Annual Report 2000 (Download in PDF)

Transcription

2000 Annual Report
Brazil and AmBev. Both one of a kind.
2000 Annual Report
BRAZIL — ONE OF A KIND
ANNUAL REPORT
Financial Highlights
4
Message to Shareholders
5
Our Beliefs and Values
6
Only People Like Ours
9
A One of a Kind Market 13
Distribution 15
Growth Potential 16
Oper
International Operations 20
Financial Section 23
Investor Information 79
Brazil is much more than just a country. It is by far the
largest country in Latin America, and the fifth largest
in the world. Its markets are at the same time diverse
and enormous, spread over 8.5 million square
kilometers, an area just slightly smaller than the size
of United States, presenting spectacular opportunities.
Much more than an exotic place, rich in natural
beauty, Brazil is the tenth largest economy in the
world and one of the great political and economic
powers of Latin America.
Brazil has what we call “a nurturing environment”:
there are no earthquakes, volcanoes or severe
natural catastrophes. Within this enormous territory,
the regional origins and racial and cultural influences
are so diverse, it is almost as if Brazil was a continent.
Despite this, everybody speaks the same language
— Portuguese — without regional dialects. About
170 million people are heavily concentrated near
the Country’s shores, especially in the southern
and southeastern part of the Country.
Brazil has an annual GDP of around R$ 1 trillion
(US$ 500 billion), and is growing the industrial,
commercial, service, and agricultural segments
of the economy. And economic stabilization efforts
are preparing the Country for a promising, bright
future, with even more business opportunities.
From a human point of view, Brazil is an unique country.
One makes friends here more quickly than in any
other place in the world. Here, you don’t need to
be formally introduced to just start up a conversation,
even to go have a coffee together. There is of course
another beverage in this Country that is a symbol
of kindness, friendship, and neighborly chats.
Whenever friends get together or new friendships
are made, “how about a beer?” is almost inevitable.
We at AmBev love this because every time people
gather over a friendly beer there is a 79% chance
that this beer will be one of ours.
Investor Relations
Investor
Information
Companhia de Bebidas das Américas - AmBev
Av. Maria Coelho Aguiar, 215 - Bloco F - 7O andar
CEP 05804-900 - São Paulo - SP - Brazil
Tel. (55 11) 3741-7560/7553/3315
Fax (55 11) 3741-3527
[email protected]
www.ambev.com.br
Companhia de Bebidas das Américas - AmBev was created in June 1999 as a result of a merger between Companhia
Cervejaria Brahma and Companhia Antarctica Paulista. In September 1999, all minority shareholders of Antarctica
migrated to AmBev, and on September 15, 2000, after the approval of the antitrust agency was received, the final
legal step in the combination of Brahma and Antarctica was completed, with the exchange of all outstanding shares
of Brahma for shares of AmBev.
Stock Exchange Information
AmBev has two classes of shares, common shares (ON) and preferred shares (PN), traded on both BOVESPA in São Paulo
and the NYSE. The stock symbols for common and preferred shares on the BOVESPA are AMBV3 and AMBV4,
respectively. The symbols for common and preferred ADRs on the NYSE are ABV.c and ABV, respectively.
The preferred shares have preference in respect to the proceeds of liquidation of the Company, without any premium to
existing shareholders. Preferred shareholders are not entitled to vote at the Company’s general shareholders meeting.
Under the Brazilian Corporate Law, dividend payments to preferred shareholders must be 10% greater than dividend
payments to ordinary shareholders.
Local Depositary Bank
Transfer Agent and Registrar
Banco Itaú
Shareholder Information
Tel. (55 11) 237-5151
The Bank of New York
Church Street Station, P.O. Box 11258
New York, NY 10286 USA
Tel. 1 (212) 815-5800
Dividend Payments
During 2000, the Company declared dividend payments of R$ 4.40 per lot of 1,000 common shares and R$ 4.84
per lot of 1,000 preferred shares (as interest paid on capital).
São Paulo Stock Exchange — AMBV4, AMBV3
Quarterly stock information
Brazilian Reais per lot of 1,000 shares
Quarter Ended
December 31
September 30
June 30
March 31
ON*
ON* ex-rights
PN*
PN* ex-rights
ON
PN
ON
PN
ON
PN
High
1,940.00
425.00
2,200.00
478.00
1,530.00
2,030.00
1,150.00
1,460.00
930.00
1,360.00
Low
1,510.00
325.00
2,000.01
374.02
1,150.00
1,455.00
890.00
1,178.00
710.00
1,000.00
2000
Close
1,800.00
422.00
2,161.01
470.01
1,510.00
1,940.01
1,150.00
1,455.00
920.00
1,350.00
(*) On October 20, 2000, the Company approved a 5 for 1 split of its stock traded on the BOVESPA. The Company did not split its stock traded
on the New York Stock Exchange.
New York Stock Exchange — ABV, ABV.c
Year-end stock information
U.S. Dollars per ADR (1 ADR = 100 shares)
Quarter Ended
December 31
Common
Preferred
High
23.06
26.38
Low
14.06
19.44
2000
Close
22.25
25.75
www.ambev.com.br
79
AMBEV — ONE OF A KIND
Companhia de Bebidas das Américas - AmBev, now
the largest private Brazilian company in terms of gross
revenue, was created through the merger of Companhia
Antarctica Paulista and Companhia Cervejaria Brahma,
the two largest and most venerated companies in the
Brazilian beverage industry.
AmBev is a merger that has worked, especially through
the integration, in a short period of time, of different
processes and cultures, which is critical in making
transactions such as this one successful. It is on this
foundation that AmBev is further building its business
by applying progressive philosophies and state of the
art management practices such as:
• A culture of creative informality, combined with
a relentless quest for exceeding results and
expectations;
• Management based on EVA (Economic Value Added),
both by plant and by business unit; and
AmBev was formed to realize the enormous potential
of a diversified Brazilian-based beverage company
capable of competing on equal footing with the largest
players worldwide. Today, the Company is the third
largest brewery and the fifth largest beverage company
in the world, with sales volume of 64.8 million hectoliters
of beer and 17.2 million hectoliters of soft drinks, totaling
82.0 million hectoliters in 2000. In Brazil, the Company
holds 70% of the beer market and 17.4% of the soft
drinks market.
AmBev’s shares trade on the São Paulo stock exchange,
the BOVESPA (AMBV3, AMBV4), and on the NYSE
(ABV, ABVc), and are held by over 40,000 investors
worldwide. AmBev operates in other Latin American
countries, with plants in Argentina, Uruguay, and
Venezuela. Through its extensive distribution network,
the Company offers the highest quality products under
leading brand names while simultaneously creating jobs
and improving the quality of life for millions of Brazilians.
This is why we think both Brazil and AmBev are one
of a kind.
• Individuals who are highly trained and motivated,
with a variable compensation system, based on
meritocracy, and complemented by an employee
stock ownership plan.
AmBev’s management system, driven by people of
strong commitment, supported the Antarctica–Brahma
merger’s rapid and harmonious development. A small
group of employees from both companies were invited
to design, plan, and execute the integration process.
In 2000, AmBev’s executive directors visited all of the
Company’s business units to ensure that the culture
and values of AmBev would be fully adopted by all the
Company’s employees.
This kind of management culture guarantees, even in
the midst of great change, that AmBev can implement
new projects such as the Zero-Based Cost Plan. This
program’s objective is to reduce variable costs by
dividing the production process into “cells”, and to
make each operator responsible for managing his or
her own budget.
www.ambev.com.br
3
FINANCIAL HIGHLIGHTS
Income Statement Data
2000
Pro Forma
1999
% Change
2,706.4
1,240.5
472.1
775.8
242.4
5,250.3
2,406.6
915.8
1,505.0
470.2
4,610.2
1,850.4
438.9
974.0
8.9
13.9
30.1
108.6
54.5
5,201.4
4,453.4
1,130.4
600.1
1,586.1
8,639.6
2,192.9
1,164.6
3,076.9
9,348.6
3,590.7
1,839.3
1,406.7
-7.6
-38.9
-33.5
118.7
146.2
411.2
283.6
797.7
15%
—
—
1%
41.04
6.27
20.07
79.89
12.17
38.94
669.76*
4.22*
463.70*
Number of shares — millions
Number of ADRs — millions
38,646.1
3,864.6
2,100.4*
—
Market capitalization — R$ millions
Market capitalization — US$ millions
18,283.8
9,405.3
1,681.4*
864.9*
R$ Millions
Net sales
Gross profit
EBIT
EBITDA
Net income
2000
U.S. Dollars
Balance Sheet Data
R$ Millions
Total assets
Total debt
Net debt
Shareholders’ equity
Other Financial Data
R$ Millions
EVA (Economic Value Added)
NOPAT (Net Operating Profit After Taxes)
ROE (%)
Per Share Data
R$/1,000 Shares
Book value per share
Earnings per share
EBITDA per share
Sales Volume
Millions of Hectoliters
Beer
Soft drinks
Total
64.8
17.2
82.0
60.6
16.0
76.7
6.9
7.0
6.9
(*) Reflects the share capital of Antarctica and that of the controlling shareholders of Brahma. The non-controlling shareholders
of Brahma converted their shares to shares of AmBev on September 15, 2000.
Pro forma data is considered as if the merger of Antarctica and Brahma had occurred on January 1, 1999.
Figures throughout this report are stated in Brazilian Reais. The exchange rate on December 31, 2000 was R$ 1.94/US$ 1.
4
www.ambev.com.br
MESSAGE TO SHAREHOLDERS
The year 2000 was the first full year of operations of
Companhia de Bebidas das Américas - AmBev. The
integration of Antarctica and Brahma began immediately
following the approval of the merger by the Brazilian
antitrust authority, CADE - Conselho Administrativo
de Defesa Econômica, on March 30, 2000.
These two companies transcended a hundred-year-old
rivalry and were united to create a large and competitive
Brazilian beverage company. The Company is now the
third largest brewer and the fifth largest beverage
company in the world, with international scope and
Latin American leadership. The merger expands growth
opportunities in each product line, with synergy gains
of over US$ 263 million, and now commands a 38%
share of the Brazilian beverage market. In 2000, AmBev
registered EVA (Economic Value Added) of US$ 149 million
and EBITDA of US$ 792 million. AmBev has 17,500
employees and 46 plants with installed capacity of
131 million hectoliters per year. The Company markets
its products via 700 exclusive third party distributors
and 24 direct distribution centers and coverage over
a million points of sale. Outside Brazil, it has operations
in Argentina, Uruguay, and Venezuela.
So that full integration and the realization of synergies
could be achieved in less that a year, three basic
guidelines were established:
a) All decisions should be made to create the greatest
possible value for shareholders;
b) The best processes in each area of AmBev would be
implemented throughout the company; and
c) The most qualified professionals would assume
management of the business.
During the antitrust approval process, approximately 100
employees, guided by these principles, shaped the future
of AmBev. The right people, processes, and
objectives were brought together to drive
a successful integration within the desired
time frame. Although the company was
created just over a year ago, we now feel
as though we have been operating as a
unified and cohesive team for much longer.
We identified a promising future for the
new Company the moment the merger
was planned; since the merger we have
not only built on the value of our brands
and our competitive advantages resulting
from proprietary processes and best practices, but have
developed our people and culture as well.
We have a strong and uniform corporate culture, focused
on results, and guided by our priorities of urgency,
simplicity, and transparency. Talent is carefully recruited
and trained, with their efforts and competencies
recognized and compensated by a performance-based
variable pay system and by the possibility of becoming a
partner in the Company through our stock ownership plan.
As managers of a company with over 40,000 investors,
we understand our responsibility to create opportunities
that will produce steadily improving results, for both our
employees and our shareholders. We understand our
responsibility to the communities in which we operate,
as well as the importance of treating our employees with
dignity and providing them with the best possible
employment conditions. We always expect the best from
our people, including the ability to balance priorities.
This first year of consolidated operations presented us with
unique challenges as well as tremendous opportunities.
Our success has given us the confidence to continue to
set the highest of goals, such as:
a) Increase per capita beverage consumption in Brazil,
which is still far below comparable markets;
b) Improve distribution capabilities, with an eye toward
achieving a balance between direct distribution and
exclusive third party distribution;
c) Expand the synergy gains from the merger of Antarctica
and Brahma, from the US$ 100 million realized from April
to December 2000, to more than US$ 263 million in 2001;
d) Enhance both our market share and the profitability of
the soft drinks segment; and
e) Develop, on a sound financial and strategic footing,
the foundations we have begun to build in order to gain
a more a significant share of the world
beverage market.
Growth resumed in the Brazilian economy
in 2000 and the economic outlook over
the next few years reinforces our conviction
that we can produce even better results.
In this environment, we will be ready to
take advantage of the opportunities before
us: better serving our consumers desires
and our customers needs, providing
opportunities for employees, and creating
more value for our shareholders.
Marcel Herrmann Telles and Victório Carlos De Marchi
Co-Chairmen of the Board of Directors
www.ambev.com.br
5
OUR BELIEFS AND VALUES
At AmBev, we are working hard to be recognized as
the most competitive beverage company in the world
in terms of EBITDA margin and with annual growth of
15% in EVA. To reach these goals, AmBev recruits,
trains and keeps the best professionals, and invests
in efficient production, distribution and effective
marketing. We anticipate our consumers’ desires with
quality products at the lowest cost in the world.
These are AmBev’s values:
Customers
Communication
• Our customers connect us to the consumer.
• The success in selling our products depends on
the presence, presentation and environment at the
point of sale as well as a partnership with our
distributors.
• We show consideration and a sense of partnership
with our clients by rapidly meeting their requests and
needs.
• Our success depends on our employees’ ability to
work together toward clearly defined objectives, among
other factors.
• We actively encourage open communication
between employees, maintaining a straightforward,
streamlined organizational structure with few
hierarchical levels.
Ethics
Consumers
• We hold ourselves ultimately accountable to the
consumer. Everything we do must take into account
their wishes, needs, and expectations.
• Our goal is to increase preference for our brands
and products, and, through this, total satisfaction of
our consumers.
People
• We invest in our people continually. Our team is an
asset that does not depreciate and can not be imitated
by our competitors.
• We train our people constantly, working on the premise
that to feel challenged generates self-development.
We pay our professionals according to performance;
those who act like owners, earn like owners.
• We create a workplace so that each employee takes
pride in AmBev and feels excited about his work. We
foster safe work practices.
• We have a sense of urgency – if we have to do it,
let’s do it now! This drives everything we do.
6
• Ethics and integrity are important in all actions and
activities undertaken by AmBev.
• We believe in open, frank partnerships, always
working toward common objectives that contribute
to economic and social development.
Returns
• Value creation guarantees the continuous growth
of AmBev and its meritocracy, which values and
recognizes excellence. Greater performance is
reflected in strong shareholder returns.
Brands
• Our brands are our greatest asset. We cultivate
our brands, drive their growth, and never accept
that they are mature. At AmBev, we do not become
comfortable with the level of success of our brands.
Our brands must get stronger; each and every one
of us bears this responsibility.
• We use our capacity to strengthen our brands with
the goal of total consumer satisfaction. Always.
Environment and Community
Quality
• At AmBev, we respect and preserve the
environment in all our activities, products, and
services, and we take an active role in raising
environmental awareness.
• We develop and implement technology to improve
product, process and service quality, by adopting the
best practices developed by AmBev.
www.ambev.com.br
PLANTS AND OPERATIONS
Venezuela
AmBev’s Venezuelan subsidiary, Cervecera Nacional, was acquired in 1994
and has an 8.2% share of that country’s beer market. Our plant has an annual
production capacity of 2.2 million hectoliters.
Brazil
Argentina
AmBev inaugurated its plant in 1994,
with capacity of 2.3 million hectoliters
per year, and sells Brahma Chopp and
Miller Genuine Draft, with a beer market
share of 14.7%. The Company also
controls the largest malting plant in
Latin America, located in Argentina.
AmBev is the largest beverage
company in Brazil with
33 production facilities including
14 beer plants, seven soft drinks
plants, and 12 combined beer
and soft drink plants. In addition,
we have one malting plant and one
concentrate unit. Annual installed
capacity is 89.8 million hectoliters of
beer and 36.6 million hectoliters
of soft drinks. With three distribution
networks – Brahma, Skol, and
Antarctica – AmBev holds 70% of
the beer market and 17.4%
of the soft drinks market.
Uruguay
AmBev owns a stake in two companies in Uruguay – Salus and Cympay –
which, together, hold 39.7% of the beer market and 50% of the bottled
water market. AmBev also has two malting plants in the country.
www.ambev.com.br
7
Brazil is the world’s tenth largest economy.
It is the second largest market for helicopters,
executive jets and cellular phones.
Of the 500 largest multinationals in the world,
approximately 400 operate in Brazil.
ONLY PEOPLE LIKE OURS
AmBev has about 17,500 employees involved in the
production, marketing, and distribution of our products.
It is a young group that is highly trained and motivated.
The Trainee Program has graduated over 400 of these
young potential professionals with the skills necessary to
assume strategic roles over the short and medium term.
Among the 400, today one is an executive officer,
60% are top managers, 36% hold senior positions,
and 4% are in other key positions.
In 2000, 22 more trainees were hired. Besides the
requirement of a strong academic background,
AmBev’s people are permanently driven to grow and
improve their professional qualifications. To make that
happen, they participate in a broad range of training
courses and exercises, organized internally or through
external programs, and development courses both in
Brazil and abroad.
In 2000, nearly 80% of employees participated in these
courses, many through our own AmBev University.
Investment in training, in all forms, totaled R$ 13 million
in 2000.
AmBev University’s objectives are to integrate all
Company training efforts, and to capture and develop
the best talent available. The AmBev University internal
MBA program is one of the University’s highlights. The
purpose of the program is to develop its professionals
and third party distributors, through instruction by
the best-qualified professors and speakers, thereby
increasing excellence across the Company.
The Black Belts and Green Belts Programs aim to
improve and empower professionals’ analysis and
problem solving skills, and to facilitate goal-oriented
achievement. It utilizes total quality methods and
statistical tools to achieve excellence. To date, more
than 100 employees have participated in these
programs.
www.ambev.com.br
9
PERFORMANCE-BASED
VARIABLE PAY
This system is a powerful lever to motivate and reward
outstanding performance by AmBev’s employees. In
2000 alone, more than R$ 68.3 million was distributed
in variable bonuses, which for many, doubled their
annual compensation. A select group of 258
employees have also become AmBev shareholders
through the stock ownership plan. Employees who
consistently surpass even the most aggressive
performance goals are invited to join this program.
QUALITY PROGRAMS
AmBev develops programs to guarantee efficient
management practices and to provide guidance to
all areas of the Company on resource and efficiency
maximization.
The Manufacturing Excellence Program was
developed to measure, benchmark, and motivate
factory employees through clear rules and standards
of excellence in plant management, in order to define
both the desired results and the means to achieve
them. The Manufacturing Excellence Program
recognizes and rewards the best plants for their
achievements.
The Integrated Certifications System (ICS) consists
of the implementation of ISO 9000 series norms
(total quality management), ISO 14000 (environmental
management) and BS 8800 (safety and
occupational health) in all business
units. Thanks to this system,
AmBev today has more than
17 plants and four business
units, which have already been
certified for ISO 9001/2 norms,
while eight factories have achieved
the ISO 14000 for environmental
management and two factories have
received the BS 8800.
The Sales Excellence Program was
created to motivate and educate
employees in the commercial and
proprietary distribution areas, as
well as the regional marketing
posts, to achieve management
excellence. The Sales Excellence
Program establishes a standardized
basis for operation in all of AmBev’s
business units. With standardization,
the focus turns toward the
utilization and promotion of best
practices throughout the sales
force, encompassing both the
direct and third party systems.
The Distribution Excellence Program seeks to
professionalize AmBev’s entire network. It is an
operations manual for the Company’s 700 exclusive
third party distributors that allows evaluation and
benchmarking, orientation, and motivation, with the
objective of achieving the highest efficiency levels
and determining the necessary coverage to achieve
growth in market share and greater profitability. Year
after year, this program is updated to incorporate
technological innovation and current market best
practices. In 2001, this program will kick off its
tenth year.
The result of a joint venture between AmBev and
Souza Cruz (BAT), Agrega was launched at the end
of 2000 and is expected to process transaction volume
of approximately R$ 1 billion in the first half of 2001.
AMBEV INTERNET PROGRAMS
AmBev has created new opportunities and alternative
models for reducing costs and generating value for its
shareholders using the Internet.
The Company has technological initiatives throughout
the supply chain to enhance profitability and create
competitive advantages. These focus on the assets –
tangible and intangible – with which the Company’s
operation can add value. The first example is the
Agrega.com portal. Agrega helps coordinate shared
purchase of non-production related materials and
services – Maintenance, Repair and Operations (MRO).
www.ambev.com.br
11
Brazil has a predominantly young population of
170 million.
With its 26 states, Brazil has 11 state capital cities
with over 1 million inhabitants each. Its markets are
large and diverse.
A ONE OF A KIND MARKET
Without a doubt, Brazil is a beer country. Besides
enjoying a warm climate year round, other factors boost
the prospects for beer and soft drinks consumption.
Brazil has a young population, with two-thirds of its
inhabitants under the age of 30. While Brazil’s largest
beverage category is soft drinks, the second largest
segment is beer.
Notwithstanding, per capita consumption of beer and soft
drinks is still quite low. This is due to unequal income
distribution and high taxes, which results in consumer
prices among the highest in the world while factory costs
are among the lowest in the world. AmBev’s challenge
is to take advantage of the opportunities this situation
presents, while overcoming inherent obstacles.
Due to the Country’s size, transportation difficulties, as
well as cultural differences and historical, economic
and structural factors, the Brazilian beverage market is
unique. Brazil is in essence a group of varied markets,
each with its own strong regional preferences that
make it possible for one brand to be a huge success
in one part of the country, and a modest performer
elsewhere. That is why a comprehensive product line
that appeals to varied consumer tastes is necessary.
Among the factors that make the Brazilian beverage
market unique are its more than one million points
of sale. Most of these are small establishments such
as local bakeries (a Brazilian staple), corner bars,
restaurants, cafes, neighborhood markets, and others.
www.ambev.com.br
13
Share of Stomach – 2000
Aguardente
2%
Juice/Sport Drinks/Tea/Other
2%
Mineral Water
11%
Soft Drinks
37%
Milk
21%
source: AmBev
Beer
27%
These small vendors account for two-thirds of Brazilian
beer sales volumes and nearly half of Brazilian soft
drinks sales.
Let’s look at some of the ways in which Brazil is
different from the world’s largest beverage market, the
United States. Beer sales in the U.S. are concentrated
in supermarkets and liquor stores, while in Brazil,
60% of consumption occurs on the premises, with
the majority of our consumers deciding what to drink
on the spot.
Another difference is that 25% of AmBev’s sales volume
in Brazil is sold in cans, and 70% is sold in returnable
600 milliliter bottles.
It is important to note that the Brazilian market has
another important peculiarity: Most beverages – beer,
soft drinks, water, juices, and others – are sold together.
The distribution networks in the industry are integrated.
With the high degree of fragmentation in beverage
retailing, companies must be “total beverage”
companies offering a wide range of products with
well-known brands to compete as a supplier to most
points of sale.
14
www.ambev.com.br
Beer Sales Volume
by Channel – 2000
Supermarkets
27%
On Premise
Consumption – 52%
Small Retailers
21%
source: Nielsen
Beer Sales Volume
by Package – 2000
Long Neck (355 ml)
4%
Cans (350 ml)
25%
source: Nielsen
Other
1%
Returnable Bottles
(600 ml) – 70%
Vilmondes de Souza
Cerbel – Goiânia (GO)
Armando Antônio Rizatti
Rizatti – Franca (SP)
Basílio Fernades de Barros
Nova Radar – Osasco (SP)
José Eduardo Lang
Aeroporto – São Paulo (SP)
AmBev third party distribution “Ambassadors”
Mauro Carvalho Jr.
Colorado – Vargem Grande (MT)
Carlos Alberto da Fonseca
Beer Garden – Caieiras (SP)
Reinaldo Solera
Nova Era – Goiânia (GO)
Francisco de Assis Pinto
Cervale – Ceres (GO)
EFFECTIVE DISTRIBUTION NETWORKS
Distribution is one of the most critical areas of any
beverage company. For this reason, AmBev has
concentrated a great amount of effort on the
continuous development of a direct distribution
system, and, at the same time, the empowerment
and professionalization of the Company’s exclusive
third party distributor networks. AmBev is developing
its direct and third party distribution networks into
some of the most efficient in the country, and works
to optimize the cost of service to each individual
point of sale. The process of improving distribution
efficiency is one of AmBev University’s priority missions,
which brings together distributors (third party and
direct), Company managers and executive officers
around a common goal. Recent versions of this
development program put special emphasis on point
of sale execution, seeking to improve the quality of
service provided to customers and to standardize best
practices for sales channels across the system.
The goal is to sell more and to sell better. These efforts
have proven themselves so effective, that our University
has established TVAmBev, which simultaneously
transmits standardized training programs every week via
a closed-circuit satellite to the Company’s sales force
of 12,000 people. Another effective tool to enhance
sales emerged in 1998 with the launch of high-tech
coolers especially developed to meet the unique needs
of the market. The coolers chill 600 milliliter bottles of
beer to the ice-cold temperature preferred by Brazilians,
especially on the numerous very hot days. At the same
time, the coolers are environmentally friendly and energy
efficient. These special beer coolers have been
installed in 48,000 locations throughout the country’s
most important markets.
These resources are important factors improving the
efficiency and scope of the Company’s distribution
network, composed of 700 exclusive third party
distributors and 24 direct distribution centers.
www.ambev.com.br
15
WITH GROWTH POTENTIAL LIKE OURS...
AmBev has 70% of the domestic beer market, with the
Skol, Brahma, and Antarctica product lines, and 17.4%
of the soft drinks market, with Guaraná Antarctica as
the absolute leader of the guaraná soft drink segment.
With the merger, AmBev became a diversified
beverage company with considerable economies of
scale and enhanced competitive advantages such as:
• Strong operating cash flow (EBITDA) that reached
R$ 1.5 billion in 2000;
• Consumer preference for our Skol, Brahma Chopp,
and Antarctica Pilsen brands, which reached a
combined 79% in 2000. All three of these brands
are among the 15 best selling brands worldwide;
• An agile and informal management style with a focus
on the customer, an approach that drove Brahma’s
success from 1989 through 1999;
• 17,500 employees, carefully selected and trained,
with a performance-based compensation system and
a stock ownership plan;
• Installed capacity of 131 million hectoliters per year,
in 46 plants in Brazil and in Latin America;
• One of the lowest production costs in the world, with
the goal of improving every year;
• A vast distribution network, involving 700 exclusive
third party distributors and 24 direct distribution
centers, serving over one million points of sale; and
• Cutting edge and consistent methodologies for
measuring economic results (EVA), controlling fixed
and variable costs throughout all operations, and
implementing strict quality controls.
Brazil is the world’s fourth largest beer market, after
the United States, China and Germany, and there are
compelling reasons to believe it can reach a higher
position. The first is that Brazil is entering a period
of sustained economic growth, with expected annual
growth rates estimated near 4%. The last decade
reveals a direct correlation between beverage
consumption and GDP growth near 1.5x for beer
and an even greater multiplier for soft drinks.
The second is that the population of 170 million is
continuously growing at an average rate of 1.5% per
annum over the next five years, while the subgroup of
consumers over the age of 18 (42% of the population)
is expected to increase by more than 4% per year
16
www.ambev.com.br
Breakdown of Beer Market
by Segment – 2000
Super Premium
3%
Price
20%
Premium
77%
source: Nielsen
Breakdown of AmBev Consumer Price
Beer – 2000
Distributor
11%
Manufacturer
26%
Taxes
29%
Retailer
34%
source: Nielsen/AmBev
Breakdown of AmBev Consumer Price
Soft Drinks – 2000
Distributor
11%
Taxes
21%
Manufacturer
30%
Retailer
38%
source: Nielsen/AmBev
during the same period. This kind of growth will have
a major positive impact on beer consumption and
means that more than 2.5 million potential consumers
expand the market each year.
The third reason is that per capita consumption of
49.3 liters per year places Brazil at a distant 14th
in the worldwide ranking. There are some countries
that register per capita consumption of 90, 120
or even 160 liters per year. Therefore, considerable
room for growth still exists. The differences are even
greater in soft drinks. Per capita consumption of
64.7 liters per year is less than half the average in
Mexico and an even a smaller percentage when
compared to more developed countries.
Per Capita Consumption
of Beer (liters)
Per Capita Consumption
of Soft Drinks (liters)
68
67
51
65
66
49
1999
2000
48
1996
1997
1998
In light of this environment, AmBev is moving forward
on two fronts:
I. Strengthening its brands, to build on high levels
of consumer preference.
II. Stimulating growth in per capita consumption in
Brazil by:
1. increasing the reach and efficiency of its distribution
network in order to pursue new consumers in the
source: Pepsi
49
source: Sindcerv
50
63
1996
1997
1998
1999
2000
extensive number of points of sale makes distribution
extremely complex and expensive. Most points of
sale do not have a telephone, and do not practive
efficient or sufficient inventory controls. For this
reason, AmBev’s sales representatives are equipped
with handheld computers to perform inventory
control for their customers as well as survey prices
during their visits. Additionally, beverage pricing in
Brazil is highly distorted when compared to countries
such as Mexico, where the factory and distributor
share of the consumer price totals 52%, of which
26% is taxes, and 22% is the retailer margin. In Brazil,
the manufacturer and distributor combined retain only
37% of the final price, because 29% is collected in
government taxes, while 34% of the consumer price
goes to the retailer.
regions offering great potential, such as the
Northeast and the interior of the country;
2. devising an effective marketing plan to develop
the super premium segment of the market, which
today is responsible for only 3% of beer industry
sales; and
3. continuing to research and analyze consumption
habits to better understand specific market
opportunities.
With all the positive aspects of the Brazilian beverage
market, there are also significant challenges. The
www.ambev.com.br
17
the consumption profile of points of sale where
installed, resulting in significantly higher beer sales
and consumption. As a consequence of satisfying
the needs of our consumers, AmBev’s brand
preference improved and sales rose. By the end of
2000, AmBev placed 48,000 special beer coolers
in the country’s main consumer markets. Additionally,
AmBev continues to invest in this special equipment
and has plans for additional cooler placements in
strategic points of sale.
GUARANÁ ANTARCTICA:
TAKING A TASTE OF BRAZIL
TO THE WORLD
ACHIEVING EXCELLENCE IN
POINT OF SALE EXECUTION
The higher average temperatures in Brazil make
the task of keeping beverages appropriately chilled
a great challenge. In general, the majority of the
country’s points of sale do not have the necessary
resources to invest in refrigeration equipment
capable of offering Brazilian consumers the ice-cold
beer that they want. With an eye to meeting the
specific needs of the market, AmBev developed
a special high-tech beer cooler called the “Sahara”
with much higher levels of refrigeration capacity.
These coolers maintain beer at -5ºC, do not
excessively increase the point of sale’s energy
consumption and do not emit environmentally
damaging CFC/pollutants. In addition to chilling
beer, these special beer coolers have changed
18
www.ambev.com.br
AmBev also wants to transform its Guaraná Antarctica
into a global brand, which it believes has great
potential in the global soft drinks market. Guaraná
is a typically Brazilian soft drink made from a fruit
that grows in the Amazon rainforest. It has become
a staple of the Brazilian diet, rivaling even the most
popular international soft drinks. To ensure sustainable
expansion in international markets, AmBev is first
undertaking a careful planning and testing program.
PepsiCo Inc. is AmBev’s partner in this venture, and
is investing in a joint team that has been studying,
testing, and plotting the necessary course of action
to take Guaraná Antarctica, the flavor of Brazil, to
consumers around the world.
Brazil is the fourth largest beer market in the
world, with annual consumption of 82.6 million
hectoliters and per capita consumption of
49.3 liters.
It has the third largest consumption of soft drinks,
with a market size of 110 million hectoliters and
64.7 liters per year in per capita consumption.
WITH INTERNATIONAL OPERATIONS LIKE THESE...
AmBev’s international strategy looks to countries where
growth potential is strong, and where it can generate
incremental shareholder value. AmBev is carefully
exploring expansion opportunities, particularly in
Latin America where AmBev believes it has specific
competitive advantages.
AmBev has plants in Argentina, Venezuela, and Uruguay.
In Argentina, the strategy consists of investing in the
principal brand sold in that country — Brahma Chopp.
Direct distribution efforts focus on the main channels
for beer sales, which are small establishments such
as bars and kiosks. This initiative was started in 1998,
in metropolitan Buenos Aires, where only 30% of the
points of sale were covered. The effort now supplies
80% of the points of sale, with significant growth in
market share. These results prove that we are moving
this operation in the right direction, with Brahma Chopp
garnering a 14.7% market share in 2000. More
importantly than the volumes, the Argentine operation
enhanced its profitability in 2000 and registered a record
EBITDA of R$ 23 million, advancing 20% compared
to the previous year, despite a recession.
This year, plans are in place to expand the direct
distribution system to other large cities in Argentina,
such as Córdoba.
20
www.ambev.com.br
AmBev intends to continue to explore and develop new
distribution channels, such as take-home consumption,
where its brands have strong growth potential.
In Venezuela, Cervecera Nacional, acquired in 1994,
made important advances on three fronts in 2000:
plant productivity, sales, and distribution. The Plant
Productivity Program led to an improvement of over
20% in productivity, with a particularly strong impact
on production costs.
In the sales and distribution area, market coverage
evolved based on research, which identified AmBev’s
potential to increase its penetration. The sales force
also gained an important competitive advantage
by launching a special high-tech beer cooler in
points of sale with high growth potential. This
investment is another example of the innovative
programs in place in that country, which has one
of the highest levels of per capita consumption
on the continent.
To increase its market share, of 8.2%, the Company
reinforced its investments in the Brahma Chopp brand
with a new sales and marketing campaign and will
soon expand direct distribution to the capital Caracas,
Venezuela’s largest beer market.
In Uruguay, AmBev established its presence in 2000
with the acquisition of two companies, which together
hold a 39.7% share of the Uruguayan beer market.
In addition, it increased its malt production capacity
by nearly one-third.
In October 2000, AmBev and Danone Group
purchased 57.3% of the shares of Salus, through
a joint venture in which AmBev has 26.3%. Salus is
Uruguay’s second largest brewer, with a 20% market
share, and is the leader of the local mineral water
market with a share of 42%. Two production units, one
water plant and one combined beer and soft drinks
plant, were acquired.
In February 2001, AmBev also purchased 95.4% of
Cympay. This Company possesses a malting plant
as well as the Norteña and Prinz beer brands, which
have beer market share of 19.7%. Cympay also has
8% of the mineral water market, through its subsidiary
Fuente Matutina S.A.
AmBev Market Share
in Argentina – Beer (%)
AmBev Market Share
in Venezuela – Beer (%)
14.7
13.8
11.4
11.7
11.1
9.8
9.8
1996
1997
1998
1999
2000
source: Datos
source: Nielsen
8.2
7.2
5.1
1996
1997
1998
1999
2000
www.ambev.com.br
21
Brazil is the second largest recipient of foreign
investment among the developing countries.
In 2000, foreign companies invested US$ 33
billion in Brazil.
Financial Section
Table of Contents
24
34
35
36
39
40
42
44
46
48
79
Management’s Discussion and Analysis of 2000 Results
Corporate Governance
Board of Directors and Executive Officers
Social Responsibility and Environmental Policy
Report of Independent Accountants (*)
Balance Sheet (*)
Statement of Income (*)
Statement of Changes in Stockholders’ Equity (*)
Statement of Changes in Financial Position (*)
Notes to the Financial Statements (*)
Investor Information
(*) A free translation of the original financial statements (in Portuguese) prepared
in conformity with accounting principles determined by Brazilian corporate legislation.
The following analysis is presented on a consolidated basis in nominal Brazilian Reais pursuant to Brazilian Corporate
law accounting principles. Unaudited pro forma results for 1999 are being presented in order to facilitate comparisons,
as if the merger of Antarctica and Brahma had occurred on January 1, 1999.
Consolidated Financial Highlights
R$ Millions
Net sales
Cost of goods sold
Gross profit
SG&A expenses
EBIT
EBIT margin (%)
Depreciation and amortization
EBITDA
EBITDA margin (%)
Net income
EPS — R$/000 shares
Sales volume — 000 hectoliters (*)
Net revenue per hectoliter — R$/hl (*)
2000
Pro Forma
1999
5,250.3
(2,843.7)
2,406.6
(1,490.8)
915.8
17.4%
589.2
1,505.0
28.7%
470.2
12.17
4,610.2
(2,759.8)
1,850.4
(1,411.5)
438.9
9.5%
535.0
974.0
21.1%
8.9
4.22
5,201.4
188.1
82,000
64.0
76,586
60.1
7.1
6.4
% Change
13.9
3.0
30.1
5.6
108.6
10.1
54.5
(*) Includes sales volume of beer and soft drinks only.
Values may not add due to rounding.
Net Sales
Net sales reached R$ 5,250.3 million in 2000, a 13.9% increase over the previous year, when net sales were
R$ 4,610.2 million. These results were due to higher sales volume and net sales per hectoliter in the core beer and
soft drinks segments in Brazil, which are further analyzed in the respective sections below.
The net sales increase primarily reflects success in the implementation of strategies aimed at continuous
improvement in point of sale execution and increased efficiency in AmBev’s distribution network, as well as the focus
on the core soft drinks portfolio since August 2000. Additionally, the expansion of the distribution infrastructure in
Argentina and Venezuela translated into rising beer volumes, resulting in sales growth of approximately 11.5% in the
year 2000. Net revenue per hectoliter also rose because of the increased number of cans in the Company’s beer
sales mix, which rose from 23.7% in 1999 to 24.7% in 2000.
24
www.ambev.com.br
Synergies
During the year 2000, the Company achieved R$ 192.1 million in synergy gains, representing 38.1% of the total gains
forecasted from the integration of Antarctica and Brahma operations. This result exceeded the announced goal for
synergy gains between R$ 100 million and R$ 150 million for 2000.
Sinergy Gains
R$ Millions
Real 2000
Proposed (*)
% Change
91.3
31.8
34.9
14.5
19.6
192.1
273.7
105.8
49.5
15.0
60.3
504.3
33.4
30.1
70.6
96.7
32.5
38.1
Production
Distribution
Administrative/Commercial
Purchasing
Interest costs
Total
(*) Values proposed for 12 months of integration.
The synergy gains began to be achieved upon merger approval by the Brazilian antitrust authority (CADE). This occurred
on April 7, 2000, with the Company’s performance commitment signed on April 19, 2000. The Company foresees
a total of R$ 504 million in synergy gains in 2001.
Cost of Goods Sold
Merger synergies were responsible for substantial reductions in fixed production costs (labor and other), as well as
for greater efficiency in raw material usage and lower variable costs such as PET and CO2.
In 2000, the increase in packaging costs was due to the rise of cans in the packaging mix. Since cans represented
24.7% of total sales volumes, compared to 23.7% in 1999, this increase impacted both beer and soft drinks.
The total production cost per hectoliter (excluding depreciation) fell 2.9%, compared to the previous year.
Cost Breakdown
Raw material
Packaging
Labor
Depreciation
Other
Total
Costs of goods sold excluding depreciation
2000
R$ Millions
1999
2000
R$/hl (*)
1999
% Change
762.6
1,272.0
167.2
386.9
255.0
2,843.7
2,456.9
723.2
1,094.6
174.4
389.2
378.3
2,759.8
2,370.5
9.3
15.5
2.0
4.7
3.1
34.8
30.0
9.4
14.3
2.3
5.1
4.9
36.0
30.9
-1.2
8.9
-10.2
-6.9
-36.8
-3.5
-2.9
(*) Includes sales volume of beer and soft drinks only.
www.ambev.com.br
25
Selling, General and Administrative Expenses
Selling, general and administrative expenses totaled R$ 1,490.8 million in 2000, a 5.6% increase from 1999, when
SG&A expenses were R$ 1,411.5 million. As a percentage of net sales, SG&A expenses declined from 30.6% in
1999 to 28.4% in 2000.
While selling expenses decreased from R$ 631.9 million to R$ 578.5 million, due to lower commercial fixed costs,
general and administrative expenses remained nearly constant, considering the non-recurring nature of general
integration expenses of R$ 66.2 million incurred during the Antarctica and Brahma merger.
Depreciation and amortization increased from R$ 145.8 million to R$ 202.3 million, a 38.7% increase, following the
depreciation and amortization of investments in direct distribution and the development and production of special
high technology beer coolers, which were placed in 48,000 strategic points of sale during the year.
Direct distribution expenses were R$ 337.0 million for the year, 28.7% above 1999 levels, when they totaled R$ 261.9
million. This increase was mainly due to the increase in direct sales volumes, which were responsible for 22.8% of total
sales volume in 2000, compared to 16.5% during 1999. Direct distribution expenses per hectoliter, however, fell
12.7% to R$ 18.1/hl in 2000 from R$ 20.7/hl in 1999. This decline reflects improved efficiency in the Company’s direct
distribution operations in 24 of the main Brazilian markets.
Operating Profit
AmBev’s operating profit (“EBIT”) was R$ 915.8 million in 2000, a 108.6% increase over the previous year, when it
was R$ 438.9 million. This performance reflects not only the success of the rapid integration of the two companies,
which made possible the faster than expected capture of synergies, but also the improved point of sale execution,
guaranteeing growth in sales volumes and revenue per hectoliter.
Net Interest Expense
Net interest expense in 2000 (excluding interest on own capital) totaled R$ 324.0 million, 27.9% below 1999 levels,
when it was R$ 449.1 million. This decline is due to lower levels of net debt and a substantial improvement in interest
costs and maturities.
Consolidated Debt Position
R$ Millions
Short-term debt
Long-term debt
Total
Cash and marketable securities
Net debt
Net debt/equity (%)
Local Currency
Foreign Currency
Total
316.8
701.8
1,018.6
948.5
225.8
1,174.3
1,265.3
927.6
2,192.9
1,028.3
1,164.6
37.8%
AmBev’s foreign currency exposure due to the use of U.S. Dollar-denominated financing is fully hedged by investing
in securities indexed to the U.S. dollar, swap contracts and other derivatives.
26
www.ambev.com.br
Non-Operating Income
The Company booked non-operating income of R$ 57.8 million in 2000. This is mainly related to a gain on the sale
of assets and the Bavaria brand to Molson totaling R$ 42.8 million. This transaction occurred as a consequence of
the merger approval by the Brazilian antitrust authority (CADE). The mandatory sale was completed in accordance
with the scheduled timetable. Non-operating gains of R$ 18.7 million were also booked on ICMS (state VAT tax) and
IPI (federal excise tax) credits on capital expenditures prior to October 1996, and other credits related to the sales
tax PIS/COFINS (federal unemployment contribution and social security tax). These gains were partially offset by R$ 3.7
million in non-operating charges due to losses on tax credits.
Provision for Contingencies
In 2000, net provisions for contingencies amounted to R$ 269.2 million. Of this amount, R$ 103.4 million is
attributable to the principal and fines for a pending legal issue relating to payment of IPI and ICMS taxes. An
additional R$ 55.5 million was provisioned to provide for losses on obsolete bottles and crates, and R$ 43.6 million
was also provisioned due to a legal discussion of a change in the basis for calculation of the PIS/COFINS tax
implemented by the government. Finally, R$ 29.2 million in provisions related to legal issues and labor liabilities were
made during the year.
Income Tax and Social Contribution
In 2000, an income tax and social contribution benefit was registered in the amount of R$ 405.4 million. After the
conclusion of studies regarding the legal restructuring of AmBev, some of the group’s subsidiaries were reorganized
based on a timetable that would allow the use of income tax loss carry-forwards accumulated during previous years.
An income tax/social contribution benefit in the amount of R$ 162.7 million was recognized given its expected future
utilization. Additionally, deferred taxes totaling R$ 267.6 million were reversed due to the fact that profits previously
obtained by subsidiaries abroad became non-taxable. Also, a R$ 61.2 million tax savings resulted from the payment
of interest on own capital to shareholders in 2000. These payments are tax deductible. Other tax benefits utilized in
2000 amounted to R$ 26.3 million.
Profit Sharing
According to the Company by-laws, the maximum percentage of net income to be paid in profit sharing is 10% for
employees and 5% for directors. Profit sharing is directly commensurate with the attainment of corporate goals,
including those related to EVA, profitability and growth targets. Since the corporate goals set for 2000 were achieved,
the Company made a provision for profit sharing totaling R$ 53.7 million. On a cash basis, profit sharing paid in 2000
amounted to R$ 68.3 million.
Net Income
Net income for the year 2000 was R$ 470.2 million, and includes minority interest of R$ 265.9 million, largely
explained by the occurrence of the exchange of Brahma shares for AmBev shares in September 2000. Since these
minority shareholders exchanged their shares in the second half of the year, while the controlling shareholders had
exchanged their shares on July 1, 1999, Brahma only became a wholly owned subsidiary of AmBev on September
15, 2000. AmBev’s 2000 earnings per share was R$ 12.17 per lot of 1,000 local shares, and R$ 1.22 per ADR (1 ADR
is equal to 100 shares).
www.ambev.com.br
27
Segment Breakdown
2000
Pro Forma
1999
% Change
Beer Brazil
Sales volume — 000 hl
Net revenue
EBIT
EBITDA
61,952
4,044.2
868.0
1,330.3
58,050
3,508.1
501.4
917.9
6.7
15.3
73.1
44.9
Soft Drinks
Net revenue
EBIT
EBITDA
17,177
848.8
59.9
147.8
15,962
726.3
(53.2)
22.3
7.1
16.9
n.s.
562.8
Beer International
Net revenue
EBIT
EBITDA
2,871
243.8
9.8
36.9
2,574
221.6
12.0
28.9
11.5
10.0
-17.9
27.7
Other Products
Net revenue
EBIT
EBITDA
113.5
(22.0)
(10.0)
154.1
(1.3)
4.9
-26.3
1,571.5
-304.1
82,000
5,250.3
915.7
1,504.9
76,586
4,610.2
438.9
974.0
6.9
13.9
108.6
54.5
R$ Millions
Total
Net revenue
EBIT
EBITDA
Beer Brazil. This segment’s EBITDA grew 44.9% in 2000, compared to the same period in 1999, reaching R$ 1.3
billion. This performance was influenced by a favorable macroeconomic environment and by improvement in the
Company’s sales and distribution systems. Through sales force training programs and best practice utilization,
AmBev has enhanced its point of sale execution and has achieved sales growth, both in volume and in value.
Additionally, the Company has been investing in special beer coolers placed in strategic points of sale. This
equipment was developed to satisfy the specific dynamics of the Brazilian market and to increase beer consumption.
As average temperatures in Brazil are higher and Brazilian consumers prefer ice-cold beer, installation of the coolers
made for ideal product delivery and led to a sales increase. By the end of 2000, the Company had installed 48,000
of these special beer coolers in the main markets across Brazil.
28
www.ambev.com.br
Soft Drinks. To better develop its soft drinks business, AmBev created a dedicated division during 2000. The
Company named a general manager of the soft drinks operation and reinforced its focus on the domestic beverage
market. This new division sets its own policies and strategies, using AmBev’s production and logistics infrastructure.
The strategy implemented in 2000 determined specific soft drinks-related goals for the entire organization. The
division focused on premium products, in which AmBev intends to invest further to enhance brand equity.
In its first year of operation as AmBev, the soft drinks business showed a significant increase in profitability and its
EBITDA rose from R$ 22.3 million in 1999 to R$ 147.8 million in 2000. Sales volume, net sales and costs benefited
from the merger through a stronger portfolio, implementation of best practices and substantial cost reductions.
International Beer. To increase focus on international operations and prepare the Company for the next steps
towards internationalization, AmBev has created an International Operations division, which will be responsible for
export activities, in addition to beverage and malt operations outside Brazil. AmBev currently has operations in
Argentina, Uruguay and Venezuela.
Liquidity and Capital Resources
Liquidity
The Company’s primary source of liquidity have been cash flows from operating activities. EBITDA was R$ 1,505.0
million in 2000. These resources were primarily used for:
(1) Interest payments and amortization of debt contracted to finance investments. Considering only the net
consolidated debt reduction, R$ 674.7 million was used;
(2) Investments in Property, Plant and Equipment (PP&E) of R$ 268.8 million;
(3) Investments in subsidiaries of R$ 22.3 million;
(4) Payment of dividends and interest on own capital of R$ 111.8 million;
(5) Share buyback program, R$ 10.5 million.
Net Working Capital
The net working capital has improved considerably, evolving from a R$ 520.9 million deficit at the end of 1999 to a
R$ 12.0 million deficit on December 31, 2000. This is explained by the reduction in consolidated short-term debt
following AmBev’s strong cash flow generation.
Capital Expenditures
In 2000, the Company’s capital expenditures amounted to R$ 268.8 million, of which R$ 75.0 million was invested
to acquire beer coolers especially designed for the Brazilian market. These coolers were placed in strategic bars and
restaurants where cold beer availability increases sales. Approximately R$ 121.8 million was invested in plants and
information technology. The Company also invested R$ 72.0 million to replace its existing inventory of beer bottles
and cases.
www.ambev.com.br
29
Acquisitions and Business Development
Salus
On October 6, 2000, AmBev and Danone Group acquired 57.3% of the shares of Salus, the second biggest brewer
in Uruguay and the local mineral water market leader. This acquisition was made through a joint venture, in which
Danone Group holds a 73.7% stake and AmBev holds the remaining 26.3%. Salus produces the Patricia brand and
holds a 20% beer market share in Uruguay. In the mineral water market, Salus holds a 42% market share.
This acquisition involves two plants, one for mineral water and another for beer and soft drinks. In 1999, Salus produced
190,000 hectoliters of beer and 850,000 hectoliters of mineral water.
Cympay
On February 14, 2001, AmBev acquired 95.4% of Cympay, a company based in Uruguay. Cympay controls a malting
plant, as well as the beer brands Norteña and Prinz, which hold a 19.7% market share in that country. Cympay also
holds an 8% share in the mineral water market through its subsidiary Fuente Matutina S.A., of which it holds 78.4%.
The rationale for this acquisition was to increase AmBev’s international presence. Indeed, AmBev now holds a 39.7%
market share in Uruguay, including the Patricia brand as well as the Norteña and Prinz brands acquired in the
purchase of Salus and Cympay, respectively. Additionally, Cympay increases AmBev’s vertical integration in malt, one
of the most important raw materials in beer production. This acquisition will begin to be consolidated into AmBev’s
results on February 1, 2001.
Agrega
AmBev and Souza Cruz (BAT) have signed a Memorandum of Understanding regarding the formation of a joint
venture to manage the acquisition of services and indirect materials (i.e., items not used in the production processes).
Both parties believe that the creation of a new Internet business (a B2B — Business to Business — portal) will add
value not only to their companies but also for their suppliers.
The documents relating to the creation of Agrega were presented to CADE for evaluation and the Company awaits
the decision.
30
www.ambev.com.br
Share Information
NYSE ADR Listing
On September 15, 2000, AmBev’s ADRs began trading on the New York Stock Exchange, with one ADR
representing 100 preferred or common shares.
Stock Split
On October 20, 2000, the Company’s share split was approved, thus each shareholder received five shares for each
pre-split share owned and consequently, the Company’s capital became comprised of 15,976,336,000 common
shares and 22,669,744,000 preferred shares.
Buyback Program
On December 13, 2000, AmBev announced its intention to initiate a share buyback program of up to R$ 400 million.
As of March 5, 2001, the Company had acquired R$ 68.5 million of its own shares, of which R$ 10.5 million were
acquired during December 2000.
Tender Offer — Antarctica Polar and Nordeste
In May 2000, the Company’s Board of Directors authorized a tender offer, subject to the approval of the Brazilian
CVM (Comissão de Valores Mobiliários), to acquire minority shareholders’ stake in Indústria de Bebidas Antarctica
Polar S.A., for R$ 2.65 per share and the minority shareholders’ stake in Indústria de Bebidas Antarctica NorteNordeste S.A., for R$ 214.51 per 1,000 common shares and for R$ 242.13 per 1,000 preferred shares.
The tender offer for the Polar shares was approved by the CVM, and the terms of the tender offer were published
on March 5, 2001.
Risk Factors
AmBev makes every effort to manage its inherent business risks.
Company results are subject to fluctuations as a consequence of several factors outside of its control. The Company
believes that its main risks include:
• Economic activity levels and their impact on the beverage industry;
• The level of sales tax rates, particularly the IPI, the federal excise tax, the state VAT tax ICMS, as well as PIS and
COFINS;
• Exchange rate fluctuations. Certain raw material and packaging costs, especially for non-returnable packaging
presentations, are directly influenced by the U.S. Dollar/Real exchange rate. The Company also has debt
denominated in foreign currencies; however, the currency exposure from such debt is fully hedged.
www.ambev.com.br
31
Pro Forma Statements
To facilitate comparison with the year 1999, the Income Statement and Statement of Cash Flows were prepared
according to Brazilian Corporate Law and 1999 results are presented on a pro forma basis, as if the Antarctica and
Brahma merger had occurred on January 1, 1999. Additionally, the results of Bavaria S.A. were consolidated until
December 1, 2000 due to divestment to comply with the antitrust requirements of the AmBev merger.
Consolidated Income Statement
Corporate Law
2000
Pro Forma
1999
Net sales
Cost of goods sold
Gross profit
Gross margin (%)
5,250,345
(2,843,749)
2,406,596
45.8%
4,610,193
(2,759,766)
1,850,427
40.1%
13.9
3.0
30.1
Selling expenses
Direct distribution expenses
General & administrative
Depreciation & amortization
Total SG&A
% of sales
(578,469)
(337,002)
(373,023)
(202,288)
(1,490,782)
28.4%
(631,901)
(261,881)
(371,905)
(145,798)
(1,411,485)
30.6%
-8.5
28.7
0.3
38.7
5.6
EBIT
% of sales
915,814
17.4%
438,942
9.5%
108.6
Provisions, net
Other operating income (expense)
Interest expense
Interest income
Net interest income (expense)
Non-operating income (expense)
Income Before Taxes
Provision for Income Tax/Social Contribution
Profit sharing & bonuses
Minority interest
(269,154)
3,917
(697,970)
373,981
(323,989)
57,786
384,374
405,413
(53,718)
(265,887)
(47,440)
170,170
(1,189,667)
740,560
(449,107)
(27,751)
84,814
(8,359)
(40,230)
(27,356)
470,182
9.0%
38,646,080
12.17
1.22
8,869
0.2%
2,100,422
4.22
—
5,201.4
589,182
1,504,996
28.7%
535,031
973,973
21.1%
10.1
54.5
R$ 000
Net Income
% of sales
Shares outstanding
EPS (R$/1,000 shares)
EPADR (R$/ADR)
EBITDA
% of sales
32
www.ambev.com.br
% Change
-27.9
353.2
188.1
Consolidated Statement of Cash Flows
R$ 000
Cash Flows from Operating Activities
Net income
Adjustments to reconcile net income
Non-cash expenses (income)
Contingencies and liabilities associated with
tax disputes, including interest
(Gain) loss on disposal of PP&E, net
Financial charges on long-term debt
Provision for loss on assets to be held and used
Deferred income tax (benefit) expense
Amortization of goodwill and intangible assets
Minority interest
(Increase) decrease in assets
Trade accounts receivable
Sales taxes recoverable
Inventories
Prepaid expenses
Receivables and other
(Decrease) increase in liabilities
Suppliers
Payroll, profit sharing and related charges
Income tax, social contribution, and other taxes recoverable
Other
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities
Proceeds on disposal of property, plant and equipment
Change in marketable securities
Restricted deposits for legal proceedings
Payment for purchase of subsidiary, net of cash acquired
Property, plant and equipment
Payment for deferred asset
Net Cash Provided (Used) in Investing Activities
Cash Flows from Financing Activities
Receivable from subsidiaries
Cash used for contingencies and legal proceedings
Dividends, interest distribution and capital decrease paid
Repurchase of treasury shares
Increase (payment) of debt
Net Cash Provided (Used) in Financing Activities
Subtotal
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Net Increase in Cash and Cash Equivalents
2000
Pro Forma
1999
470,182
8,869
589,182
535,031
288,606
(40,050)
65,790
15,362
(613,301)
91,050
265,887
69,891
31,393
219,729
13,854
(96,933)
43,553
27,356
(337,889)
44,555
(11,339)
7,816
24,118
53,047
(112,295)
5,298
12,876
8,869
158,700
1,060
60,661
(96,636)
983,754
66,409
37,032
79,596
(100,268)
903,307
245,368
696,037
(25,507)
(22,310)
(268,790)
(28,796)
596,002
89,490
(529,351)
3,677
(11,473)
(409,971)
(48,117)
(905,745)
33,421
(54,292)
(111,838)
(10,527)
(1,463,601)
(1,606,837)
(27,081)
71,787
44,706
(27,081)
(58,110)
(36,491)
(216,267)
(7,065)
334,231
16,298
13,860
57,927
71,787
13,860
www.ambev.com.br
33
Corporate
Governance
AmBev enthusiastically supports best practice in corporate governance.
Board of Directors
Our Board is composed of ten members (eight permanent and two alternates), elected in 1999, with mandates until
the Annual Meeting of 2002. The Board provides general orientation regarding the Company’s business, helps to
define strategic drivers and chooses the management team, as well as other strategic, regulatory and legal functions.
Executive Committee
This committee is elected by the Board of Directors. It has nine members with mandates through 2001 and 2002.
Its primary functions are to represent the Company and to manage its operations.
None of the members of the Board is part of the management team and, therefore, the positions of Chairmen of the
Board and CEO are filled by different professionals.
Transparency
AmBev has set a goal of establishing world-class investor relations programming and is already well regarded in this
area in Brazil and abroad. Along with a variety of activities, it conducted approximately 300 meetings with investors
in 2000.
The Company hosts quarterly conference calls, which are simultaneously transmitted over the Internet, to discuss
the Company’s earnings performance and to respond to analyst and investor inquiries.
Shareholder Value
Transparency is only one of the aspects of AmBev’s shareholder value policy. Other aspects have been equally
effective, among which we highlight:
• Our dividend policy that, in 2000, resulted in the distribution of R$ 180.0 million in interest on own capital and a capital
decrease of R$ 118.8 million;
• The R$ 400 million buyback program announced in December 2000, through which we had repurchased R$ 10.5
million in shares by December 31, 2000. The repurchased shares will be cancelled, with the aim of revaluing the
remaining base of shares;
• Active management of the capital structure, aiming to minimize the cost of capital by maintaining optimal leverage;
and
• EVA. AmBev’s market value reached R$ 18.3 billion in December 2000. Its financial performance was monitored
by sound indicators such as EVA, which amounted to R$ 283.6 million in 2000, and EBITDA, which rose by 54.5%,
compared to the 1999 pro forma results.
34
www.ambev.com.br
Board of
Directors
and Executive
Officers
Board of Directors
Permanent Members
Marcel Herrmann Telles – Co-Chairman of the Board
Victório Carlos De Marchi – Co-Chairman of the Board
Carlos Alberto da Veiga Sicupira
Danilo Palmer
Jorge Paulo Lemann
José Heitor Attilio Gracioso
José de Maio Pereira da Silva
Roberto Herbster Gusmão
Alternate Members
Roberto Moses Thompson Motta
Vicente Falconi Campos
Executive Officers
Magim Rodriguez Junior – Chief Executive Officer
Carlos Alves de Brito – Sales Executive Officer
Claudio Braz Ferro – Manufacturing Executive Officer
Guilherme Rodolfo Laager – Executive Officer of Logistics and IT
José Adilson Miguel – Distribution Executive Officer
Juan Manuel Vergara Galvis – Soft Drinks Executive Officer
Luis Felipe Dutra Leite – CFO and IR Executive Officer
Maurício Luis Luchetti – Executive Officer of People and Quality
Miguel Nuno da Mata Patrício – Marketing Executive Officer
Audit Board
Permanent Members
Antônio Carlos Monteiro
Hilário Franco
Ricardo Scalzo
Alternate Members
Luiz Fernando Mussolini
Miguel Ramos de Carvalho
www.ambev.com.br
35
Social Responsibility
and Environmental Policy
Social Projects
AmBev actively contributes to the development of several cultural, educational and charitable activities, and through
its partnership with leading community action groups, the Company donated R$ 3 million in 2000.
Skill-Building Program (“Programa Capacitação Solidária - PCS”)
AmBev has joined this skill-building program, oriented to prepare young people from the ages of 16 to 21 to learn
and execute a wage-earning activity, by selecting, funding and surveying courses proposed by social organizations.
“PCS” has been active since 1996 in the Country’s main metropolitan areas, with excellent results: in only four years,
through partnerships with approximately 1,000 organizations, it has helped to prepare some 51,000 people to enter
the labor market.
“Recyclibrary”
Since 1993, AmBev and the non-governmental organization Associação Ecológica Ecomarapendi, have made the
“Recyclibrary” — a center of information about Recycling and the Environment — available to the public. Its purposes are:
to promote public awareness about the importance of recycling in improving the quality of life, to stimulate responsible
citizenship, and to sponsor conservation and environmental research initiatives such as residues processing areas.
Selective Garbage Collecting in the São Francisco Quarter in Niterói (RJ)
A huge quantity of garbage, much of which could be reused or recycled to help preserve the environment while
simultaneously reducing expenses, is produced in the areas where AmBev operates.
For this reason, over the past 10 years, AmBev has pioneered a project called “Selective Garbage Collecting” in
Niterói’s São Francisco Quarter, in the State of Rio de Janeiro. This project also serves as a permanent field
observation to students of Universidade Federal Fluminense and has been used as a model for the development of
Selective Collecting in several cities across the country.
“voluntarios.com.br” Program
To help solve part of the social problems of Brazil, to feel useful and valued, to do something different: these are the
main reasons why people volunteer. Yet while over half of Brazil’s youth wish to volunteer, many do not know how
or where to begin.
Consequently, AmBev sponsored the creation of the “Web Nacional de Apoio a Voluntários - WNAV” (“Volunteer Support
National Web”), a Web site that allows volunteers and donors to identify charitable entities that match their interests, goals
and affinities. It also allows these entities to showcase their projects. There are already more than 2,000 registered entities.
The Web site’s URL is www.voluntarios.com.br.
36
www.ambev.com.br
Commitment to the Environment
Respect for the environment is a principle embedded in AmBev’s culture and we consider environmental concerns
in each and every business process. The Company’s environmental initiatives are designed to promote sustainable
development, by preserving the natural resources and contributing to better quality of life, in a cleaner and healthier
world. We are constantly searching for better ways to use industrial process residues and by-products.
AmBev is associated with pioneer initiatives in this area, such as the recycling of materials into animal feed, fertilizer
and even as raw material for packaging. Additionally, AmBev has been implementing an environmental management
policy focused on eco-friendly production and raising the environmental awareness of its employees, consumers and
suppliers.
AmBev’s Environmental Policy
It is AmBev’s policy to respect the environment in the development of its activities, products and services,
with a pro-active posture and growing environmental awareness:
• To assure the observance of legal requirements and regulations;
• To develop and apply technologies, processes and inputs that minimize the impact on the environment,
maintaining competitiveness and preventing pollution;
• To keep the team aware, trained and qualified to promote continuous improvement of its environmental
performance;
• To develop, promote and support programs to promote environmental awareness and education among
its clients, suppliers and communities; and
• To continuously monitor and periodically evaluate its environmental performance.
Some of the steps AmBev has taken in the implementation of its environmental policy are: acquiring machinery which
generates fewer residues in the industrial production process; researching new technologies, processes and inputs
that reduce environmental impact to a minimum; standardizing operating processes to provide better internal
controls; partnering with suppliers and third party service providers who share a commitment to the environment;
and promoting internal and external training programs to update professionals so that they can apply the most
modern techniques in environmental protection as well as environmental education in the community.
Furthermore, all plants have environmental supervisors. They are chemists, chemical engineers, agronomists and
biologists who evaluate environmental risks, supervising every unit.
In the last five years, AmBev’s business units have invested US$ 36 million in Stations of Industrial Effluents Treatment
(“Estações de Tratamento de Efluentes Industriais - ETEIs”) and in environmental improvements, such as by-products
reutilization.
The 41 “ETEIs” have the capacity to treat 230,000 cubic meters of effluents every day, equivalent to basic sanitation
for 5 million people. More than R$ 5.2 million has been used for treating solid waste. During the beer manufacturing
process there is no discharge of toxic substances, chemical products, or heavy metals. Even disinfecting solutions
used in the cleaning are separated and discharged to the “ETEIs” under rigid controls.
www.ambev.com.br
37
Social Responsibility
and Environmental Policy
AmBev has several partnerships to reuse its solid residues. By-products such as malt bagasse, are used to feed milk cattle
and in fisheries. The bagasse generated is enough to feed 720,000 cattle, which produce 7 million liters of milk per day.
Flavoring in soups, supplements in human diets and animal feeds proteins all use residual yeast from beer production.
The label pulp from beer bottles is also used to produce cardboard and even packages damaged during the
production process are returned to producers to be recycled.
Indicators
Actions
Liquid effluents
AmBev’s plants have treatment capacity equivalent to basic sanitation of a city
of approximately 5 million inhabitants.
Solid residues
They are reused as animal feed, fertilizer or even as raw material for the production
of new packages (glass, cardboard, aluminum, etc.), reaching a solid waste
reutilization rate of around 94%.
Adoption of cleaner
technologies
New technologies and programs implemented to reduce the consumption of
electric energy, water and fuel oil, among others.
Packages weight
Through partnerships with package suppliers, a reduction in packaging weight
was achieved.
Environmental
Management
System
Every plant has an Environmental Management System implemented to carry out
a Corporate Environmental Policy. Eight plants are already ISO 14000 certified and
system ready while others are in the implementation process and expected to
be certified in the near future.
AmBev Co-Generation
Program (PACO)
AmBev initiated a project to implement co-generation in its Nova Rio plant in Rio de Janeiro in 1996 with installed
capacity of 12 MW. In 1999, this power plant was sold to Energy-Works, with whom a partnership was created to
operate and maintain the power plant, selling energy and steam to Brahma.
During the year 2000, AmBev signed a protocol with the Brazilian Government Ministry of Mines and Energy to
participate in the Thermoelectricity Priority Program (PPT). The protocol assures AmBev access to sufficient natural
gas resources for its co-generation plants for a period of 20 years.
In this protocol, AmBev formalized its co-generation program (PACO), which calls for co-generation in ten of its plants
with a total installed capacity of 83 MW. The first stage of the project calls for the expansion of the Nova Rio power
plant from 12 MW to 18 MW, and additional power plants in nine of AmBev’s beverage manufacturing facilities by 2002.
Of this amount, US$ 12 million have already been invested in the Nova Rio plant, and the planned investments are
as follows:
• 2001 – US$ 23 million – Increase Nova Rio power plant capacity and implement co-generation projects in Jacareí
and Jundaí plants.
• 2002 – US$ 48 million – Implementation of remaining co-generation projects.
Note: The Company co-generation plan is subject to the availability of natural gas supply in each of the plants
of Petrobras (Gaspetro), and may alter the investment program in 2001 and 2002.
38
www.ambev.com.br
Financial Statements at December 31, 2000 and 1999
and Report of Independent Accountants
Report of Independent Accountants
January 29, 2001, except for Note 1(e),
which is dated February 15, 2001
To the Board of Directors and Stockholders
1. We have audited the accompanying financial statements of Companhia de Bebidas das Américas - AmBev
(parent company) as of and for the years ended December 31, 2000 and 1999, and the consolidated financial
statements of Companhia de Bebidas das Américas - AmBev and its subsidiaries as of and for the year and sixmonth period ended December 31, 2000 and 1999, respectively. These financial statements are the responsibility of
Company management. Our responsibility is to express an opinion on these financial statements. The financial
statements of the subsidiary Companhia Antarctica Paulista - Indústria Brasileira de Bebidas e Conexos (Antarctica)
at December 31, 1999 were audited by other accountants and our opinion, insofar as it relates to this subsidiary, is
based solely on the report of those accountants. At December 31, 1999, the investment in Antarctica, recorded by
the parent company on the equity method of accounting, amounted to R$ 1,136,898 thousand, and the equity in
the loss for the year amounted to R$ 208,162 thousand; total assets and liabilities of Antarctica are equivalent to
30% and 36%, respectively, of the consolidated totals.
2. We conducted our audits in accordance with approved Brazilian auditing standards, which require that we
perform the audit to obtain reasonable assurance about whether the financial statements are fairly presented in all
material respects. Accordingly, our work included, among other procedures: (a) planning our audit taking into
consideration the significance of balances, the volume of transactions and the accounting and internal control
systems of the companies; (b) examining, on a test basis, evidence and records supporting the amounts and
disclosures in the financial statements and; (c) assessing the accounting principles used and the significant estimates
made by management, as well as evaluating the overall financial statement presentation.
3. In our opinion, based on our audits and on the report of the other accountants, the financial statements we
audited present fairly, in all material respects, the financial position of Companhia de Bebidas das Américas - AmBev,
parent company and consolidated, at December 31, 2000 and 1999, and the results of operations, the changes in
stockholders’ equity and the changes in financial position of the parent company for the years then ended, as well
as the consolidated results of operations and the changes in consolidated financial position for the year ended
December 31, 2000 and for the six-month period from July 1, 1999 (start of operations) to December 31, 1999, in
conformity with accounting principles determined by Brazilian corporate legislation.
4. The report of the other accountants on the audit of the financial statements of Antarctica as at December 31,
1999, dated March 24, 2000, contains a qualification (because of the deferral of exchange losses), which does not
affect the financial statements of Companhia de Bebidas das Américas - AmBev because adjustments were made to
harmonize the accounting principles, as explained in Note 5(a).
PricewaterhouseCoopers
Independent Accountants
CRC 2SP000160/O-5
Ivan M. Clark
Partner
Accountant CRC 1MG061100/O-3 “S” SP 002617
www.ambev.com.br
39
Balance Sheet at December 31
In Thousands of Reais
Assets
Current assets
Cash
Marketable securities
Trade accounts receivable
Dividends receivable
Other accounts receivable
Taxes recoverable
Inventories
Prepaid expenses
Total current assets
Parent Company
2000
1999
28
Consolidated
2000
1999
44,706
983,626
684,448
71,787
1,679,663
358,520
110,614
246,972
591,122
26,152
202,770
291,527
579,783
33,968
2,687,640
3,218,018
24,179
65,454
102,671
165,151
996,088
287,980
47,984
97,544
22,084
64,148
77,164
89,038
522,950
328,781
81,405
157,311
1,787,051
1,342,881
19,729
643
26,603
3,460
1,875
29,149
23,189
Long-term assets
Compulsory deposits
Deposits for fiscal incentive investments
Judicial deposits
Financed sale of shares
Deferred income tax and social contribution
Other taxes recoverable
Accounts receivable from subsidiaries
Properties for sale and other
Total long-term assets
38,710
3,651
38,710
3,651
2,791,592
702,002
573,196
774,817
614,754
44,810
798,772
48,545
3,364,788
1,476,819
659,564
847,317
3,204,259
301,138
3,574,450
366,001
Permanent assets
Investments
Investments in subsidiaries
Goodwill and negative goodwill on
acquisition of subsidiaries
Properties not in use and other investments
Total investments
Deferred charges
Total permanent assets
3,364,788
1,476,819
4,164,961
4,787,768
Total assets
3,432,647
1,503,659
8,639,652
9,348,667
The accompanying notes are an integral part of these financial statements.
40
www.ambev.com.br
Liabilities and Stockholders’ Equity
Current liabilities
Trade accounts payable
Loans
Salaries, profit sharing and social security charges
Dividends payable as interest
on own capital
Income tax and social contribution
Other taxes and contributions
Other accounts payable
Accounts payable to subsidiaries
Total current liabilities
Parent Company
2000
1999
2,562
3,744
156,538
8,087
54,726
40
5,550
17,451
225,657
23,041
Long-term liabilities
Loans
Deferred sales taxes
Provision for losses on unsecured liabilities
of subsidiaries
Provision for contingencies and liabilities
related to tax claims
119,518
Total long-term liabilities
119,518
2,565,249
1
522,222
579,200
1,265,334
115,769
420,500
2,474,748
114,709
159,350
26,436
456,215
97,318
122,013
42,581
385,749
178,620
2,699,622
3,738,920
927,574
470,010
1,115,971
463,670
21,853
53,202
37,187
193,365
877,969
643,655
2,350,608
2,453,848
512,477
1,749,109
2,565,249
1
522,222
(10,527)
1,717,471
1
73,828
73,828
Minority interest
Stockholders’ equity
Subscribed and paid-up capital
Capital reserve
Revenue reserves
Treasury stock
Accumulated deficit
Consolidated
2000
1999
1,717,471
1
(310,682)
(310,682)
Total stockholders’ equity
3,087,472
1,406,790
3,076,945
1,406,790
Total liabilities and stockholders’ equity
3,432,647
1,503,659
8,639,652
9,348,667
www.ambev.com.br
41
Statement of Income
Period from July 1 (Start of Operations) to Years Ended in December 31
Parent Company
2000
1999
Gross revenue
Sales
11,282,452
5,255,610
Sales deductions
Excise tax - IPI, value-added tax on
sales and services (ICMS), other taxes,
discounts and returns
(6,032,107)
(2,772,558)
Net sales
5,250,345
2,483,052
Cost of sales
(2,843,749)
(1,478,998)
Gross profit
2,406,596
1,004,054
578,469
337,002
363,960
319,301
156,327
195,119
269,154
9,063
202,288
697,970
(373,981)
53,458
8,120
66,946
434,483
(149,586)
Operating expenses (income)
Selling
Direct distribution
Administrative
Directors’ fees
Financial expenses
Financial income
Equity in the earnings (loss) of subsidiaries
Other operating expenses (income), net
Operating profit (loss) (carried forward)
55,562
www.ambev.com.br
22,633
3,334
5,911
(741)
(645,524)
90,761
176,689
40,753
(3,917)
40,190
(490,697)
240,480
2,080,008
1,124,358
490,697
(240,480)
326,588
(120,304)
42
Consolidated
2000
1999
405
Operating profit (loss) (brought forward)
Non-operating (expenses) income, net
Income (loss) before social contribution
on net income and income tax
Benefit (expense) of social contribution
on net income and income tax
Current
Deferred
Income (loss) before profit sharing
Profit sharing
Employees
Directors
Income (loss) before minority interest
Parent Company
2000
1999
490,697
(240,480)
(53,310)
(73,828)
57,786
(27,178)
437,387
(314,308)
384,374
(147,482)
26
35,059
(25)
3,651
(207,888)
613,301
(443,888)
400,313
35,085
3,626
405,413
(43,575)
472,472
(310,682)
789,787
(191,057)
(47,018)
(6,700)
(9,605)
(5,074)
736,069
(205,736)
(265,887)
(104,946)
470,182
(310,682)
(2,290)
470,182
(310,682)
Minority interest
Net income (loss) for the year/period
Number of shares at year/period-end
(in thousands)
Net income (loss) per thousand shares
at year/period-end, in Reais — R$
Consolidated
2000
1999
326,588
(120,304)
470,182
(310,682)
38,646,080
2,100,422
12.17
(147.91)
www.ambev.com.br
43
Statement of Changes in Stockholders’ Equity of the Parent Company
Subscribed
and Paid-Up
Capital
At December 31, 1998
Capital
Reserve
10
Capital increase
In cash
Through transfer of shares
1
1,717,460
Stockholders’ contributions allocated to reserve
Redemption of preferred shares
9
(8)
Loss for the period from July 1, 1999
(start of operations)
to December 31, 1999
1,717,471
1
Reduction of capital to offset
Accumulated deficit
(310,682)
Loss for the period ended August 31, 2000
(232,058)
Reimbursement of invested capital
Capital increase through transfer of shares
(111,838)
1,502,356
Net income for the year
Appropriation of net income
Legal reserve
Proposed and approved dividends as interest
on own capital
Statutory reserves
44
www.ambev.com.br
2,565,249
1
Revenue Reserves
Legal
Investments
Future
Capital
Increase
Retained Earnings
(Accumulated)
Deficit
Total
10
1
1,717,460
9
(8)
(310,682)
(310,682)
(310,682)
1,406,790
310,682
232,058
(111,838)
1,502,356
470,182
23,509
(23,509)
(180,018)
23,509
470,182
13,333
485,380
13,333
485,380
(180,018)
(498,713)
3,087,472
www.ambev.com.br
45
Statement of Changes in Financial Position
Period from July 1 (Start of Operations) to Years Ended in December 31
Parent Company
2000
1999
Financial resources were provided by
Operations
Net income (loss) for the year/period
Expenses (income) not affecting working capital
Equity in the earnings (loss) of subsidiaries
Provision for losses on unsecured liabilities
of subsidiaries
Amortized goodwill and negative goodwill,
net
Financial charges on long-term loans
Minority interest
Financial expenses on provision for
contingencies, net
Dividends from subsidiary
Residual value of property, plant and
equipment and investment disposals
Capital increase through transfer of shares
Minority interest
Decrease in long-term receivables
Increase in long-term liabilities
Loans
Deferred sales taxes
Permanent assets
Investments, including goodwill and
negative goodwill
Total funds provided
470,182
(310,682)
470,182
(310,682)
(645,524)
(35,059)
176,689
(3,651)
(613,301)
(400,313)
45,690
73,828
83,457
40,740
23
91,050
589,185
42,148
260,240
269,154
65,790
265,887
53,458
69,069
104,946
19,452
176,454
www.ambev.com.br
23,209
95,200
156
1,502,356
1,717,470
145,551
48,861
1,302,950
(132,273)
1,717,470
1,644,163
33,421
40,801
59,766
6,177
1,046,902
463,670
37,187
362,144
94,607
1,597,556
46
Consolidated
2000
1999
1,717,626
1,537,722
5,139,263
Parent Company
2000
1999
Financial resources were used for
Increase in long-term receivables
Judicial and compulsory deposits and
deposits for fiscal incentive investments
Financed sale of shares
Permanent assets
Investments, including goodwill and
negative goodwill
Deferred charges
Reimbursement of invested capital
Redemption of preferred shares
Program for the repurchase of shares
Proposed and approved dividends as interest
on own capital
Decrease in liabilities
Loans
Total funds used
Increase (decrease) in working capital
Consolidated
2000
1999
28,908
76,113
1,502,356
1,717,470
5
111,838
268,790
28,796
111,838
8
163,396
89,038
81,405
17,040
140,271
869,975
3,933,031
366,001
8
10,527
180,018
180,018
254,186
15,334
54,292
1,794,212
1,717,483
1,028,802
5,660,165
(196,656)
143
508,920
(520,902)
29,149
23,189
23,189
5
2,687,640
3,218,018
3,218,018
5,960
23,184
(530,378)
3,218,018
225,657
23,041
23,041
2,699,622
3,738,920
3,738,920
202,616
23,041
(1,039,298)
3,738,920
(196,656)
143
508,920
(520,902)
Changes in working capital
Current assets
At the end of the year/period
At the beginning of the year/period
Current liabilities
At the end of the year/period
At the beginning of the year/period
Increase (decrease) in working capital
www.ambev.com.br
47
Notes of the Financial Statements
at December 31, 2000 and 1999
All Amounts in Thousands of Reais Unless Otherwise Indicated
1 Operations
(a) Business
Companhia de Bebidas das Américas - AmBev (the “Company” or “AmBev”), headquartered in São Paulo,
started its operations on July 1, 1999 as a beverage and malt-related holding company. In the year and sixmonth period ended December 31, 2000 and 1999, sales abroad represented approximately 4% of the total
consolidated sales.
AmBev shares are traded on the São Paulo Stock Exchange and, as from September 15, 2000, also on the
New York Stock Exchange (NYSE) under the form of American Depositary Receipts (ADRs).
(b) Association for the Creation of Companhia de Bebidas das Américas - AmBev
The Company holds the investments which resulted from the association of the controlling stockholders of
Companhia Cervejaria Brahma (“Brahma”) and Companhia Antarctica Paulista - Indústria Brasileira de Bebidas
e Conexos (“Antarctica”), approved in an Extraordinary General Meeting of stockholders - EGM held on July 1,
1999, and subsequently submitted for analysis and approval of the agencies for the defense of fair trade in
Brazil. The Brazilian antitrust authority (“CADE - Conselho Administrativo de Defesa Econômica”) approved the
integration of Brahma and Antarctica on April 7, 2000.
The approval was given subject to the compulsory sale of the Bavaria brand, in addition to the following conditions
formally accepted by AmBev in a performance commitment agreement (“Agreement”) signed on April 19, 2000:
• Requirement to make a public sales offer for any breweries which it decides to close within four years, from the
date of publication of the Agreement.
• Requirement to offer, on a remunerated basis, the use of its distribution network to one beer producer in each
major geographic region in Brazil, provided that this producer’s share in the Brazilian beer market does not
exceed 5%, and this should be implemented within eight months from the date of publication of the Agreement.
• Commitment to maintain the existing employment level. The dismissals connected with the business
restructuring must be accompanied by retraining and outplacement programs.
• Ban on the practice of exclusivity with regard to sales outlets, beginning six months from the date of publication
of the Agreement, except when investments and improvements to sales outlets by AmBev are equivalent to a
shareholding.
The Company is developing the implementation of the process of sharing its network in accordance with the
requirements established by CADE and, in 2000, presented a proposal along these lines to CADE. The
Company is currently awaiting approval of the proposed operations.
48
www.ambev.com.br
(c) Sale of the Bavaria Brand and Five Breweries
in Accordance with the CADE Requirement
On October 1, 2000, the subsidiary Bavaria S.A. was incorporated with a capital of R$ 127,341, through
subscription, at net book values, of the assets of the five breweries owned by subsidiaries of AmBev. All the
shares of Bavaria S.A. were sold to Molson Incorporated (“Molson”) on December 20, 2000 in a transaction
approved by CADE, in compliance with the requirements established as a condition for the approval of the
association between Brahma and Antarctica. The amount of the transaction was R$ 191,443 (equivalent to US$
98 million), subject to adjustments to be determined as of December 31, of each year, from 2000 to 2005, by
which the price may be increased by up to R$ 224,652 based on market share gains to be achieved by Bavaria.
The profit on the sale of shares was R$ 39,973, net of the price adjustment applicable at December 31, 2000,
recorded as non-operating income. The share sales agreement includes a clause — required by CADE —
whereby AmBev agrees to share, on a remunerated basis, its distribution network with Molson during a six-year
period, which is extendable for four more years.
(d) Joint Venture, Licensing and Distribution Agreements
On October 20, 1999, AmBev signed an agreement with PepsiCo Inc. for the distribution of the soft drink
Guaraná Antarctica in those countries where Pepsi brand soft drinks are already distributed.
The Company also has, through Brahma, a joint venture and licensing agreements for the production and
distribution of Miller and Carlsberg beers, Pepsi brand soft drinks and Lipton Ice Tea brand products. All these
agreements have been approved by CADE.
(e) Expansion of Operations Abroad
On October 6, 2000, the Company purchased the controlling interest in the Uruguayan company Salus Sociedad
Anónima, through a subsidiary, jointly with Danone Group. At December 31, 2000, the indirect holding of 26.2%
of the voting shares is recorded at the cost of R$ 22,310, including goodwill of R$ 21,117, based on future
profitability and to be amortized over ten years.
Also, on November 24, 2000, the Company signed a purchase option agreement with stockholders representing
95.4% of the voting and total capital of the Uruguayan company Cerveceria y Malteria Paysandu S.A. (Cympay)
for the purchase of their shares in this company. On February 14, 2001, the Company concluded the legal due
diligence process, exercising the purchase option for Cympay and will pay the equivalent of US$ 27.7 million
for this investment.
www.ambev.com.br
49
(f) Corporate Restructuring
In the second half year of 2000, the Company began a process of corporate restructuring to reorganize its
investments in subsidiary and associated companies in Brazil and abroad so as to achieve gains associated
with a simpler structure. Accordingly, Brahma purchased the producing units from its subsidiaries CRBS S.A.,
Cervejarias Reunidas Skol Caracu S.A. and Pepsi-Cola Engarrafadora Ltda., which became branches of Brahma
as of November 2000. Also, Jalua S.A. became a wholly owned subsidiary of the subsidiary Eagle Distribuidora
de Bebidas S.A.
(g) E-Commerce (Portal “B2B - Business to Business”)
On November 30, 2000, AmBev and Souza Cruz S.A. (BAT) announced the formation of a joint venture to manage
the purchase of indirect materials (i.e., those non-strategic to the production process) and services through a
portal “B2B - Business to Business” over the Internet.
The purpose of this initiative is to create benefits for the supply chain, choose the best practices, optimize
processes, rationalize costs and promote the access of any and all suppliers to the purchasing companies,
obtain better competitive conditions, and guarantee the transparency of transactions.
On December 26, 2000, linked to this initiative, the Company invested R$ 25 million in the incorporation of
Agrega Inteligência em Compras Ltda. (“Agrega”), in which it holds 50% of the total capital.
The documentation relating to the formation of Agrega was presented to CADE for analysis and approval, and
the Company is awaiting the decision.
50
www.ambev.com.br
2 Significant Accounting Policies
(a) Financial Statements
The financial statements have been prepared and are presented in conformity with accounting principles
determined by Brazilian corporate legislation and the regulations of the Brazilian Securities Commission
(“CVM - Comissão de Valores Mobiliários”).
For purposes of consolidation and equity accounting, the financial statements of Antarctica at December 31,
1999 include certain adjustments made for the harmonization of its accounting policies and practices with
those adopted by the Company (Note 5).
When preparing financial statements, it is necessary to use estimates to record certain assets, liabilities and
other transactions. The financial statements, therefore, include various estimates relating to the selection of the
useful lives of property, plant and equipment, provisions for contingent liabilities, the calculation of provisions
for income tax and other similar provisions, which, although reflecting best estimates, may differ from the actual
facts and amounts.
(b) Determination of Net Income
Net income is determined on the accrual basis of accounting. Sales revenues and related costs are recorded
on delivery of the products.
(c) Current Assets and Long-Term Receivables
The allowance for doubtful accounts of R$ 109,040 at December 31, 2000 (1999 — R$ 97,079) is recorded at an
amount considered to be sufficient to cover probable losses on collection.
Inventories are stated at the average cost of purchase or production, adjusted, when necessary, by a provision
for reduction to realizable values. At December 31, 2000, the provision for reduction of inventories to their
realizable values amounts to R$ 18,005 (1999 — R$ 17,768).
Cash, represented by amounts of immediate liquidity, marketable securities, comprising mainly bank deposit
certificates and funds with maturity over 90 days, and other current assets and long-term receivables are stated
at cost, including, when applicable, accrued income. When necessary, a provision for reduction to realizable
value is recorded.
www.ambev.com.br
51
(d) Permanent Assets
Investments in subsidiary and jointly controlled companies are recorded by the parent company on the equity
method of accounting. The financial statements of foreign subsidiaries are translated into Brazilian Reais at the
rate of exchange ruling on the dates of the financial statements. The goodwill on investment arising from the
surplus on appraisal of property, plant and equipment is amortized based on the depreciation or realization of the
related assets of the subsidiary, whereas the goodwill based on future profitability is amortized over ten years.
The amortization of goodwill is recorded in “Other operating expenses”. The negative goodwill on investment,
attributed to various economic reasons, will be amortized on the sale of the investment, in accordance with the
instructions of the CVM (“Brazilian Securities Commission”).
Property, plant and equipment is stated at cost and includes bottles and crates, as well as interest capitalized
during the construction of major facilities. Expenditures with maintenance and repairs are recorded in expenses
as incurred. Losses from breakage of bottles and crates during production are included in cost of sales.
Depreciation is calculated on the straight-line basis considering the economic useful lives of the assets at the
annual rates listed in Note 9.
Deferred charges, comprising mainly pre-operating expenses incurred on the implementation and expansion of
industrial and commercial units, are amortized on the straight-line basis over a period of up to ten years as from
the start of operations of the units. At December 31, 2000, deferred charges are stated net of accumulated
amortization of R$ 490,940 (1999 — R$ 413,762).
The cost of the permanent assets includes price-level restatements up to December 31, 1995.
(e) Current And Long-Terms Liabilities
Current and long-term liabilities are stated at known or estimated amounts including accrued charges as well
as monetary and exchange variations, when applicable. Contingent liabilities are recorded when the likelihood
of occurrence is considered probable and their amounts can be estimated with reasonable accuracy.
(f) Currency and Interest Futures and Swap Transactions
The nominal amounts of foreign currency and interest rate futures transactions are not recorded in the financial
statements. Unrealized gains and losses on these transactions, as well as those on foreign currency and interest
swaps are recorded on the accrual basis of accounting.
52
www.ambev.com.br
(g) Contingent Assets
Tax benefits obtained through provisional judicial decisions are offset in the financial statements by provisions
related to tax claims. Any rights which may arise from judicial proceedings, mainly of a tax nature, are only recorded
when they are assured by a final unappealable decision in favor of the Company or its subsidiaries.
(h) Fiscal Incentives
The Company’s subsidiaries have state fiscal incentive programs under which payment of taxes may be deferred
with partial or total discounts on these taxes. Certain states do not determine grace periods and restrictions in
relation to obtaining the benefit of the waiver of part of these taxes. However, when these exist, they refer to
aspects under the Company’s control. The benefit related to the waiver of payment of these taxes is recorded
as a reserve for fiscal incentives included in the stockholders’ equity of the subsidiaries, as these taxes are recorded
on the accrual basis, or when the subsidiaries comply with the main requirements of the state programs so that
the right to receive the benefit is probable. This benefit is recorded in the consolidated financial statements as
“Other operating income” (2000 — R$ 18,723; 1999 — R$ 6,213).
(i) Income Tax
Income tax and social contribution on net income are calculated at the rates determined by current legislation.
Income tax and social contribution charges are recorded on the accrual basis, including deferred tax calculated
on the differences between the accounting and taxable bases of assets and liabilities. A deferred tax asset is
also recorded relating to income tax losses and negative bases of social contribution which are expected to be
realized based on future profit projections.
( j) Translation of the Financial Statement of Foreign Subsidiaries
For purposes of equity accounting and consolidation, the financial statements of foreign subsidiaries are translated
into Brazilian Reais at the official exchange rate determined by the Brazilian Central Bank on the date of the
Company financial statements.
Considering the current inflation rates in Venezuela, the financial statements of the subsidiaries in that country
are prepared in accordance with accounting principles which consider the effects of inflation on its assets and
liabilities, as well as on the determination of the results of operations for the year.
(l) Reclassifications
Certain reclassifications were made to the December 31, 1999 financial statements to improve their comparability
with the current year, the most significant being the provision of R$ 258,053 related to tax claims on presumed
credits of IPI at a zero rate, which was classified as a reduction of long-term receivables and was reclassified
to a long-term liability (Note 15 (a)).
www.ambev.com.br
53
3 Consolidated Financial Statements
The companies controlled by the Company were fully consolidated (assets, liabilities, income and expenses) and
the minority interest is presented separately in the balance sheet and the statement of income.
The investments in subsidiaries and the assets, liabilities, income and expenses arising from intercompany
transactions were eliminated on consolidation.
The consolidated financial statements include the financial statements of the direct and indirectly owned subsidiaries
listed in Notes 5 and 6, respectively, at dates coinciding with those of the parent company.
The subsidiaries jointly owned through a stockholders’ agreement were consolidated on a proportional basis (assets
and liabilities, income and expenses) in accordance with the total percentage holding by the Company of capital.
These companies are:
December 31, 2000
Total
Voting
Cervejaria Miranda Corrêa S.A.
Miller Brewing do Brasil Ltda.
Pilcomayo Participações S.A.
Cervejaria Astra S.A.
60.8
50.0
50.0
43.2
49.6
50.0
50.0
50.0
Percentage Holding of Capital
December 31, 1999
Total
Voting
12.6
10.4
10.4
9.0
10.3
10.4
10.4
11.1
The assets consolidated proportionally amount to R$ 161,397 at December 31, 2000 (R$ 125,260 in 1999), with
a negative net working capital of R$ 5,017 at the same date (positive working capital R$ 16,020 in 1999).
54
www.ambev.com.br
4 Inventories — Consolidated
Finished products
Work in process
Raw materials
Production materials
Bottles and crates
Warehouse and other
2000
122,817
44,022
254,139
68,873
13,600
87,671
December 31
1999
106,479
39,837
252,518
57,756
42,798
80,395
591,122
579,783
5 Investments in Subsidiaries
(a) Harmonization of the Accounting Policies
The investments in subsidiaries received as subscription for capital increase in the Company were recorded
based on the equity method of accounting, in conformity with CVM Instruction NO 247/96. In their first valuation,
the acquisition cost was separately recorded between the net book value of the investment and goodwill.
The first valuation of the investments in subsidiaries also took into consideration adjustments arising mainly from
the harmonization of the accounting policies (that is, the adoption of uniform accounting policies and procedures,
in as practical and appropriate a manner as possible) of Antarctica with those adopted by the Company and by
Brahma. Such adjustments totaled R$ 815,557, reducing the net equity value of the subsidiary. These adjustments
were recorded at July 1, 1999 only in the financial statements of AmBev; they were not recorded in the financial
statements of Antarctica and its subsidiaries due to the restrictions to the integration process imposed by CADE
up to the final approval of the association.
Once CADE approval of the association was received on April 7, 2000, and with the start of the integration of
operations, the harmonization adjustments were recorded by Antarctica and its subsidiaries throughout the
year. As determined in Article 186 of Law NO 6,404/76, and consistent with the accounting treatment previously
adopted by AmBev, the subsidiaries recorded such adjustments substantially as charges or credits to retained
earnings.
A significant part of these adjustments was recorded by Antarctica and its subsidiaries up to December 31,
2000, these amounts being eliminated for purposes of consolidation and equity accounting in compliance with
CVM instructions. On the other hand, additional harmonization adjustments were identified and recorded in the
six-month period ended June 30, 2000, in the net amount of R$ 31,782, after tax effects and minority interest,
which were considered in the parent company and consolidated financial statements as a complementary
adjustment to the goodwill on the Antarctica investment.
www.ambev.com.br
55
(b) Information on Subsidiaries
Description
Brahma
2000
1999
Common
Preferred
2,628,452
4,465,839
1,451,916
13,581
Total
7,094,291
1,465,497
100.0
100.0
100.0
55.0
0.3
21.2
2,545,624
1,606,375
967,243
322,295
Number of shares held — in thousands
Percentage holding in capital
On common shares
On preferred shares
On total shares
Information on the financial statements
at December 31
Adjusted stockholders’ equity
Adjusted net income (loss)
(*) Headquartered abroad.
The December 31, 2000 financial statements of the subsidiaries Brahma, Antarctica and Hohneck were
reviewed to the extent necessary to support the audit opinion on the Company financial statements.
The December 31, 1999 financial statements of the subsidiaries Brahma and Antarctica were audited and an
unqualified opinion was issued in relation to Brahma. The opinion on Antarctica was qualified because of the
deferral of exchange losses. This qualification does not affect the parent company since the effect was adjusted
by AmBev for the purposes of consolidation and equity accounting.
56
www.ambev.com.br
Antarctica
Hohneck (*)
2000
1999
2000
1999
10,726
1,274
10,726
1,274
10,000
10,000
12,000
12,000
10,000
10,000
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
245,969
362,084
(119,518)
(73,828)
(93,847)
(187,102)
(45,690)
(73,828)
www.ambev.com.br
57
(c) Movement of Investments and Goodwill on the Acquisition of Subsidiaries
Description
Investments received as subscription for capital increase in the Company
at July 1, 1999
Net book value
Goodwill
Equity in the earnings (loss)
Amortization of goodwill
Dividends receivable
Shares received as subscription for capital increase
Negative goodwill on the incorporation of shares
Dividends received
Equity in the earnings (loss)
Amortization of goodwill
At December 31, 2000, the provision for losses on unsecured liabilities of the subsidiary Hohneck S.A. recorded
by the Company amounted to R$ 119,518 (1999 — R$ 73,828). The related expense is recorded in “Non-operating
expenses”.
58
www.ambev.com.br
Brahma
Antarctica
Total
331,657
570,246
815,557
901,903
815,557
331,657
1,385,803
1,717,460
31,473
(208,162)
(40,743)
(176,689)
(40,743)
(23,209)
1,136,898
1,476,819
(84,332)
(83,457)
1,652,302
(149,946)
(176,454)
645,524
(83,457)
969,109
3,364,788
(23,209)
339,921
1,652,302
(149,946)
(176,454)
729,856
2,395,679
www.ambev.com.br
59
6 Significant Indirect Holdings in Subsidiaries and Jointly-Owned
Subsidiaries at December 31
Indirect Percentage
Holding
Company Name
Pepsi-Cola Engarrafadora Ltda.
Malteria Pampa S.A. (i)
Jalua S.A. (i)
Eagle Distribuidora de Bebidas S.A.
Distribuidora de Bebidas Antarctica de Manaus Ltda.
Dahlen S.A. (i)
CCBP S.A. (i)
Arosuco Aromas e Sucos S.A.
ANEP - Antarctica Empreendimentos e Participações Ltda.
Cervejarias Reunidas Skol Caracu S.A.
Indústria de Bebidas Antarctica do Sudeste S.A.
CRBS S.A.
Cervejaria Águas Claras S.A.
Indústria de Bebidas Antarctica do Norte-Nordeste S.A.
Cervejaria Miranda Corrêa S.A.
Indústria de Bebidas Antarctica Polar S.A.
Pilcomayo Participações S.A.
Miller Brewing do Brasil Ltda.
Cervejaria Astra S.A.
CCBA S.A. (i)
C.A. Cervecera Nacional (i)
Antarctica U.S.A. - Inc. (i) (ii)
2000
1999
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
99.7
98.8
99.8
93.3
61.8
60.8
59.0
50.0
50.0
43.2
70.0
50.2
21.2
21.2
21.2
21.2
100.0
21.2
21.2
21.2
100.0
21.2
98.7
21.2
19.8
64.3
12.5
59.3
10.3
10.4
8.9
14.8
10.6
100.0
(i) Headquartered abroad.
(ii) Extinguished in 2000.
The December 31, 2000 and 1999 financial statements were reviewed/audited to the extent necessary to support
the opinion on the Company financial statements.
At December 31, 2000, the subsidiary Brahma has a provision of R$ 34,485 (1999 — R$ 40,801) for losses
on unsecured liabilities of the subsidiaries Pilcomayo Participações S.A., Miller Brewing do Brasil Ltda. and
Cervejaria Miranda Corrêa S.A. The related expense is recorded in Brahma’s financial statements in “Non-operating
expenses”.
60
www.ambev.com.br
Information on Subsidiaries and Jointly-Owned Subsidiaries
Adjusted Stockholders’ Equity
Net Income (Loss) for the
(Unsecured Liability)
Year/Period
2000
1999
2000
1999
182,053
70,732
2,024,346
502,172
4,747
47,299
2,733
133,618
769,921
159,017
368,637
645,212
181,127
887,569
(11,534)
317,573
(39,014)
(15,940)
117,257
106,888
66,494
97,769
54,770
1,681,266
206,163
5,959
43,985
1,107
47,465
966,882
139,292
546,875
562,928
137,692
926,250
(9,322)
312,611
(57,003)
(13,272)
82,786
91,354
35,403
246
83,336
11,289
343,080
294,505
(738)
3,313
1,538
95,849
(104,697)
21,780
(145,749)
99,351
14,961
16,374
(1,344)
7,960
8,994
(1,334)
20,822
(4,608)
(11,306)
(101,010)
(15,916)
545,724
(6,695)
(303)
(1,068)
631
22,076
(147,555)
(16,256)
(91,199)
67,435
(2,746)
(10,541)
(9,339)
31,425
(20,545)
(4,525)
7,320
(10,355)
(15,728)
(117)
www.ambev.com.br
61
7 Goodwill and Negative Goodwill on the Acquisition of Subsidiaries
Balance at December 31
Parent Company
Consolidated
2000
1999
2000
1999
Goodwill
Antarctica
Arising from the surplus
on appraisal of property,
plant and equipment
Based on future profitability
144,579
702,760
144,579
670,978
144,579
702,760
144,579
670,978
847,339
815,557
847,339
815,557
21,117
28,101
28,101
Salus Sociedad Anónima
Malteria Pampa S.A.
Negative goodwill
Brahma
(149,946)
Accumulated amortization
(124,197)
(40,740)
(131,857)
(44,886)
573,196
774,817
614,754
798,772
Annual
Amortization
Rates (%)
10
10
10
(149,946)
8 Transactions with Related Parties
Transactions with related parties were eliminated in the consolidated financial statements, except for the
non-consolidated portion of sales and loans of jointly-owned subsidiaries (consolidated on a proportional basis).
Loan contracts have no undetermined maturity dates and are subject to financial charges equivalent to those on
funding obtained in the market by the Company and its subsidiaries.
62
www.ambev.com.br
9 Property, Plant and Equipment
December, 31
2000
Consolidated
December, 31
1999
Annual
Depreciation
Rates (%)
1,686,501
3,618,066
55,984
530,492
189,278
76,051
51,188
117,042
2,231
1,727,476
3,728,061
76,422
376,148
196,794
64,358
45,075
118,286
3,082
4
10 to 20
20
10
6,326,833
6,335,702
(3,122,574)
(2,761,252)
3,204,259
3,574,450
Cost
Buildings and constructions
Machinery and equipment
Vehicles
Offsite equipment
Land
Information technology systems
Other intangibles
Constructions in progress
Afforestation and reforestation
Accumulated depreciation
20
10 to 20
4
As of December 31, 2000, the subsidiaries had deactivated 21 units, whose assets, net of accumulated
depreciation and provision for loss, amount to R$ 145,157.
Properties for sale of these units are classified in long-term receivables in the net amount of R$ 37,592, at cost
which is lower than realizable values.
Properties, machinery and equipment out of use of these units are classified in permanent assets at estimated
realizable values of R$ 107,565, net of the provision for loss of R$ 41,243, considered sufficient by management
to cover potential losses on realization.
www.ambev.com.br
63
10 Loans — Consolidated
Type/Purpose
Financial Charges
Local currency
Working capital
ICMS fiscal incentives
Purchase of equipment
Plant construction, expansion and modernization
Raw materials
Working capital — debentures
Working capital — promissory notes
Pre-fixed interest of 9.8% p.a.
Interest of 0.5% per month
Interest of 3.1% up to 3.8% p.a. plus TJLP
Interest of 2.7% up to 3.2% p.a. plus TJLP
Pre-fixed interest of 8.7% p.a.
Interest of 105% of the CDI
Pre-fixed interest of 15% p.a.
Total local currency
Foreign currency
Working capital
Importation of raw materials
Purchase of equipment
Total foreign currency
Total loans
Abbreviations used:
• CDI – Interbank Deposit Certificate
• TJLP – Long-Term Interest Rate
64
www.ambev.com.br
Interest of 9.2% up to 9.9% p.a.
Final Due Date
March 2002
January 2007
August 2002
July 2007
March 2002
September 2002
June 2003
2000
Current
1999
2000
Long-Term
1999
10,284
45,004
58,064
203,466
221,657
2,164
116,528
190,143
35,252
63,045
252,493
9,594
135,567
119,248
437,399
23,747
103,809
191,123
573,686
316,818
881,282
701,808
892,365
246,596
632,989
68,931
930,349
508,473
154,644
143,901
1,617
80,248
65,377
158,229
948,516
1,593,466
225,766
223,606
1,265,334
2,474,748
927,574
1,115,971
www.ambev.com.br
65
(a) Guarantees
Loans received by subsidiaries for expansion, construction of new plants and purchase of equipment are
guaranteed by mortgages on the new plants and financial liens on the equipment. Loans for the purchase of raw
materials, principally malt, are guaranteed by sureties of group companies and by promissory notes.
(b) Due Dates
Long-term loans at December 31, 2000 fall due as follows:
2002
2003
2004
2005
Subsequent years
348,490
274,948
173,889
108,538
21,709
Total
927,574
(c) Contractual Clauses with the International Finance Corporation (IFC)
In 1996, Brahma and its subsidiaries obtained funding from the IFC amounting to US$ 241 million. These loans
include an amount equivalent to US$ 5 million, which may be converted into preferred shares of AmBev (previously
Brahma preferred shares) at the discretion of the IFC.
The subsidiary Brahma and some of its subsidiaries assumed certain obligations with the IFC in relation to the
loans, among which are:
• Maintain certain balance sheet indices within specified limits.
• Comply with the World Bank environmental impact policies.
• Contract sufficient insurance coverage.
• Do not substantially dispose of the current plants.
The Company is discussing with the IFC the compliance with the contractual clauses relating to the
maintenance of balance sheet indices.
66
www.ambev.com.br
(d) ICMS Tax Incentives — Consolidated
ICMS tax incentives arising from State programs are as follows:
Loans
Deferral of taxes on sales
2000
December 31
1999
180,571
470,010
105,973
463,670
650,581
569,643
The loans relate to programs offered by certain states under which a percentage of the ICMS payable is
financed by the State Bank, generally over five years as from the payment date. Besides loans, the Company’s
subsidiaries receive deferral of ICMS due, for a period of up to 10 years, as a result of industry incentive programs.
The percentages deferred may be fixed over the program or reduce progressively, from 75% in the first year to
40% in the last year. The amounts deferred are partially indexed by 60% up to 80% of a general price index.
11 Stockholders’ Equity
(a) Subscribed and Paid-Up Capital
Capital at December 31, 2000 amounts to R$ 2,565,249 and comprises 38,646,080 thousand shares (1999 —
2,100,422 thousand), of which 15,976,336 thousand are common shares (1999 — 2,018,731 thousand) and
22,669,744 thousand are preferred shares (1999 — 81,691 thousand), all nominative and with no par value.
The following changes in the Company’s capital have taken as place as result of the association between the
controlling shareholders of Brahma and Antarctica:
As approved by the stockholders on July 1, 1999, the 270,000 common shares which represented the capital
of R$ 11 were grouped into three nominative common shares with no par value. At the same date, capital was
increased by R$ 1,549,783 through the subscription by the controlling stockholders of Antarctica and Brahma,
of 9,448 thousand common shares and 1,101 thousand preferred shares of Antarctica, and of 1,451,916
thousand common shares and 13,581 thousand preferred shares of Brahma. The Company accordingly issued
1,911,437 thousand common shares and 67,149 thousand preferred shares.
On September 15, 1999, there was an additional capital increase of R$ 167,677 through the subscription by
the minority stockholders of Antarctica of the remaining shares of that company (1,277 thousand common
shares and 173 thousand preferred shares), with the issue of 107,294 thousand common shares and 14,541
thousand preferred shares of the Company.
The share exchange ratio in these capital increases, for the same classes of share, was of one AmBev share
for each Brahma share, 48.63 AmBev shares for each Antarctica share owned by the controlling stockholders,
and 84 AmBev shares for each Antarctica share owned by the minority stockholders.
On January 17, 2000, an EGM approved a capital reduction of R$ 193,900, from R$ 1,717,471 to R$ 1,523,571,
without a reduction in the number of shares. Of this capital reduction, R$ 174,171 were used to offset the loss
recorded in the interim financial statements at September 30, 1999. Also, R$ 19,729, equivalent to dividends
received from Brahma as interest on own capital, was paid to the Company’s stockholders in proportion to their
holdings, as a return of invested capital.
www.ambev.com.br
67
Also, on April 28, 2000, an EGM approved a further capital reduction of R$ 136,511, from R$ 1,523,571 to
R$ 1,387,060, also without reduction in the number of shares, in order to offset the fourth quarter 1999 loss.
The Brahma and AmBev EGMs held on September 14, 2000 approved a capital increase of R$ 1,502,356 in
AmBev through subscription of the remaining shares of Brahma held by minority stockholders, totaling 1,176,536
common shares and 4,452,258 preferred shares, with a value of R$ 266.9054 per thousand shares, regardless
of their class. Brahma thus became a wholly owned subsidiary of AmBev and the Brahma stockholders received
one share issued by AmBev for each share held in Brahma of the same class of share.
On September 22, 2000, an EGM approved a further capital reduction of R$ 324,167, of which R$ 232,058 was
used to offset the loss for the period ended August 31, 2000 and R$ 92,109 was paid as a return of invested
capital, in both cases without reduction in the number of shares.
On October 20, 2000, an EGM approved the split of the Company’s shares, through which the shareholders
received five shares for each share held of the same class; the number of outstanding shares of capital was
increased to 15,976,336 thousand common shares and 22,669,744 thousand preferred shares.
(b) Stock Option Rights
In 1996, the subsidiary Brahma, through a private issue to its stockholders, offered 404,930,519 stock option
rights (1 for each 17 shares held), at R$ 50.00 per thousand rights, of which 35% were for subscription of
common shares and the remainder for preferred shares.
With the subscription of the Brahma shares as a capital increase in the Company and in keeping with the
decision of the EGM held on September 14, 2000 and rules previously established by the Brahma Board of
Directors, these rights now provide the option to subscribe to AmBev shares, in the proportion of five shares
for each stock option held, of the same class of shares.
The subscription right to will take effect in April 2003. The price of the subscription will be R$ 0.20 per share
(considering the effect of the split of the AmBev shares, approved on October 20, 2000, of one share per five
held), to be adjusted as established in the issue.
68
www.ambev.com.br
(c) Appropriation of Net Income
Net income for the year, after the deductions prescribed in the by-laws, is appropriated as follows:
(i) 27.5% as a compulsory dividend payment to all stockholders. For the year ended December 31, 2000, the
dividend distribution to stockholders was 34.2%. Pursuant to legal determination, preferred shares are
entitled to a dividend 10% greater than that paid to common shares.
(ii) An amount not lower than 5% and not higher than 68.875% of net income will be transferred to a reserve
for investments, in order to finance the expansion of the activities of the Company and its subsidiaries,
including subscriptions to capital increases and the formation of new businesses. For the year ended
December 31, 2000, the Company appropriated R$ 13,333 to the reserve for investments.
(iii) Transfer to the reserve for future capital increase of the remaining balance of net income for the year after
appropriations to the legal reserve, the reserve for investments and to proposed dividends payable. For the
year ended December 31, 2000, the Company appropriated R$ 485,380 to the reserve for future capital
increases.
(d) Interest on Own Capital
As of 1996, companies have the option to pay interest on own capital (stockholders’ equity), calculated based
on the TJLP (Long-Term Interest Rate), which can be considered part of the compulsory dividend when paid.
Although recorded as an expense for tax purposes, this interest was reclassified in the financial statements as
stockholders’ equity.
(e) Proposed and Approved Dividends
The calculation of the dividends proposed and approved at the Board of Directors Meeting held on December 13,
2000 on net income for the year ended December 31, 2000, is as follows:
Net income for the year
Appropriation to legal reserve (5%)
470,182
(23,509)
Dividend calculation basis
446,673
Proposed and approved dividends, payable as interest on own capital
Withholding income tax — at 15%
180,018
(27,003)
Total, net of withholding tax
153,015
Percentage of dividends on the calculation basis
34.26
Proposed and approved dividends, payable as interest on own capital,
per thousand shares outstanding at the year end — R$
Common
Preferred
4.40
4.84
www.ambev.com.br
69
12 Program for Repurchase of Shares
On December 13, 2000, the Brahma Board of Directors approved, under the terms of Paragraph 1, Article 244
of Law NO 6,404/76 and CVM Instruction NO 10/80, the investment of funds in the purchase of AmBev shares.
Brahma was authorized, for a period of 90 days which may be extended, to purchase common and preferred
shares issued by AmBev up to the limit of 396,368,752 common shares and 2,107,031,690 preferred shares,
which correspond to 10% and 9.75%, respectively, of the outstanding shares of each class.
The purchase will be debited to the revenue reserve account in the balance sheet at December 31, 1999 of the
subsidiary, up to the amount of R$ 400,000. During the year ended December 31, 2000, Brahma purchased
26,289,000 common shares for R$ 10,527, recognized in the consolidated financial statements as a reduction of
stockholders’ equity, which explains the difference between the parent company’s and consolidated stockholders’
equities at December 31, 2000.
13 Profit Sharing and Stock Option Plan
(a) Profit Sharing
The Company by-laws provide for the distribution to employees of up to 10% of net income, based on predetermined
criteria. The directors are entitled to receive an amount, which cannot exceed their annual remuneration, or a share
of profits of 5% of net income, whichever is lower. The amounts attributed to each director are based on individual
performance and efficiency, as approved by the Board of Directors.
The amounts allocated to profit sharing of employees and directors for the year ended December 31, 2000, in
accordance with the limits established in the by-laws, amounted to R$ 53,718 and R$ 2,290 respectively, in the
consolidated and parent company financial statements. No profit sharing was paid in 1999 as the targets set by
the Company and its subsidiaries were not met, except for Brahma that allocated R$ 39,866, paid in 2000.
(b) Stock Option Plan
The option plan for purchase of Company shares (“Plan”) substituted the stock option plan existing in the subsidiary
Brahma. On September 14, 2000, with the transfer of the Brahma minority stockholders to the Company, the
holders of stock purchase options for Brahma shares, with the maintenance of the rules of the prior Brahma plan,
received the right to subscribe AmBev shares.
In accordance with its by-laws, the Plan is managed by a committee comprised non-executive personnel of the
Company. This committee periodically establishes stock option plans, for common and preferred shares,
defining the conditions and the employees to be included and the price at which options can be exercised.
This price cannot be less than 90% of the average price of shares traded on the São Paulo Stock Exchange
(BOVESPA) in the three business days prior to the option concession date, indexed for inflation to the exercise
date. The number of shares that can be granted during each year cannot exceed 5% of the total number of
shares of each class of share on that date.
70
www.ambev.com.br
When options are exercised, the Company may issue new shares or use shares held in treasury. Stock options
granted have no final exercise date. If an employee leaves, the options expire; the Company has the right to
repurchase any shares purchased by the employee at a price established by the rules, which takes into
consideration the price paid by the employee, inflation since the date of subscription and the current market price
of the share.
As of 2001, the Company will finance the purchase of shares in accordance with the established rules of the Plan.
Financing arrangements are normally for periods of no more than four years and include interest of 8% per annum
over a designated general price index. These loans are guaranteed by the shares issued when the option is
exercised. At December 31, 2000, the outstanding balance of these loans relating solely to Brahma and its
subsidiaries amounted to R$ 165,151 (1999 — R$ 89,038).
The change in stock options for the years ended December 31, 2000 and 1999 is summarized as follows:
Stock Options
(Thousand of Shares)
2000
1999
Stock options exercisable
at the beginning of the year/period
433,731
372,350
Change during the year/period
Exercised
Cancelled
Split (1 for 5)
Granted
(175,934)
(22,826)
939,884
66,500
(39,327)
(30,892)
131,600
1,241,355
433,731
Stock options exercisable
at the end of the year/period
The EGM held on October 20, 2000 approved the split of the Company’s shares and, consequently, the holder
of one purchase option of shares received the right of five purchase options of the same class of share.
14 Social Programs
(a) Supplementary Private Pension Benefits
Brahma and its subsidiaries have two pension plans: one is a defined contribution plan (open to new participants)
and the other is a defined benefit plan (closed to new participants). The transfer of participants from the defined
benefit plant to the defined contribution plan is permitted by agreement of the Board of Directors of the Instituto
AmBev de Previdência Privada (the “AmBev Private Pension Institute” or “AmBev Institute”). These plans are
managed by the AmBev Institute and their main objective is to supplement the pension benefits of their employees
and management.
Antarctica and its subsidiaries have two defined contribution pension plans, under contract with Bradesco
Previdência e Seguros S.A., whose objectives are the same as those of AmBev Institute.
As approved by Administrative Rule NO 806/2000 of December 8, 2000, of the Supplementary Pension Secretariat,
the AmBev Institute succeeded Instituto Brahma de Seguridade Social - IBSS and in the future will absorb the
benefit plans maintained by Antarctica with Bradesco Previdência e Seguros S.A.
www.ambev.com.br
71
All plans are supported by the participants and sponsors. AmBev Institute has 5,332 participants (5,951 in 1999),
2,389 of whom received benefits in 2000 (2,549 in 1999). The contributions of sponsors to the AmBev Institute
are at least equivalent to the difference between the percentage contribution of the active participants and the
total charge determined by the actuarial valuation. The cost of the benefit plan is determined actuarially and
includes capitalization of the benefit credit units projected through retirement pensions or death benefits of the
beneficiary, and also the distribution of capital coverage for death benefits. Based on this calculation, the Company
has made contributions to the AmBev Institute, with 3.1% of the payroll participants in the defined benefit plan
and with 5.4% of the payroll participants in the defined contribution plan. For the year ended December 31,
2000, Brahma and its subsidiaries contributed with R$ 2,816 (1999 — R$ 3,101) to the AmBev Institute for the
execution of its program. At December 31, 2000, there is no deficit in the AmBev Institute that may represent
a liability to the sponsor companies.
The benefit pension plans maintained by Antarctica currently have 577 participants, 146 of whom received
benefits in 2000. The contributions of the sponsors are based on fixed amounts determined individually for each
participant.
(b) Health Care Assistance and Other
On October 27, 2000, the deed of incorporation of Fundação Assistencial Brahma (the “Brahma Welfare
Foundation”) by Fundação Antônio e Helena Zerrener Instituição Nacional de Beneficência (“Foundation”) was
formalized. The beneficiaries of the “Brahma Welfare Foundation” thus receive the assistance of the Foundation,
which assumed all of its obligations.
At December 31, 2000, the Foundation had 27,547 participants (23,413 in 1999) and, according to its by-laws,
its main objectives are to provide health care and dental assistance to employees and management, offer literacy
courses, assistance in professional and university courses, grant scholarships to students or professionals
of merit, maintain establishments for help and assistance to the elderly, among others, through direct activities or
financial agreements with appropriate entities.
The sponsor companies may contribute, according to their by-laws, up to 10% of their net income to support
the Foundation. In the year ended December 31, 2000, the Foundation did not receive contributions from its
sponsors.
15 Provision for Contingencies and Liabilities Related
to Tax Claims — Consolidated
ICMS and IPI
PIS and COFINS
Income tax and social contribution
Labor claims
Distributor claims
Other
72
www.ambev.com.br
2000
December 31
1999
478,211
184,032
36,110
100,087
31,382
48,147
344,542
124,222
31,750
79,044
30,908
33,189
877,969
643,655
The provision for contingencies is recorded, at current amounts, to cover losses which legal counsel of the
Company and its subsidiaries consider to be probable with respect to labor, tax, civil and commercial claims in
progress at the administrative and judicial levels.
The Company and its subsidiaries have other ongoing claims of the same nature which, according to the opinion
of legal counsel, are subject to possible, but not probable, losses of approximately R$ 437,000 (R$ 380,000
in 1999).
The nature of the main contingencies and liabilities related to tax claims are:
(a) Value-Added Tax on Sales and Services - ICMS
and Excise Tax - IPI
At December 31, 2000 and 1999, the Company has a provision of R$ 258,053 of liabilities related to tax claims
on IPI presumed credits at a zero tax rate.
Also, the Company has provisions related to extemporaneous ICMS and IPI credits on purchases of property,
plant and equipment made in years prior to 1996. For the year ended December 31, 2000, the Company
recorded a provision of R$ 50,785 (R$ 38,586 in 1999) in the consolidated financial statements related to interest
and charges on the amounts potentially liable.
(b) Social Integration Program - PIS and
Social Contribution on Revenues - COFINS
The Company obtained a preliminary injunction in the first quarter of 1999, which recognizes the right to pay
PIS and COFINS on sales revenues but not on other income. The amounts unpaid are being recorded in this
account monthly until the Company obtains a final favorable decision. Amounts recorded for the year 2000
total R$ 43,570 in the consolidated financial statements (R$ 26,676 in 1999).
(c) Income Tax and Social Contribution on Net Income
These relate mainly to the recognition of the deductibility of interest on own capital in the calculation of social
contribution on net income for the year 1996.
(d) Labor Claims
These relate to claims filed by former employees. At December 31, 2000, judicial deposits made by the Company
totaled R$ 39,021 (December 31, 1999 — R$ 30,851), restated by official indices.
(e) Distributor Claims
These relate mainly to cancellations of agreements with certain distributors as a result of non-compliance with
Company directives, in addition to the restructuring of the distribution network.
(f) Other
These are mainly related to issues involving the National Institute of Social Security (INSS), products and suppliers.
www.ambev.com.br
73
16 Financial Instruments
(a) General
The Company and its subsidiaries carry out futures and swap transactions of currencies and interest rates in order
to protect against exchange rate variations on the global exposure in foreign currencies, and against interest rate
fluctuations. Temporary cash surpluses are invested in line with Treasury policies, which are periodically reviewed.
(b) Market Value
The market values of the holdings in the capital of Brahma and Antarctica are not readily determined, since their
shares are no longer publicly quoted.
The market value of the holding in Brahma, based on the last quotation in the São Paulo Stock Exchange on
September 14, 2000, was R$ 12,409,585 (R$ 1,244,796 — December 31, 1999) while that of Antarctica, based
on the last quotation available on September 15, 1999, was R$ 756,216.
The market value of other financial instruments of the Company approximates their book values. These market
values were obtained through calculation of their present values considering current market interest rates for
transactions of similar term and risk.
(c) Credit Risk Concentration
A substantial part of the sales of Brahma, Antarctica and their subsidiaries is to distributors comprising a broad
distribution network. The direct sales are widely spread over a large number of customers. The credit risk is low
because of the large customer base and the control procedures which monitor this risk. Historically, the subsidiaries
have not suffered significant losses on trade accounts receivable.
In order to minimize the credit risk of its investments, management has adopted procedures for the allocation
of cash and/or investments taking into consideration limits and credit ratings of the financial institutions and not
allowing any concentration.
(d) Foreign Currency Exposure
The Company has operations in Argentina, Venezuela and Uruguay, which represent approximately 23% of its
total assets at December 31, 2000. Also, certain loans obtained by the Company in Brazil, as well as trade
account payables, are denominated in foreign currency.
(e) Interest and Currency Swap and Forward
At December 31, 2000, the total nominal amount of interest rate and foreign currency swap and forward
contracts amounts to R$ 221,179 (1999 — R$ 2,071,727) and R$ 849,621 (1999 — R$ 286,240) on a consolidated
basis, respectively.
74
www.ambev.com.br
17 Income Tax and Social Contribution
on Net Income - CSLL
(a) Reconciliation of the Benefit (Expense) of Consolidated
Income Tax and CSLL
The reconciliation of the benefit (expense) of income tax and social contribution for the years ended December 31,
2000 and 1999 with their nominal amounts, is as follows:
December 31,
2000
December 31,
1999
Consolidated net income (loss) before social contribution
and income tax, and minority interest
330,656
(162,161)
Income tax and social contribution benefit (expense)
at nominal rates
(112,423)
60,000
267,611
2,240
162,673
61,206
(35,324)
38,468
(75,991)
Adjustments to obtain the effective rate
Equity in the earnings of subsidiaries abroad not subject to taxation
Tax losses, CSLL negative basis and temporary differences of prior
years accounted for
Tax gain arising from interest on own capital
Tax losses not used in subsidiaries without a history of profits
Equity gains on reserves for fiscal incentive investments in
subsidiaries
Reduction of the CSLL rate from 12% to 9%
Permanent additions and deductions and other
Social contribution and income tax benefit (expense)
per the consolidated statement of income
31,569
(5,223)
(5,654)
(27,314)
405,413
(43,575)
www.ambev.com.br
75
(b) Composition of Deferred Taxes
The main components of deferred taxes at December 31 are as follows:
Parent Company
2000
1999
Long-term receivables
Tax loss carryforwards
Temporary differences
Employees’ profit sharing
Other
38,710
38,710
Long-term liabilities
Temporary differences
Accelerated depreciation
Equity in the earnings of foreign subsidiaries
Exchange variations, net on outstanding loans
76
www.ambev.com.br
3,651
3,651
Consolidated
2000
1999
607,439
303,454
334,514
18,199
35,936
173,795
11,819
33,882
996,088
522,950
27,802
2,075
23,325
30,370
103,519
59,476
53,202
193,365
(c) Tax Loss Carryforwards
(i) Local
Deferred income tax assets include tax losses of Brazilian subsidiaries which do not prescribe and which can be
offset against future taxable income, except losses of Pepsi-Cola Engarrafadora Ltda., were only partially
recognized by the Company.
The offsetting of tax losses is limited to 30% of income for the year before income tax, determined in conformity
with Brazilian tax legislation. The asset recorded is limited to amounts whose offset is supported by projections
of taxable income made by the Company.
(ii) Abroad
The tax benefit related to operating losses of foreign companies was not recorded as an asset since management
is unsure of its probable realization. The movement of the accumulated tax losses of the foreign companies is
as follows:
2000
1999
At the beginning of the year
Tax loss for the year
151,428
24,132
130,142
21,286
At December 31
175,560
151,428
Losses of the foreign subsidiaries expire as follows:
2001
2002
2003
2004
2005
58,953
33,324
58,895
7,793
16,595
175,560
www.ambev.com.br
77
18 Insurance Coverage
The main assets of the Company and its subsidiaries, such as property, plant and equipment and inventories
are insured at December 31, 2000 against fire and other risks at their market values. The insurance cover of the
policies in effect up to December 31, 2001 amounts to R$ 5,525,420.
19 Non-Operating Income (Expenses), Net
Non-operating income and expenses for the years ended December 31, 2000 and 1999 comprise the following:
Parent Company
2000
1999
Non-operating income
Gain on disposal of property, plant
and equipment, and investments
Other non-operating income
Non-operating expenses
Loss on disposal of property, plant
and equipment
Provision for loss on unsecured
liabilities of subsidiaries
Other non-operating expenses
(7,615)
Non-operating income (expenses), net
*
78
www.ambev.com.br
*
*
Consolidated
2000
1999
42,800
21,209
4,925
64,009
4,925
(2,750)
(31,393)
(3,473)
(710)
(45,690)
(5)
(73,828)
(53,310)
(73,828)
(6,223)
(32,103)
(53,310)
(73,828)
57,786
(27,178)
ANNUAL REPORT
Financial Highlights
4
Message to Shareholders
5
Our Beliefs and Values
6
Only People Like Ours
9
A One of a Kind Market 13
Distribution 15
Growth Potential 16
Oper
International Operations 20
Financial Section 23
Investor Information 79
Brazil is much more than just a country. It is by far the
largest country in Latin America, and the fifth largest
in the world. Its markets are at the same time diverse
and enormous, spread over 8.5 million square
kilometers, an area just slightly smaller than the size
of United States, presenting spectacular opportunities.
Much more than an exotic place, rich in natural
beauty, Brazil is the tenth largest economy in the
world and one of the great political and economic
powers of Latin America.
Brazil has what we call “a nurturing environment”:
there are no earthquakes, volcanoes or severe
natural catastrophes. Within this enormous territory,
the regional origins and racial and cultural influences
are so diverse, it is almost as if Brazil was a continent.
Despite this, everybody speaks the same language
— Portuguese — without regional dialects. About
170 million people are heavily concentrated near
the Country’s shores, especially in the southern
and southeastern part of the Country.
Brazil has an annual GDP of around R$ 1 trillion
(US$ 500 billion), and is growing the industrial,
commercial, service, and agricultural segments
of the economy. And economic stabilization efforts
are preparing the Country for a promising, bright
future, with even more business opportunities.
From a human point of view, Brazil is an unique country.
One makes friends here more quickly than in any
other place in the world. Here, you don’t need to
be formally introduced to just start up a conversation,
even to go have a coffee together. There is of course
another beverage in this Country that is a symbol
of kindness, friendship, and neighborly chats.
Whenever friends get together or new friendships
are made, “how about a beer?” is almost inevitable.
We at AmBev love this because every time people
gather over a friendly beer there is a 79% chance
that this beer will be one of ours.
Investor Relations
Investor
Information
Av. Maria Coelho Aguiar, 215 - Bloco F - 7O andar
CEP 05804-900 - São Paulo - SP - Brazil
Tel. (55 11) 3741-7560/7553/3315
Fax (55 11) 3741-3527
[email protected]
www.ambev.com.br
Companhia de Bebidas das Américas - AmBev was created in June 1999 as a result of a merger between Companhia
Cervejaria Brahma and Companhia Antarctica Paulista. In September 1999, all minority shareholders of Antarctica
migrated to AmBev, and on September 15, 2000, after the approval of the antitrust agency was received, the final
legal step in the combination of Brahma and Antarctica was completed, with the exchange of all outstanding shares
of Brahma for shares of AmBev.
Stock Exchange Information
AmBev has two classes of shares, common shares (ON) and preferred shares (PN), traded on both BOVESPA in São Paulo
and the NYSE. The stock symbols for common and preferred shares on the BOVESPA are AMBV3 and AMBV4,
respectively. The symbols for common and preferred ADRs on the NYSE are ABV.c and ABV, respectively.
The preferred shares have preference in respect to the proceeds of liquidation of the Company, without any premium to
existing shareholders. Preferred shareholders are not entitled to vote at the Company’s general shareholders meeting.
Under the Brazilian Corporate Law, dividend payments to preferred shareholders must be 10% greater than dividend
payments to ordinary shareholders.
Local Depositary Bank
Transfer Agent and Registrar
Banco Itaú
Shareholder Information
Tel. (55 11) 237-5151
The Bank of New York
Church Street Station, P.O. Box 11258
New York, NY 10286 USA
Tel. 1 (212) 815-5800
Dividend Payments
During 2000, the Company declared dividend payments of R$ 4.40 per lot of 1,000 common shares and R$ 4.84
per lot of 1,000 preferred shares (as interest paid on capital).
São Paulo Stock Exchange — AMBV4, AMBV3
Quarterly stock information
Brazilian Reais per lot of 1,000 shares
Quarter Ended
December 31
September 30
June 30
March 31
ON*
ON* ex-rights
PN*
PN* ex-rights
ON
PN
ON
PN
ON
PN
High
1,940.00
425.00
2,200.00
478.00
1,530.00
2,030.00
1,150.00
1,460.00
930.00
1,360.00
Low
1,510.00
325.00
2,000.01
374.02
1,150.00
1,455.00
890.00
1,178.00
710.00
1,000.00
2000
Close
1,800.00
422.00
2,161.01
470.01
1,510.00
1,940.01
1,150.00
1,455.00
920.00
1,350.00
(*) On October 20, 2000, the Company approved a 5 for 1 split of its stock traded on the BOVESPA. The Company did not split its stock traded
on the New York Stock Exchange.
New York Stock Exchange — ABV, ABV.c
Year-end stock information
U.S. Dollars per ADR (1 ADR = 100 shares)
Quarter Ended
December 31
Common
Preferred
High
23.06
26.38
Low
14.06
19.44
2000
Close
22.25
25.75
www.ambev.com.br
79
2000 Annual Report
Brazil and AmBev. Both one of a kind.
2000 Annual Report

Annual Report 2000 (Download in PDF)

Transcription

Similar documents

Beer (2011)

market share

FREE SAVE on BEER CAN KOOZIE

With 36 beer tap handles, we at iron pig alehouse keep a variety of

Annual Report 2008

Hop Stoopid POS Sell Sheet

Oktoberfest - Camp Richardson

AmBev Citizenship Report 06

Annual Report 2004 (Download in PDF)