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Provida Pension Fund Administrator – ‘6-K’ for 9/30/03

On:  Friday, 2/13/04, at 3:59pm ET   ·   For:  9/30/03   ·   Accession #:  950103-4-244   ·   File #:  1-13406

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 2/13/04  Provida Pension Fd Administrator  6-K         9/30/03    1:225K                                   Davis Polk & … LLP 01/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 6-K         Report of a Foreign Private Issuer                  HTML    215K 

FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of February, 2004

Commission File Number: 001-13406

Provida Pension Fund Administrator
(Translation of registrant’s name into English)

Avenida Pedro de Valdivia 100
Santiago, Chile
011-562-697-0040
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A

Provida Pension Fund Administrator

TABLE OF CONTENTS

   Item   

ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In millions of constant Chilean pesos of September 30, 2003 and thousands of U.S. dollars)

ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES

STATEMENTS OF INCOME
(In millions of constant Chilean pesos of September 30, 2003 and thousands of U.S. dollars)

ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS
(In millions of constant Chilean pesos of September 30, 2003 and thousands of U.S. dollars)

ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS
(In millions of constant Chilean pesos of September 30, 2003 and thousands of U.S. dollars)

ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS
(In millions of constant Chilean pesos of September 30, 2003 and thousands of U.S. dollars)

ADMINISTRADORA DE FONDOS DE PENSIONES PROVIDA S.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In millions of constant Chilean pesos of September 30, 2003)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. General - The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Chile ("Chilean GAAP") as supplemented by regulations issued by the Superintendencia de Administradoras de Fondos de Pensiones (Superintendency of Pension Fund Administrators - "SAFP") and the Superintendencia de Valores y Seguros (Superintendency of Securities and Insurance - "SVS").

b. Basis of Consolidation - The consolidated financial statements include the accounts of Administradora de Fondos de Pensiones Provida S.A. (“Provida”) and its 99.99986% owned subsidiary, Provida Internacional S.A. and 99.999994% and 99.99984% of the indirect subsidiaries AFP Génesis S.A. (Ecuador) since September 2001 and AFP Porvenir S.A. (República Dominicana) since September 2003. All significant transactions and balances between the companies have been eliminated in consolidation.

c. Regulation and Industry Segment - The sole object of Provida is to administer Fondos de Pensiones Provida ("the Pension Funds Types A, B, C, D and E"), a defined contribution pension fund and to administer the provision of related benefits, in accordance with Decree Law 3,500 and modifications. Accordingly, Provida is regulated by the SAFP. Starting 1994, in accordance with Laws 19,031 and 18,876, Provida is allowed to form subsidiaries and to invest in companies that act as depositaries of securities.

d. Price-Level Restatements - All amounts in the financial statements and notes are expressed in constant Chilean pesos of September 30, 2003 purchasing power, unless otherwise stated.

The financial statements have been price-level restated in accordance with accounting principles generally accepted in Chile in order to reflect the effect of the changes in the purchasing power of the Chilean peso during each period. For this purpose, shareholders' equity and non-monetary assets and liabilities and the income statement amounts have been restated in terms of period-end constant Chilean pesos. The resulting net charge to income arises as a result of the gain or loss in purchasing power from the holding of monetary assets and liabilities exposed to the effects of inflation.

In accordance with Chilean GAAP, the restatements were calculated based on the official Consumer Price Index published by the National Institute of Statistics which was 2.2% and 2.9% for the periods ended September 30, 2002 and 2003, respectively.

For comparative purposes, the financial statements as of September 30, 2002 have been restated in terms of constant Chilean pesos of September 30, 2003 purchasing power. The restatement does not change the prior periods' statements in any way except to update the amounts to constant Chilean pesos of September 30, 2003 purchasing power.

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Such price-level restatements do not purport to present appraised or replacement values and are only intended to restate all non-monetary financial statement amounts in terms of Chilean pesos of the same purchasing power and to include in net income for each period the net loss or gain resulting from the holding of monetary assets and liabilities exposed to the effects of inflation.

e. Foreign Currency - Foreign currency assets and liabilities are translated into Chilean pesos at the observed (inter-bank) rate reported by the Central Bank of Chile at the end of each period. The rates are as follows, expressed in historical Chilean pesos per United States dollar:

f. Financial Investments

Time deposits: Are stated at cost plus accrued interest and UF or US dollar indexation adjustments, as applicable.

Marketable securities: The company, as part of its trading activities holds marketable securities, which mainly consist of recognition bonds, mutual fund shares, and companies’ bonds which are recorded lower of fair value or cost. Unrealized gains and losses are recorded in income.

Mandatory Investments: Provida must achieve a minimum return on the Pension Funds’ assets, as required by D.L. 3,500, or compensate for any shortfall. To ensure the maintenance of the Funds’ Value, Provida is required to maintain a 1% investment in the amount of the corresponding pension fund which is a requirement of Chilean law. In addition to this amount, the company may maintain up to further 0.02% as an investment in the Pension Funds’ assets, which is presented as other current assets. Should the minimum return on the fund not be maintained, the Company may use the proceeds from its mandatory investments to reimburse the pension fund for the shortfall.

g. Property, Plant and Equipment - Property, plant and equipment are have been valued at price-level restated cost. Depreciation has been determined using the straight-line method over the estimated useful lives of the assets.

Capital lease assets are recorded at present value, which is calculated using the contracted monthly installments plus the purchase option at the interest rate implicit in the respective contract. The related obligations are included in "Other current liabilities and Other long-term liabilities" in the Consolidated Balance Sheets, net of deferred interest costs. Assets obtained under financial contracts are not the legal property of the Company until it decides to exercise the related purchase option. Therefore, the Company cannot freely dispose of them.

Capital lease assets are depreciated using the straight-line method over the estimated useful lives of the assets.

2

h. Investments in Related Companies - Investments in related companies are included in other assets using the equity method, when there is significant influence over the affiliate. This valuation method recognizes in income the Company’s equity participation in the net income or loss of each investee on an accrual basis, after eliminating intercompany transactions. Changes in shareholders’ equity that do not affect the income of the related companies are recorded as a direct charge to retained earnings, other reserves or accumulated deficit in development stage, where applicable. Under Chilean GAAP, significant influence is presumed to exist when the investment represents more than 10% and less than or equal to 50% of the investee’s outstanding shares.

i. Goodwill - Goodwill results from differences between the carrying value of assets and liabilities acquired and the acquisition cost at the purchase date. Amortization is determined by the estimated period of the investment return using the straight-line method over a maximum of 20 years.

j. Income Tax and Deferred Taxes - Provida recognizes its income tax obligations in accordance with the tax laws of the respective countries in which it operates. Deferred taxes arising from those items which are treated differently for tax and book purposes have been recorded as established in Boletín Técnico No. 60 (Technical Bulletin No. 60, or “BT60”) of the Chilean Institute of Accountants, as amended. Additionally and according to the Technical Bulletin No 71 starting 2001, deferred taxes are accounted for applying the income tax rate of the year that the temporary difference will reverse.

k. Revenue Recognition - Fee income from the Pension Fund is recognized when all the activities relating to the administration of the Pension Fund have been completed. In accordance with instructions issued by the SAFP, fee income is not recognized for the Pension Funds' individual account administration until the contributions have been deposited.

l. Employee Vacations - The cost of employee vacations is recorded on a monthly accrual basis.

m. Convenience Translation to US Dollars - Provida maintains its accounting records and prepares its financial statements in Chilean pesos, the currency of the country in which the Company is incorporated and operates. The translation of Chilean pesos amounts into U.S. dollar amounts has been made solely for the convenience of readers outside Chile. The Chilean pesos amounts have been translated at the current exchange rate in effect at September 30, 2003 (Ch$660.97 = US$1). Such translations should not be construed as a representation that Chilean peso amounts could be converted into U.S. dollars at the above or any other rate.

n. Cash and Cash Equivalents - The Company and its subsidiaries have considered cash and cash equivalents to be all cash and investments defined under Technical Bulletin 50.

Cash flows from operating activities include all cash flows from operations, including fees from clients, payments to suppliers and personnel remuneration. In addition to the above, cash flows related to taxes, interest paid, financial income and in general all cash flows not otherwise defined as financing or investing activities are considered to be operating in nature. This concept is broader than the operating income used in the consolidated statement of income.

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2.  FINANCIAL INVESTMENTS

Provida must achieve a minimum return on the Pension Funds assets (Types A, B, C, D and E), as required by Decree Law 3,500, or make up any shortfall. To guarantee this contingent liability, Provida must maintain investments named Mandatory Investments equivalent to 1% of the amount of such Pension Funds, that should be maintained in shares of each fund.

At September 30, 2002, the reserve was composed of 16 thousand shares of the Pension Fund Type A which equaled Ch$165 million, 27 thousand units of the Pension Fund Type B which equaled Ch$278 million, 6,979 thousand units of the Pension Fund Type C which equaled Ch$79,487 million, 21 thousand units of the Pension Fund Type D which equaled Ch$216 million and 26 thousand units of the Pension Fund Type E which equaled Ch$366 million, respectively. At September 30, 2003, the reserve was composed of 143 thousand units of the Pension Fund Type A which equaled Ch$1,815 million, 1,037 thousand units of the Pension Fund Type B which equaled Ch$12,038 million, 5,171 thousand units of the Pension Fund Type C which equaled Ch$63,302 million, 828 thousand units of the Pension Fund Type D which equaled Ch$9,049 million and 247 thousand units of the Pension Fund Type E which equaled Ch$3,479 million, respectively.

Financial investments are as follows:

4

3.  PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consist of the following:

4. INVESTMENTS IN RELATED COMPANIES

Investments in related companies consist of the following:

5

5.  SHAREHOLDERS' EQUITY

Changes in shareholders' equity accounts during the nine-month periods ended September 30, 2002 and 2003, are as follows (in historical amounts, with restatements of ending balances for comparative purposes):

Common stock: Provida's subscribed and paid-in capital is represented by 331,316,623 no-par-value common shares.

Dividends: Dividends may only be paid out of earned income as determined in accordance with Chilean GAAP. Unless the General Meeting of Shareholders resolves otherwise by the unanimous vote of all issued shares, Chilean law requires that Provida distribute as cash dividends at least 30% of the net income of the preceding year. The Board of Directors determined that, subject to annual review, dividends will be in an amount equal to 30% up to 80% of each year’s net income.

6

However, Provida cannot distribute as dividends the that portion of an investee’s net income which should be allotted to cover the balance of the account “Development Period Accumulated Deficit” of the respective companies. In the year 2002 the balance of this account was offset against results in related companies.

Accumulated deficit in development stage : this amount represents the organization and startup expenses incurred by the foreign affiliated companies. Such expenses were recorded in equity following instructions issued by the SAFP. The deficit in each affiliated company is offset by the net income generated by the corresponding foreign affiliated companies. At September 30, 2002 and 2003, this account is zero.

6.  FEE INCOME

Provida receives fee income from the Pension Funds for the services it provides. Fees are charged only when there is a deposit in an affiliate's account. From January to September 2002 and 2003, the fixed fee on each account was Ch$390 per month, and the variable fee was 2.25 % from January to September 2002 and 2003, except for affiliates who do not qualify for the life and disability insurance who are subject to a variable fee of 1.4% per month for the periods ended September 30, 2002 and 2003.

Fee income received consist of the following (expressed in historical pesos plus price-level restatement of the balances to constant Chilean pesos of September 30, 2003):

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7.  INCOME TAX

Income taxes have been charged to income as follows:

8.  PRICE-LEVEL RESTATEMENT

Price-level restatement (monetary correction), described in Note 1d, charged (credited) to income is as follows:

For practical reasons, the price-level restatement of trading and reserve securities is not computed separately from the holding gain or loss on such securities and is included in such gain or loss. Accordingly, the net loss from changes in purchasing power of the currency does not include the gain that would have been separately recognized if price level restatement on trading and reserve securities had been computed separately prior to restating trading securities to fair values and pension funds shares to period-end values.

8

9.  RELATED PARTY TRANSACTIONS

Provida has transactions with companies that are under common ownership (BBVA Pensiones Chile S.A.) and other related companies.

Significant transactions with related companies in the nine- month period ended September 30, 2002 and 2003 are summarized as follows:

10. COMMITMENTS AND CONTINGENCIES

a. Disability, Survivors' and Annuity Pensions - Annuities or pensions payable under life and disability insurance that were granted prior to 1988 are the responsibility of the insurance company that granted those benefits. If the insurance company fails to meet its contractual obligations, the State will guarantee those pensions on the basis of certain minimum incomes. For annuities or pensions that exceed those minimums, the State guarantee will cover approximately 75% of the excess for a maximum of UF 45 and Provida will have to cover the balance.

In the event that the insurance company were to default on its obligations, Provida's maximum contingency would be approximately MCh$20,444 at September 30, 2003. This contingency is estimated on the basis of a life expectancy of 28 years for pensioners, a 5% annual discount rate and the State guarantee described above. The pensioners' claims against the insurance company would be privileged.

9

b. Insurance Contracts - Provida has purchased life and disability insurance from ING Seguros de Vida S.A. (formerly Aetna Chile Seguros de Vida S.A.). The policies establish that the stated premiums will be adjusted based on formulas that take into account the actual rate of claims received and advances of monthly financial income from insurance companies.

Provida has received refunds from ING Seguros de Vida S.A. on the following disability and survivors' insurance policies:

Additional settlements on ING Seguros de Vida S.A. (Former Aetna Chile Seguros de Vida S.A.) contracts whose coverage period is complete are provided for partial settlements through June 30, 2006. The current contract with ING Seguros de Vida S.A. provides for periodic settlements through June 30, 2008. The amounts to be received cannot be determined currently.

c. Lawsuits - Provida is subject to certain claims and is a party to certain legal proceedings incidental to the normal course of its business. Provida does not believe that liabilities related to such claims and proceedings are likely to have, in the aggregate, a material effect on its financial condition or results of operations.

In 1993, 1995 and 1997 the labor union which represents certain Provida employees filed actions against Provida on behalf of the union members during 1990, 1991, 1992, 1993, 1994 and 1995. The action, which was filed in the Labor Court of Santiago, alleges certain miscalculations of payment of legally and contractually required profit sharing in those periods. According to Provida’s legal advisors, none of these lawsuits would have a material impact on Provida´s financial position.

Provida has initiated a lawsuit against Banco del Estado de Chile, claiming damages for the losses suffered by Provida and the Pension Fund when in 1986, the bank made extraordinary curtailments of mortgage-backed bonds in violation of the applicable legal and contractual statutes. In a subsequent action, Provida filed a demand for payment based on Law No.18,010.

At the close of September 2003, 22 labor actions have been brought by former employees against the Company, filed with several courts in the country. These labor actions seek the payment of approximately MCh$322. However, in the opinion of Provida’s legal advisors, these actions will not result in relevant unfavorable effects on the results of the Company.

10

d. Derivative financial instruments - At September 30, 2003 and 2002 there are no current sale agreements or agreements for instruments sold with repurchase agreement.

e. Future contracts (exchange insurance) - At the end of September 2003, the Administrator has future contracts or exchange insurances in force. During the period, future contracts or exchange insurances implied recognizing in “Exchange difference” income for ThCh$53 in 2003 and losses for ThCh$39 in 2002.

f. Unpaid social securities - Social securities not duly paid from October 10, 1982, must be declared by employers to the Administrator in accordance with Law 18.646 of August 19, 1987. The amounts for unpaid social securities filed correspond to the total unpaid amount from the date indicated by the Law until September 30, 2003 and 2002, respectively. In addition, the amount of social securities not filed or paid by employers was estimated based on affiliates with positive balances in their Consolidated capitalization accounts, which record unpaid periods in the last 32 months. Such figure was corrected by the Official Unemployment Index, and readjusted and increased for interest.

g. Investment abroad - As a consequence of the implementation of pension systems in other Latin American countries based on individual capitalization, AFP Provida like other administrators is participating in these projects through capital contributions and sale of software.

At year-end, the Administrator holds investments through its subsidiary Provida Internacional S.A. as follows: in AFP Horizonte (Peru) with 15.87% interest an investment of US$4,096,919; in Génesis AFP (Ecuador) with a 99.999994% interest and an investment of US$2,855,282; in Afore Bancomer (Mexico) with 7.50% interest and an investment of US$66,263,572; in AFP Crecer (former AFP Porvenir of El Salvador) with a 19.00% interest and an investment of US$4,338,885 and in AFP Porvenir República Dominicana with a 99.9999% interest and an investment of US$4,306,470.

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11. RELEVANT EVENTS

At the extraordinary meeting held on August 28 of the current year, the Board of Directors of A.F.P. Provida S.A. agreed to approve the negotiation of the sale of its ownership in A.F.P.C. Porvenir of Colombia through its subsidiary called Provida Internacional S.A. and, at the same time, the negotiation of the total acquisition of shares of A.F.P. Porvenir of República Dominicana, duly authorizing management for such effect. The operations above are subject to due diligence processes and other processes inherent to these types of negotiations, and involve transactions for approximately MUS$26.8, if they take place.

At September 30, 2003, the Company informed that negotiations concluded, and the following operations, approved and publicly informed by the Board of Directors, were perfected:

The aforementioned amount is gross with respect to disposal of shares, being subject to applicable taxes in conformity with regulations in Colombia.

As a complement of the essential matter at October 1, 2003, the Company informed the following:

The sale of our ownership in AFPC Porvenir S.A. of Colombia generated a net effect on income of the Company at September 30 for US$8,872,612, equivalent to ThCh$5,864,530, at the exchange rate of Ch$660.97 per dollar. The amount above is the reported selling price, less the estimated taxes and the value of assets.

On the acquisition of AFP Porvenir S.A. of República Dominicana, goodwill arose an investments of US$10,879,304, equivalent to ThCh$7,190,894 at the exchange rate of Ch$660.97 per dollar. The Company used its preliminary financial statements for the calculation above; therefore such calculation may result in an inmaterial variation.

Net effects on income for US$8,872,612 were after the final liquidation of taxes in ThCh$1,086,436.

* * * * * *

12

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘6-K’ Filing		Date		Other Filings
		6/30/08
		6/30/06		20-F
Filed on:		2/13/04
		10/1/03
For Period End:		9/30/03		3
		12/31/02		20-F
		9/30/02
		12/31/01
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Filing Submission 0000950103-04-000244   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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