OFFERING MEMORANDUM CONFIDENTIAL - Coca Cola İçecek

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CCI (a)Dec. 31, 2005EfesInvest (a)(b)Dec. 31, 2005Efes Invest 45 daysendedDec. 31, 2005 (c)Pro FormaCombined EfesInvest and CCIDec. 31, 2005Adjustments(in millions of YTL)Net sales ............................... 1,190.4 159.7 (19.0) 1,330.1Cost of sales ......................... (822.0) (104.1) 12.6 (913.5)Gross Profit......................... 368.4 55.6 (6.4) 417.6Selling, distribution andmarketing expense ............ (210.0) (18.1) 2.4 (225.7)General and administrativeexpense.............................. (40.9) (12.7) 1.9 (51.7)Other operational income(expense) ........................... (0.8) 0.0 0.0 (0.8)Profit From Operations..... 116.6 24.8 (2.1) 139.3Financial (expense) income.(8.1) (1.3) 0.1 (10.9) (d) (20.2)Other income (expense)....... 4.7 10.8 (7.3) 8.3Monetary gain ...................... 6.8 1.4 (5.4)Income Before Taxes ......... 106.4 35.7 (9.3) 121.9Tax charge net...................... (26.8) (6.9) 2.2 (31.5)Net Income.......................... 79.6 28.8 (7.1) 90.4Minority Interest................Equity holders of theparent ...............................(0.8)78.9(1.9)26.9(0.1)(7.2)(2.4) (e) (5.2)85.2Profit From Operations..... 116.6 24.8 (2.1) 139.3Depreciation andamortization ...................... 72.7 8.1 (0.9) 79.8Other operating(income)/expense .............. 0.8 0.0 0.0 0.8Retirement and vacation pay 3.3 0.0 (0.0)EBITDA ................................ 193.5 32.9 (3.0) 223.3(a) The consolidated income statements of CCI and Efes Invest for the year ended December 31, 2005 have been derivedfrom their respective audited consolidated financial statements for the year ended December 31, 2005 of the respective entitiesincluded elsewhere in this offering memorandum.(b) The income statement of Efes Invest is prepared in U.S. dollars. For purposes of preparing the unaudited pro formaconsolidated financial information, the U.S. dollar amounts have been converted into New Turkish Lira using the average ratefor 2005 (YTL1.3404 = $1.00).(c) Reflects the elimination of the results of Efes Invest for the 45 days beginning November 15, 2005 and endingDecember 31, 2005 as these results are included in the consolidated income statement of CCI. The income statementinformation of Efes Invest for the 45 days beginning November 15, 2005 and ending December 31, 2005 has been derived fromits unaudited income statement for the related period.(d) CCI paid YTL331.2 million for 87.63% of Efes Invest. The purchase of Efes Invest was financed as follows:(i) YTL196.0 million through a share capital increase; (ii) YTL125.5 million through bank borrowings (a dollar denominatedfacility of $60.0 million and a YTL denominated facility of YTL45.0 million); and (iii) the YTL9.7 million from cash fromoperations. The dollar denominated borrowings incur interest at an annual rate of LIBOR plus 0.45% and the YTL denominatedborrowings incur interest at an annual rate of 14.8%. Assuming the debt was incurred as of January 1, 2005, the additionalaccrued interest expense on these loans for the period between January 1, 2005 and November 14, 2005 is reflected as financial(expense).(e) Minority interest in the unaudited pro forma consolidated income statement for the year ended December 31, 2005 wascomputed based on a minority share ownership of 12.37% of Efes Invest for the period.2005Efes Invest net income, for the period between January 1, 2005 and November 14, 2005 (attributable to the equityholders of CCI) (in millions of YTL)................................................................................................................................ 19.7
Minority share ownership..................................................................................................................................................... 12.37%Minority interest in net income of Efes Invest (in millions of YTL) .................................................................................. 2.4MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONSYou should read the following discussion of our financial condition and results of operations in conjunction with ourIFRS Financial Statements and the related notes contained elsewhere in this offering memorandum. For a description of certainsignificant differences between IFRS and U.S. GAAP, see Annex A to this offering memorandum. This discussion containsforward-looking statements that involve risks and uncertainties, including those discussed in "Risk Factors" and elsewhere inthis offering memorandum.Overview of Our BusinessWe are a leading bottler and distributor of CSDs and NCBs with operations in Southern Eurasia (which we define asTurkey, the Caucasus and Central Asia) and the Middle East. Our business consists of producing, selling and distributingalcohol-free beverages, primarily brands of The Coca-Cola Company, in Turkey, Kazakhstan, Azerbaijan, Jordan andKyrgyzstan. We also have a 28.9% interest in the Coca-Cola bottler in Turkmenistan.We offer a wide range of beverages, including CSDs as well as an expanding selection of NCBs (a category thatincludes juices, waters, sports drinks, energy drinks, iced tea and iced coffee) in selected markets. The core brands that we sell inall of our markets are Coca-Cola, Coca-Cola light, Fanta and Sprite. Although CSDs continue to represent a high proportion ofour sales volume, our NCB sales have grown as we continue to expand our offering. In 2003, 2004 and 2005, CSDs represented82.7%, 83.8% and 84.9%, respectively, and NCBs represented 17.3%, 16.2% and 15.1%, respectively, of our total unit casesales volume in Turkey. On a pro forma basis, in 2003, 2004 and 2005, CSDs represented 84.3%, 85.1% and 85.2%,respectively, and NCBs represented 15.7%, 14.9% and 14.8%, respectively, of our total unit case sales volume in all of themarkets in which we now operate.Recent DevelopmentsAcquisition of Shares by CCSDIn April 2005, E. Özgörkey İçecek Yatırımı A.Ş. sold its interest in CCI to Anadolu Efes and CCSD in equal parts. Asa result, CCSD acquired 1,253,354,597.5 Class C Shares for YTL58.6 million, which was financed through borrowings.Recent AcquisitionsWe expanded our bottling operations beyond Turkey with the acquisition from Anadolu Efes of a 51.87% interest inEfes Invest on November 14, 2005 for consideration of YTL196.0 million. Subsequent to the acquisition, we extended amandatory call to all remaining shareholders in accordance with CMB requirements. As a result of the mandatory call, weacquired an additional 35.76% of the shares of Efes Invest for aggregate consideration of YTL135.2 million, increasing our totalinterest in Efes Invest to 87.63%. The purchase of Efes Invest was financed as follows: (i) YTL196.0 million through a sharecapital increase in which Anadolu Efes was the sole participant; (ii) YTL125.5 million through bank borrowings; and(iii) YTL9.7 million through cash from operations.On December 29, 2005, our subsidiary Efes Invest Holland B.V. acquired from an indirect wholly owned subsidiary ofThe Coca-Cola Company a 90.0% interest in CC Jordan for approximately $6.4 million (YTL8.7 million). The purchase ofCC Jordan was financed through borrowings. The remaining 10.0% of the shares of CC Jordan are held by an indirect whollyowned subsidiary of The Coca-Cola Company.The acquisitions of Efes Invest and CC Jordan were accounted for using the purchase method of accounting inaccordance with IFRS 3, "Business Combinations." The aggregate purchase price of such acquisitions was allocated to thetangible and intangible assets acquired and liabilities assumed based upon their respective fair values as of the time eachacquisition was consummated. The excess of the purchase price over the historical cost basis of the net assets acquired("goodwill") was allocated based upon appraisals of the fair market value and useful lives of the acquired fixed assets andliabilities.The results of Efes Invest and CC Jordan are not included in our IFRS Financial Statements as of and for the yearsended December 31, 2003 and 2004. Our consolidated balance sheet as of December 31, 2005 reflects the acquisitions of Efes
Page 1 and 2: OFFERING MEMORANDUM CONFIDENTIAL5,0
Page 4 and 5: Neither we, the selling shareholder
Page 7 and 8: ENFORCEABILITY OF CIVIL JUDGMENTSCC
Page 9 and 10: PRESENTATION OF FINANCIAL AND OTHER
Page 11 and 12: FORWARD-LOOKING STATEMENTSThis offe
Page 13 and 14: market in Europe for products of Th
Page 15 and 16: The OfferingThe International Offer
Page 17 and 18: corresponding figures for previous
Page 19 and 20: 2004 and 2005, respectively, and 32
Page 21 and 22: Sales of alcohol-free beverages are
Page 23 and 24: Our principal shareholders have the
Page 25 and 26: integration into the European Union
Page 27 and 28: part of governmental authorities; a
Page 29 and 30: of all of the companies with equity
Page 31 and 32: • the remainder of the net profit
Page 33 and 34: In February 2005, the SIS substitut
Page 35 and 36: statutory books is slightly lower t
Page 37: 2005 2004 2003(audited)(in thousand
Page 41 and 42: on the consolidated balance sheets.
Page 43 and 44: "Package mix" refers to the relativ
Page 45 and 46: to the total amount of qualifying c
Page 47 and 48: Xpress in April 2005. These increas
Page 49 and 50: We had net other expense of YTL12.3
Page 51 and 52: Marketing and advertising expense i
Page 53 and 54: Net cash used in investing activiti
Page 55 and 56: In 2004, the increase in net workin
Page 57 and 58: upon with the bank on a case-by-cas
Page 59 and 60: Interest Rate RiskOur interest rate
Page 61 and 62: We record a valuation allowance to
Page 63 and 64: Attractive Growth MarketsWe operate
Page 65 and 66: In June 1996, The Coca-Cola Company
Page 67 and 68: The following table compares the pe
Page 69 and 70: have received special authorization
Page 71 and 72: 2005 2004 2003Unit CaseSales Volume
Page 73 and 74: The sports drinks segment is a rela
Page 75 and 76: Indirect DistributionIn addition to
Page 77 and 78: CC Kazakhstan was established in 19
Page 79 and 80: CC Kazakhstan's share of the bottle
Page 81 and 82: We believe that Azerbaijan's demogr
Page 83 and 84: Piko (2) ..........................
Page 85 and 86: consolidation in recent years and,
Page 87 and 88: The following table shows the packa
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"Peak season production capacity" i
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Turkey:Ankara......................
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We intend to explore possible syner
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and producers and distributors, whi
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We have implemented systems that we
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(2) These properties are not curren
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Our senior management is responsibl
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Group, Mr. Zorlu worked for Turkish
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Consistent with our commitment to l
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Anadolu EfesEstablished in 1966, An
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Coca-Cola Company may, in its sole
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distribution or sale of any product
Page 113 and 114:
certain approved containers of The
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Resolution the Trade RegistryGazett
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Class B Shareholders pursuant to wh
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Notices covering general meetings (
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In the event any party or parties a
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AuditorsPursuant to our articles of
Page 125 and 126:
implementation of the New Turkish L
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Insider TradingInsider trading is d
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The Republic of TurkeyThe following
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Gains from the sale, exchange, or o
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• certain former citizens or long
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Subject to the discussion below und
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In addition, until 40 days after th
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(1) The purchaser acknowledges that
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In our opinion, the consolidated fi
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Coca-Cola İçecek Anonim Şirketi
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Coca-Cola İçecek Anonim Şirketi
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a) the restatement for changes in t
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• Non-monetary assets and liabili
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The functional currency of Efes Sı
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Goodwill arising from acquisitions
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Financial assets and liabilities ar
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121,424 88,516 78,7545. INVESTMENTS
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Accumulated Impairment .... (8,123)
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Management premium /bonus accrual f
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The legal reserves are not availabl
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The Group is subject to taxation in
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The Group's objective is to maintai
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OtherBeverage Partners Worldwide...
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Cash and cash equivalents .........
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Efes Sınai Yatırım Holding Anoni
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1. CORPORATE INFORMATIONGeneralEfes
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Trade receivables—net ...........
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Investments classified as available
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arising from the business combinati
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differences will reverse in the for
Page 185 and 186:
Less impairment for ACCB and Kuban
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2005 2004Trade accounts payable....
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2005 2004Net profit attributable to
Page 191 and 192:
Total depreciation and amortization
Page 193 and 194:
For the purposes of consolidated fi
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Political and Economic Environment
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Credit risk arises from the possibi
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2004Domestic Foreign Elimination Co
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Dış Ticaret Ltd. Şti.)(*) The li
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activities. The equity and net inco
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The Group presents assets subject t
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Deferred income tax is provided, us
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2004 2003ACCB......................
Page 215 and 216:
The effective interest rates at the
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There have been no other transactio
Page 219 and 220:
Major components of income tax expe
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Balances with related parties as of
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Bishkek CC is subject to corporate
Page 225 and 226:
The Group does not hedge its foreig
Page 227 and 228:
ANNEX ASUMMARY OF CERTAIN SIGNIFICA
Page 229 and 230:
As to U.S. LawAs to Turkish LawWhit
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OFFERING MEMORANDUM CONFIDENTIAL - Coca Cola İçecek

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