Banco Santander                         |       | Brasil      |       | Brazilian Real  |       | Monthly          |       | 7.15            | %          | 7.15       | %          | 1,005,420                        |       | 128,612                          |       | — |   | 1,134,032 |   | — |   |
| Foreign                  |       | Rio de Janeiro Refrescos Ltda.        |       | Brasil      |       | Foreign          |       | Banco Itaú                         |       | Brasil      |       | Brazilian Real  |       | Monthly          |       | 2.99            | %          | 3.52       | %          | 17,028,187                       |       | 17,028,187                       |       | — |   | 34,056,374 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.             |       | Chile       |       | 97.004.000-5     |       | Banco Chile                             |       | Chile       |       | Chilean pesos   |       | At maturity      |       | 5.76            | %          | 5.76       | %          | 660,000                          |       | —                           |       | — |   | 660,000 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.             |       | Chile       |       | 97.004.000-5     |       | Banco Chile                             |       | Chile       |       | Chilean pesos   |       | At maturity      |       | 6.39            | %          | 6.39       | %          | 1,900,000                        |       | —                           |       | — |   | 1,900,000 |   | — |   |
| 91.144.000-8             |       | Embotelladora Andina S.A.             |       | Chile       |       | 97.080.000-K     |       | Banco BICE                              |       | Chile       |       | Chilean pesos   |       | At maturity      |       | 4.29            | %          | 4.29       | %          | 568,735                          |       | —                           |       | — |   | 568,735 |   | — |   |
| ** **               | ** ** | ** **                            | ** ** | ** **  | ** ** | ** **       |       |                                    | ** ** | ** **  | ** ** | ** **      | ** ** | ** **       | ** ** | ** **      | ** ** | ** ** | ** ** | ** **                       | ** ** | ** **                       | ** ** | **Total** | ** ** | **46,353,758** | ** ** | **5,081,986** | ** ** |

 

----

(1)              The Bicentennial loan granted at a prime rate by Banco de la Nacion Argentina to Embotelladora del Atlántico S.A. is a benefit from the Argentine government to encourage investment projects.  Embotelladora del Atlántico S.A. registered investment projects and received this loan at a prime rate of 9.9% annually.  The loan has been recorded in the financial statements at the fair value, i.e. using the market rate of 14.8% per annum.  The interest differential of ThCh$ 382,028  is recorded as a component of the fixed asset balance and depreciated over its estimated useful life.

 

F-68

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Table of Contents

 

**NOTE 15 —  OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)**

 

**15.2.1     Bonds payable**

 
| ** **                                                     | ** ** | **Current**    | ** ** | **Non-Current** | ** ** | **Total**       | ** ** |
|----------------------------------------------------------------|------------|----------------|------------|-----------------|------------|-----------------|------------|
| **Composition of bonds payable**                | ** ** | **12.31.2012** | ** ** | **12.31.2011**  | ** ** | **12.31.2012**  | ** ** | **12.31.2011** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
| ** **                                                     | ** ** | **ThCh$**      | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Bonds (face rate   interest)                                   |       | 4,728,582      |       | 3,674,408       |       | 127,169,976     |       | 71,877,478 |   | 131,898,558 |   | 75,551,886 |   |
| Expenses of bond issuance and discounts on   placement         |       | (351,934       | )          | (247,486        | )          | (813,936        | )          | (2,318,061 | ) | (1,165,870 | ) | (2,565,547 | ) |
| **Net   balance presented in statement of financial position** | ** ** | **4,376,648**  | ** ** | **3,426,922**   | ** ** | **126,356,040** | ** ** | **69,559,417** | ** ** | **130,732,688** | ** ** | **72,986,339** | ** ** |

 

**15.2.2     Current and non-current balances**

 

The bonds correspond to Series A, B and C UF bonds issued on the Chilean market. These instruments are further described below :

 
| **Bond registration or**    | ** ** | ** ** | ** ** | ** ** | ** ** | ** **       | ** ** | ** **   | ** ** | ** **   | ** ** | ** **     | ** ** | **Next**            | ** ** | ** **         | ** ** | ** **     | ** ** |
|---------------------------------------|------------|------------|------------|------------|------------|------------------|------------|--------------|------------|--------------|------------|----------------|------------|---------------------|------------|--------------------|------------|----------------|------------|
| **identification number**        | ** ** | ** ** | ** ** | **Face**   | ** ** | **Unit of** | ** ** | **Interest** | ** ** | **Final**    | ** ** | **Interest**   | ** ** | **amortization**    | ** ** | **Par value** | ** ** |
| **Bond registration or**    | ** ** | **Series** | ** ** | **amount** | ** ** | **adjustment**   | ** ** | **rate**     | ** ** | **maturity** | ** ** | **payment**    | ** ** | **of capital** | ** ** | **12.31.2012**     | ** ** | **12.31.2011** | ** ** |
| ** **                            | ** ** | ** ** | ** ** | ** ** | ** ** | ** **       | ** ** | ** **   | ** ** | ** **   | ** ** | ** **     | ** ** | ** **          | ** ** | **ThCh$**          | ** ** | **ThCh$**      | ** ** |
| **Bonds,   current portion**          |       |       |       |       |       |             |       |         |       |         |       |           |       |                |       |               |       |           |       |
| SVS Registration   No, 640, 8/23/2010 |       | A          |       | 1,000,000  |       | UF               |       | 3.0          | %          | 08.15.2017   |       | Semi- annually |       | 02/15/2014          |       | 255,057            |       | —         |       |
| SVS Registration   No, 254, 6/13/2001 |       | B          |       | 3,298,646  |       | UF               |       | 6.5          | %          | 06.01.2026   |       | Semi- annually |       | 12/01/2013          |       | 3,964,645          |       | 3,674,408      |       |
| SVS Registration   No, 641, 8/23/2010 |       | C          |       | 1,500,000  |       | UF               |       | 4.0          | %          | 08.15.2031   |       | Semi- annually |       | 02/15/2021          |       | 508,880            |       | —         |       |
| **Total current portion**             | ** ** | ** ** | ** ** | ** ** | ** ** | ** **       | ** ** | ** **   | ** ** | ** **   | ** ** | ** **     | ** ** | ** **          | ** ** | **4,728,582**      | ** ** | **3,674,408**  | ** ** |
|                                  |       |       |       |       |       |             |       |         |       |         |       |           |       |                |       |               |       |           |       |
| **Bonds non-current portion**         |       |       |       |       |       |             |       |         |       |         |       |           |       |                |       |               |       |           |       |
| SVS Registration   No, 640, 8/23/2010 |       | A          |       | 1,000,000  |       | UF               |       | 3.0          | %          | 08.15.2017   |       | Semi- annually |       | 02/15/2014          |       | 22,840,750         |       | —         |       |
| SVS Registration   No, 254, 6/13/2001 |       | B          |       | 3,298,646  |       | UF               |       | 6.5          | %          | 06.01.2026   |       | Semi- annually |       | 12/01/2013          |       | 70,068,101         |       | 71,877,478     |       |
| SVS Registration   No, 641, 8/23/2010 |       | C          |       | 1,500,000  |       | UF               |       | 4.0          | %          | 08.15.2031   |       | Semi- annually |       | 02/15/2021          |       | 34,261,125         |       | —         |       |
| **Total non-current portion**         | ** ** | ** ** | ** ** | ** ** | ** ** | ** **       | ** ** | ** **   | ** ** | ** **   | ** ** | ** **     | ** ** | ** **          | ** ** | **127,169,976**    | ** ** | **71,877,478** | ** ** |

 

Accrued interest included in the current portion of bonds totaled ThCh$1,156,542 and ThCh$400,661 at December 31, 2012 and 2011, respectively

 

F-69

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Table of Contents

 

**NOTE 15 —  OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)**

 

**15.2.3****       ****Non-current maturities**

** **
| ** **                        | ** ** | ** ** | ** ** | ** **                     | ** ** | ** **      | ** ** | ** **     | ** ** | ** **     | ** ** | ** **     | ** ** | **Total**       | ** ** |
|-----------------------------------|------------|------------|------------|--------------------------------|------------|-----------------|------------|----------------|------------|----------------|------------|----------------|------------|-----------------|------------|
| ** **                        | ** ** | ** ** | ** ** | **Year of maturity** | ** ** | **non-current** | ** ** |
| ** **                        | ** ** | **Series** | ** ** | **2014**                       | ** ** | **2015**        | ** ** | **2016**       | ** ** | **2017**       | ** ** | **After**      | ** ** | **12.31.2012**  | ** ** |
| ** **                        | ** ** | ** ** | ** ** | **ThCh$**                      | ** ** | **ThCh$**       | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**       | ** ** |
| SVS Registration 640,   8/23/2010 |       | A          |       | 5,710,188                      |       | 5,710,188       |       | 5,710,188      |       | 5,710,186      |       | —         |       | 22,840,750      |       |
| SVS Registration 254, 6/13/2001   |       | B          |       | 3,804,223                      |       | 4,051,500       |       | 4,314,846      |       | 4,595,310      |       | 53,302,222     |       | 70,068,101      |       |
| SVS Registration   641,08/23/2010 |       | C          |       | —                         |       | —          |       | —         |       | —         |       | 34,261,125     |       | 34,261,125      |       |
| **Total**                         |       |       | ** ** | **9,514,411**                  | ** ** | **9,761,688**   | ** ** | **10,025,034** | ** ** | **10,305,496** | ** ** | **87,563,347** | ** ** | **127,169,976** | ** ** |

 

**15.2.4****       ****Restrictions**

 

The following restrictions apply to the issuance and placement of the Company’s Series B bonds on the Chilean market in 2001, as well as Series A and C bonds, for a total of UF 6,200,000. Of that amount, UF 5,798,646.34 is outstanding:

 

·                                Embotelladora Andina S.A. must maintain a debt level in which consolidated financial liabilities do not exceed 1.20 times the consolidated equity in the case of Series B bonds. As defined in the debt agreements, consolidated financial liabilities will be considered to be current interest-accruing liabilities, namely: (i) Other financial liabilities, plus (ii) Other non-current financial liabilities. Total equity plus non-controlling interests will be considered consolidated Equity.

 

·                                For Series A and C bonds, Embotelladora Andina S.A. must maintain a net financial indebtedness that does not exceed 1.5 times in its quarterly financial statements, measured against its consolidated financial statements.  For these effects, financial indebtedness level shall be defined as the ratio between net financial debt and total equity of the issuer (equity attributable to controlling shareholders plus non controlling interest). On the other hand, net financial debt is the difference between financial debt and cash balance of the issuer.

 

·                                Consolidated assets must be kept free of any pledge, mortgage or lien for an amount at least equal to 1.30 times the consolidated unsecured current liabilities of the issuer.

 
| **As of December 31, 2012 the amounts included in this restriction are the following: ** | ** ** | **ThCh$**     | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------|------------|
| Consolidated Assets free from pledges, mortgages and other taxes:                                                                                              |       | 1,521,286,596 |       |
| Non-guaranteed outstanding liabilities                                                                                                                         |       | 280,128,213   |       |

 

Based on these figures Consolidated Assets free from pledges, mortgages and other taxes are equal to 5.4 times of non consolidated outstanding liabilities.

 

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**NOTE 15 —  OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)**

 

·                                For Series B bonds the franchise of The Coca-Cola Company in Chile, called Metropolitan Region, must be maintained and in no way forfeited, sold, assigned or transferred to a third party. This franchise is for the elaboration, production, sale and distribution of Coca-Cola products and brands according to the bottlers’ agreement or periodically renewable licenses.

 

·                                For Series B bonds, the territory now under franchise to the Company by The Coca-Cola Company in Argentina or Brazil, which is used for the preparation, production, sale and distribution of Coca-Cola products and brands, must not be forfeited, sold, assigned or transferred to a third party, provided such territory represents more than 40% of the adjusted consolidated operating flow of the Company.

 

·                                For A and C lines, not invest in instruments issued by related parties, nor engage in other activities with these parties that are not related to their general purpose, in conditions that are less favorable to the Issuer than those existing in the market.

 

·                                For A and C lines, maintain in quarterly financial statement, a Net Financial Hedging higher than 3 must be maintained.  Net Financial Hedging shall be the ratio between EBITDA of the issuer for the last 12 months and the net financial expenses (financial income less financial expenses) of the issuer for the last 12 months. However, this restriction will be deemed to be not in compliance when the mentioned net financial hedging level is lower than the lever before mentioned for two consecutive quarters.

 

The Company was in compliance with all financial covenants at December 31, 2012 and 2011.

 

**15.2.5****       ****Repurchased bond**

 

In addition to UF bonds, the Company holds bonds issued by itself that it has repurchased in full through companies that are integrated in the consolidation:

 

Through its subsidiaries, Abisa Corp S.A. (formerly Pacific Sterling), Embotelladora Andina S.A. repurchased its Yankee Bonds issued on the U.S. Market during the years 2000, 2001, 2002, 2007 and 2008. The entire placement amounted to US$350 million, of which US$200 million are outstanding and are presented after deducting the long-term liability from the other financial liabilities item.

 

Rio de Janeiro Refrescos Ltda. holds a liability corresponding to a US$75 million bond issue expiring in December 2020, with semi-annual interest payments. At December 31, 2012 and December 31, 2011, those bonds were held in full by Abisa Corp S.A., (formerly Pacific Sterling). Consequently, the assets and liabilities relating to that transaction have been eliminated from these consolidated financial statements. Furthermore, that transaction has been treated as an investment by the Company in the Brazilian subsidiary, so the effects of foreign exchange differences between the dollar and the functional currency of each of the entities have been charged to other comprehensive income.

 

**15.2.6****       ****Fair value of financial liabilities**

 

The fair value of financial liabilities is similar to its book value, except for the bonds outstanding, which had a fair value of $176.4 million and $89.5 million as of December 31. 2012 and 2011, respectively.

 

**15.3.1****       ****Forward contract obligations**

 

Please see the explanation in Note 20.

 

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**NOTE 15 —  OTHER CURRENT AND NON-CURRENT FINANCIAL LIABILITIES (Continued)**

 

**15.4.1       Current liabilities for leasing agreements**

 
| ** **                            | ** ** | ** **               | ** ** | ** **       | ** ** | ** **       | ** ** | ** **    | ** ** | ** **     | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** | **Maturity**     | ** ** | **Total**       | ** ** |
|---------------------------------------|------------|--------------------------|------------|------------------|------------|------------------|------------|---------------|------------|----------------|------------|----------------|------------|------------------|------------|------------|------------|------------------|------------|-----------------|------------|
| **Indebted Entity**              | ** ** | **Creditor Entity** | ** ** | ** **       | ** ** | **Amortization** | ** ** | **Effective** | ** ** | **Nominal**    | ** ** | **Up to** | ** ** | **90 days** | ** ** | **at**     | ** ** | **at**           | ** ** |
| **Name**                              | ** ** | **Country**              | ** ** | **Tax ID,** | ** ** | **Year**         | ** ** | **Country**   | ** ** | **Currency**   | ** ** | **Year**       | ** ** | **Rate**         | ** ** | **Rate**   | ** ** | **90 days** | ** ** | **1 year** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
| ** **                            | ** ** | ** **               | ** ** | ** **       | ** ** | ** **       | ** ** | ** **    | ** ** | ** **     | ** ** | ** **     | ** ** | ** **       | ** ** | ** ** | ** ** | **ThCh$**        | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Rio de Janeiro Refrescos Ltda.        |       | Brasil                   |       | Foreign          |       | Banco Itaú  |       | Brasil        |       | Brazilian Real |       | Monthly        |       | 10.21            | %          | 10.22      | %          | 63,469           |       | 191,653         |       | 255,122 |   | — |   |
| Rio de Janeiro Refrescos Ltda.        |       | Brasil                   |       | Foreign          |       | Banco Alfa       |       | Brasil        |       | Brazilian Real |       | Monthly        |       | 9.65             | %          | 9.47       | %          | 6,866            |       | 38,627          |       | 45,493 |   | — |   |
| Embotelladora del Atlántico S.A. |       | Argentina                |       | Foreign          |       | Tetra Pak SRL    |       | Argentina     |       | Dollars        |       | Monthly        |       | 12.00            | %          | 12.00      | %          | 11,009           |       | 35,072          |       | 46,081 |   | — |   |
|                                  |       |                     |       |             |       |             |       |          |       |           |       |           |       |             |       |       |       |             |       |            |       |   |   |   |   |
|                                  |       |                     |       |             |       |             |       |          |       |           |       |           |       |             |       |       |       |             | ** ** | **Total**       | ** ** | **346,696** |   | — |   |

** **

**15.4.2  Noncurrent liabilities for leasing agreements**

** **
| ** **                            | ** ** | ** **               | ** ** | ** **       | ** ** | ** **       | ** ** | ** **    | ** ** | ** **     | ** ** | ** **                    | ** ** | ** **                    | ** ** | ** **              | ** ** | **Maturity**     | ** ** | **T****otal**    | ** ** |
|---------------------------------------|------------|--------------------------|------------|------------------|------------|------------------|------------|---------------|------------|----------------|------------|-------------------------------|------------|-------------------------------|------------|-------------------------|------------|------------------|------------|------------------|------------|
| **Indebted Entity**              | ** ** | **Creditor Entity** | ** ** | ** **       | ** ** | **Amortization** | ** ** | **Effective** | ** ** | **Nominal**    | ** ** | **1 years to   up** | ** ** | **3 years to   up** | ** ** | **More   than de** | ** ** | **at**           | ** ** | **at**           | ** ** |
| **Name**                              | ** ** | **Country**              | ** ** | **Tax ID,** | ** ** | **Year**         | ** ** | **Year**      | ** ** | **Currency**   | ** ** | **Year**                      | ** ** | **Rate**                      | ** ** | **Rate**                | ** ** | **3 years** | ** ** | **5 years** | ** ** | **5 years** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
| ** **                            | ** ** | ** **               | ** ** | ** **       | ** ** | ** **       | ** ** | ** **    | ** ** | ** **     | ** ** | ** **                    | ** ** | ** **                    | ** ** | ** **              | ** ** | **ThCh$**        | ** ** | **ThCh$**        | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Rio de Janeiro Refrescos Ltda.        |       | Brasil                   |       | Foreign          |       | Banco Itaú  |       | Brasil        |       | Brazilian Real |       | Monthly                       |       | 10.21                         | %          | 10.22                   | %          | 599,593          |       | —           |       | — |   | 599,593 |   | — |   |
| Rio de Janeiro Refrescos Ltda.        |       | Brasil                   |       | Foreign          |       | Banco Alfa       |       | Brasil        |       | Brazilian Real |       | Monthly                       |       | 9.65                          | %          | 9.47                    | %          | 63,561           |       | —           |       | — |   | 63,561 |   | — |   |
| Embotelladora del Atlántico S.A. |       | Argentina                |       | Foreign          |       | Tetra Pak SRL    |       | Argentina     |       | Dollars        |       | Monthly                       |       | 12.00                         | %          | 12.00                   | %          | 171,758          |       | 335,485          |       | — |   | 507,243 |   | — |   |
|                                  |       |                     |       |             |       |             |       |          |       |           |       |                          |       |                          |       |                    |       |             |       |             |       |   |   |   |   |   |   |
| ** **                            | ** ** | ** **               | ** ** | ** **       |       |             | ** ** | ** **    | ** ** | ** **     | ** ** | ** **                    | ** ** | ** **                    | ** ** | ** **              | ** ** | ** **       | ** ** | ** **       | ** ** | **Total** | ** ** | **1,170,397** |   | — |   |

 

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**NOTE 16 —   TRADE AND OTHER CURRENT ACCOUNTS PAYABLE**

 

a)                 Trade and other current accounts payable are detailed as follows:

** **
| **Item**               | ** ** | **12.31.2012**  | ** ** | **12.31.2011**  | ** ** |
|------------------------|------------|-----------------|------------|-----------------|------------|
| ** **             | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
| Trade accounts payable |       | 159,211,448     |       | 112,963,542     |       |
| Withholdings           |       | 23,529,819      |       | 14,977,133      |       |
| Others                 |       | 1,576,506       |       | 97              |       |
| **Total**              | ** ** | **184,317,773** | ** ** | **127,940,772** | ** ** |

 

b)                 The Company maintains commercial lease agreements for forklifts, vehicles, properties and machinery.  These lease agreements have an average duration of one to five years excluding the renewal option of the agreements. No restrictions exist regarding the lessee by virtue of these lease agreements.

 

Future payments of the Company ́s operating leases are the following:

 
| ** **                                                | ** ** | **12.31.2012** | ** ** |
|-----------------------------------------------------------|------------|----------------|------------|
| ** **                                                | ** ** | **ThCh$**      | ** ** |
| Maturity within one year term                             |       | 4,322,954      |       |
| Maturity after a term of one year to less than five years |       | 2,301,651      |       |
| **Total**                                                 | ** ** | **6,624,605**  | ** ** |

 

Total expenses related to operating leases maintained by the Company as of December 31, 2012 and 2011 amounted to ThCh$7,467,380 and ThCh$7,319,745, respectively.

 

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**NOTE 17 — ****CURRENT AND NON-CURRENT PROVISIONS**

 

**17.1****          ****Balances**

 

The balances of provisions recorded by the Company at December 31, 2012 and December 31, 2011 are detailed as follows:

 
| **Description** | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|-----------------|------------|----------------|------------|----------------|------------|
| ** **      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Litigation (1)  |       | 6,821,165      |       | 7,970,835      |       |
| Others          |       | 195,103        |       | —         |       |
| **Total**       | ** ** | **7,016,268**  | ** ** | **7,970,835**  | ** ** |
|            |       |           |       |           |       |
| Current         |       | 593,457        |       | 87,966         |       |
| Non-current     |       | 6,422,811      |       | 7,882,869      |       |
| **Total**       | ** ** | **7,016,268**  | ** ** | **7,970,835**  | ** ** |

 

----

(1)             These provisions correspond mainly to provisions for probable losses due to fiscal, labor and trade contingencies based on the opinion of management after consultation with its legal counsel.

 

**17.2****          ****Movements**

 

Movement in the main items included under provisions is detailed as follows:

 
| ** **                                            | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
|-------------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| ** ****Description**                             | ** ** | **Litigation** | ** ** | **Others**     | ** ** | **Total**      | ** ** | **Litigation** | ** ** | **Others** | ** ** | **Total** | ** ** | **Litigation** | ** ** | **Others** | ** ** | **Total** | ** ** |
| ** **                                            | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| **Initial Balance at   January 1**               | ** ** | **7,970,835**  |       | —         | ** ** | **7,970,835**  | ** ** | **4,328,367** | ** ** | **—** | ** ** | **4,328,367** | ** ** | **4,461,153** | ** ** | **34,833** | ** ** | **4,495,986** | ** ** |
| Increase due to mergen                                |       | 325,174        |       | 136,826        |       | 462,000        |       | — |   | — |   | — |   | — |   | — |   | — |   |
| Additional provisions                                 |       | 65,745         |       | 62,372         |       | 128,117        |       | — |   | — |   | — |   | 875,703 |   | — |   | 875,703 |   |
| Increase (decrease) in   existingprovisions           |       | 851,150        |       | —         |       | 851,150        |       | 4,370,851 |   | — |   | 4,370,851 |   | 381,875 |   | — |   | 381,875 |   |
| Payments                                              |       | (1,168,725     | )          | —         |       | (1,168,725     | )          | (702,552 | ) | — |   | (702,552 | ) | (1,146,574 | ) | (34,833 | ) | (1,181,407 | ) |
|                                                  |       |           |       |           |       |           |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Increase (decrease)   foreignexchange rate difference |       | (1,223,014     | )          | (4,095         | )          | (1,227,109     | )          | (25,831 | ) | — |   | (25,831 | ) | (243,790 | ) | — |   | (243,790 | ) |
| **Ending Balance**                                    | ** ** | **6,821,165**  | ** ** | **195,103**    | ** ** | **7,016,268**  | ** ** | **7,970,835** |   | — | ** ** | **7,970,835** | ** ** | **4,328,367** |   | — | ** ** | **4,328,367** | ** ** |

 

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**NOTE 18 —   OTHER CURRENT AND NON-CURRENT NON-FINANCIAL LIABILITIES**

 

Other current and non-current liabilities at each year end are detailed as follows:

 
| **Description**                      | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** |
|--------------------------------------|------------|----------------|------------|----------------|------------|
| ** **                           | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Minimum dividend liability - 30% (1) | ** ** | **—**     |       | 8,766,572      |       |
| Dividend payable                     |       | 99,427         |       | 6,876,934      |       |
| Employee remuneration payable        |       | 8,240,460      |       | 6,354,816      |       |
| Accrued vacations                    |       | 11,392,231     |       | 7,723,738      |       |
| Other                                |       | 813,034        |       | 892,423        |       |
| **Total**                            | ** ** | **20,545,152** | ** ** | **30,614,483** | ** ** |
|                                 |       |           |       |           |       |
| Current                              |       | 20,369,549     |       | 30,341,479     |       |
| Non-current                          |       | 175,603        |       | 273,004        |       |
| **Total**                            | ** ** | **20,545,152** | ** ** | **30,614,483** | ** ** |

 

----

(1)         During the year 2012, there was no minimum dividend recognized because the interim dividends distributed during October and December 2012, exceed 30% of net income for the period.

 

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**NOTE 19 —   EQUITY**

 

As a result of the merger agreement with Embotelladoras Coca-Cola Polar S.A described in note 1b), during 2012, 93,152,097 Series A shares and 93,152,097 Series B shares were issued and exchanged for 100% of the outstanding shares of Embotelladoras Coca-Cola Polar S.A.  The value in legal terms of this new issuance amounted to ThCh$39,867,121.

 

**19.1****                      ****Paid-in Capital**

 

The paid-in capital of the Company totaled ThCh$270,759,299 as of December 31, 2012, divided into 946,578,736 Series A and B shares. The distribution and classification of these is detailed as follows:

 

**19.1.1****       ****Number of shares:**

 
| **Series** | ** ** | **Number of   shares   subscribed** | ** ** | **Number of   shares paid in** | ** ** | **Number of   voting shares** | ** ** |
|------------|------------|------------------------------------------|------------|-----------------------------------------------|------------|-----------------------------------------|------------|
| A          |       | 473,289,368                              |       | 473,289,368                                   |       | 473,289,368                             |       |
| B          |       | 473,289,368                              |       | 473,289,368                                   |       | 473,289,368                             |       |

 

**19.1.2****       ****Capital:**

 
| **Series** | ** ** | **Subscribed   Capital** | ** ** | **Paid-in********Capital** | ** ** |
|------------|------------|--------------------------|------------|----------------------------|------------|
| ** ** | ** ** | **ThCh$**                | ** ** | **ThCh$**                  | ** ** |
| A          |       | 135,379,649.5            |       | 135,379,649.5              |       |
| B          |       | 135,379,649.5            |       | 135,379,649.5              |       |
| **Total**  | ** ** | **270,759,299.0**        | ** ** | **270,759,299.0**          | ** ** |

 

**19.1.3****       ****Rights of each series:**

 

·                                          Series A: Elect 12 of the 14 directors

·                                          Series B: Receives an additional 10% of dividends distributed to Series A and elects 2 of the 14 directors .

 

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**NOTE 19 —   EQUITY (Continued)**

 

**19.2****   ****Dividend policy**

 

According to Chilean law, cash dividends must be paid equal to at least 30% of annual net profits, barring a unanimous vote by shareholders to the contrary. If there is no net profit in a given year, the Company will not be legally obligated to pay dividends from retained earnings. At the April, 2012 Annual Shareholders Meeting, the shareholders authorized the Board of Directors to pay interim dividends during July and October 2012 and January 2013, at its discretion.

 

During 2012, the Shareholders’ Meeting approved an extraordinary dividend payment against the retained earnings fund. It is not guaranteed that those payments will be repeated in the future.

 

Regarding Circular Letter N°1945 of the Chilean Superintendence of Securities and Insurance, the Company does not present any adjustments to be made in order to determine distributable net earnings to comply with minimum legal amounts.

 

Pursuant to Circular Letter N° 1,945 of the Chilean Superintendence of Securities and Insurance dated September 29, 2009, the Company’s Board of Directors decided to maintain the initial adjustments of adopting IFRS as retained earnings for future distribution.

 

Retained earnings at the date of IFRS adoption amounted to ThCh$19,260,703, of which ThCh$3,564,500 have been realized at December 31, 2012 and are available for distribution as dividends in accordance with the following:

 
| **Concept**                                                                    | ** ** | **Event when amount is   realized** | ** ** | **Amount of   accumulated   earnings at   01.01.2009** | ** ** | **Realized at   12.31.2012** | ** ** | **Amount of   accumulated   earnings at   12.31.2012** | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|------------------------------------------------------------------|------------|-----------------------------------|------------|------------------------------------------------------------------|------------|
| ** **                                                                     | ** ** | ** **                                         | ** ** | **ThCh$**                                                        | ** ** | **ThCh$**                         | ** ** | **ThCh$**                                                        | ** ** |
| Revaluation of assets                                                          |       | Sale or impairment                                 |       | 12,538,123                                                       |       | (3,127,627                        | )          | 9,410,496                                                        |       |
| Foreign currency translation differences of investments in related   companies |       | Sale or impairment                                 |       | 6,393,518                                                        |       | —                            |       | 6,393,518                                                        |       |
| Full absorption cost accounting                                                |       | Sale of products                                   |       | 813,885                                                          |       | (813,885                          | )          | —                                                           |       |
| Post-employment benefits actuarial calculation                                 |       | Termination of   employees                         |       | 929,560                                                          |       | (385,192                          | )          | 544,368                                                          |       |
| Deferred taxes complementary accounts                                          |       | Amortization                                       |       | (1,414,383                                                       | )          | 762,204                           |       | (652,179                                                         | )          |
| **Total**                                                                      |       |                                               | ** ** | **19,260,703**                                                   | ** ** | **(3,564,500**                    | **)**      | **15,696,203**                                                   | ** ** |

 

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**NOTE 19 —   EQUITY (Continued)**

 

The dividends declared and paid during 2012, 2011 and 2010 are presented below:

 
| **Dividend payment date** | ** ** | **Dividend type** | ** ** | **Profits imputable to dividends** | ** ** | **Ch$ per   Series A   Share** | ** ** | **Ch$ per   Series B   Share** | ** ** |
|-------------------------------------|------------|------------------------|------------|---------------------------------------------------|------------|------------------------------------------|------------|------------------------------------------|------------|
| 2010                                |       | January                |       | Interim                                           |       | 2009                                     |       | 7.00                                     |       | 7.70 |   |
| 2010                                |       | April                  |       | Final                                             |       | 2009                                     |       | 11.70                                    |       | 12.87 |   |
| 2010                                |       | May                    |       | Additional                                        |       | Retained Earnings                        |       | 50.00                                    |       | 55.00 |   |
| 2010                                |       | July                   |       | Interim                                           |       | 2010                                     |       | 8.50                                     |       | 9.35 |   |
| 2010                                |       | October                |       | Interim                                           |       | 2010                                     |       | 8.50                                     |       | 9.35 |   |
| 2011                                |       | January                |       | Interim                                           |       | 2010                                     |       | 8.50                                     |       | 9.35 |   |
| 2011                                |       | May                    |       | Final                                             |       | 2010                                     |       | 13.44                                    |       | 14.784 |   |
| 2011                                |       | July                   |       | Additional                                        |       | Retained   Earnings                      |       | 50.00                                    |       | 55.00 |   |
| 2011                                |       | July                   |       | Interim                                           |       | 2011                                     |       | 8.50                                     |       | 9.35 |   |
| 2011                                |       | October                |       | Interim                                           |       | 2011                                     |       | 8.50                                     |       | 9.35 |   |
| 2012                                |       | January                |       | Interim                                           |       | 2011                                     |       | 8.50                                     |       | 9.35 |   |
| 2012                                |       | May                    |       | Final                                             |       | 2011                                     |       | 10.97                                    |       | 12.067 |   |
| 2012                                |       | May                    |       | Additional                                        |       | Retained   Earnings                      |       | 24.30                                    |       | 26.73 |   |
| 2012                                |       | October                |       | Interim                                           |       | 2012                                     |       | 12.24                                    |       | 13.46 |   |
| 2012                                |       | December               |       | Interim                                           |       | 2012                                     |       | 24.48                                    |       | 26.93 |   |

 

**19.3****          ****Reserves**

** **
| **Reserves**                          | ** ** | **2012**        | ** ** | **2011**        | ** ** |
|---------------------------------------|------------|-----------------|------------|-----------------|------------|
| ** **                            | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
| Polar acquisition                     |       | 421,701,520     |       | —          |       |
| Foreign currency translation reserves |       | (63,555,545     | )          | (22,459,879     | )          |
| Legal and statutory reserves          |       | 5,435,538       |       | 5,435,538       |       |
| **Total**                             | ** ** | **363,581,513** | ** ** | **(17,024,341** | **)**      |

 

**19.3.1****       ****Polar acquisition**

 

This amount corresponds to the the fair value of the issuance of shares of Embotelladora Andina S.A. used to acquire Embotelladoras Coca-Cola Polar S.A.,.

 

**19.3.2****       ****Legal and statutory reserves**

 

In accordance with Official Circular No. 456 issued by the Chilean Superintendence of Securities and Insurance, the legally required price-level restatement of paid-in capital for 2009 is presented as part of other equity reserves and was accounted for as a capitalization from Other Reserves with no impact on net income or retained earnings under IFRS. This amount totaled ThCh$5,435,538 at December 31, 2009.

 

**19.3.3****       ****Foreign currency translation reserves**

 

This corresponds to the conversion of the financial statements of foreign subsidiaries whose functional currency is different from the presentation currency of the consolidated financial statements. Foreign currency translation differences between the receivable held by Abisa Corp S.A. and owed by Rio de Janeiro Refrescos Ltda. are also shown in this account, which has been treated as an investment in Equity Investees (associates and joint ventures). Foreign currency translation reserves are detailed as follows:

 

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**NOTE 19 —****        ****EQUITY (Continued)**

 
| **Description**                                | ** ** | **12.31.2012**  | ** ** | **12.31.2011**  | ** ** | **12.31.2010**  | ** ** |
|------------------------------------------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| ** **                                     | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** | **ThCh$**       | ** ** |
| Rio de Janeiro Refrescos Ltda.                 |       | (26,905,052     | )          | (1,274,857      | )          | 1,324,710       |       |
| Embotelladora del Atlántico S.A           |       | (29,448,998     | )          | (19,072,195     | )          | (19,706,911     | )          |
| Paraguay Refrescos S.A.                        |       | 24,248          |       | —          |       | —          |       |
| Exchange rate differences in related companies |       | (7,225,743      | )          | (2,112,827      | )          | (3,200,224      | )          |
| **Total**                                      | ** ** | **(63,555,545** | **)**      | **(22,459,879** | **)**      | **(21,582,425** | **)**      |

 

The movement of this reserve for the fiscal periods ended December 31, 2012 and 2011 respectively is detailed as follows:

 
| **Description**                                | ** ** | **12.31.2012**  | ** ** | **12.31.2011** | ** ** | **12.31.2010**  | ** ** |
|------------------------------------------------|------------|-----------------|------------|----------------|------------|-----------------|------------|
| ** **                                     | ** ** | **ThCh$**       | ** ** | **ThCh$**      | ** ** | **ThCh$**       | ** ** |
| Rio de Janeiro Refrescos Ltda.                 |       | (25,630,195     | )          | (2,599,567     | )          | (5,171,036      | )          |
| Embotelladora del Atlántico S.A           |       | (10,376,803     | )          | 634,716        |       | (4,278,804      | )          |
| Paraguay Refrescos S.A.                        |       | 24,248          |       | —         |       | —          |       |
| Exchange rate differences in related companies |       | (5,112,916      | )          | 1,087,397      |       | (1,845,427      | )          |
| **Total**                                      | ** ** | **(41,095,666** | **)**      | **(877,454**   | **)**      | **(11,295,267** | **)**      |

 

**19.4****          ****Non-controlling interests**

 

This is the recognition of the portion of Equity and income from subsidiaries that are owned by third parties, The detail of this account at December 31, 2012 is as follows:

 
| ** **                            | ** ** | **Non-controlling Interests** | ** ** |
|---------------------------------------|------------|------------------------------------|------------|
| ** **                            | ** ** | **Percentage**                     | ** ** | **Shareholders ** | ** ** | ** ** | ** ** |
| **Description**                       | ** ** | **%**                              | ** ** | **Equity y** | ** ** | **Income** | ** ** |
| ** **                            | ** ** | ** **                         | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Embotelladora del Atlántico S.A. |       | 0.0243                             |       | 10,763 |   | 3,468 |   |
| Andina Empaques Argentina S.A.        |       | 0.0244                             |       | 1,977 |   | 439 |   |
| Paraguay   Refrescos S.A.             |       | 2.1697                             |       | 4,697,403 |   | 89,012 |   |
| Inversiones   Los Andes Ltda.         |       | 0.0001                             |       | 53 |   | 1 |   |
| Transportes   Polar S.A.              |       | 0.0001                             |       | 6 |   | — |   |
| Vital   S.A.                          |       | 35.0000                            |       | 8,811,764 |   | 130,874 |   |
| Vital   Aguas S.A.                    |       | 33.5000                            |       | 1,807,913 |   | 81,651 |   |
| Envases   Central S.A.                |       | 40.7300                            |       | 4,111,258 |   | 326,764 |   |
| Andina Inversiones Societarias S.A.   |       | 0.0001                             |       | 35 |   | 2 |   |
| **Total**                             | ** ** | ** **                         | ** ** | **19,441,172** | ** ** | **632,211** | ** ** |

 

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**NOTE 19 —   EQUITY (Continued)**

 

**19.5****                                ****Earnings per share**

 

The basic earnings per share presented in the statement of comprehensive income are calculated as the quotient between income for the year and the average number of shares outstanding during the same period.

 

The earnings per share used to calculate basic and diluted earnings per share is detailed as follows:

** **
| ** **                                          | ** ** | **12.31.2012**    | ** ** |
|-----------------------------------------------------|------------|-------------------|------------|
| **Earnings per share**                    | ** ** | **SERIES A** | ** ** | **SERIES B** | ** ** | **TOTAL** | ** ** |
| Earnings attributable to shareholders (ThCh$)       |       | 41,732,721        |       | 45,904,240 |   | 87,636,961 |   |
| Average weighted number of shares                   |       | 400,809,380       |       | 400,809,380 |   | 801,618,760 |   |
| **Earnings per basic and diluted share (in pesos)** | ** ** | **104.12**        | ** ** | **114.53** | ** ** | **109.32** | ** ** |

** **
| ** **                                          | ** ** | **12.31.2011**    | ** ** |
|-----------------------------------------------------|------------|-------------------|------------|
| **Earnings per share**                    | ** ** | **SERIES A** | ** ** | **SERIES B** | ** ** | **TOTAL** | ** ** |
| Earnings attributable to shareholders (ThCh$)       |       | 46,203,022        |       | 50,821,383 |   | 97,024,405 |   |
| Average weighted number of shares                   |       | 380,137,271       |       | 380,137,271 |   | 760,274,542 |   |
| **Earnings per basic and diluted share (in pesos)** | ** ** | **121.54**        | ** ** | **133.69** | ** ** | **127.62** | ** ** |

** **
| ** **                                          | ** ** | **12.31.2010**    | ** ** |
|-----------------------------------------------------|------------|-------------------|------------|
| **Earnings per share**                    | ** ** | **SERIES A** | ** ** | **SERIES B** | ** ** | **TOTAL** | ** ** |
| Earnings attributable to shareholders (ThCh$)       |       | 49,333,069        |       | 54,264,303 |   | 103,597,372 |   |
| Average weighted number of shares                   |       | 380,137,271       |       | 380,137,271 |   | 760,274,542 |   |
| **Earnings per basic and diluted share (in pesos)** | ** ** | **129.78**        | ** ** | **142.75** | ** ** | **136.26** | ** ** |

 
| ** **                                                   | ** ** | **12.31.2012**    | ** ** |
|--------------------------------------------------------------|------------|-------------------|------------|
| **Movement of shares**                             | ** ** | **SERIES A** | ** ** | **SERIES B** | ** ** | **TOTAL** | ** ** |
| Starting balance at Jaunary 1, 2012                          |       | 380,137,271       |       | 380,137,271 |   | 760,274,542 |   |
| Issuance of shares due to merger October 1, 2012        |       | 93,152,097        |       | 93,152,097 |   | 186,304,194 |   |
| Ending balance at December 31, 2012                     |       | 473,289,368       |       | 473,289,368 |   | 946,578,736 |   |
| **Compounded average number of shares (in Chilean   pesos)** | ** ** | **400,809,380**   | ** ** | **400,809,380** | ** ** | **801,618,760** | ** ** |

 

During year 2011, there were no movements in the number of shares.

 

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**NOTE 20 —   DERIVATIVE ASSETS AND LIABILITIES**

 

The Company held the following derivative liabilities at December 31, 2012 and 2011:

 

**20.1****               ****Currency forwards of items recognized for accounting purposes:**

 

As of December 31, 2012, the Company had agreements to guaranty bank liabilities in Brazil denominated in US dollars for an amount of ThUS$71.429, to convert them to reais at a different tax rate.  The valuation of said agreements was at fair value with a net loss of ThCh$333,427.  The effect of these agreements have been recognized as current financial liabilities and financial costs within the statement of income as of December 31, 2012.

 

**20.2****               ****Currency forwards for highly probable expected transactions:**

 

During 2010, the Company made agreements to hedge the exchange rate in the purchases of fixed assets in a foreign currency during 2011. Those agreements were recorded at the fair value, resulting in a net profit of ThCh$134,572 for the year ended at December 31, 2011. No such agreements were outstanding at December 31, 2012 and 2011. Since these agreements did not meet the documentation requirements of IFRS to be considered hedges, they were accounted for as investment contracts and the effects recorded directly in income.

 

In 2010, 2011 and 2012, the Company made agreements to hedge the exchange rate in the purchases of raw materials and future flows in 2011, 2012 and 2013. The outstanding agreements totaled ThUS$140,000 at December 31, 2012 (ThUS$42,500 at December 31, 2011). Those agreements were recorded at fair value, resulting in a net loss of ThCh$1,102,412 for the year ended at December 31, 2012 (net gain of ThCh$1,347,277 at December 31, 2011), and liabilities for derivative contracts of ThCh$394,652 were recognized at December 31, 2012 (liabilities of ThCh$163,718 at December 31, 2011). Since these agreements did not meet the documentation requirements of IFRS to be considered hedges, they were accounted for as investment contracts and the effects recorded directly in income.

 

**Fair value hierarchy**

 

The Company had total assets related to its foreign exchange forward contracts of ThCh$394,652 and liabilities to ThCh$163,718 at December 31, 2012 and 2011, respectively, which are classified within the other current non-financial liabilities and are carried at fair value on the statement of financial position. The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 
| Level 1: | quoted   (unadjusted) prices in active markets for identical assets or liabilities                                                                                                      |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Level 2: | Assumptions   different to quoted prices included in level 1 and that are applicable to   assets and liabilities, be it directly (as Price) or indirectly (i.e. derived   from a Price) |
| Level 3: | Assumptions   for assets and liabilities that are not based on information observed   directly in the market.                                                                           |

 

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**NOTE 20 —   DERIVATIVE ASSETS AND LIABILITIES (Continued)**

 

During the year ended December 31, 2012 and 2011, there were no transfers of items between fair value measurements categories all of which were valued during the period using level 2

 
| ** **                    | ** ** | **Fair Value Measurements at December 31, 2012** | ** ** | ** **      | ** ** |
|-------------------------------|------------|--------------------------------------------------------------------------------|------------|-----------------|------------|
| ** **                    | ** ** | **Quoted prices in**                                                 | ** ** | **Significant** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **actives markets**                                                       | ** ** | **other**       | ** ** | **Significant** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **for Identical**                                                         | ** ** | **observable**  | ** ** | **unobservable** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **Asset**                                                                      | ** ** | **Inputs**      | ** ** | **Inputs** | ** ** | **Total** | ** ** |
| ** **                    | ** ** | **ThCh$**                                                                      | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                          |       |                                                                           |       |            |       |   |   |   |   |
| **Liabilities:**              |       |                                                                           |       |            |       |   |   |   |   |
| **Current liabilities**       |       |                                                                           |       |            |       |   |   |   |   |
| Current financial liabilities |       | —                                                                         |       | 394,652         |       | — |   | 394,652 |   |
| **Total liabilities**         |       | —                                                                         | ** ** | **394,652**     | ** ** | **—** | ** ** | **394,652** | ** ** |

 
| ** **                    | ** ** | **Fair Value Measurements at December 31, 2011** | ** ** | ** **      | ** ** |
|-------------------------------|------------|--------------------------------------------------------------------------------|------------|-----------------|------------|
| ** **                    | ** ** | **Quoted prices in**                                                 | ** ** | **Significant** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **actives markets**                                                       | ** ** | **other**       | ** ** | **Significant** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **for Identical**                                                         | ** ** | **observable**  | ** ** | **unobservable** | ** ** | ** ** | ** ** |
| ** **                    | ** ** | **Asset**                                                                      | ** ** | **Inputs**      | ** ** | **Inputs** | ** ** | **Total** | ** ** |
| ** **                    | ** ** | **ThCh$**                                                                      | ** ** | **ThCh$**       | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
|                          |       |                                                                           |       |            |       |   |   |   |   |
| **Liabilities:**              |       |                                                                           |       |            |       |   |   |   |   |
| **Current liabilities**       |       |                                                                           |       |            |       |   |   |   |   |
| Current financial liabilities |       | —                                                                         |       | 163,718         |       | — |   | 163,718 |   |
| **Total liabilities**         |       | —                                                                         | ** ** | **163,718**     | ** ** | **—** | ** ** | **163,718** | ** ** |

 

**NOTE 21 —   CONTINGENCIES AND COMMITMENTS**

 

**21.1****                                ****Lawsuits and other legal actions:**

 

The Parent Company and its Subsidiaries face litigation or potential litigation, in and out of court, that might result in material or significant losses or gains, in the opinion of the Company’s legal counsel, detailed as follows:

 

1) Embotelladora del Atlántico S.A. is a party to labor and other lawsuits:  Accounting provisions have been made for the contingency of a probable loss because of these lawsuits, totaling ThCh$1,600,326. Management considers it unlikely that non-provisioned contingencies will affect the Company’s income and equity, based on the opinion of its legal counsel.

 

2) Rio de Janeiro Refrescos Ltda. is involved in current lawsuits and probable lawsuits regarding labor, tax and other matters. The accounting provisions to cover contingencies of a probable loss total ThCh$5,097,582. Management considers it unlikely that non-provisioned contingencies will affect income and equity of the Company, based on the opinion of its legal counsel. As it is customary in Brazil, the Company has been required by the tax authorities to guarantee contingencies in the amounts of ThCh$18,002,490 at December 31, 2012 and ThCh$19,989,604 at December 31, 2011.

 

3) Embotelladora Andina S. A. is involved in tax, commercial, labor and other lawsuits. The accounting provisions to cover contingencies for probable losses because of these lawsuits total ThCh$123,257. Management considers it unlikely that non-provisioned contingencies will affect income and equity of the company, in the opinion of its legal advisors.

 

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**NOTE 21 —   CONTINGENCIES AND COMMITMENTS**

 

On April 28, 2011 the Company was legally informed of an anti-competition lawsuit filed by the Chilean Fiscalía Nacional Económica (“Chilean National Economic Prosecutor”, the FNE) before the Tribunal de Defensa de la Libre Competencia (“Chilean Anti-Competition Court”, the TDLC) against Embotelladora Andina S.A. and Coca-Cola Embonor S.A. This lawsuit indicates that said companies would have violated the regulation of free competition by establishing a system of granting incentives in the traditional distribution channel since these points of sale do not advertise, exhibit and/or commercialize, in any manner, the so called “B-brands” or alternative soft drink beverages.  This lawsuit ended on November 22, 2011, by approval of the Anti-competition Court of the terms of reconciliation proposed November 15, 2011 by the National Economic Prosecutor, Embotelladora Latinoamericana S.A., Embotelladora Castel Ltda., Industrial y Comercial Lampa S.A., Sociedad Comercial Antillanca Ltda., Coca-Cola Embonor S.A. and Embotelladora Andina S.A..

 

As a result of this agreement, the Company assumed certain commitments that included allowing 20% of space to be available to other brands in refrigerators provided by Embotelladora Andina S.A. at certain points of sale in the traditional channel where there are no other refrigerators, for a period of five years.

 

The reconciliation agreement did not impose fines nor constitute an acknowledgement of liability in the anti-competition offenses.

 

**21.2****                                ****Direct guarantees and restricted assets:**

 

Guarantees and restricted assets as of December 31, 2012 are detailed as follows:

 
| **Guarantee in favor**                                | ** ** | **Provided by**                    | ** ** | **Committed assets** | ** ** | **Carrying**       | ** ** | **Balance pending payment   on the closing date of the   financial statements** | ** ** | **Date of guarantee   release** | ** ** |
|-----------------------------------------------------------------|------------|-----------------------------------------|------------|---------------------------|------------|--------------------|------------|-------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|
| **of**                                                          | ** ** | **Name**                                | ** ** | **Relationship**          | ** ** | **Guarantee**      | ** ** | **Type**                                                                                                                | ** ** | **amount**                                | ** ** | **2012** | ** ** | **2011** | ** ** | **2013** | ** ** | **2014** | ** ** |
| ** **                                                      | ** ** | ** **                              | ** ** | ** **                | ** ** | ** **         | ** ** | ** **                                                                                                              | ** ** | **ThCh$**                                 | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Aduana de Ezeiza                                                |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Guaranty insurance |       | Import                                                                                                                  |       | 35,132                                    |       | — |   | — |   | — |   | — |   |
| Aduana de Ezeiza                                                |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Cash deposit       |       | Import                                                                                                                  |       | 208,348                                   |       | — |   | — |   | — |   | — |   |
| Polar Argentina S.A.                                            |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Cash deposit       |       | Import                                                                                                                  |       | 3,601                                     |       |   |   |   |   |   |   |   |   |
| Distribuidora Baraldo   S.H.                                    |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Cash               |       | Judicial embargo                                                                                                        |       | 1,952                                     |       | — |   | — |   | — |   | — |   |
| Acuña Gomez                                                |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Cash               |       | Judicial embargo                                                                                                        |       | 2,928                                     |       | — |   | — |   | — |   | — |   |
| Municipalidad Gral.   Alvear                                    |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Cash               |       | Judicial embargo                                                                                                        |       | 19,993                                    |       | — |   | — |   | — |   | — |   |
| Municipalidad San   Martín                                 |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Cash               |       | Judicial embargo                                                                                                        |       | 35,132                                    |       | — |   | — |   | — |   | — |   |
| Nicanor López                                              |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Cash               |       | Judicial embargo                                                                                                        |       | 2,094                                     |       | — |   | — |   | — |   | — |   |
| Labarda                                                         |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Cash               |       | Judicial embargo                                                                                                        |       | 35                                        |       | — |   | — |   | — |   | — |   |
| Aduana de Ezeiza                                                |       | Embotelladora del   Atlántico S.A. |       | Subsidiary                |       | Guaranty insurance |       | Mold Import                                                                                                             |       | 7,199                                     |       | — |   | — |   | — |   | — |   |
| Poder Judiciario                                                |       | Rio de Janeiro   Refrescos Ltda.        |       | Subsidiary                |       | Judicial deposit   |       | Long term asset                                                                                                         |       | 18,002,490                                |       | — |   | — |   | — |   | — |   |
| Inter Material S.A.                                             |       | Embotelladora Andina S.A.               |       | Parent Company            |       | Guarantee receipt  |       | Guarantee receipt                                                                                                       |       | 101,700                                   |       | — |   | — |   | 101,700 |   | — |   |
| Linde Gas Chile S.A.                                            |       | Embotelladora Andina S.A.               |       | Parent Company            |       | Guarantee receipt  |       | Guarantee receipt                                                                                                       |       | 143,988                                   |       | — |   | — |   | — |   | 143,988 |   |
| Linde Gas Chile S.A.                                            |       | Embotelladora Andina S.A.               |       | Parent Company            |       | Guarantee receipt  |       | Guarantee receipt                                                                                                       |       | 287,976                                   |       | — |   | — |   | — |   | 287,976 |   |
| Echeverría Izquierdo   Ingeniería y Construcción |       | Embotelladora Andina S.A.               |       | Parent Company            |       | Guarantee receipt  |       | Guarantee receipt                                                                                                       |       | 1,019,190                                 |       | — |   | — |   | 1,019,190 |   | 287,976 |   |

 

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**NOTE 22 —  FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES**

 

The Company’s businesses are exposed to diverse financial and market risks (including foreign exchange rate risk, fair value interest rate risk and price risk). The Company’s global risk management program concentrates on the uncertainty of financial markets and tries to minimize potentially adverse effects on the financial returns of the Company. The Company uses derivatives to hedge certain risks. Below is a description of the primary policies established by the Company to manage financial risks.

 

**Interest rate risk**

 

As of December 31, 2012, the Company carried all of its debt at a fixed rate. Consequently, the risk of fluctuations in market interest rates as compared to the Company’s cash flows is low.

 

Notwithstanding the above, the Company’s most significant indebtedness comes for the issuance of Bonds that are denominated in Unidades de Fomento, which is indexed to the inflation in Chile).  If the inflation in Chile had reached 4% (instead of 2.5%) for the period January 01 to December 31, 2012, the Company’s results would have decreased by ThCh$2,008,527.

 

**Foreign currency risk**

 

Sales revenues earned by the Company are linked to the local currencies of countries in which it does business, the detail of which is detailed as follows:

 
| **Chilean Peso** | ** ** | **Brazilean Real** | ** ** | **Argentine Peso** | ** ** | **Paraguayan   Guarani** | ** ** |
|-----------------------|------------|-------------------------|------------|-------------------------|------------|--------------------------|------------|
| 33                    | %          | 31                      | %          | 28                      | %          | 8                        | %          |

 

Since the Company’s income is not tied to the US dollar, the policy of managing that risk, meaning the gap between assets and liabilities denominated in that currency, has been to hold financial investments in dollar—denominated instruments for at least the equivalent of the liabilities denominated in that currency (if US dollar liabilities exist).

 

Additionally and depending on market conditions, the Company’s policy is also to make foreign currency hedge contracts to reduce the foreign exchange rate impact on cash outflows expressed in US dollars, corresponding mainly to payments made to raw material suppliers.  In accordance with the percentage at of raw material purchases that are indexed to the US dollar, if the currencies were to devalue by 5% in the three countries where the Company operates and remaining everything constant, it would generate a cumulative decrease in income December 31, 2012 of ThCh$6,877,441. Currently, the Company holds derivative contracts to cover this effect in Chile and Argentina, which do not qualify for hedge accounting according to IAS 39

 

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**NOTE 22 —  FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)**

 

The exposure to foreign currency exchange conversion differences of subsidiaries abroad (Brazil, Argentina and Paraguay), because of the difference between monetary assets and liabilities (i.e., those denominated in a local currency and consequently exposed to foreign currency translation risk from translation from their functional currency to the presentation currency of the consolidated statements) is only hedged when it is predicted that material adverse differences could occur and when the cost associated with such hedging is deemed reasonable by management. Currently the Company does not have these kinds of hedge agreements.

 

During the year ended December 31, 2012, the Brazilian real Argentine Peso and the Paraguayan Guarani have devalued 13.6%, 8.6% and 4.3% respectively regarding the presentation currency for the same period of 2011.

 

Currently in Argentina there are foreign exchange restrictions and there is a parallel currency market with an exchange rate which is higher than the official rate.-  If the Argentine peso were to devalue an additional 25% with respect to the Chilean peso, the effects upon results for the concept of translation from foreign subsidiaries would amount to a higher loss of ThCh$5,102,723. On the other hand, at equity level, this would result that the remainder of the translation of asset and liability accounts would lead to a decrease in equity of ThCh$10,723,836.

 

If the Brazilian real devalued at least 3.6% with respect to the Chilean peso, the effect upon results for the concept of translation from foreign subsidiaries would amount to a higher gain of thCh$1,917,060.  On the other hand, at equity level, this would result that the remainder of the translation of asset and liability accounts would lead to a smaller decrease in equity of ThCh$4,619,049.

 

If the Paraguayan Guarani appreciated 2.8% with respect to the Chilean peso, the effect upon results for the concept of translation from foreign subsidiaries would amount to a higher gain of thCh$317,385. On the other hand, at equity level, this would result that the remainder of the translation of asset and liability accounts would lead to an increase in equity of ThCh$16,648,642.

 

**Commodities risk**

 

The Company faces a risk of price fluctuations in the international markets for sugar, aluminum and PET resin, which are inputs required to produce beverages and, as a whole, account for 35% to 40% of operating costs. Procurement and anticipated purchase contracts are made frequently to minimize and/or stabilize this risk. When warranted by market conditions commodity hedges have also been used. The possible effects that exist in the present consolidated integral statements of a 5% eventual rise in prices of its main raw materials, would be a reduction in our accumulated results for the year ended December 31, 2012 of approximately ThCh$7,879,432.  To minimize and/or stabilize said risk, anticipated purchase and supply agreements are frequently obtained when market conditions are favorable.  Derivative instruments for commodities have also been used.

 

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**NOTE 22 —  FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)**

 

**Liquidity risk**

 

The products we sell are mainly paid for in cash and short term credit, therefore our main source of financing comes from the cash flow of our operations. This cash flow has historically been sufficient to cover the investments necessary for the normal course of our business, as well as the distribution of dividends approved by the General Shareholders’ Meeting. Should additional funding be required for future geographic expansion or other needs, the main sources of financing to consider are: (i) debt offerings in the Chilean and foreign capital markets (ii) borrowings from commercial banks, both internationally and in the local markets where we have operations; and (iii) public equity offerings.

 

The following table presents our contractual and commercial obligations as of December 31, 2012:

 
| ** **                  | ** ** | **Year of maturity** | ** ** |
|-----------------------------|------------|--------------------------------|------------|
| **Item**                    | ** ** | **2013**                       | ** ** | **2014** | ** ** | **2015** | ** ** | **2016** | ** ** | **2017 and   more** | ** ** |
| ** **                  | ** ** | **ThCh$**                      | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| Bank debt                   |       | 95,602,503                     |       | 18,246,000 |   | 14,281,607 |   | 12,696,487 |   | 10,102,925 |   |
| Bonds payable               |       | 10,264,230                     |       | 15,931,909 |   | 15,761,871 |   | 15,591,833 |   | 131,486,846 |   |
| Purchase obligations        |       | 42,450,378                     |       | 5,415,240 |   | 4,423,912 |   | 4,343,418 |   | 552,729 |   |
| Operating lease obligations |       | 4,697,482                      |       | 1,386,046 |   | 975,917 |   | 570,311 |   | — |   |
| Total                       |       | 153,014,593                    |       | 40,979,195 |   | 35,443,307 |   | 33,202,049 |   | 142,142,500 |   |

 

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**NOTE 23 —  OTHER INCOME**

 

Other operating income is detailed as follows

 
| ** **                                        | ** ** | **01.01.2012** | ** ** | **01.01.2011** | ** ** | **01.01.2010** | ** ** |
|---------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| **Description**                                   | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
| ** **                                        | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Gain on disposal of property, plant and equipment |       | 2,304,613      |       | 673,669        |       | 548,111        |       |
| Adjustment judicial deposit (Brazil)              |       | 748,299        |       | 784,856        |       | 450,299        |       |
| Guaxupé fiscal credits   (Brazil)            |       | —         |       | 1,313,212      |       | —         |       |
| Other                                             |       | 213,086        |       | 137,708        |       | 119,469        |       |
| **Total**                                         | ** ** | **3,265,998**  | ** ** | **2,909,445**  | ** ** | **1,117,879**  | ** ** |

 

**NOTE 24 — OTHER EXPENSES**

 

Other expenses are detailed as follows:

 
| ** **                                        | ** ** | **01.01.2012** | ** ** | **01.01.2011** | ** ** | **01.01.2010** | ** ** |
|---------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| **Item**                                          | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
| ** **                                        | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Tax on bank debits                                |       | 4,487,209      |       | 3,074,333      |       | 2,966,852      |       |
| Write-off of property,   plant and equipment      |       | 1,314,528      |       | 2,452,231      |       | —         |       |
| Contingencies                                     |       | 2,012,879      |       | 4,370,851      |       | 1,257,579      |       |
| Professional service   fees                       |       | 650,912        |       | 1,101,482      |       | 1,656,515      |       |
| Loss on the sale of property, plant and equipment |       | 804,751        |       | 415,823        |       | 470,459        |       |
| Merger Andina-Polar   (see note 13.2)             |       | 4,517,661      |       | —         |       | —         |       |
| Donations                                         |       | 815,945        |       | —         |       | 862,307        |       |
| Other                                             |       | 816,123        |       | 500,283        |       | 562,112        |       |
| **Total**                                         | ** ** | **15,420,008** | ** ** | **11,915,003** | ** ** | **7,775,824**  | ** ** |

 

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**NOTE 25 — FINANCIAL INCOME AND COSTS**

 

Financial income and costs break down as follows:

 

**a)****            ****Finance income**

 
| ** **            | ** ** | **01.01.2012** | ** ** | **01.01.2011** | ** ** | **01.01.2010** | ** ** |
|-----------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| **Description**       | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
| ** **            | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Interest income       |       | 2,487,739      |       | 2,846,728      |       | 2,451,808      |       |
| Other interest income |       | 240,320        |       | 335,706        |       | 924,330        |       |
| **Total**             | ** ** | **2,728,059**  | ** ** | **3,182,434**  | ** ** | **3,376,138**  | ** ** |

 

**a)****            ****Finance costs**

 
| ** **           | ** ** | **01.01.2012** | ** ** | **01.01.2011** | ** ** | **01.01.2010** | ** ** |
|----------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| **Description**      | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
| ** **           | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| Bond interest        |       | 5,473,534      |       | 5,092,403      |       | 5,022,931      |       |
| Bank loan interest   |       | 4,594,167      |       | 1,098,757      |       | 1,079,806      |       |
| Other interest costs |       | 1,105,052      |       | 1,044,016      |       | 1,299,094      |       |
| **Total**            | ** ** | **11,172,753** | ** ** | **7,235,176**  | ** ** | **7,401,831**  | ** ** |

 

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**NOTE 26 —  OTHER INCOME AND EXPENSES**

 

Other gains and losses are detailed as follows:

 
| ** **                                             | ** ** | **01.01.2012** | ** ** | **01.01.2011** | ** ** | **01.01.2010** | ** ** |
|--------------------------------------------------------|------------|----------------|------------|----------------|------------|----------------|------------|
| **Description**                                        | ** ** | **12.31.2012** | ** ** | **12.31.2011** | ** ** | **12.31.2010** | ** ** |
| ** **                                             | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** | **ThCh$**      | ** ** |
| ** **                                             | ** ** | ** **     | ** ** | ** **     | ** ** | ** **     | ** ** |
| Restructuring of   operations (new Renca plant)        |       | (1,212,579     | )          | (304,629       | )          | (416,618       | )          |
| Gain (loss) derivatives   transactions                 |       | (1,102,412     | )          | 1,481,849      |       | 722,108        |       |
| Insurance deductible   and donations due to earthquake |       | —         |       | —         |       | (620,512       | )          |
| Profit on the sale of   shares in Vital S.A.           |       | —         |       | 653,214        |       |           |       |
| Other income and   outlays                             |       | (21,224        | )          | (335,516       | )          | (169,619       | )          |
| **Total**                                              | ** ** | **(2,336,215** | **)**      | **1,494,918**  | ** ** | **(484,641**   | **)**      |

 

**NOTE 27 —  ENVIRONMENT (UNAUDITED)**

 

The Company has made disbursements totaling ThCh$3,333,058 for improvements in industrial processes, equipment to measure industrial waste flows, laboratory analyses, consulting on environmental impacts and other,

 

These disbursements by country are detailed as follows:

 
| ** **  | ** ** | **Year ended December 31, 2012** | ** ** | **Future commitments**                                      | ** ** |
|-------------|------------|------------------------------------------------------|------------|------------------------------------------------------------------|------------|
| **Country** | ** ** | **Recorded as********expenses**                 | ** ** | **Capitalized to   property,   plant and   equipment** | ** ** | **Recorded   as expenses** | ** ** | **Capitalized to   property,   plant and   equipment** | ** ** |
| ** **  | ** ** | **ThCh$**                                            | ** ** | **ThCh$**                                                        | ** ** | **ThCh$** | ** ** | **ThCh$** | ** ** |
| ** **  | ** ** | ** **                                           | ** ** | ** **                                                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Chile       |       | 674,893                                              |       | 124,388                                                          |       | — |   | — |   |
| Argentina   |       | 742,213                                              |       | 71,596                                                           |       | 311,598 |   | 1,963,658 |   |
| Brazil      |       | 1,004,181                                            |       | 678,887                                                          |       | 1,308,374 |   | 3,979,832 |   |
| Paraguay    |       | 26,628                                               |       | 10,272                                                           |       | — |   | 5,740 |   |
| **Total**   | ** ** | **2,447,915**                                        | ** ** | **885,143**                                                      | ** ** | **1,619,972** | ** ** | **5,949,230** | ** ** |

 

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**NOTE 28 —  SUBSEQUENT EVENTS**

 

On April 25, 2013, final additional dividend number N° 184 was agreed to pay from retained earnings as follows:

 

a)             Ch$12.3 for each series A share; and

b)             Ch$13.53 for each series B share.

 

On April 25, 2013, final additional dividend number 185 was agreed to pay from retained earnings as follows:

 

a)             Ch$47.0 for each series A share; and

b)              Ch$51.7 for each series B share.

 

No other significant events have occurred between December 31, 2012 and the issuance date of these financial statements that could significantly affect the presentation of these financial statements.

 

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**ITEM 19. EXHIBITS**

 

The exhibits filed with or incorporated by reference in this annual report are listed in the exhibit index below.

 

**EXHIBIT INDEX**

 
| **Item** | ** ** | **Description** |
|----------|------------|-----------------|
|     |       |            |   |
|     | 1.1        |            | English   translation of our Bylaws (filed herewith and also available on our website   www.embotelladoraandina.com) |
|     |       |            |   |
|     | 1.2        |            | English   translation of the Bottler’s Agreement |
|     | 1.2.1      |            | Argentina’s   Bottler’s Agreement EDASA (filed herewith) |
|     | 1.2.2      |            | Argentina’s   Bottler’s Agreement EDASA (Schweppes) (filed herewith) |
|     | 1.2.3      |            | Argentina’s   Bottler’s Agreement Ex — Polar (filed herewith) |
|     | 1.2.4      |            | Argentina’s   Bottler’s Agreement Ex — Polar (other) (filed herewith) |
|     | 1.2.5      |            | Brasil’s   Bottler’s Agreement RJR (filed herewith) |
|     | 1.2.6      |            | Brasil’s   Bottler’s Agreement RJR (Exhibit) (filed herewith) |
|     | 1.2.7      |            | Chile’s   Bottler’s Agreement Ex — Polar (filed herewith) |
|     | 1.2.8      |            | Chile’s   Bottler’s Agreement Andina (filed herewith) |
|     | 1.2.9      |            | Chile’s   Bottler’s Agreement Andina (Exhibit) (filed herewith) |
|     | 1.2.10     |            | Paraguay’s   Bottler’s Agreement PARESA (filed herewith) |
|     |       |            |   |
|     | 1.3        |            | Depositary   Agreement with The Bank of New York Mellon (filed herewith) |
|     |       |            |   |
|     | 1.4        |            | Shareholders’   Agreement (filed herewith) |
|     |       |            |   |
|     | 1.5        |            | English   Translation of the Stock Purchase Agreement and Amendment to the Stock   Purchase Agreement (filed herewith) |
|     |       |            |   |
|     | 1.6        |            | Indenture   dated as of September 30, 1997 among Embotelladora Andina S.A., Credit   Suisse First Boston Corporation, and J.P. Morgan Securities Inc.   (incorporated herein by reference and filed with the SEC on   September 30, 1997 and also available on our website   www.embotelladoraandina.com) |
|     |       |            |   |
|     | 8.1        |            | List   of our subsidiaries (filed herewith). |
|     | 8.2        |            | Letter   addressed to SEC ref: dismissal of previous auditors (filed herewith). |
|     |       |            |   |
|     | 12.1       |            | Certification   of Miguel Ángel Peirano, Chief Executive Officer, pursuant to   Rule 13-a14(a) (17 CFR 240.13a-12(a)) or   Rule 15d-14(a) (17 CFR 240.15d-14(a)) (filed herewith). |
|     |       |            |   |
|     | 12.2       |            | Certification   of Andrés Wainer, Chief Financial Officer pursuant to   Rule 13-a14(a) (17 CFR 240.13a-12(a)) or   Rule 15d-14(a) (17 CFR 240.15d-14(a)) (filed herewith). |
|     |       |            |   |
|     | 13.1       |            | Certification   of Miguel Ángel Peirano, Chief Executive Officer, pursuant to 18 U.S.C.   Chapter 63, Section 1350, (filed herewith). |
|     |       |            |   |
|     | 13.2       |            | Certification   of Andrés Wainer, Chief Financial Officer, pursuant to 18 U.S.C. Chapter 63,   Section 1350, (filed herewith). |

 

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**SIGNATURE**

 

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report on Form 20-F to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Santiago, Chile on April 30, 2013.

 
|   | EMBOTELLADORA   ANDINA S.A.   (ANDINA BOTTLING COMPANY) |
|--------|---------------------------------------------------------|
|   |                                                    |
|   | /s/   Andrés Wainer                                |
|   | Andrés   Wainer Andrés Wainer                 |
|   | Chief   Financial Officer                               |

Date: April 30, 2013

 

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