Ambev AnnualRepl 2003 Eng

2003 Annual Report
/ 2003 Annual Report
Designed by williams and phoa, London.
AmBev is the worlds fifth largest brewer

and, arguably, one of the best-managed
and most profitable companies in the
international beverage industry.
The undisputed market leader in the
Brazilian beer industry, with 67% market
share, AmBev is also present in 11 other
Latin American countries, with leading
positions in four of them.
Following the business combination
with Interbrew, Canadas second largest
brewery was merged into AmBev. With
AmBevs footprint extending across
the three Americas, we really are the
American Beverage Company.
01/ Highlights
02/ Our operations in 2003
04/ Chairmens letter
06/ Moving forward
10/ Operating review
18/ Corporate governance
20/ Corporate and social responsibility
22/ The team
23/ Financial section
72/ Investor information
Highlights /corporate and financial
2003
US$ million
2003
R$ million
2002
R$ million
% Change
2,821
1,507
628
749
459
8,684
4,640
1,933
2,306
1,412
7,325
3,984
1,933
2,051
1,510
18.5%
16.5%
0.0%
12.4%
-6.5%
877
5,133
2,070
1,510
2,534
14,830
5,980
4,363
3,505
12,381
4,487
4,130
-27.7%
19.8%
33.3%
5.6%
998
280
3,072
35.4%
862
32.4%
2,710
37.0%
545
36.6%
13.4%
58.3%
39.83
12.09
7.52
8.27
115.07
37.23
23.14
25.45
107.94
39.48
12.40
13.64
6.6%
-5.7%
86.6%
86.6%
9,135
1,193
68
26,392
3,447
196
37,913
379.1
19,686
982
79
38,258
382.6
34.1%
251.1%
148.2%
-0.9%
-0.9%
Income statement
Net sales
Gross profit
SG&A expenses
EBIT
Net income
Balance sheet
Cash and equivalents
Total assets
Total debt
Shareholders equity
Cash flow and profitability
EBITDA
EBITDA margin
Capital expenditures
Return on equity (%)
Per share ($/1,000 shares)
Book value
EPS
Dividends (ON)*
Dividends (PN)*
Capitalization
Market capitalization
Net debt
Minority interest
Shares outstanding**
ADRs equivalent
* Includes payments of regular dividends and interest on capital.

** Excludes shares held in treasury.
US dollar amounts have been translated at an average exchange rate of R$ 3.08 or year-end exchange rate of R$ 2.89.
Numbers may not add up due to rounding.
AmBev /Ibovespa
180
160
140
120
100
80
60
40
20
0
Dec 00
AmBev
Net sales /% total

Dec 01
Dec 02
Dec 03
70% Beer Brazil 1

15% CSD & Nanc Brazil 2
12% International 3
Operations
2% Other Brazil 4
4 3
Ibovespa
EBITDA /R$ m and EBITDA margin (%)

2000 1,505
28.7%
1
2001 1,990
2002 2,710
2003 3,072
30.5%
37.0%
35.4%
01
Our operations in 2003 /AmBev at a glance
Distribution network
Facilities
52
Points of sale
1,700,000
Installed capacity (million hl/year) 175.9
Employees
Manufacturing
9,823
Sales and distribution
7,745
Headquarters/administrative
1,322
10
5
3
2
7
Brazil
Overview
Brazil is AmBevs home country and core
business division. It is the worlds fourth largest
beer market and third largest soft drinks market,
where AmBev holds 67% and 17% market share,
respectively.
Key brands
Skol, Brahma, Antarctica, Bohemia and
Guaran Antarctica
International
Overview
During 2003, in addition to our operations in
Brazil, AmBev was present in nine other
countries across Latin America, including the
Southern Cone (with a leading position through
our strategic alliance with Quinsa), the Andean
region and Central America.
Key brands
Quilmes, Brahma, Pepsi
AmBev Annual Report 2003
Key highlights in 2003

Undisputable leader in the beer market
Strong second player in soft drinks
Unparalleled distribution system reaching
1,000,000 points of sale
37% of volumes sold through direct
distribution
Benchmarking profitability, with
37% EBITDA margin
Key highlights in 2003

#1 brewer in Argentina, Bolivia, Paraguay
and Uruguay
34% EBITDA margin in Quinsa operations
Successful launch of operations in Guatemala
Expansion into Ecuador and Peru
Revitalized operations in Venezuela
1/Argentina
4/Chile
7/Paraguay
10/Venezuela
Plants: 7
Installed capacity: 17.3
(million hl/year)
POS reached: 311,000
Plants: 1
(million hl/year)
POS reached: 13,000
Plants: 1
(million hl/year)
POS reached: 48,000
Plants: 1
(million hl/year)
POS reached: 23,000
2/Bolivia
5/Ecuador
Plants: 6
(million hl/year)
POS reached: 52,000
Plants: 1
(million hl/year)
POS reached: 13,000
3/Brazil
6/Guatemala
Plants: 29
(million hl/year)
POS reached: 1,000,000
Plants: 1
(million hl/year)
POS reached: 30,000
Volume contribution
56%
27%
13%
2%
2%
Skol 1
Brahma 2
Antarctica 3
Outros 4
Bohemia 5
3
4 5
Volume contribution
71.6%
8.2%
7.3%
5.9%
2.9%
1.9%
1.7%
0.4%
0.1%
Argentina 1
Bolivia 2
Paraguay 3
Venezuela 4
Uruguay 5
Chile 6
Peru 7
Guatemala 8
Ecuador 9
1
2
3
4
5
6
8
7
9
8/
Peru
Plants: 3
(million hl/year)
POS reached: 141,000
9/
Uruguay
Plants: 2
(million hl/year)
POS reached: 43,000
2003 was a challenging

year for AmBev in Brazil.
We faced a tougher
competitive environment
and high economic
volatility. Nevertheless,
we kept the AmBev
machine robust and
well oiled to capture the
growth opportunities
in the country.
Carlos Alves de Brito
Chief Executive Officer
Sales /US$
AmBevs expansion
in 2003 is a genuine
case of success. As
the leading brewer in
Latin America, we are
definitely the best
positioned company
to benefit from the
beverage market
growth in the continent.
Juan Manuel
Vergara Galvis
International
Operations
Executive Officer
Sales /US$
2,481m
EBITDA & EBITDA margin
/US$
915m
37%
340m
EBITDA & EBITDA margin
/US$
83m
25%
02/03
Chairmens letter /Dear shareholder
Victorio Carlos De Marchi

Co-Chairman of the Board
of Directors
Marcel Herrmann Telles
Co-Chairman of the Board
of Directors
2003 was a challenging but important

year for AmBev. In spite of a difficult
macroeconomic environment and
increased competition in Brazil, we
made significant strides in advancing
our long-term strategy by strengthening
our business in our home market and
developing new sources for sustainable
growth and profit generation abroad.
This effort has been driven by our intense focus on four

key drivers that have guided AmBev since its creation:
A culture motivated by success, based on meritocracy
and performance-driven remuneration, that encourages
employee pride, ownership and excellence;
A commitment to continuous improvement, top line growth
and excellence in execution, especially in distribution;
Unrelenting efforts to reduce cost and increase
productivity; and
Strict financial discipline.
We continued to inculcate these drivers in our Brazilian
business, and apply them as we expand our footprint across
Latin America by completing a successful combination of
alliances, greenfield projects and acquisitions.
As the worlds fourth-largest beer market, Brazil remains
the most important contributor to AmBevs profit pool. In
2003, we faced a number of challenges from external factors
in this core market that seriously impacted our consolidated
results. However, we have taken steps to address these
issues our efforts are beginning to pay off and we are now
even better positioned for the future.
Specifically, we faced a sluggish beer market, as the result
of unstable macroeconomic conditions, that negatively
impacted consumer consumption. Secondly, we faced a
volatile real exchange rate, early in 2003, that forced us to
adjust our hedging policy and depressed operating margins.
The weakened demand for consumer goods caused the
Brazilian beer market to contract by roughly 2%, putting
further pressure on revenues.
On top of this, we faced an increased amount of pricing
and marketing pressure from competitors. Over this period,
AmBevs market share decreased below our target range of
67% to 70%, negatively impacting revenues and demanding
higher marketing expenditures.
1/
People
2/
Top line
3/
Improving
4/
Continually
5/
Enhance
& culture
growth
distribution
efficiency
execution
reducing
costs &
expenses
profitability
Financial discipline
The combined effect of lower volumes and higher costs
offset all of our operating improvements, and consequently
AmBev delivered results in Brazil that were not in line with our
own profitability expectations or our industry-leading track
record. EBITDA from Brazilian operations, that grew by 38%
in 2002, grew by only 6% in 2003.
While AmBev strengthened its position at home to meet
challenges, we also made significant strides in building our
international presence to complement AmBevs core
business and fully seize future growth opportunities.
We embarked on a deliberate and consistent expansion
to boost our position in select Latin American markets,
reflecting our role as The American Beverage Company.
Through a combination of alliances, greenfield developments
and acquisitions, AmBev now spans the whole of South
America, with the exception of Colombia and the Guyanas,
and extends into northern Central America. These are all fastgrowing markets and our proven skill sets and clear drivers
will support our efforts to build value in these markets.
By the end of January 2003 we concluded our strategic
alliance with Quinsa, consolidating our leading position in
South America. Quinsa is the number one brewer in
Argentina, Bolivia, Paraguay and Uruguay, and it also holds
a 10% market share in Chile. These are all markets with
significant potential.
We have already captured significant synergies in 2003 from
this alliance. The successful integration of AmBevs Southern
Cone assets into Quinsas operations boosted the results for
the new combined entity, allowing Quinsa to deliver a 108%
pro forma EBITDA growth.
In the second half of the year, we started operations in
Central America. Cerveceria Rio, our joint venture in
Guatemala, launched the production and sales of our Brahva
beer brand, achieving an impressive 30% market share in
only four months.
At the same time, we expanded our footprint in northwest

South America. In October 2003 we entered the attractive
Peruvian beverage market, acquiring the Pepsi franchise
in Lima and the Northern Region, the two largest markets
in the country. The soft drinks business will provide an
effective distribution system for our beer operations that
we expect to commence by 2005. We also acquired an 80%
stake in Cerveceria Suramericana, the second-largest player
in Ecuador.
Our international business has since been further enhanced
by our business combination with Interbrew, now called
InBev, that we announced in March 2004. This combination
gives us a stronghold in the Canadian beer market and an
expanded platform to access other new and attractive
international markets.
We expect this groundbreaking transaction to unleash
significant synergies at both AmBev and InBev, generated
through the exchange of best practices between two worldclass beverage companies. Together, AmBev and InBev will
form the worlds largest beer sales platform for some of the
worlds leading brands, including our own Brahma.
Also as part of this transaction, AmBev will incorporate
Labatt Brewing Company Limited, the leading brewer in the
profitable Canadian beer market, holding 43% market share.
The merger of Labatt into AmBev also consolidates our
presence across the three Americas, providing our Company
significant cash flows in hard currency and an attractive way
into the imports segment of the United States beer market,
the most profitable in the world.
Although 2003 had its challenges, we are a better Company
because of our response to them. During the year, we
strengthened our management skills and ability to execute,
bolstered our domestic business and built a platform to seize
new opportunities abroad we see enormous potential for
long-term sustainable and profitable growth and value
creation for all stakeholders.
04/05
Moving forward /strategy

People
AmBevs performance-driven culture runs deep
throughout all levels of the organization, and represents
a unique competitive advantage. Senior managements
active involvement in the recruiting process helps ensure
that we hire individuals who will thrive in AmBevs
meritocratic environment. Our training programs prepare
our people to meet and exceed all job requirements and
optimize career development.
We compensate our outstanding employees accordingly;

bonuses are based on an aggressive variable compensation
system dependent on AmBevs performance target
achievements. Top performing employees participate in our
Stock Ownership Plan, which helps ensure that performance
for shareholders is an employee priority.
The motivation, drive and leadership of our people are our
greatest assets, allowing us to transform our ambitious goals
into accomplishments.
People and culture

creating competitive
advantage
Our young talent relates
to our consumer base
AmBevs staff is renowned
for its energy and motivation.
Employees closely follow
Company performance, and are
encouraged to share any and all
suggestions for improvement.
We are a company of young,
competitive, talented individuals
the average age of our
executive officers is 44 years,
and 80% of our employees are
35 years old or younger. This
makes for an enthusiastic,
driven workforce, but more
importantly, it means that our
employees are able to easily
relate to the needs and demands
of our consumers, who are
predominantly in a similar age
demographic.
Performance-driven
compensation
Our aggressive variable
compensation system creates a
strong commitment to AmBevs
corporate goals and sense of
ownership among our
employees. Generous employee
bonuses are paid only when
corporate goals are met.
Because we did not meet our
corporate targets, there were no
employee bonuses in 2003 (with
the exception of certain factory
workers who met industrial
efficiency targets).
World-class trainee program
Founded in 1990, AmBevs
trainee program is a valuable
tool to attract young talent and
prepare them for AmBevs
challenges and opportunities.
This program has trained more
than 500 professionals, six of
whom are currently Executive
Officers in the Company. In 2003,
almost 16,000 people applied; 37
were recruited, 18 of them
internationally.
Bonus evolution
2001 R$ 81.3m
2002 R$ 112.3m
2003
R$ 23.7m
Investments
in training
2002 R$ 10,022m
2003 R$ 10,917m
Training programs deliver value
We invest a great deal of time
and effort training and preparing
our people to make increasingly
valuable contributions to the
Company. Training courses at
AmBev are offered through our
AmBev University program, and
range from one-day workshops
to one-year extended courses in
varied areas of studies, such as
industrial, brewing, business
management and sales.
Our commitment to top line growth has four drivers:

Portfolio management
We manage our portfolio sales mix to maximize
profitability, working to increase the contribution
from our high margin products and by developing
the Brazilian premium beer market.
Market share
AmBev is committed to recovering Brazilian market share
back to the 67 70% range by leveraging brand equity,
reinforcing consumer preference, and increasing brand
prominence while preserving profitability.
Margin pool share

We are also collaborating with retailers to capture
a higher profit share from consumer beverage purchases,
and since 2000 we have increased our margin pool share
from 26.7% to 30.7%.
Per capita consumption

Working to grow the beer market is as important to us as
market share preservation and growth. We have identified
a series of opportunities that will allow us to significantly
increase the Brazilian share of stomach.
Focused on top line

growth and revenue
management
No.1
AmBev operates in 13 countries
and 3 continents
AmBev has operations in
12 countries spanning Latin
America*, representing
sales of more than 95 million
hectoliters per year**. The
combination with Interbrew
takes AmBev even further,
giving access to North America.
These markets represent an
attractive mix of stable currency
revenues as well as exciting
growth markets.
* Including Dominican Republic and Nicaragua,
which were added in 2004.
** Considering the totality of Quinsas volumes.
Significant growth potential on

higher margin premium segment
Premium sales in Brazil
represented 6% of our beer
portfolio in 2003, accounting
for 3.4 million hectoliters.
Products like Bohemia, Skol
Beats and Original are the
highlights in this segment.
Although still a start up
initiative, we are working to
maximize the profitability of
our sales mix by developing
the Brazilian premium segment.
Brazil beer net

sales R$/hl
2002 95.6
2003 110.7
Increase in net sales
per hectoliter
In 2003, AmBev met its
commitment to keep consumer
prices stable in real terms. This
commitment, together with
additional revenue management
initiatives, improved net beer
sales per hectoliter by 16% in
Brazil. Net soft drinks and
Nanc sales per hectoliter
also performed strongly,
improving by 13%.
Enhanced trade programs

In a nationwide effort to drive
volume growth, AmBev
negotiated a consumer price
reduction in more than 180,000
points of sale throughout Brazil.
As an alternative to providing
retailer rebates to make up the
consumer price differential,
AmBev invested in advertising
focused on generating footfall,
and thus volumes, by inviting
consumers to party in the
official Festeja (The Beer
Festival) points of sale.
06/07
Moving forward /strategy

Distribution efficiency and execution
In Latin America, beer is mostly consumed on-premise,
and there are millions of points of sale. For this reason,
distribution is particularly important to our success and is
a key focus at AmBev. We constantly look for ways to further
streamline our operations and make our route to market
more efficient.
In 2003, we made significant progress in this area through

two initiatives. We reduced middleman costs by
implementing direct distribution of our products in key urban
regions. We also began to consolidate our third-party
distribution. Multi-brand operators eliminate conflicts of
interest and give us more control over portfolio management.
Improving our
distribution, efficiency
and execution
1.7
Consolidation of third-party
distributors
The number of multi-brand
operators increased from 28%
to 46% of total third party
exclusive distributors in 2003.
The consolidation of our
distribution network to
exclusive AmBev-brand
operators significantly improves
our ability to implement revenue
management initiatives.
1.7 million points of sale reached

AmBev reaches 1.7 million
points of sale each week.
Wherever someone asks for
a case of beer, we are there
to supply it. The extensive
reach of our distribution system
is secured by an unparalleled
understanding of market
dynamics, excellent execution,
and outstanding service to
retail beer stores across
the Americas.
83,000 new coolers in place

In 2003, AmBev installed 83,000
new sub-zero coolers in Brazil.
In a market where consumption
is predominantly on-premise,
the availability of perfectly icecold beer is a key component of
successful sales execution.
Multi-brand thirdparty operators /%

2002 28%
2003 46%
37%
of total volumes sold through
direct distribution
AmBevs direct distribution
network sold 37% of AmBevs
total volumes in Brazil in 2003.
Our expanded salesforce is now
present in each major Brazilian
city, optimizing the Companys
go to market capabilities,
improving service to the retail
channel and advancing
AmBevs understanding of
the marketplace.
Cost reduction
Another key strategic driver at AmBev is our continuous
effort to reduce costs and expenses. Every year we challenge
ourselves to achieve reductions in real terms in our cost
structure. AmBevs Supply Chain Department closely follows
the evolution of inflation, commodity prices and currency
exchange ratios, working out ways to mitigate possible
negative impacts in our production costs. From improved
agreements with suppliers to higher plant efficiency, there
is a relentless pursuit of cost reduction.
Additionally, several fixed expense reduction programs

are in place, aiming to negate inflation-related fixed cost
increases and fund incremental sales and marketing
investments. We constantly investigate ways to decrease
fixed expenses to sustain AmBevs benchmarking margins
while we allocate the appropriate expenditures to assure
the health of our brands.
Continually
reducing costs
and expenses
Increased plant efficiency
To improve industrial
process efficiencies, AmBev
implemented the Manufacture
Project, which developed
standard procedures and
execution guidelines in our
production lines. The project
focuses on four aspects:
people, plant management,
maintenance and quality, and
was rolled out to all plants early
in 2003. Consequently, we have
been able to improve production
line efficiency by 1,000 basis
points to 86% in 2003.
Manufacture
Project structure
4%
decrease in maintenance costs

Quality
Maintenance
Results
Management
Fixed costs reduced

by R$ 3 million
AmBevs Manufacture Project
has not only significantly
increased plant efficiency, but
it has also considerably reduced
fixed costs in our industrial
operations. This progress is
illustrated by the evolution of
our maintenance costs
(including services and parts),
which decreased by 4% in real
terms in 2003.
Environmental improvements
contribute to productivity gains
AmBev promotes eco-efficiency
by developing technologies,
processes and resources
that minimize the environmental
impact of our Companys
operations, while maintaining
our competitiveness.
AmBev carefully manages
production losses, reducing
environmental impact as well
as creating production chain
productivity gains.
Raw material
losses
2001 8.58%
Saving enough water for

an entire city
AmBevs Environmental
Management System is
committed to environmental
preservation and production
cost reduction. Our water
resources management
program develops eco-efficient
alternatives aimed at reusing
and recycling water, therefore
reducing water consumption
and waste in the production
lines. AmBevs water savings in
2003 would supply the
population of Florianpolis
(approximately 370,000 people)
for an entire month.
2002 7.97%
2003 6.41%
Water consumption
per hl produced (hl/hl)
2001 5.62
2002 5.36
2003 4.88
People
<None>/09
08/09
Operating review /Beer Brazil
Brazils sizeable beer market

and AmBevs leadership in the
country makes Beer Brazil
the centerpiece of AmBevs
profit pool.
With volumes greater than
80 million hectoliters per year,
one million points of sale, a large
proportion of high-margin
on-premise consumption,
and the predominance of lowcost returnable packaging,
the Brazilian beer market
offers great value creation
potential. AmBevs 67%
Brazilian market share (the
average for 2003, according
to ACNielsen) positions us
to benefit from growing beer
consumption and upside of
Brazils economic development.
However, in 2003, Beer Brazil
results came under pressure
and failed to meet our high
expectations. We achieved
EBITDA of R$ 2,670 million, an
increase of 3% compared to
2002, notably below the last
three years compounded
average of 23%. The decline
in 2003 performance was the
consequence of several external
factors, and in light of these we
We work hard to
have our products
always available
for prompt delight.
Promotion at the point

of sale is key to fostering
consumption.
have taken steps to ensure that

we are able to meet our
expectations in the future.
in a 7.5 percentage point decline

in our market share, reaching
a low of 62.6% in November.
First, due to the real exchange

rate volatility at the beginning
of the year, we hedged our
dollar-linked production costs,
which represent roughly 50%
of our total costs of goods sold.
We were attempting to protect
shareholders returns but the
real appreciated during the rest
of the year. As a result, AmBev
was forced to carry extra
hedging costs through to
inventories, which amounted
to R$ 99 million. Those costs
offset the benefits of our
successful 2003 fixed cost
reduction initiatives and
increased production
efficiencies.
In keeping with this scenario,

the unstable macroeconomic
environment in 2003 increased
Brazilian unemployment and
impacted disposable income,
causing the beer market to
decrease by 2.1%, (ACNielsen).
In June 2003, we adjusted

prices, sticking to our
commitment of keeping longterm consumer prices stable
in real terms. Our competitors
delayed following this move for
some months, causing a larger
than usual price gap between
our brands and theirs for a
significant period of time. The
combination of price difference
and marketing investments from
one of our competitors resulted
Brahma sponsors
Barreto, the largest
cow stampede in
Latin America.
Consequently, Beer Brazil

volumes declined 4.7%
and production costs per
hectoliter increased by 17.6%,
constraining bottom line growth.
AmBevs response to these
conditions has, however,
strengthened the Company,
and helped prepare us to
deliver long-term sustainable
growth in adverse conditions.
Specifically, we have adopted
a consistently proactive
approach to the marketplace.
We will not settle for the status
quo, constantly challenging
ourselves with stretched
targets, and strengthening our
leadership position wherever
and whenever possible.
Every employee in Brazil is
challenged to rethink their
attitude, entering into a highly
The Bohemia brand

is our jewel in the
premium portfolio.
competitive mindset to recover

the Companys market share,
allowing AmBev to regain the
67% to 70% range. Our
commitment to market share
recovery is part of AmBevs
core targets in 2004.
It is essential that we
outperform competitors at
both the consumer and trade
levels. Improving our brand
positioning and excellence in
execution at the point of sale
is critical to AmBevs success
in 2004. Also, as part of the
efforts to rebuild AmBevs
Brazilian market share, we are
analyzing the successes and
failures of 2003.
Starting with the consumer
front, during the second half
of 2003 we made a number
of improvements: Skol
was running a responsible
consumption campaign,
Brahma had halted its
advertising campaign due
to the governments new
advertising restrictions, and
Antarcticas campaign was
under review. To strengthen
our brand positioning and
marketing, the responsible
consumption messages
were shifted from a brand
Brazilians toasted
2004 with Brahma.
to a corporate perspective,
and our marketing executives
concentrated on redefining
our brand positioning. New
campaigns were launched
during the fourth quarter of
2003, helping AmBev to reverse
the market share loss. Moving
into 2004, it is paramount
that we maintain the right
positioning for our three
mainstream brands Skol,
Brahma and Antarctica will
reaffirm their rankings as
one, two and three in both
consumers preference and
market share.
On the trade front, AmBevs
Brazilian distribution system is
unparalleled, and the Company
is moving on several fronts to
leverage this valuable asset and
to anticipate and overcome any
initiative launched by the other
market players.
First, we have streamlined our
third-party distributors, with
the objective of establishing
a single operator for our three
mainstream brands in each
sales district in Brazil. Despite
maintaining separate sales
forces for each portfolio of
brands, some cost synergies
related to economies of scale
in warehousing and delivery

have already been captured.
In addition to the cost savings
from this initiative, we have
been driving significant revenue
upsides and market share gains
by implementing our portfolio
management strategy in areas
where we are already operating
through a single operator. The
number of multi-brand exclusive
operators increased from 28%
to 46% of total third-party
distributors in 2003.
Second, we continued the
shift from third-party to direct
distribution in the core areas of
Brazil. By reaching the retail
channel with our own sales
structure we have been able to
enjoy significant benefits. From
a better understanding of the
market to a more efficient cost
structure, direct distribution
brought important contributions
to AmBevs results. In this roll
out process, significant value
was also captured through the
benchmark of best practices
between AmBev and our key
third-party operators. The
lessons from our distributors
extensive experience in
sales and delivery played a
fundamental role in the success
of our direct distribution system.
Young adults party at Skol Beats,

an electronic music festival that
attracts 45,000 people annually.
In 2003 we were able to increase

the participation of direct
distribution by 765 basis points
in our sales mix, increasing its
share of volume to 43% in
December 2003 from 35% in
December 2002.
Finally, we worked at full speed
on rolling out our sub-zero
cooler program, placing 83,000
new coolers in key points of
sale across Brazil. As already
mentioned, the beer market in
Brazil is predominantly based
upon on-premise consumption,
and we prioritize the ability to
prominently display our brands
and provide products to our
customers that are presented
under ideal standards ice-cold.
In 2003, we strengthened
our business in our core
operations in the wake of
external challenges. AmBev
is ready for the challenges of
the Brazilian market in 2004
and we are confident that
our Company will excel once
again at serving our customers
as well as our shareholders.
Our brand awareness

is further enhanced
by sponsoring
massive events.
10/11
Operating review /Brazil soft drinks
Although AmBevs primary

focus is on beer, soft drinks
are a key part of the Companys
business and an important
contribution to the Companys
profit pool, mainly due to the
significant synergies and profit
opportunities that complement
our core beer business. In 2003,
soft drinks delivered R$ 246
million of EBITDA, an increase
in real terms of 19% compared
to 2002.
Our soft drinks business has

mastered the category through
an in-depth understanding of
the sectors core performance
levers, encompassing a
multidimensional universe of
consumers, packaging, flavors
and sales channels. Its strategy
has been crafted to complement
AmBevs intense focus on beer
sales. The achievements of 2003
demonstrate AmBevs ability to
deliver on both of these fronts.
The positive results of the last

few years validate our decision
in 2000 to create an independent
soft drinks division. With this
specialized team in place, the
Company has been able to focus
on maximizing the potential
of the soft drinks brands,
implementing an effective and
profitable growth strategy.
Underlying this strategy of
focusing on the right few
initiatives was the alignment
of three key assets: AmBevs
brand portfolio, our long-term
partnership with PepsiCo and
the Companys unparalleled
distribution system.
First, our core portfolio posted

a strong performance over the
last year, with volumes up 5%
in comparison to 2002. Our
increased emphasis on higher
margin products, namely
Guaran Antarctica, Pepsi Cola
(including the successful brand
extension Pepsi Twist) and
Gatorade, supported strong
brand positioning and superior
point of sale execution. Guaran
Antarctica and Gatorade
retained their leadership
positions in their respective
categories, while Pepsi Twist
brought new momentum to
Pepsi Cola, reaffirming the
brand as a strong challenger in
the cola segment, the largest
sector in the market.
Our Brazilian original,

with its natural and
healthy appeal, is the
second brand in the
soft drinks market.
Pepsi Twist effectively

revitalized the Pepsi
franchise in Brazil.
The core portfolio accounted for

82% of soft drinks volumes in
2003, compared to 74% in 2002.
In addition to volume growth,
pricing also improved
significantly. We were able
to apply successful pricing
techniques from our beer
business to the soft drinks
operations, with clear results.
Specifically, in the case of
carbonated soft drinks, a better
understanding of price elasticity
per package, sales channel and
region allowed us to reduce the
price gap between our products
and those of the market leader.
The improved price positioning
impacted directly on our net
revenues per hectoliter, which
increased in 2003 by 13.3%.
Gatorade is the
absolute leader in
the profitable sports
drinks market.
We also made progress

on the cost side. AmBev
benefited from a new PET
bottle, developed by PepsiCo,
and coordinated its launch in
the Brazilian market. This new
2 liter size container required
much less PET resin than the
previous container, leading
to a significant reduction in
production costs. Additionally,
AmBevs procurement
department was able to make
significant improvements
in the way it sources PET and
sugar through the development
of advanced supply chain
management platforms. These
achievements partially offset
the negative effects of the
hedging policy that was put
into place last year, and the
net effect on the cost of goods
sold for soft drinks in 2003
was an increase of 15%.
Looking to 2004 and beyond,

we are excited about the role
that our soft drinks business
will play as a complement to
AmBevs core beer business.
Soft drinks will play an
increasingly important role
in AmBevs strategy to drive
long-term sustainable growth
through increased per capita
consumption, market share
and operating margins. The
Company is well-positioned
to seize the opportunity offered
by the third largest soft
drinks market in the world.
Pepsi X, the energy

boosting cola.
What better sponsor

to the Brazilian national
soccer team than the
countrys favorite soda?
12/13
Operating review /international
International Operations
AmBev significantly expanded
its International Operations
in 2003. Its contribution to
AmBevs consolidated EBITDA
increased to 8.4% compared to
1.5% in 2002, with the number of
countries in which we operate
increasing from four to ten in the
same period1 .
The main driver of our improved
performance was the
successful completion of our
strategic alliance with Quinsa,
consolidating AmBevs leading
position in South America.
Quinsa is the number one
brewer in Argentina, Bolivia,
Paraguay and Uruguay, with
a secondary position in the
Chilean market.
After the transaction closed
in January, Quinsa and AmBev
conducted an extensive
integration process, dedicated
to merging the beer assets in
Argentina, Paraguay and
Uruguay. The successful
combination of operations
resulted in significant
operational synergies, which
allowed the newly enlarged
Quinsa to deliver EBITDA
growth, in pro forma terms,
of 108% compared to 2002.
1
In addition to the successful

asset integration, the Argentine
economic recovery also
contributed to the marked
improvement in results.
Following the 2001/2002
economic crisis, consumer
confidence rebounded in 2003.
The beer market increased by
roughly 7% last year, reaching
13 million hectoliters, and
AmBev was well positioned
to benefit from this.
In Central America, 2003 also
saw the start of beer production
from our new greenfield
operation in Guatemala.
Cerveceria Rio, our joint-venture
with Central America Bottling
Corporation, CabCorp,
commenced operations at the
end of September. The strategy
is to combine AmBevs expertise
in driving beer sales with
CabCorps strong distribution
platform. CabCorp is PepsiCos
primary bottler in Central
America and holds the franchise
for PepsiCos soft drinks in
Guatemala, El Salvador,
Honduras and Nicaragua.
This new business model for

AmBev, a greenfield beer
operation supported by a strong
soft drinks distribution platform,
has proved successful in its
initial stages. After eight months
of operations, Cerveceria Rio
already had 22% of market
share in Guatemala, and our
Brahva beer brand could be
found at more than 80% of the
countrys points of sale. Our
plans for Cerveceria Rio include
the roll out of beer sales to the
other countries in which
CabCorp operates. In 2004
Brahva has already been
introduced to the Nicaraguan
market, achieving roughly
8% market share in only
three months.
The strong results in Guatemala
encouraged AmBev to pursue a
similar operation in Peru, where
AmBev had already announced
its intention to enter the local
beer market. In October 2003
we announced the acquisition
of select production and
distribution assets from
Embotelladora Rivera, a
transaction that granted AmBev
the Pepsi franchise for the
regions of Lima and Northern
Peru. Those regions represent
more than 80% of the Peruvian
Excluding Nicaragua and Canada, which were added in 2004.
Brahma is AmBevs
flagship brand for
international expansion.
Argentinas
unquestionable leader.
Patricia was
successfully positioned
as our premium brand
in Uruguay.
beer market, and we expect the

Pepsi distribution platform to
facilitate the launch of our beer
brands in the country.
AmBev entered the Ecuadorian
beer market in November 2003
through its 80% acquisition of
Cerveceria Suramericana. With
Suramericanas 6% market
share in Ecuador, AmBev gained
access to a state-of-the-art
brewing facility in Guayaquil,
Ecuadors largest city and
primary beer market. With a
capacity close to 900,000
hectoliters, this facility is able
to serve up to 30% of the
Ecuadorian beer market and
allows AmBev to introduce new
beer brands to the country
without investing in additional
production assets.
Underlying the expansion in
2003 was a fundamental
element that increased
efficiency in all of the new
operations in a short period of
time. After many greenfield and
acquisition initiatives, such as
those in Argentina, Venezuela,
Paraguay and Uruguay, AmBev
was able to develop a service
pack aimed at supporting startup operations. The pack utilizes
technology that streamlines the
AmBevs plants follow

the same standards
across the Americas.
integration process, allowing

AmBev to assign administrative
tasks from any of its operations
to its Shared Services Center in
Brazil. This eliminates the need
for a full administrative structure
in each new subsidiary,
significantly reducing the human
resource requirements and also
avoiding any additional fixed
cost structure.
The consolidation of our
current operations as well as
further expansion will continue
to be important sources of
growth in the future. We have
already had some success
in this process in 2004. First,
in February we announced
the acquisition of 51% of
Embotelladora Dominicana,
PepsiCos anchor bottler in the
Caribbean. Second, in August
we completed a strategic
alliance with Interbrew, now
renamed InBev.
As part of this operation AmBev

will incorporate Labatt Brewing
Company Limited, the leader in
the profitable Canadian beer
market, establishing a solid
North American footprint. The
Company will also gain access
to the attractive beer imports
segment in the US, as well as
other new and exciting markets,
where we believe there is an
enormous potential for the
commercialization of our
Brahma brand.
The outlook for AmBev outside
of Brazil is more exciting than
ever AmBev has made
significant progress in growing
its international business in
2003. We are now wellpositioned for growth in a
number of key North and South
American markets, where we
will apply the drivers that made
us a leader in Brazil in order to
seize the opportunities that
these markets present.
The alliance between AmBev

and InBev establishes the
worlds largest beer platform.
We expect to generate
significant synergies from best
practices exchange between
two world-class brewers, which
should be captured at both
AmBev and InBev levels.
The Pepsi franchise

played a key role in
AmBevs expansion
in Latin America.
14/15
Operating review /people and culture
People
Our commitment to recruiting,
training and retaining the best
people is a key element of one
of our strategic drivers. We
know that AmBev people
represent our greatest
competitive advantage.
operates in Argentina,
Venezuela, Uruguay, Paraguay,
and was launched in Peru in
2003. This year, we screened
almost 16,000 applications to
hire 37 new trainees, 18 of them
from the home markets of our
International Operations.
Recruiting and training

AmBevs senior management is
directly and actively involved in
the recruiting process and, in
the final rounds of the process,
every candidate is interviewed
by at least one of our top
executives.
Reflecting the imperatives we

place on training, in 1995, we
created the AmBev University
(originally called Brahma
University), a Human Resources
Department task force in charge
of defining, implementing and
coordinating the Companys
training policy and guidelines.
In 2003 R$ 10.9 million was
invested in human resource
development, offering our
employees more than 40
different courses across several
distinct disciplines. We ensure
that each of our people receives
the preparation that they need
to fulfill the requirements of
their position, while at the
same time optimizing career
development. These courses
offer a broad variety of content
and formats, ranging from
one-day on-site seminars
to a one-year MBA Program.
Our trainee program, which

was originally implemented
at Brahma in 1990, is the
foundation of our ability to
inculcate our corporate culture
in our employees. This program
has trained more than 500
professionals, six of whom are
currently Executive Officers in
the Company. 50% of them
today hold senior strategic
positions, and 2003s retention
rate was close to 100%. To
support AmBevs international
expansion, our trainee program
Sales people leave

the daily morning
meetings energized
and motivated.
A casual and open

environment is at the
heart of our culture.
Motivating and retaining

To retain our outstanding
employees, we compensate
them accordingly. To accomplish
this, they participate in a profit
sharing program that is focused
on attainment of AmBevs
performance targets. This
ensures that performance for
shareholders is an employee
priority. According to our
variable pay system, every year
that the Company accomplishes
its internal profit target, up to
25% of the EVA generated is
distributed to the employees
who have contributed. Our
meritocracy provides
substantial motivation for
our employees, as those
who perform the best get the
most, and those who dont
accomplish their goals do not
receive a bonus.
In 2002, the Company
outperformed its targets, and
in return R$ 112 million were
distributed to the 2,129 people
who contributed to the success.
In 2003, however, we failed to
deliver the 15% real EBITDA
growth to which we were
committed. Therefore, no bonus

was paid this year, except to
certain factory workers who met
industrial efficiency targets.
In addition to the compensation
structure, top performing
employees, who exemplify
AmBevs culture and have a
long-term track record of
commitment to the Company,
are granted access to a Stock
Ownership Plan. This plan
enables holders to acquire
AmBevs preferred stock at a
10% discount to the market, and
purchases vest over five years.
This program has helped further
align the interests of AmBev, its
shareholders and its employees.
In the same vein, we have
developed sophisticated
excellence programs to
motivate our operational units
and our distributors. Currently
there are three programs in
place: the PEF (for industrial
units), PEV (for our distribution
centers) and PEX (for our
distributors). All of these
programs are dedicated to
maximizing efficiency, and the
units compete against each
other to achieve the highest
score based on compliance with
a number of procedures. The
A pleasant environment
helps to compensate for
AmBevs heavy workload.
employees of the winning units

of each program are awarded
extra compensation, and if one
unit achieves the top score more
than three times, it is granted the
Ambassador title. As well as
motivating key people and
partners, the excellence
programs effectively support
our cost reduction initiatives.
Lastly, but perhaps most
importantly, we remain totally
committed to employee safety.
AmBev is a huge organization,
working in a very dynamic
industry. Every day, more than
40,000 people perform tasks
directly or indirectly related to
AmBevs operations. From the
sourcing of barley to the delivery
of beer, there are a range of risks
that we must pay close attention
to managing. We have been
working hard to identify and
centralize knowledge regarding
causes of accidents, creating a
platform for the design and
implementation of effective
programs aimed at accident
prevention. AmBev is constantly
working to improve initiatives
to ensure that people are
aware, informed and, most
importantly, in compliance
with the official company safety
policies and procedures.
Culture
Since its formation, AmBev
has delivered strong results
for its shareholders. We are
proud of that track record, and
we are very clear about the
fundamental contribution that
our culture makes to these
accomplishments.
No matter how hard we have
worked or how creative we have
been, we measure success by
our ability to deliver results. We
continually challenge and drive
ourselves to set new targets and
achieve greater goals.
To deliver excellence, we must
recruit the best people and train
them to meet a variety of
challenges. The motivation,
drive and leadership of our
people is our greatest asset,
allowing us to transfer our goals
into accomplishments. Our
managers believe that hands
on guidance is the most
efficient and effective way to
motivate a workforce. Instead
of formal reports, they insist on
experiencing our operations
first-hand and lead by example.
They are the first ones to work
in the morning and the last to
leave embracing a strict work

ethic and driven by a passion
to produce.
We require a serious
commitment from our people.
Everyone must think and work
as a business owner and take
personal responsibility for
delivering individual, unit and
corporate goals, each of which
complement one another.
AmBev has an uncompromising
variable compensation system
and bonuses are only paid upon
the achievement of all the goals
established in this three-tiered
structure. Our people are
compensated as owners when
ambitious goals are achieved.
Not everyone will fit into
AmBevs culture; it is intense
and relentless in many respects.
But this is our way forward and a
unique performance advantage!
Careful planning is the

first step to delivering
our targets.
16/17
Corporate governance /improving practices
Corporate governance
is a critical matter related
to public companies.
Capital market investors
must be assured that
organizations where they
hold stakes are managed
to maximize firm value.
AmBev cares about this.
We believe that such
transparency is achieved
through the coordination
of three basic principles:
An efficient bilateral
communication channel
between the Company
and the market
Appropriate decisionmaking and control
processes
Senior management,
Board members and
counselors experience
and competence
Communication
We are heavily committed to
presenting and discussing with
the market a detailed analysis
of our quarterly results. We are
concerned that people
understand the fundamentals
of our business and how the
main drivers lead to the results
we present. To achieve this we
conduct quarterly conference
calls following the publication
of our earnings releases; we
also conduct roadshows and
hundreds of meetings with
analysts and investors
every year.
Decision-making
and control processes
The definition of AmBevs longterm strategy, as well as the
maintenance and improvement
of current competitiveness,
is the responsibility of the
Board of Directors, supported
by a number of committees
and councils.
Members:
Board of Directors
The Board of Directors has nine
members, seven of whom were
elected for a three-year term in
1999 at a General Shareholders
Meeting and, in 2002, had their
mandates extended until 2005.
The remaining Board members,
Diego Miguens and Magim
Rodriguez, took their seats
in April 2003 and February 2004
respectively. Board members
use their sound knowledge
of the business to ensure that
AmBev reaches its long-term
goals while preserving
competitiveness. Also, the
Board of Directors ensures
that AmBevs corporate values
are practiced and disseminated.
Day-to-day management
activities are performed by
AmBevs executive officers,
who are elected by the Board
of Directors for a two-year term.
Shareholders
GSM
Companys by-law
Fiscal
Council
Executive
Committee
Board of Directors
Audit
Committee
Executive
Officers
Advisory
Committee
Finance
Committee
Members of the Fiscal Council

are appointed every year at the
General Shareholders Meeting.
None of them combines this
position with a seat on the Board
of Directors, the Executive
Committee or a senior
management position in
the Company.
The posts of Chairman of the

Board of Directors and Chief
Executive Officer are separate
and are held by different people.
Fiscal Council
AmBev has a permanent Fiscal
Council, which supervises the
managements actions,
analyzes and gives opinions on
AmBevs financial statements,
as well as performing other
duties as determined by
Brazilian Corporate Law.
Currently, the members of the
Fiscal Council hold meetings at
least on a quarterly basis.
Antonio Luiz Benevides Xavier

Everardo de Almeida Maciel
Jos Fiorita
Advisory Council
The General Shareholders
Meeting held on April 25, 2003
included a provision in the bylaws authorizing the Board of
Directors to create an Advisory
Council, formed by three
independent members
appointed by the Board of
Directors every three years or in
case of vacancy. The Advisory
Councils role is:
to issue opinions for the
General Shareholders
Meeting regarding: the
conducting of business and
the compliance of legal
obligations by the Companys
senior management,
discussions on the senior
management and on the
Companys analysis report,
and any proposal to be
submitted by the Board of
Directors to the General
Shareholders Meetings; and
to present recommendations
concerning new businesses
and general issues submitted
for their consideration
and advice.
The mandate of current
members of the Advisory
Council expires in 2006.
Executive Committee
The Executive Committee is the
main link between the policies
and decisions taken by the
Board of Directors and AmBevs
management team. The explicit
responsibilities of the Executive
Committee are:
to present medium-term
planning proposals to
the Board of Directors,
with their respective
pluriannual projects;
to propose annual
performance targets for
the Company, as well as the
necessary budgets to reach
the projected goals; and
to monitor the Companys
positioning by analysis
of results and market
developments.
The Executive Committee is also
responsible for the interests of
AmBevs employees, and its
members are involved in
recruiting programs, variable
compensation policies and in
the dissemination of the
Companys culture.
The Executive Committee holds
at least eight meetings per year,
in which are discussed, among
other matters: the evolution
of the Companys results, the
beverage market, integrated
planning, goals, budget,
people, investment planning,
compensation policy, and
pricing policy.
The members of the Executive
Committee are also members of
the Board of Directors. They are
appointed according to their
strong experience in the
beverage business.
Members:

Victrio Carlos de Marchi
Carlos Alberto da Veiga
Sicupira
Audit Committee
The Audit Committee acts on
behalf of the Board of Directors
and is responsible for
monitoring the integrity and
accuracy of the Companys
financial statements and the
performance of internal and
external auditors.
Moreover, it oversees the
Companys compliance
with the legislation in relation
to its operations, the
management of its internal
controls and the appointment
of external auditors.
Throughout the year, the

Finance Committee holds
at least three meetings, in which
are discussed, among other
matters: budget, financial risk
analysis, treasury policy,
and merger and acquisition
opportunities.
The members of the Finance
Committee are also members
of the Board of Directors.
They are appointed according
to their knowledge of finance
and their experience in the
beverage business.
Members:
Throughout the year, the Audit

Committee holds quarterly
meetings, in which are
discussed, among other
matters: the Companys
financial statements, internal
audit, fiscal risks and
compliance with the SarbanesOxley Act.
The members of the Audit
Committee are also members
of the Board of Directors.
They are selected according
to their knowledge of finance
and accounting, and also
their experience in the
beverage business.
Members:
Victrio Carlos de Marchi

Jorge Paulo Lemann
Jos Heitor Attlio Gracioso
Finance Committee
The Finance Committee
analyzes and monitors the
Companys annual investment
plan and ensures its execution.
This Committee evaluates
opportunities for mergers
and acquisitions before
presenting them to the Board
of Directors. It is also part of
the Finance Committees
responsibilities to evaluate
the most appropriate capital
structure for the Company,
aiming at maximizing the
Economic Value Added (EVA).

Carlos Alberto da Veiga
Sicupira
Roberto Moses Thompson
Motta
Members of the Board of
Directors and Executive Officers
The most appropriate indication
of the abilities of AmBevs
Directors and Executive Officers
is the Companys successful
track record. Their experience
and competence are directly
translated into the Companys
strong results.
Also important to mention
is AmBevs stock ownership
plan. As top and key middle
management become
committed to a long-term
investment in AmBev non voting
shares, their interests are
automatically aligned with
AmBev shareholders.
18/19
CSR /corporate social responsibility
Formed by companies
whose evolution has been
part of Brazilian history for
more than a century, AmBev
has learned the importance
of a serious commitment
towards the improvement
of the quality of life in the
communities where it
operates. During 2003 we
worked to a strategy built on
corporate responsibility and
ethical principles, which is
focused on three key pillars:
Responsible Consumption
of Alcohol
Responsibility Towards
the Community
Environmental
Responsibility
Responsible consumption
of alcohol
As one of the largest beverage
companies in the world,
responsible consumption of
alcohol is one of the most
important issues in our
corporate responsibility policy.
International experience and
internal research conducted by
the Company show that the
utilization of supervising
measures, by Government,
associated with educational and
awareness campaigns, are the
best way to achieve satisfactory
and effective results.
Based on that research,
we have been working on
two main programs. The first
of them is named AmBev and
Responsible Consumption, and
it is aimed at our clients, points
of sale, and final consumers,
including several actions to
promote the responsible
consumption of our beer
brands. The two main issues
tackled by this program are the
incompatibility of drinking and
driving and the prevention of
alcohol consumption by people
under 18 years old, the legal age
for drinking in Brazil. The
second program is targeted
internally on our marketing
department, the advertising and
Responsible
consumption is
fundamental for the
sustainability of the
beverage industry.
Responsibility towards
the community
AmBev runs a number of
continuous initiatives dedicated
to improving the social and
economic situation of the
communities in which we
operate. Some of these
initiatives include:
Maus Project
An initiative developed in the
city of Maus, located in the
Amazon region, which is the
greatest source of the guaran
fruit used by AmBev. The purpose
of this project is the economic,
social and environmental
development of the region, based
on the improvement of guaran
cultivation techniques. In
partnership with the local
city hall, Embrapa (Brazils leading
agriculture research center) and
IDAM (the Institute for the
Development of the Amazon
region), the project provides
technical assistance to local
farmers and supports research
to improve cultivation productivity.
Recycling Library
An engagement in partnership
with the non-governmental
organization Ecomarapendi,
dedicated to the development
of recycling activities. We have
developed one of the largest
information centers dedicated
to this matter in Latin America.
Furthermore, we have also
established a supply system to
artists who work with waste as
their primary raw material, and
created a special program,
Solidarity Recycling, devoted
to assisting cooperatives of
waste collectors.
Education Programs
AmBev acknowledges the
relevance of education as a
fundamental component of
sustainable development. We
support different initiatives
dedicated to improving access to
schools and to reducing illiteracy.
AmBev sponsors the work of
SolidaryEducation, a nongovernmental organization,
in four cities in the North and
Northeast regions of Brazil, located
in critical areas where illiteracy
levels are higher than 21%. Another
initiative fully supports the Walter
Belian Technical School, located in
events agencies that we hire and

our distributors. It involves the
development of a Responsible
Marketing Procedures Manual,
which guides the preparation
and execution of marketing
events, assuring the compliance
with procedures dedicated
to responsible consumption
and safety.
Skol sponsored
a broad campaign
dedicated to the
prevention of drinking
and driving.
the city of So Paulo, in order to

provide free education for the
children of our employees. This
is achieved through the Antonio
and Helena Zerenner
Foundation.
Environmental responsibility
One of AmBevs beliefs is to
develop activities, products
and services that involve a proactive attitude to environmental
preservation and contribute to
the expansion of environmental
awareness. We have embraced
the principles of sustainable
development, convinced of
the imperative to combine
development with sustainability.
In the last five years, R$ 200
million were invested in our
environmental management
policy. Besides reaching the
goal of unifying and maximizing
AmBevs environmental actions,
this process also led to
significant cost reductions
through programs designed to
minimize losses, reutilize waste,
and save energy and water.
In a pioneer action, we have
implemented an Environmental
Management System in all
our plants, in accordance with
ISO 14001 standards.
Clean technologies
We have made a clear
commitment to promote
sustainable development and
the search for eco-efficiency,
which means producing the
minimum impact on the
environment, often exceeding
legal requirements. We use
clean technologies including
machinery that leads to less
waste and no toxic substances,
chemical by-products or heavy
metals and constantly
research new technologies,
production processes and
raw materials.
Waste recycling
Another success of our
environmental policy is the
recycling of industrial
production waste. Currently,
this index is at 95% and our
goal is to reach 100%. In some
plants it is already at 99%,
thanks to the efficiency of the
selective collection system,
rigorous enforcement of the
rules established in AmBevs
Environmental Procedures
Manual and specific programs,
such as the destination of waste
for the manufacturing of animal
food, fertilizers and packaging.
In numbers, these efforts

represent the economy of:
Malt husks, for instance, can be

used, with great results, as part
of the diet of dairy cattle. The
volume discarded at AmBevs
plants is enough to feed 720,000
head, which in turn are capable
of producing up to 3 million liters
of milk per day. The labels
leftovers, originated from the
cleaning of returnable bottles,
are specially prepared to be
recycled into cardboard and
egg boxes.
9 million m3 per year in water

consumption;
10,000 tons of glass per year,
equivalent to approximately
42 million bottles;
600 tons of PET, equivalent to
14 million soft drink bottles;
Full of nutrients,
by-products of the water
filtering process in compound
plants are turned into fertilizer.
This reutilization cycle produces
valuable benefits to the
environment, to communities
and to the Company itself.
AmBev contributes to the
protection of the environment
and benefits the economy by
creating direct and indirect jobs
as an intelligent alternative
to simply dumping waste.
1,800 tons of aluminum,

equivalent to 12 million cans.
AmBev supports the guaran

cultivation in the Amazon
through the Maus Project,
dedicated to the social
development of the region.
20/21
The team /management
01 /
02 /
03 /
04 /
05 /
06 /
07 /
08 /
09 /
10 /
11 /
12 /
13 /
Board of Directors
Fiscal Council
Executive Directors

Co-Chairman
Antonio Luiz Benevides Xavier
01 / Carlos Alves de Brito

Chief Executive Officer
Victorio Carlos De Marchi

Co-Chairman
Jos Fiorita
Everardo de Almeida Maciel
Carlos Alberto da Veiga Sicupira

Diego Fernando Miguens Bemberg
Jorge Paulo Lemann

Jos Heitor Attlio Gracioso
02 / Bernando Pinto Paiva

Logistics Executive Officer
03 / Cludio Brz Ferro
Industrial Executive Officer
04 / Claudio Garcia
Shared Services and
Information Technology
Executive Officer
Magim Rodriguez Junior

Roberto Herbster Gusmo
Vicente Falconi Campos
Roberto Moses Thompson Motta
Alternate
Fersen Lamas Lambranho
Alternate
05 / Joo M. Castro Neves

Soft Drinks Executive Officer
06 / Jos Adilson Miguel
Third-Party Distribution
Executive Officer
07 / Juan Manuel Vergara Galvis
Executive Officer
08 / Luis Felipe Pedreira

Dutra Leite
Chief Financial and Investor
Relations Officer
09 / Luiz Fernando Edmond
Sales and Management
Executive Officer
10 / Miguel Nuno da Mata Patrcio
Marketing Executive Officer
11 / Milton Seligman
Corporate Relations
Executive Officer
12 / Pedro de Abreu Mariani
General Counsel
13 / Ricardo Wuerkert
People and Management
Executive Officer
Financial section /contents
24/ Managements discussion and analysis

35/ Report of the independent auditors
36/ Balance sheet
38/ Income statement
40/ Statement of changes in shareholders equity of the parent company
41/ Statement of changes in financial position
43/ Notes to the financial statements
70/ Supplementary information
72/ Investor information
<None>/23
22/23
Managements discussion and analysis
Consolidated financial highlights

(in R$ million, except volumes, percentages and per share data)
2003
2002
Change %
Sales volume (000 hl) (1)

Net revenue per hectoliter R$/hl
Net revenue
84,310
103.0
8,683.8
81,590
89.8
7,325.3
3.3%
14.7%
18.5%
Gross profit
Gross margin (%)
4,639.6
53.4%
3,983.6
54.4%
16.5%
EBIT
EBIT margin (%)
2,306.1
26.6%
2,050.9
28.0%
12.4%
EBITDA
EBITDA margin (%)
3,072.4
35.4%
2,710.4
37.0%
13.4%
Net income
EPS R$/000 shares (2)
1,411.6
37.23
1,510.3
39.48
-6.5%
-5.7%
Market capitalization
Return on equity
26,392
32%
19,686
37%
34.1%
(1) Sales volumes include beer, CSD and Nanc. Quinsa consolidation according to the Companys proportional stake in each quarter.
(2) Based on the number of shares outstanding, excluding shares in treasury, at the end of each year.
Values may not add up due to rounding.
AmBev /Annual Report 2003
Financial highlights by business segment

2003
2002
Brazil
International
Brazil
International
74,058
7,637.7
(3,509.4)
10,252
1,046.1
(534.7)
77,650
6,929.0
(3,127.6)
3,939
396.3
(214.1)
Gross profit
Gross margin (%)
Sales, general and administrative expenses
4,128.3
54.1%
(1,957.5)
511.3
48.9%
(376.0)
3,801.4
54.9%
(1,767.5)
182.2
46.0%
(165.2)
EBIT
EBIT margin (%)
Total depreciation
2,170.7
28.4%
644.8
135.3
12.9%
121.5
2,033.9
29.4%
635.9
17.0
4.3%
23.6
EBITDA
EBITDA margin (%)
2,815.6
36.9%
256.8
24.6%
2,669.7
38.5%
40.6
10.3%
Sales volume (000 hl) (1)

Net revenue
Cost of goods sold
(1) Sales volumes include beer, CSD and Nanc. Quinsa consolidation according to the Companys proportional stake in each quarter.
Financial highlights by product segment

2003
2002
Beer
CSD + Nanc
Others
Beer
CSD + Nanc
Others
55,260
110.7
18,798
70.9
NA
NA
58,010
95.6
19,641
62.6
NA
NA
Net revenues
Cost of goods sold
6,114.6
(2,503.6)
1,332.1
(887.3)
190.9
(118.6)
5,546.4
(2,237.1)
1,228.9
(809.0)
153.7
(81.5)
Gross profit
Gross margin (%)
Sales, general, administrative
expenses
3,611.0
59.1%
444.9
33.4%
72.3
37.9%
3,309.3
59.7%
419.9
34.2%
72.2
47.0%
(1,624.1)
(330.8)
(2.6)
(1,433.4)
(311.7)
(22.4)
1,987.0
32.5%
513.0
114.0
8.6%
131.8
69.7
36.5%
1,875.9
33.8%
549.1
108.2
8.8%
80.5
49.8
32.4%
6.2
2,500.0
40.9%
245.9
18.5%
69.7
36.5%
2,425.0
43.7%
188.7
15.4%
56.0
36.5%
Sales volume (000 hl)

Net revenue per hectoliter R$/hl
EBIT
EBIT margin (%)
Total depreciation
EBITDA
EBITDA margin (%)
24/25
Net revenues
Net revenues increased 18.5% to
R$ 8,683.8 million in 2003 (2002:
R$ 7,325.3 million). This increase reflects
the successful performance of our
Brazilian Operations (up 10.2%), which
include the beer segment (up10.2%),
soft drinks (CSD) and non-alcoholic noncarbonated beverages (Nanc) (up 8.4%)
and others malt and by-products (up
24.2%), as well as our significant
expansion abroad during 2003, which
led to a 164% increase in revenues
for the International Operations.
Net revenues Brazilian Operations
Net revenues for the Brazilian Operations
amounted to R$ 7,637.7 million, up 10.2%
(2002: R$ 6,929.0 million). The continuous
focus on our revenue management
strategy, increase of direct distribution,
best practices for POS execution, and our
policy to keep consumer prices stable in
real terms, were the main levers to achieve
this result.
Beer
Due to the combined impact of the
adverse economic scenario (decreasing
disposable income and increasing
unemployment rates), unfavorable
weather and a more competitive
environment, beer volumes decreased
by 4.7% in 2003. Despite this decrease
in volumes, net revenues grew by 10.2%
in 2003, totaling R$ 6,114.6 million. The
good performance of the segment reflects
the 15.7% increase in net revenues per
hectoliter. Although we maintain our
strategic commitment to keep consumer
prices stable in real terms, we managed
to leverage revenue per hectoliter through
our revenue management strategy,
evidenced by the greater participation
of Skol in our sales mix (56.4% in 2003,
55.0% in 2002), as well as by the increase
of direct distribution as a percentage of
total volume of beer sold (32.4% in 2003,
27.1% in 2002).
Other initiatives, such as: (i) the launch

of new products (Bohemia Dark,
Bohemia Weiss and Brahma Light);
(ii) the re-launch of Original in the
super-premium segment; (iii) better
standardization and execution at POS;
and (iv) the increase in the participation
of multi-brand distributors, also helped
to increase net sales per hectoliter.
In 2003, the Beer Brazil segment
accounted for 70.4% of AmBevs
consolidated net revenues, 530 bps
less than in 2002 (75.7%).
CSD and Nanc
Following our strategy to focus on our
core portfolio Guaran Antarctica,
Pepsi and Gatorade we reached net
sales of R$ 1,332.1 million in 2003, up
8.4% (2002: R$ 1,228.9 million).
Net sales for the CSD segment increased
9.9%, totaling R$ 1,205.1 million, (2002:
R$ 1,096.3 million). The introduction of the
new Pepsi Twist 2 liter PET presentation,
and the focus on Guaran Antarctica,
allowed for an increase of the participation
of our core portfolio (Guaran Antarctica
and Pepsi in the case of CSD) in our sales
mix from 78.2% to 84.7% and an increase
of 5.3% in CSD core volumes during the
year, compared to a 2.8% decrease in our
total CSD volumes and a 3.3% contraction
of the Brazilian CSD market. Net revenues
per hectoliter increased by 13.1% in 2003,
reaching R$ 68.1/hl. The greater presence
of our core brands in the sales mix,
in addition to the evolution of direct
distribution (49.2% of volume in 2003
compared to 48.0% in 2002), and our
strategy to realign prices, were the main
factors leading to increased revenues per
hectoliter. On the other hand, a significant
increase in the participation of PET
presentation in our packaging mix,
from 65.6% in 2002 to 69.6% in 2003,
had a negative impact in net revenues
per hectoliter.
In the Nanc segment, despite the decrease

in net sales in 2003 of 4.X%, our strategy
to focus on high value added products,
especially Gatorade, allowed for an
increase in net sales per hectoliter of 24.X%,
improving the businesss profitability.
In the year, the CSD and Nanc segment
consolidated net revenues, slightly below
2002 (16.8%).
Others
Due to a higher volume of malt sold to third
parties and greater commercialization of
by-products, net revenues for the segment
increased by 24.2%, totaling R$ 190.9
million in 2003.
Net revenues International
Operations
In 2003, International Operations
contributed net revenues of R$ 1,046.1
million, 164% above 2002 (R$ 396.3
million). Through the combination of
strategic alliances, joint venture, greenfield
projects and acquisitions, AmBev has
significantly expanded its presence
in Latin America. In February 2003,
we consolidated our strategic alliance
with Quinsa, which allowed us to expand
our presence and leadership in South
America. In September, we began
operating in Guatemala through the
construction of a beer plant having as
partner a local Pepsi bottler, CabCorp.
In November, we announced the
acquisition of some assets from
Embotelladora Rivera in Peru, the main
Pepsi bottler for the Northern region
of the country and Lima. Lastly, in
December, we acquired the secondlargest brewery in Ecuador.
Net revenues per hectoliter, for both
international beer and CSD, were
R$ 102.0/hl.
In the year, the international segment
consolidated net revenues, significantly
higher than the 5.4% reported in 2002.
Cost of goods sold (COGS)

COGS increased 21% in 2003, reaching
R$ 4,044.2 million, (2002: R$ 3,341.7
million). Our dollar-linked variable costs,
such as aluminum cans, malt, hops, sugar
and PET resin, remained attached to a
fixed exchange rate (through currency
hedging transactions) in a similar way
to 2002. However, unlike 2002, when
the strong currency devaluation
concentrated mainly in the second half
of the year allowed for a R$ 345.7 milliongain, our hedging transactions in 2003
increased our costs by R$ 99.0 million,
due to the Brazilian real appreciation
during the year.
Excluding the impact of the hedging
transactions on both periods, COGS
would have been only 7.0% higher
than 2002. Additionally, eliminating
the exchange rate impact, which resulted
in a R$ 161.1 million loss in 2003 against
2002 (average exchange rate in 2003
was R$ 3.08/US$ against R$ 2.93/US$),
the increase in COGS would have been
only 2.5%.
The following table shows the breakdown
of total cost, and the COGS per hectoliter:
Cost of goods sold Brazilian

Operations
COGS for the Brazilian Operations
increased 12.2% totaling R$ 3,509.4
million (2002: R$ 3,127.6 million). As
previously mentioned, excluding the
hedging transactions effect and the
impact of the exchange rate on both
years, COGS would have decreased
by 6.2% in 2003.
COGS per hectoliter was R$ 47.4/hl,
17.6% higher than the R$ 40.3/hl recorded
in 2002. Excluding the impact of the
hedging transactions and of the
exchange rate, COGS per hectoliter in
2003 would have decreased by 1.6%,
demonstrating the Companys efforts
to reduce costs. Regarding those efforts,
the following stand out during the year:
(i) development of alternative raw material
and packaging suppliers; (ii) tolling
operations; (iii) packaging engineering
(highlighting the new 2 liter PET bottle);
(iv) greater process efficiency, reducing
losses and optimizing the workforce; and
(v) reduction of fixed costs through the
centralization of some activities.

Operations Beer
COGS for the segment reached
R$ 2,503.6 million in 2003, up 11.9%
(2002: R$ 2,237.1 million). Excluding the
hedging transactions effect and the
impact of the exchange rate on both years,
the COGS of the beer segment would
have been reduced by 6.8%.
In terms of hectoliters, COGS for the beer
segment was R$ 45.3/hl, 17.5% higher
than in 2002 (R$ 38.6/hl). Again, excluding
the hedging transactions effect and the
impact of the exchange rate on both
years, the cost per hectoliter would have
decreased by 2.1%. Due to a higher
presence of returnable presentations in
the sales mix, the efforts to increase the
efficiency at the production lines and the
reduction of losses, we were able to net
out the negative impact of unfavorable
price changes of the main commodities,
specially malt (due to 2003s barley crop
under-expectations), and the decrease
in volumes throughout the second half
of the year.
Variable costs, comprised mainly of raw

material (malt, hop, corn syrup, sugar and
concentrates) and packaging (aluminum
cans, PET bottles and disposable glass
bottles), represented 72.6% and 69.6%
of total COGS for the Brazilian Operations
in 2003 and 2002, respectively.
Cost breakdown
AmBev Brazil
Raw material
Packaging
Labor
Depreciation
Others
Total AmBev Brazil
Total AmBev Consolidated
2003
(in R$ million)
2002
(in R$ million)
2003
(R$/hl)
2002
(R$/hl)
Change %
998.9
1,548.9
195.4
272.0
494.2
3,509.4
534.7
4,044.1
794.2
1,383.1
212.3
316.9
421.2
3,127.7
561.1
3,688.8
13.5
20.9
2.6
3.7
6.7
47.4
52.2
48.0
10.2
17.8
2.7
4.1
5.4
40.3
59.5
42.4
31.9%
17.4%
-3.5%
-10.0%
23.0%
17.6%
-12.4%
13.2%
26/27

Operations CSD and Nanc
COGS for the CSD and Nanc segment
reached R$ 887.3 million in 2003, up
9.7% (2002: R$ 809.0 million). In terms
of hectoliters, COGS for the segment
was R$ 47.2/hl, 14.6% higher than
the R$ 41.2/hl reported in 2002.
Considering only the CSD segment
performance, COGS was R$ 785.3
million, a 12.4% increase against 2002.
Excluding the hedging transactions effect
and the impact of the exchange rate on
both years, the cost of operations
would have decreased by 9.2%. In terms
of hectoliters, cost of goods sold was
R$ 44.4/hl, 15.7% above 2002. Excluding
the hedging transactions effect and the
impact of the exchange rate on both years,
cost per hectoliter would have been 6.5%
lower. Again, such result reflects our efforts
to increase efficiency and reduce losses at
the production line, as well as a more
favorable packaging mix in terms of cost
(PET bottles represented 69.6% in 2003
against 65.6% in 2002).
Cost of goods sold International
Operations
In 2003, COGS for the International
Operations increased 150% to
R$ 534.7 million (2002: R$ 214.1 million),
as a result of the expansion of our
operations. However, the positive
evolution of the gross margin (48.9%
in 2003 compared to 46.0% in 2002)
and the reductions of COGS per hectoliter
(from R$ 54.3/hl in 2002 to R$ 52.2/hl
in 2003) reflect the initial capture of
synergies between our pre-existing
operations (Argentina, Uruguay and
Paraguay) and Quinsa, as well as the
economic recovery in Argentina after
the economic crisis in 2002.
Gross profit
AmBevs consolidated gross profit rose
16.5% to R$ 4,639.6 million in 2003
(2002: R$ 3,983.6 million). Excluding the
positive impact of the hedging
transactions on the dollar-linked variable
costs in 2002 (R$ 345.7 million) and the
negative impact in 2003 (R$ 99.0 million),
gross profit would have increased by over
30%. In 2003 gross margin was 53.4%,
slightly below the 54.4% recorded in 2002.
Once again, excluding the losses from
hedging transactions associated with our
dollar-linked variable costs, gross margin
in 2003 would have been 54.6%.
Sales and marketing expenses
Sales and marketing expenses reached
R$ 847.1 million in 2003, up 23.3%
(2002: R$ 687.2 million). This increase
is fully explained by the expansion of
our International Operations, since
sales and marketing expenses for the
Brazilian Operations remained stable
in 2003, totaling R$ 627.9 million (2002:
R$ 628.5 million).
Adhering to our strategic commitment,
we maintained our policy to reduce fixed
sales expenses as much as possible,
in order to finance higher marketing
expenditures, which we consider essential
for the Company.
Direct distribution expenses
Consolidated direct distribution expenses
reached R$ 648.6 million in 2003, an
increase of 20.7% (2002: R$ 537.4 million).
Going forward with our strategy to
increase volume sold through our direct
distribution network, the total volume
distributed directly reached 36.9% for the
Brazilian Operations in 2003, significantly
higher than the 32.6% reported in 2002.
Direct distribution expenses per hectoliter
for the Brazilian Operations were
R$ 22.2/hl, 18.4% above the previous
year. This increase is mainly due to the
increase of freight prices resulting from
higher fuel costs in 2003, and the increase
in the number of distribution centers. The
combination of lower volumes, especially
in the second half of the year, with more
distribution centers resulted in higher fixed
costs per hectoliter.
Regarding the International Operations,

the volume commercialized through direct
distribution in Venezuela represented
84.4% of total volumes in that country,
230 basis points higher than in 2002.
Direct distribution expenses per hectoliter
amounted to R$ 39.4/hl, 6.4% above the
previous year.
Administrative expenses
Consolidated administrative expenses
amounted to R$ 417.9 million in 2003,
11.9% above 2002. The Companys
international expansion was the main
cause of the increase in administrative
expenses.
Regarding Brazilian Operations,
administrative expenses amounted
to R$ 351.6 million, slightly above 2002
(R$ 346.4 million). The implementation
of new regional offices in addition to onetime expenses related to information
technology net out the gains obtained
from our initiatives to reduce fixed costs.
Regarding International Operations,
AmBevs presence in several new markets
and its economic stake in Quinsa,
impacted international administrative
expenses, which amounted to R$ 66.3
million in 2003.
Depreciation and amortization
Consolidated depreciation and
amortization increased 25.5% in 2003,
reaching R$ 420.0 million (2002: R$ 334.6
million). Depreciation and amortization
for the Brazilian Operations totaled
R$ 372.9 million in 2003, 16.9% higher
than in 2002 (R$ 319.0 million). This
increase is due to continuous investment
in our cooler program, direct distribution
expansion and investments in IT for our
sales team (palm tops).
Regarding our International Operations,
depreciation and amortization expenses
accounted for R$ 47.1 million, 202.3%
higher than the R$ 15.6 million in 2002.
EBIT
In 2003, AmBevs consolidated EBIT
reached R$ 2,306.1 million, up 12.4%
(2002: R$ 2,050.9 million).
Brazilian Operations accounted for
R$ 2,170.7 million in 2003, or 94.1% of
consolidated EBIT, 6.7% above 2002. On
a per hectoliter basis, Brazilian Operations
EBIT reached R$ 29.3/hl, 11.9% higher
than the R$ 26.2/hl recorded in 2002.
This performance reflects the positive
effects of our revenue management
initiatives and efforts to reduce costs and
fixed expenses. In spite of these positive
effects, the negative impact of our hedge
against dollar-linked variable costs, lower
volumes and higher direct distribution
expenses partially offset the gains.
International Operations recorded a
R$ 135.3 million EBIT in 2003,
representing 5.9% of consolidated EBIT,
and nearly eight times greater than 2002
EBIT. The expansion of our International
Operations, in addition to the recovery of
the Argentinean macroeconomic scenario,
has driven these results.
EBITDA
Consolidated EBITDA in 2003 totaled
R$ 3,072.4 million, up 13.4% (2002:
R$ 2,710.4 million).
EBITDA Brazilian Operations
EBITDA for the Brazilian Operations
represented 91.6% of consolidated
EBITDA in 2003, an increase of 5.5% in
relation to R$ 2,669.7 million in 2002
(98.5% of consolidated EBITDA).
Beer
Beer Brazil segment EBITDA presented
growth of 3.1% in 2003, reaching R$ 2.50
billion (2002: R$ 2.43 billion). The impact of
our hedge policy for dollar-linked variable
costs, in addition to higher sales and
marketing expenses, due to the more
competitive scenario in the second half
of the year, have almost completely offset
the results of our revenue management
and cost-cutting initiatives.
CSD and Nanc

The focus on our core portfolio, the launch
of Pepsi Twist 2 liter PET presentation,
lower prices for some of our raw materials
and lower sales and marketing expenses,
were the main drivers to spur profitability.
CSD and Nanc EBITDA grew 30.3%,
reaching R$ 245.9 million (an 18.5%
EBITDA margin). On a per hectoliter
basis, growth was even more impressive:
36.1% R$ 13.1/hl in 2003 compared
to R$ 9.6/hl in 2002.
EBITDA International Operations
In 2003, EBITDA for the International
Operations reached R$ 256.8 million,
representing a remarkable growth of
532% when compared to the R$ 40.6
million EBITDA recorded in 2002. The
expansion of our International Operations,
together with the capture of the first
synergies and early implementation of best
practices following our strategic alliance
with Quinsa, and the improvement of
Argentinean economic scenario were the
key drivers of international EBITDA growth.
In 2003, the International Operations
accounted for 8.4% of consolidated
EBITDA, compared to only 1.5% in 2002.
Provisions for contingencies
Net provisions for contingencies totaled
R$ 187.9 million in 2003 (2002: R$ 123.7
million). Brazilian Operations accounted for
R$231.8 million in provisions, comprised
of: (i) labor disputes of R$104.9 million; (ii)
sales tax (ICMS) provisions regarding the
acquisition of PP&E of R$ 77.4 million;
(iii) legal disputes on the applicability of
PIS/COFINS taxes over financial revenues
of R$ 35.2 million; and (iv) provisions
regarding the cancellation of contracts
between the Company and certain
distributors of R$ 9.7 million. Various minor
items account for the remaining balance.
International Operations accounted for

a R$ 43.8 million reversal of provisions.
This comprised a reversal of a R$ 51.4
million provision regarding the operations
of our strategic alliance with Quinsa and
a R$ 7.6 million provision from our
operations in Venezuela.
Other net operating revenues
(expenses)
Other consolidated net operating
expenses amounted to R$ 240.1 million
in the year, compared to net operating
revenues of R$ 199.4 million in 2002.
Expenses resulting from Brazilian
Operations totaled R$ 230.7 million
and were constituted as follows: (i)
effect of the real appreciation over
investments held by the Company
abroad of R$ 214.5 million; (ii) goodwill
amortization Antarctica, Astra, Cympay,
Salus, Quinsa and others of R$ 195.5
million; and (iii) re-evaluation of the
Companys actuarial liabilities, pursuant
to the Brazilian Corporate Law based
on CVM Resolution # 371 amounting
to R$ 16.5 million. Revenues coming
from fiscal incentives made through
AmBevs subsidiaries (mainly CBB)
of R$ 175.9 million and from gains resulting
from VAT advanced payment enjoying
discounts of R$ 16.6 million contributed
to the reduction in net operating expenses
of Brazilian Operations.
International Operations, on the other
hand, added R$ 9.4 million to net
operating expenses, which mostly
resulted from Quinsa.
28/29
Financial revenues and expenses

AmBevs debt exposure to exchange
rate volatility continues to be fully hedged
through investments in dollar-linked
assets, as well as through the use of
swaps and derivatives. Pursuant to the
dispositions of Brazilian Corporate Law,
liabilities must be accounted for based
on their initial value in addition to accrued
interest as opposed to being based on
market value. Assets, on the other hand,
must be accounted for based on the lesser
of their initial value in addition to accrued
interest, and their market value (the initial
value in addition to accrued interest is
calculated based on the terms of the
agreement between the Company and
its counterpart). As a result, the volatility
of both the Real/US dollar exchange
rate and the interest rate may cause
significant variations in financial revenues
and expenses.
Financial revenues in 2003 reached
R$ 601.8 million, significantly lower than
in the previous year (R$ 2,530.3 million).
Brazilian Operations contributed with
financial revenues of R$ 554.5 million in
the period, against R$ 2,506.7 million
reported in 2002. The appreciation of
the Real during 2003, as opposed to
its significant devaluation in 2002, was
the main factor that impacted financial
revenues resulting from Brazilian
Operations. In 2003, we realized R$ 133.1
million in exchange losses over foreign
currency denominated assets, while in
2002 we had realized gains of over R$
1,007.5 million. The appreciation of
financial assets due to the reduction
of risk aversion in the world market,
as well as the increase of liquidity positively
contributed to financial revenues. In the
year, we accounted for provisions of
R$ 205.9 million referring to the
adjustment of financial assets market
value according to the value of the
theoretical curve.
Financial expenses in 2003 amounted

to R$ 508.7 million, significantly lower
than in 2002 (R$ 3,277.3 million). Financial
expenses for Brazilian Operations totaled
R$ 446.7 million, against R$ 3,135.1 million
reported in 2002. Once again, the
exchange rate effect was the main reason
for the difference between the periods.
In 2002, the currency devaluation
negatively affected the value in Reais
of our foreign currency denominated debt.
In 2003, the Real appreciation against the
US dollar caused a positive effect on the
value in Reais of the foreign currency
denominated debt.
As of December 31, 2003 our
consolidated net debt amounted to
R$ 3,187.5 million, while the consolidated
EBITDA in the last 12 months reached
R$ 3,072.4 million, confirming our strong
credit profile through the indicators: net
debt/EBITDA = 1.0x; and EBITDA/net
debt plus interests = 13.5x.
Net non-operating revenues
(expenses)
Consolidated net non-operating expenses
amounted to R$ 100.7 million in 2003
(2002: R$ 72.2 million). Brazilian
Operations had non-operating expenses
of R$ 80.4 million in 2003. Expenses
amounting to R$ 47.9 million referred to
provisions of losses related to assets and
real estate for sale, and another R$ 32.6
million referred to the net effect of Quinsas
share repurchase programs which,
despite increasing our stake in the
company, had a negative effect on
Quinsas shareholders equity, since its
shares are traded above their book value.
International Operations had nonoperating expenses of R$ 20.2 million.
Income tax and social contribution
provisions in 2003 amounted to R$ 426.1
million. If provisions for income tax and
social contributions had been calculated
at the nominal rate of 34%, the amount
in 2003 would have reached R$ 625.8
million. The provision for income tax was
positively affected by: (i) provision for
interest on equity of R$ 152.7 million; (ii)
fiscal losses in previous years of R$ 147.9
million; (iii) equity gains in subsidiaries of
R$ 59.8 million; and (iv) write-off of Astras

goodwill in CBBs balance sheet of R$ 37.1
million. Results reported by subsidiaries
abroad not subject to taxation amounted
to R$ 182.9 million and other items
negatively affected the provision.
Profit sharing to employees and
management
In 2003, profit sharing to employees and
management was R$ 23.7 million, down
81.1% when compared to the previous
year. This was because corporate goals
established for the year were not met,
and therefore no bonus was paid, with the
exception of certain factory employees
who met efficiency targets.
Minority interests
Minority shareholders of our subsidiaries
shared profits that amounted to R$ 2.9
million in 2003, compared to losses of
R$ 47.4 million in 2002.
Net income
Net income reported in 2003 amounted
to R$ 1,411.6 million, 6.5% lower than the
previous years net income of R$ 1,510.3
million.
Dividends
The Company has paid dividends
amounting to R$ 23.15 per thousand
common shares and R$ 25.46 per
thousand preferred shares, representing
a payout ratio of 69.4% of 2003 adjusted
net income, excluding the 5% deduction
for statutory reserve.
Liquidity and capital resources

Our primary sources of liquidity have
historically been cash flows from
operating activities and borrowings.
Our material cash requirements have
included the following:
the servicing of our indebtedness;
capital expenditures;
our share buyback program;
payments of dividends and interest
attributable to shareholders equity;
increases in ownership of our
subsidiaries or companies in which
we have equity investments; and
investments in companies
participating in the brewing, soft
drink and malting industries.
Our cash and cash equivalents and shortterm marketable securities at December
31, 2003 were R$ 2,690.0 million (2002:
R$ 3,290.0 million). The increase in the
amount of our cash and cash equivalents
at the end of 2003 compared to the end of
2002 was primarily a result of: (i) payment
for the acquisition of our interest in Quinsa
and other acquisitions; (ii) payment of
dividends during the year; and (iii) capital
expenditures. Proceeds from the issuance
of CBBs US$ 500 million 10-year Senior
Notes in September 2003 and liquidation
of certain short-term investments
positively affected our cash position.
We believe that cash flows from operating
activities, available cash and cash
equivalents and short-term investments,
along with our derivative instruments and
our access to borrowing facilities, will be
sufficient to fund our capital expenditures,
debt service and dividend payments
going forward.
Cash flows
Operating activities
Our cash flows from operating activities
decreased 29.7% for the year ended
December 31, 2003 to R$ 2,527.6 million
from R$ 3,595.0 million for the year ended
December 31, 2002. All the foregoing cash
requirements were partially mitigated by
other transactions generating a net cash
inflow of R$ 8.3 million in 2003.
Investing activities
Cash flows used in our investing activities
for the year ended December 31, 2003
totaled R$ 2,014.7 million (2002:
R$ 1,603.1 million). The increased cash
utilized in investing activities in 2003
compared o 2002 primarily reflects the
acquisition of our economic interest in
Quinsa and our investments in new
markets in South and Central America,
such as Ecuador, Peru and Guatemala,
as well as investments in our direct
distribution network, mainly through the
acquisition of third-party distributors.
Financing activities
Cash flows used in financing activities for
the year ended December 31, 2003
totaled R$ 346.7 million (2002: R$ 2,912.2
million). The proceeds of loans, primarily
the US$500 million 10-year Senior Notes
issued in September 2003, as well as the
cash generated from our operating
activities, were used to repay R$2,510.1
million in debt in 2003.
Debt
As of December 31, 2003, our outstanding
debt totaled R$ 5,980.4 million (of which
R$ 1,976.1 million was short-term debt,
including R$ 1,427.4 million of the current
portion of long-term debt). Our debt
consisted of R$ 901.5 million of realdenominated debt and R$ 5,078.9 million
of foreign currency-denominated debt.
The weighted average annual interest rate
for the short- and long-term portions of
the local currency-denominated debt at
December 31, 2003 was 12.1% and 6.8%,
and the average duration was five months
and 2.3 years, respectively. The weighted
average annual interest rate for the shortand long-term portions of the foreign
currency-denominated debt was
approximately 7.0% and 10.5%, and
the average duration was six months
and 7.0 years, respectively.
Short-term debt
As of December 31, 2003 our short-term
debt totaled R$ 1,976.1 million, consisting
primarily of the current portion of our
syndicated loan denominated in Japanese
Yen which matures in August 2004. As of
December 31, 2003, 86.7% of our shortterm debt was denominated in foreign
currencies, with an annual weighted
average interest rate of approximately
7.0%. The Japanese Yen-denominated
loan represented 53.8% of our shortterm debt.
Net debt consolidated position

R$ million
Short-term debt*
Long-term debt
Total
2003
Local
currency
Foreign
currency
262.0
639.5
901.5
1,714.1
3,364.8
5,078.9
2002
Total
Local
currency
Foreign
currency
Total
1,976.1
4,004.3
5,980.4
269.1
719.0
988.1
338.3
3,160.3
3,498.6
607.4
3,879.3
4,486.7
*Includes current portion of long-term debt.

30/31
Long-term debt maturity

(R$ million)
Maturity
2005
2006
2007
2008
2009
2010
2011
2012 and later
232.5
390.9
152.8
150.0
20.4
53.2
1,498.1
1,506.4
Total
4,004.3
Excludes current portion of long-term debt.

Long-term debt
As of December 31, 2003, our long-term
debt, excluding the current portion of longterm debt, totaled R$ 4,004.3 million, of
which R$ 639.5 million was denominated
in Reais. The remainder was denominated
primarily in US dollars. The current portion
of our local long-term debt totaled
R$ 1,427.4 million as of December 31, 2003.
In accordance with our foreign currency
risk management policy, we have entered
into forward and cross-currency interest
rate swap contracts in order to mitigate
currency and interest rate risks.
In September 2003, CBB issued US$ 500
million 8 3/4% Notes due 2013, fully
guaranteed by AmBev. The proceeds
of the notes issued in 2003 were used
principally to repay short-term debt,
to finance part of AmBevs capital
expenditure program, and also for
general corporate purposes.
Sales tax deferrals and other tax credits

We currently participate in several
programs by which a portion of payments
of value-added tax on sales and services
(ICMS) due from sales generated by
specific production facilities are deferred
for periods of generally five years from
their original due date. The total amount
deferred at December 31, 2003, including
ICMS financing, was R$ 768.7 million.
Percentages deferred typically range
from 40% to 100% over the life of the
program. Balances deferred generally
accrue interest and are partially inflation
indexed, with adjustments generally set
at 60% to 80% of a general price index.
The amount of sales taxes deferred as
of December 31, 2003, R$ 393.6 million,
included a current portion of R$ 161.8
million, and R$ 231.8 million payable
thereafter. The remaining R$ 375.1 million
relates to ICMS financing.
We also participate in ICMS value-added
tax credit programs offered by various
Brazilian states which provide tax credits
to offset ICMS value-added tax payable.

In return, we are committed to meeting
certain operational requirements including,
depending on the state, production
volume and employment targets, among
others. The grants are received over the
lives of the respective programs. In the
years ended December 31, 2003 and
2002 we recorded R$ 175.9 million and
R$ 151.9 million, respectively, of tax
credits as gains on tax incentive programs.
The benefits granted are not subject to
withdrawal in the event that we do not
meet the programs targets, but future
benefits may be withdrawn.
Commitments and contingencies
We are subject to numerous commitments
and contingencies with respect to tax,
labor, distributors and other claims.
The following table and discussion provide
additional disclosure regarding our
material contractual obligations and
commercial commitments as of
December 31, 2003.
Contractual obligations
(R$ million)
Less than 1 year
13 years
35 years
More than 5 years
Total
Long-term debt
Sales tax deferrals
Capital expenditure commitments
Aluminum procurements
Plastic procurements
1,427.6
161.8
100.0
1,100.0
98.0
623.4
103.9
2,200.0
98.0
302.8
130.3
3,077.9
5,431.7
396.0
100.0
3,300.0
196.0
Total contractual cash commitments
2,887.4
3,025.3
433.1
3,077.9
9,423.7
Capital investment program

In 2003, capital expenditures on property,
plant and equipment totaled R$ 862.2
million (2002: R$ 522.3 million). These
expenditures primarily included
investments in quality, automation,
modernization, replacement of packaging
lines, and others of approximately
R$ 162.7 million (2002: R$ 192.8 million);
investment in warehousing for direct
distribution of R$ 405.9 million (2002:
R$ 149.9 million); investments in coolers
of R$ 157.8 million (2002: R$ 72.4 million);
expenditures for the replacement of
bottles and crates of R$ 112.2 million
(2002: R$ 77.7 million); and continued
investments in information technology
of R$ 23.6 million (2002: R$ 29.6 million).
Subsequent events
At December 31, 2003, our investments

in subsidiaries and affiliates, including
acquisitions of intangible assets net of
cash, totaled R$ 1,745.3 million, including
the acquisition of our economic interest
in Quinsa (2002: R$ 75.6 million including
the purchase of an additional stake in
Astra). The purchase price of our initial
40.475% economic interest in Quinsa
included a cash disbursement of
R$ 1,429.0 million in 2003.
b) Interbrew S.A. issued 141.7 million

shares in favor of AmBevs current
controlling shareholders, receiving in
exchange the indirect ownership of 8.3
billion common shares of the Company.
As of December 31, 2003, we had

disbursed an additional R$ 249.6
million to increase our economic
interest in Quinsa to 49.66% through
the purchase of an additional 12.0
million Quinsa class B shares on the
open market. Also included in the R$
1,745.3 million are the acquisition
of our interests in our Peruvian and
Ecuadorian assets.
Closing of transactions
with Interbrew
On August 27, 2004, AmBev announced
the closing of the transactions with
Interbrew S.A., which were originally
announced on March 3, 2004. The
combination between AmBev and InBev,
the new name of Interbrew, establishes
the worlds largest beer platform.
The business combination was
established as follows:
a) Labatt Brewing Company Limited
(Labatt) was merged into AmBev in
exchange for newly issued 7.9 billion
common shares and 11.4 billion
preferred shares; and
AmBev started consolidating Labatts

results as of September 2004.
Brazils anti-trust authority
CADEs ruling for the sale of the
Marathon brand
On July 15, 2004, the Administrative
Council for Economic Defense (CADE),
Brazils anti-trust authority, announced its
decision regarding the sale and distribution
of Gatorade by AmBev, stating that the
Gatorade brand may only be maintained
on the condition that the Marathon brand
is sold. Deadlines and conditions for the
sale were not established.
Acquisition of Embotelladora
Dominicana (Embodom)
In February 2004, the Company
acquired 51% of the share capital of
Embodom, located in the Dominican
Republic, with a goodwill in the amount
of R$ 173 million based on the expectation
of future results, to be amortized over
ten years. That subsidiary is an integral
part of the Companys consolidated
financial statements.
Quinsa
In March 2003, the Company acquired,
for the amount of R$ 1,730 million
(R$ 1,429 million paid in cash and R$ 301
million through the contribution of assets
located in Mercosur, at book values),
230,920,000 class A shares and
26,388,914 class B shares issued by
Quilmes Industrial S.A. (Quinsa), as well
as 8.6% of the capital stock of Quilmes
International (Bermuda) Ltd. (QIB), totaling
an aggregate stake of 40.5% in Quinsa.
In addition, during 2003, the Company
acquired 12,000,000 class B shares of
Quinsa, for the amount of R$ 250 million,
thus increasing its interest in Quinsa
to 47.99%.
Since then, Quinsa has been acquiring its
own shares, therefore changing AmBevs
percentage of interest in Quinsa, which
reached 50.98% as of June 30, 2004.
These acquisitions generated a R$ 17
million loss in the Companys results for
the quarter ended June 30, 2004, (R$ 14
million in the quarter ended March 31,
2004), because the amount paid was
higher than the shares equity value.
The total goodwill determined in the
acquisition of Quinsa is economically
based on expected future profitability,
to be amortized over ten years.
On August 18, 2004, Quinsa announced
a modified Dutch Auction offer to
repurchase class B shares of its own
issuance (including class B shares held
as American Depositary Shares ADSs).
On September 22, 2004, Quinsa
announced the final results of such
offer, through which it has accepted
for purchase 9,584,689 class B shares
at a purchase price of $9.50 per share
(or $19.00 per ADS). Following the
purchase of these shares, Quinsa will
have approximately 49,649,780 class B
shares issued and outstanding, and
therefore AmBevs aggregate interest
stake in Quinsa should increase to 54.5%.
32/33
Share buyback programs

During 2004 (until the closing of this
report), AmBev launched four share
buyback programs.
All the below mentioned programs were
approved along with programs to acquire
call options and issue put options linked
to AmBevs shares, in accordance with
CVM (Brazilian Securities and Exchange
Commission) Instruction 390/03, each
respecting the limits set for the overall
respective share buyback program.
Relationship with independent

auditors
Our working policy in relation to our
independent external auditors when they
are providing services that do not relate
to external auditing, is based on the
principles that preserve the auditors
independence.
These principles are defined as follows:
Additionally, all rendered services, which

are not related to independent auditing,
are supervised by the management, being
the management bodies, depending
on the levels of approval required by
the Companys bylaws, responsible for
all decisions.
The auditor must not audit his

own work;
The auditor must not perform
managerial functions; and
The auditor must not advocate
the interests of clients.
The independence of our external auditors
is ensured in every service eventually
provided by them, by means of specific
procedures. These include the involvement
of professionals who do not provide
Date approved
03/22/04
05/24/04
07/06/04
09/14/04
auditing services when the contracted

services do not require the accumulated
knowledge of the auditors or do not refer
to the hiring of auditing services ruled,
in this case, by specific procedures of
professional independence; or through
the involvement of other independent
professionals (second opinion), among
other actions performed.
In the period under analysis, the amount

referring to the hiring of services not related
to independent auditing was not higher
than 5% of the total amount spent with
independent auditing services.
Limit
Period
Date closed
or expired
% Consumed
R$ 500 million
R$ 500 million
R$ 500 million
R$ 500 million
60 days
360 days
360 days
360 days
05/23/04
07/06/04
09/14/04
NA
39%
98%
99%
NA
Report of the independent auditors
To the Management and Shareholders

Companhia de Bebidas das Amricas AmBev
1
We have audited the accompanying balance sheets of Companhia de Bebidas das Amricas AmBev and the consolidated balance
sheets of Companhia de Bebidas das Amricas AmBev and its subsidiaries at December 31, 2003 and 2002 and the related
statements of income, of changes in shareholders equity and of changes in financial position of Companhia de Bebidas das
Amricas AmBev and the consolidated statements of income and of changes in financial position for the years then ended. These
financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these
financial statements.
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 audits 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 significant
estimates made by management, as well as evaluating the overall financial statement presentation.
In our opinion, the financial statements audited by us present fairly, in all material respects, the financial position of Companhia de
Bebidas das Amricas AmBev and of Companhia de Bebidas das Amricas AmBev and its subsidiaries at December 31, 2003
and 2002, and the results of operations, of changes in shareholders equity and of changes in financial position of Companhia de
Bebidas das Amricas AmBev, as well as the consolidated results of operations and changes in financial position, for the years then
ended, in conformity with accounting practices adopted in Brazil.
Our audits were conducted for the purpose of forming an opinion on the financial statements referred to in the first paragraph, taken
as a whole. The consolidated statement of cash flows, which is being presented to provide supplementary information about the
Company, is not required as an integral part of the financial statements. The consolidated statement of cash flows was submitted to
the auditing procedures described in the second paragraph and, in our opinion, is fairly presented in all material respects in relation to
the financial statements taken as a whole.
So Paulo, February 12, 2004, except for note 21, which is dated as of March 1, 2004
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5
Paulo Cesar Estevo Netto
Contador CRC 1RJ026365/O-8 T SP
34/35
Balance sheet
As at December 31 / In millions of Reais
Parent company
Assets
Current
Cash and cash equivalents
Marketable securities
Unrealized gain on derivatives
Trade accounts receivable
Inventories
Taxes recoverable
Other
Long-term receivables
Compulsory and judicial deposits
Loans to employees for purchase of shares
Deferred income tax and social contribution
Properties for sale
Other
Permanent assets
Investments
Holdings in direct subsidiaries, including goodwill
and negative goodwill, net
Other investments
2003
2002
2003
2002
0.1
1,131.6
2,158.4
214.9
679.0
837.4
410.3
139.8
68.9
0.4
47.3
6.3
1,196.1
1,338.1
258.7
725.7
954.6
771.4
255.9
69.3
53.7
5,500.5
5,571.4
43.8
182.1
239.0
41.6
145.5
139.8
78.0
78.0
365.9
234.7
1,831.8
144.1
616.1
256.9
324.8
1,558.4
121.6
444.3
542.9
404.9
3,192.6
2,706.0
5,765.9
16.2
4,589.7
1.4
1,687.3
24.1
626.9
10.4
5,782.1
4,591.1
1,711.4
637.3
4,166.3
259.3
3,330.6
136.2
Property, plant and equipment

Deferred charges
Total assets
The accompanying notes are an integral part of the financial statements.
Consolidated
5,782.1
4,591.1
6,137.0
4,104.1
6,394.3
5,049.7
14,830.1
12,381.5
Parent company
Liabilities and shareholders equity

Current
Suppliers
Financings
Unrealized loss on derivatives
Salaries, profit sharing and social security charges
Dividends payable
Other taxes and contributions
Accounts payable to related parties
Other
Long-term liabilities
Financings
Deferrals of taxes on sales
Liabilities related to tax and other claims and
provision for contingencies
Other
2003
2002
2003
2002
0.2
789.1
607.4
3.7
59.7
345.7
74.4
619.4
76.8
257.5
0.2
1,544.1
0.7
329.5
15.7
800.3
1,976.1
11.7
94.1
293.9
543.2
758.3
0.8
241.6
1,835.1
692.3
4,720.0
2,833.7
4,004.3
235.2
3,879.3
306.9
290.8
1.2
345.0
146.0
125.3
1,232.9
133.1
989.3
163.6
146.0
125.3
5,605.5
5,339.1
196.4
79.1
Minority interest
Shareholders equity
Subscribed capital stock
Capital reserve
Revenue reserves
Legal
Future capital increase
Statutory
Treasury stock
Total liabilities and shareholders equity
Consolidated
3,124.1
16.6
3,046.2
16.6
3,124.1
16.6
3,046.2
16.6
208.7
26.1
1,271.2
(233.5)
138.1
1,033.9
75.4
(78.1)
208.7
26.1
1,271.2
(338.5)
138.1
1,033.9
75.4
(180.6)
4,413.2
4,232.1
4,308.2
4,129.6
6,394.3
5,049.7
14,830.1
12,381.5
36/37
Income statement
Years ended December 31 / In millions of Reais, except for net income per thousand shares
Parent company
2003
2003
2002
Gross sales
Product sales
17,143.5
14,279.9
Sales deductions
Sales taxes, discounts and returns
(8,459.7)
(6,954.6)
Net sales
Cost of products sold
8,683.8
(4,044.2)
7,325.3
(3,341.7)
Gross profit
4,639.6
3,983.6
(687.2)
(537.4)
(350.5)
(123.7)
(23.0)
(334.6)
2,530.3
(3,277.3)
Operating income (expenses)

Selling
Direct distribution
Administrative
Tax, labor and other contingencies
Management and Directors compensation
Financial income
Financial expenses
Equity in results of investees
Other operating income (expenses), net
Operating profit (carried forward)
2002
Consolidated
(1.9)
(26.5)
(1.0)
(4.8)
(2.0)
(6.9)
35.8
(66.7)
1,665.1
(85.7)
42.7
(68.4)
1,462.3
73.9
(847.1)
(648.6)
(412.0)
(187.9)
(5.9)
(420.0)
601.8
(508.7)
(6.2)
(240.1)
1,519.1
1,496.8
(2,674.7)
(2,604.0)
1,519.1
1,496.8
1,964.9
1,379.6
199.4
Parent company
Consolidated
2003
2002
2003
2002
Operating profit (brought forward)

Other non-operating expenses, net
1,519.1
(215.5)
1,496.8
1,964.9
(100.7)
1,379.6
(72.2)
Income before income tax and social contribution on net income

Income tax and social contribution benefit (expense)
1,303.6
100.4
1,496.8
20.4
1,864.2
(426.1)
1,307.4
280.6
Income before profit sharing and contributions

Profit sharing and contributions
To employees and management
To Zerrenner Foundation
1,404.0
1,517.2
1,438.1
1,588.0
7.6
(6.9)
(23.6)
(112.3)
(12.8)
Income before minority interest

Minority interest
1,411.6
1,510.3
1,414.5
(2.9)
1,462.9
47.4
Net income for the year
1,411.6
1,510.3
1,411.6
1,510.3
38,537,333
38,620,730
Net income per thousand shares of total capital

at year-end, in Reais
36.63
39.11
Net income per thousand shares at year-end,

excluding treasury stock, in Reais
37.23
39.48
Total number of shares of capital stock at year-end (in thousands)
38/39
Statement of changes in shareholders equity of the parent company

In millions of Reais
Revenue reserves
Subscribed
and paid
in capital
Capital
reserve
At December 31, 2001

Exercise of options of the stock
ownership plan
Effect of implementation of
NPC No. 26 in subsidiary
Share buyback
Realization of the reserve
for investments
Cancellation of treasury stock
Premium on the transfer
of treasury stock linked
to financings
Appropriations of net income
for the year
Legal reserve
Prepayment of dividends
Final dividends
Reserves for future capital
increase and statutory
2,944.2
4.9

Exercise of options of the
stock ownership plan
Capital increase through
warrants
Share buyback
Cancellation of treasury stock
Transfer of reserves
Appropriations of net income
for the year
Legal reserve
Final dividends
Statutory reserve
3,046.2
3,124.1
Legal
Investments
Treasury
stock
62.7
854.9
52.6
(397.9)
Retained
earnings
Total
3,521.4
102.0
102.0
(56.3)
(354.7)
(52.6)
(674.5)
52.6
75.4
16.6
138.1
(56.3)
(354.7)
674.5
11.7
853.5
75.4
1,033.9
75.4
1,510.3
11.7
1,510.3
(75.4)
(160.9)
(341.4)
(160.9)
(341.4)
(928.9)
(78.1)
4,232.1
77.4
77.4
0.5
(154.6)
(853.2)
853.2
342.6
16.6
208.7
26.1
0.5
(310.0)
(310.0)
154.6
70.6
Statutory
reserve
Future
capital
increase
1,271.2
(233.5)
1,411.6
1,411.6
(70.6)
(717.7)
(280.7)
(342.6)
(717.7)
(280.7)
4,413.2
Statement of changes in financial position

Years ended December 31 / In millions of Reais
Parent company
Source of funds
Operations
Expenses (income) not affecting working capital
Discount on the settlement of tax incentives
Reversal of provision for losses on unsecured liabilities , net
Amortization of goodwill, net of realized negative goodwill
Financial charges on tax and fiscal contingencies
Provision for loss on permanent assets
Financial charges and variations on the stock ownership plan
Exchange rate variation and charges on long-term financings
Minority interest
Exchange gains or losses on foreign subsidiaries
Loss of interest ownership in subsidiaries
Residual value of property, plant and equipment and divestments
Reimbursement of capital by subsidiary
Dividends received and receivable
From shareholders
Capital increase
Changes in the capital of minority shareholders
Premium on the transfer of treasury stock linked to financings
From third parties
Changes in long-term receivables
Receivables from related parties
Other accounts receivable
Financings
Total sources of funds
Consolidated
2003
2002
2003
2002
1,411.6
1,510.3
1,411.6
1,510.3
(1,665.1)
(99.2)
(1,462.3)
(20.4)
6.2
(198.3)
(16.6)
(404.0)
84.8
(147.6)
69.8
26.5
2.0
(28.1)
(88.1)
215.4
252.4
766.3
187.9
59.8
58.7
(47.7)
(496.6)
2.9
367.3
33.3
73.8
90.5
659.5
123.7
32.9
97.5
(88.1)
867.3
(47.4)
(155.8)
1,386.0
88.3
1,338.3
44.4
159.8
1,331.9
1,334.7
2,461.0
2,846.2
77.9
102.0
77.9
4.8
91.3
102.0
11.7
35.1
44.1
1,409.8
1,448.4
295.7
57.3
162.6
3,032.1
3,145.9
40/41
Statement of changes in financial position

Parent company
Uses of funds
Compulsory and judicial deposits
Receivables from related parties
Other taxes and charges recoverable
Other
Changes in long-term liabilities
Other accounts payable
Permanent assets
Investments, including goodwill and negative goodwill
Property, plant and equipment
Deferred charges
Capital transactions
Share buyback
Proposed and paid dividends
Working capital of acquired subsidiary
Consolidated
2003
2002
2003
2002
2.3
8.5
3.6
2.8
84.0
51.3
21.4
14.5
11.5
9.7
6.0
4.3
98.3
123.8
28.3
32.6
5.6
8.5
1,212.2
444.5
2,100.6
862.2
91.2
107.7
544.7
45.5
310.0
998.4
354.7
502.3
311.9
1,004.0
277.6
337.1
502.3
Total funds used
2,537.0
1,316.4
4,989.3
1,681.2
Increase (reduction) in working capital
(1,127.2)
132.0
(1,957.2)
1,464.7
69.3
53.7
53.7
219.1
5,500.5
5,571.4
5,571.4
4,685.0
15.6
(165.4)
(70.9)
886.4
1,835.1
692.3
692.3
989.7
4,720.0
2,833.7
2,833.7
3,412.0
1,142.8
(297.4)
1,886.3
(578.3)
(1,127.2)
132.0
(1,957.2)
1,464.7
Changes in working capital

Current assets
At the end of the year
At the beginning of the year
Current liabilities
At the end of the year
At the beginning of the year
Increase (reduction) in working capital

Notes to the financial statements

As at December 31, 2003 and 2002 / In millions of Reais, unless otherwise indicated
1 Operating activities
(a) General considerations
Companhia de Bebidas das Amricas AmBev (the Company or AmBev), headquartered in So Paulo, Brazil, produces and markets
beer, draft beer, soft drinks, other non-alcoholic beverages, and malt either directly or by participating in other companies in Brazil and
other Latin American countries.
AmBev has a franchise agreement with PepsiCo International, Inc. (PepsiCo) to bottle, sell and distribute Pepsi products in Brazil,
including Gatorade, the isotonic sports drink, which is still under review by the Administrative Council for Economic Defense (CADE).
AmBev also has an agreement with PepsiCo for bottling, sale and distribution of Guaran Antarctica internationally. Based on this
agreement, the product is already being sold in Portugal, Puerto Rico and Spain.
AmBev shares are traded on the So Paulo Stock Exchange (BOVESPA), and on the New York Stock Exchange (NYSE), as American
Depositary Receipts (ADRs).
(b) Main activities abroad in 2003
Quilmes Industrial S.A. (Quinsa)
During 2003, AmBev and Quinsa integrated their operations, mainly in the Mercosur. The transaction, authorized with certain restrictions
by the Comisin Nacional de Defensa de la Competencia (Argentine National Commission for the Protection of Competition CNDC),
has been delayed as a consequence of the legal action filed by a company pertaining to the Compaa Cerveceras Unidas S.A. (CCU)
group in April 2003, through which it claimed the right to participate in the process of acquisition of the assets in item (i) below. A summary
of the principal restrictions imposed by the CNDC is as follows:
(i) Quinsa and AmBev (the Parties) are required to dispose of the brands Bieckert, Palermo, Imperial and Norte, as well as the
brewery located in Lujan, where the Brahma brand was produced, to an independent brewery, which must be financially sound
and which does not produce beer in the Argentinean market (the Purchaser);
(ii) the Parties should submit documentation to the CNDC evidencing the commitment to allow the Purchaser, for a period of seven
years starting on the date of the sale of the assets in item (i), to have access to Quinsas distribution network in Argentina, for the
brands sold to the Purchaser; and
(iii) the Parties shall assume a commitment with the Purchaser to produce the Bieckert, Palermo and Imperial brands, for a two-year
period, as from the date on which such assets are sold.
Industrias del Atlntico (Atlntico)
The Company and the Central American Bottling Corporation (CabCorp), launched their operations in the Central American and
Caribbean beer markets in September 2003, through the subsidiary Atlntico, located in Guatemala, which is consolidated in the
Companys financial statements.
Compaia Cervecera AmBev Peru S.A.C. (AmBev Peru)
In October 2003, the Company acquired, for the amount of R$ 86.7, machinery and equipment, inventory and the franchise of PepsiCo for
the production, marketing and sale of Pepsi products in Lima and in the northern region of Peru. Such assets were contributed to the
subsidiary, which is consolidated in the Companys financial statements.
Cerveceria Suramericana (Cervesursa)
In December 2003, the Company acquired 80% of the capital of Cervesursa, located in Ecuador, generating a negative goodwill of
R$ 18.5, based on the expectation of future results, to be amortized in up to ten years. That subsidiary is included in the Companys
consolidated financial statements.
42/43

2 Significant accounting practices

(a) Financial statements
The preparation of financial statements requires management to make estimates that affect the reported amount of assets, liabilities
and other transactions. Estimates are used for, but not limited to, the determination of useful lives of property, plant and equipment, the
provisions necessary for contingent liabilities, and provisions for income tax, which are based on the best estimates of the Companys
management; however, actual results could differ from those estimates.
(b) Determination of net income
Income and expenses are recorded on the accrual basis. Sales revenues and the corresponding cost of sales are recorded upon delivery
of products.
(c) Current assets and long-term receivables
Cash and cash equivalents, represented by highly liquid investments with original maturity of 90 days or less, are recorded at acquisition
cost, equivalent to their market values.
Financial investments, substantially represented by notes and securities, government securities and bank deposit certificates, including
those denominated in foreign currency, are recorded at cost, plus prorated accrued earnings when applicable and a provision is made
for the reduction to market values when necessary. Investment fund quotas are measured at market values, and any unrealized results
over variable interest and earnings are deferred for recognition only when realized.
The balance of financial investments at December 31, 2003 includes bank deposits and financial investments given as guarantee in
connection with the issuance of foreign debt securities of subsidiaries, in the amount of R$ 29.9 (December 31, 2002 R$ 292.4).
The consolidated allowance for doubtful accounts of R$ 182.3 at December 31, 2003 (December 31, 2002 R$ 139.4) is recorded at
an amount deemed sufficient by management to cover probable losses on realization of receivables.
Inventories are recorded at the average cost of purchases or production, adjusted by a provision for reduction to realizable values when
necessary. On December 31, 2003, the consolidated provision for reduction of inventories to net realization value amounted to R$ 33.7
(December 31, 2002 R$ 28.7), and was recorded under Supplies and others, net.
Advertising and marketing expenses are deferred within each fiscal year and systematically appropriated to results of each period,
in accordance with projected sales volume, thereby reflecting the seasonal nature of monthly sales.
Other current assets and long-term receivables are recorded at cost, including, when applicable, accrued earnings. A provision for
reduction to market values is recorded when necessary.
(d) Permanent assets
The parent company records investments in subsidiaries and jointly controlled companies using the equity method of accounting, and
harmonizes, upon initial determination, their accounting practices with those adopted by the Company, and separates the acquisition
cost into equity investment, goodwill (determined as the difference between consideration paid and underlying book values) and negative
goodwill. Goodwill justified based on the appreciation of property, plant and equipment is amortized proportionally to the depreciation or
realization of the book value of the subsidiarys assets, whereas the goodwill (negative goodwill) attributable to expected future results is
amortized over five to ten years. Amortization of goodwill is recorded under Other operating expenses. The negative goodwill, attributed
to various economic factors, will only be amortized in the event of divestment.
Property, plant and equipment are stated at cost and include the interest incurred in financing the construction phase of certain qualified
assets. Maintenance and repair costs are recorded as expenses, when incurred. Losses from breakages of bottles and crates during
production are included in the cost of sales. Depreciation is calculated on the straight-line method, considering the useful lives of the
assets, at the annual rates listed in note 7.
Amortization of deferred charges is calculated on the straight-line basis, in up to ten years, as from the date of start of operations.
The write-off of deferred charges is recorded when totally amortized.
2 Significant accounting practices continued

(e) Translation of financial statements of subsidiaries and associated companies headquartered abroad
With the exception of the operations mentioned in the following paragraph, the financial statements of foreign subsidiaries and associated
companies are prepared using the local currency as their functional currency (ie the main currency of the economic environment in which
such companies operate) adjusted to reflect the inflation rate, when applicable, based on local price indices. Accordingly, their assets,
liabilities and shareholders equity are translated into Reais at the current exchange rate at the balance sheet date. Income and expense
accounts are translated and maintained in Reais at average exchange rates for the period. The difference between the net result
determined at the exchange rates at the balance sheet date, and that determined on average exchange rates for the period, is adjusted
under Other operating income.
The US dollar was adopted as the functional currency for malt operations in Argentina and Uruguay, since their revenues and cash
flows are substantially based on that currency. Thus the following procedures are adopted when preparing the financial statements of
such subsidiaries:
(i) inventories, property, plant and equipment, accumulated depreciation, as well as shareholders equity accounts, are translated to
US dollars at historical exchange rates and converted into Reais, as with monetary assets and liabilities, at the exchange rates at
the balance sheet dates; and
(ii) depreciation and other costs and expenses related to assets recorded at historical exchange rates are calculated based on the
value of assets in US dollars, and translated to Reais at average exchange rates for the period. Other income and expense
accounts are translated to Reais at average exchange rates for the period. The difference between the net result determined at the
exchange rates on the date of the financial statements, and that determined at average exchange rates for the period, is adjusted
under Other operating income.
(f) Current and long-term liabilities
Current and long-term liabilities are stated at known or estimated amounts, including accrued charges and monetary variations,
where applicable.
(g) Forwards and cross-currency interest rate swaps
The nominal values of cross-currency interest rate swap operations and forwards are not recorded in the balance sheet.
The Company enters into derivative financial instruments to hedge its consolidated exposure to currency and interest rate risks, but which
does not prohibit redemption prior to final maturities. Accordingly, as determined by Brazilian Corporate Law, operations not designated for
accounting purposes are measured at the lower of cost based on the contractual conditions between the Company and counterparties
(yield curve) or market value and accounted for as Unrealized gain on derivatives or Unrealized loss on derivatives.
In order to neutralize the result of certain swaps, the Company at times contracts other identical operations of offsetting positions, with the
same value at maturity, settlement date and restatement index. These two offsetting positions are recorded in the Companys balance
sheet as Other, based on the value of the yield curve, being designated as hedges for accounting purposes.
(h) Forward and swap operations in commodities
The Company enters into derivative financial instruments to hedge its consolidated exposure to prices of raw material to be acquired,
denominated in foreign currency.
The net results of such derivative instruments, designated for accounting purposes as hedges, are recorded at cost (equivalent to their
market value), deferred and recorded in the Companys balance sheet under Other, and recognized in the result under Cost of products
sold when the product is sold.
(i) Provision for contingencies and liabilities related to tax and other claims
Provision for contingencies is recorded at current values for labor, tax, civil and commercial claims being disputed at the administrative and
judicial levels, based on estimates of losses determined by the Companys and its subsidiaries external legal advisors, for lawsuits in which
a loss is considered probable.
Expected tax savings obtained based on provisional court decisions resulting from claims filed by the Company and its subsidiaries against
the tax authorities, if recognized in the statement of income, are subject to provisioning until the right is assured through a final legal
decision in favor of the Company and its subsidiaries.
44/45


(j) Investment tax credits
The Companys subsidiaries enjoy state fiscal incentive programs for the deferral of sales taxes in which taxes are partially or totally
reduced. In some states, the grace periods and reductions are unconditional. Where conditions have been established, however, they
are related to events under the Companys control. The benefits relative to reduction in the payment of taxes are treated as a reserve for
investment tax credits and recorded in the shareholders equity of the subsidiaries, on the accrual basis, or when the subsidiaries comply
with the main requirements of state programs, in order to have the benefit granted. This benefit is recorded as Other operating income
in the Companys consolidated financial statements (December 31, 2003 R$ 175.9; December 31, 2002 R$ 151.9).
(k) Income tax and social contribution on net income
Income tax and social contribution on net income are calculated at rates determined by applicable tax law. Charges relating to income tax
and social contribution are recorded on the accrual basis, with the addition of deferred taxes calculated on the temporary differences
between the book and tax bases of assets and liabilities.
A deferred income tax asset is also recorded, relating to future tax benefits of tax loss carry-forwards for subsidiaries in which the realization
of such benefits is probable, over a maximum period of ten years, based on future forecasts of taxable income, discounted to present value.
(l) Actuarial assets and liabilities related to employee benefits
The initial effect arising from the adoption of the Accounting Standards and Procedures NPC No. 26 was fully recognized in the
shareholders equity of the subsidiary Companhia Brasileira de Bebidas (CBB) on December 31, 2001.
Actuarial gains and losses are recorded in an amount exceeding the higher of (a) 10% of the present value of the actuarial liability and
(b) 10% of the fair value of the plans assets, amortized over the average future working life of the plans members.
(m) Consolidated financial statements
The totality of assets, liabilities and results of companies controlled by the Company are consolidated, and the interest of minority
shareholders in the equity and results for the year of subsidiaries is shown separately.
Investments in subsidiaries and their shareholders equities, as well as inter-company assets, liabilities, income and expenses, were
eliminated on consolidation. Also, unrealized results arising from the purchase of raw materials and products from subsidiaries and
associated companies included in the balance of inventory at the end of each period, as well as other transactions between the Companys
subsidiaries, are eliminated.
The consolidated financial statements include the financial statements, prepared at the same dates, of the companies either directly
or indirectly controlled by the Company.
(n) Proportionally consolidated financial statements
The assets and liabilities, income and expenses of entities which are jointly controlled through a shareholders agreement were
consolidated proportionally to the Companys total ownership of their capital. Amounts corresponding to the proportional assets,
liabilities, income and expenses arising from inter-company transactions were eliminated on the proportional consolidation.
In March 2003, the Company acquired for the amount of R$ 1,729.7 (paid in cash R$ 1,429 and through the contribution of assets located
in Mercosur, at book values, R$ 300.7), 230,920,000 class A shares and 26,388,914 class B shares issued by Quinsa, as well as 8.6%
of the capital stock of Quilmes International (Bermuda) Ltd. (QIB), totaling an aggregate economic interest of 40.5% in Quinsa. In addition,
during 2003 the Company acquired 12,000,000 class B shares of Quinsa for the amount of R$ 249.6, thus increasing its economic interest
in Quinsa to 47.99%. Quinsa has been acquiring its own shares, therefore changing the Companys percentage of economic interest in
Quinsa. On December 31, 2003 the Company consolidated proportionally, as a result of such transactions, its 49.66% interest in Quinsa.
The total goodwill determined on the acquisition of Quinsa is justified based on expected future profitability, to be amortized over ten years.
Quinsas controlling shareholders have the right to exchange their 373.5 million class A shares of Quinsa for AmBev shares, at specific
periods each year, starting as from April 2003. AmBev also has the right to determine the exchange of class A shares of Quinsa for AmBev
shares starting from the end of the seventh year (counted from April 2003). In both cases, the number of AmBev shares to be issued to
Quinsas controlling shareholders will be determined based on the EBITDA of the two companies.

(n) Proportionally consolidated financial statements continued
The net assets of Quinsa and Agrega Inteligncia em Compras Ltda. (Agrega), proportionally consolidated in the Companys financial
statements, are as follows:
December 31, 2003
Current assets
Permanent assets
Current liabilities
Minority interest
Total net assets
Quinsa (i)
Agrega (ii)
Total
513.4
132.4
1,156.3
(382.4)
(401.9)
(199.6)
1.3
0.5
(1.1)
514.7
132.4
1,156.8
(383.5)
(401.9)
(199.6)
818.2
0.7
818.9
(i) 49.66% ownership interest.

(ii) 50% ownership interest.
December 31, 2002
Agrega
Current assets
Permanent assets
Current liabilities
1.0
0.4
(0.9)
Total net assets
0.5
Quinsas and Agregas results, proportionally consolidated in the Companys financial statements, are as follows:
Year ended
December 31, 2003
Quinsa
Agrega
Total
Net sales
Cost of products and services sold
773.7
(387.3)
0.5
774.2
(387.3)
Gross profit
Operating expenses
386.4
(210.6)
0.5
(2.4)
386.9
(213.0)
Operating profit (loss)
175.8
(1.9)
173.9
Non-operating results
Income taxes
Profit sharing
Minority interest
(11.3)
27.5
(9.3)
(33.0)
Net income (loss) for the year
149.7
(11.3)
27.5
(9.3)
(33.0)
(1.9)
147.8
46/47


(n) Proportionally consolidated financial statements continued
Year ended
December 31, 2002
Agrega
Net sales
Cost of services sold and operating expenses
0.4
(2.4)
Loss for the year
(2.0)
The table below shows Quinsas main holdings in subsidiaries, fully consolidated in its financial statements, and proportionally adjusted
in the AmBevs consolidated financial statements:
Total holdings on
December 31, 2003 %
Cervecera y Maltera Quilmes S.A.I.C.A. y G.

Cervecera Boliviana Nacional La Paz
Cervecera Chile S.A.
Cervecera Paraguay S.A.
Fbrica Paraguaya de Vitrios S.A.
Fbricas Nacionales de Cerveza S.A.
QIB
Salus S.A. (*)
87.3
68.1
87.6
75.2
67.4
85.8
94.7
81.2
(*) Only the brewery portion, not including the mineral water operation.
(o) Reclassifications
For purposes of assuring comparability with the current year, the amount of R$ 1,637.9 was reclassified in the balance sheet of
December 31, 2002, from the balance of Cash and cash equivalents, to Marketable securities (R$ 1,423) and to Unrealized gain
on derivatives (R$ 214.9).
For the same reason, R$ 19.3 was reclassified from Deferred charges and R$ 22.3 from Inventories to Property, plant and equipment
in the balance sheet of December 31, 2002. Such adjustment is due to the alignment of certain accounting criteria used in Venezuela
with accounting practices adopted in Brazil.
3
Inventories
Consolidated
Finished products
Work in progress
Raw materials
Production materials
Supplies and other, net
2003
2002
145.6
63.9
564.2
112.9
68.0
157.8
50.8
425.3
119.0
84.5
954.6
837.4
4 Transactions with related parties

The main transactions of the Company with related parties are listed in the following table:
2003
Balances
Accounts
receivable
Companies
AmBev
CBB
Skol
IBA-Sudeste
Jalua
Hohneck
Monthiers
Arosuco
Dunvegan
Cympay
Malteria Pampa
Aspen
Other nationals
Other internationals
Accounts
payable
Loan
agreements
(8.5)
(4.1)
(1,535.5)
218.1
(5.1)
977.9
(55.5)
(0.6)
1,226.6
246.1
(802.0)
0.3
(55.7)
(12.0)
(173.0)
(33.6)
(60.0)
11.9
(1.7)
3.8
7.4
41.8
19.8
Transactions
Net revenues
166.8
4.4
334.4
76.9
115.7
241.8
112.0
Net financial
results
(44.7)
277.5
(0.4)
18.5
(35.5)
(250.2)
6.0
30.8
14.0
(19.2)
1.5
(0.8)
2002
Balances
Companies
Accounts
receivable
AmBev
CBB
Skol
IBA-Sudeste
Jalua
Hohneck
Monthiers
Arosuco
Dunvegan
Cympay
Malteria Pampa
Aspen
Other nationals
Other internationals
Accounts
payable
4.1
(1.8)
(0.8)
0.2
0.7
(5.4)
0.2
18.6
19.1
(13.8)
(310.0)
Loan
agreements
(327.7)
(87.7)
(4.2)
159.8
(1,299.9)
1,366.0
319.3
118.9
9.7
17.7
(252.8)
7.4
215.3
Advances for
future capital
increase
591.5
575.3
Transactions
Net revenues
60.6
71.8
(1,166.8)
29.8
276.2
Net financial
results
(60.7)
(903.5)
(52.7)
11.4
(593.5)
353.6
1,316.9
9.9
94.4
169.4
(101.7)
26.0
103.4
(27.0)
(31.8)
(4.9)
Names used:
Cervejarias Reunidas Skol Caracu S.A. (Skol)
Indstria de Bebidas Antarctica do Sudeste S.A. (IBA-Sudeste)
Jalua Spain S.L. (Jalua)
Hohneck Sociedad Annima (Hohneck)
Monthiers S.A. (Monthiers)
Arosuco Aromas e Sucos Ltda. (Arosuco)
Dunvegan S.A. (Dunvegan)
Cervecera y Maltera Paysand Cympay (Cympay)
Maltera Pampa S.A. (Maltera Pampa)
Aspen Equities Corporation (Aspen)
48/49

4 Transactions with related parties continued

Transactions with related parties include, among other operations, the purchase and sale of raw materials such as malt, concentrates,
labels, corks and several finished products, eliminated in the Companys consolidated financial statements, except for the nonconsolidated portion of operations with jointly controlled entities (recorded based on the proportional consolidation method) and
related parties.
Loan agreements among the Companys subsidiaries in Brazil have undetermined maturity terms and are not subject to financial charges
from July 1, 2003. The agreements that involve the Companys subsidiaries headquartered abroad are indexed to the US dollar exchange
rate plus 10% p.a. interest. Inter-company loans are consolidated based on the same criteria described above.
5
Other assets
Parent company
Current assets
Deferred income from commodities
swap and forward operations, net
Prepaid expenses
Advances to suppliers and others
Long-term financial investments
Other taxes and charges recoverable
Prepaid expenses
Surplus assets Instituto AmBev
2003
2002
0.4
6.3
0.4
6.3
78.0
78.0
78.0
78.0
Consolidated
2003
2002
0.1
106.0
123.3
26.5
89.1
40.1
10.6
255.9
139.8
77.0
348.4
119.3
49.4
22.0
340.7
51.1
30.9
21.6
616.1
444.3
6 Investments in direct subsidiaries

(a) Movement of investments in direct subsidiaries, including goodwill and negative goodwill
Description
Balance on December 31, 2001

Acquisition of investment
Divestment
Effect of implementation of NPC No. 26
Increase (reduction) of capital
Equity in results
Amortization of (goodwill) negative goodwill
Acquisition of investment
Increase (reduction) of capital
Loss of interest ownership in subsidiary
Equity in results
Amortization of goodwill
CBB
Arosuco
Agrega
Hohneck (i)
Eagle
Polar
Total
1,290.0
111.0
0.4
(88.3)
(44.4)
4,280.2
0.4
(88.3)
(44.4)
(56.3)
(894.3)
1,462.3
(69.9)
2,878.4
0.8
(56.3)
(1,338.3)
(240.9)
(84.7)
1.8
(2.1)
215.4
442.2
1,483.4
0.5
215.4
3,215.6
1,158.2
(v) (1,351.8)
6.5
14.8
85.7
(34.2)
3,660.9
(v) (2,551.3)
2.0
(iii) (215.4)
2,158.7
(84.8)
172.5
(1.9)
0.1
(ii) 5,541.2
224.0
0.6
0.1
(664.3)
4,589.7
85.7
(1,386.0)
1,111.6
(215.4)
1,665.1
(84.8)
5,765.9
(i) Headquartered abroad.

(ii) Balance consisting of goodwill net of amortization R$ 468.9, negative goodwill to be amortized R$ 149.9 and investment accounted for by the equity method R$ 5,222.2.
(iii) In January 2003, the Company recorded a loss of holdings in Hohneck resulting from the capitalization made by Skol and CBB without the respective proportional
participation of AmBev in the amount of R$ 215.4, eliminated in the Companys consolidated financial statements.
(iv) In May 2003, the subsidiary CBB sold its investment in Arosuco to the Company for its book value of R$ 85.7.
(v) In July 2003, the Company made a capital investment in its subsidiary CBB, partly with its investment in Eagle Distribuidora de Bebidas S.A. (Eagle) for the book value
of R$ 2,551.3, and partly with a portion of the balance of dividends receivable from CBB in the amount of R$ 1,109.6.
50/51

6 Investments in direct subsidiaries continued

(b) Goodwill and negative goodwill
Parent company
Goodwill
CBB based on:
Property, plant and equipment fair value excess
Expected future profitability
Consolidated
2003
2002
2003
2002
144.6
702.7
144.6
702.7
144.6
702.7
144.6
702.7
847.3
847.3
847.3
847.3
Expected future profitability

Quinsa
Cympay (i)
Salus S.A. (i)
Pilcomayo Participaes S.A. (ii)
Pati do Alferes Participaes S.A. (ii)
Cervejaria Astra S.A. (ii)
Maltera Pampa
Atlntico
Cervejaria Miranda Corra S.A.
1,123.2
34.2
19.0
28.1
5.1
5.5
34.2
19.0
33.9
16.9
123.3
28.1
5.5
847.3
847.3
2,062.4
510.4
1,108.2
847.3
847.3
2,572.8
1,108.2
Accumulated amortization
(378.4)
(293.7)
(708.6)
(331.4)
Total goodwill, net
468.9
553.6
1,864.2
776.8
(149.9)
(149.9)
(149.9)
(18.5)
(8.5)
(149.9)
(149.9)
(149.9)
(176.9)
(149.9)
319.0
403.7
1,687.3
626.9
Quinsa and subsidiaries (proportionally consolidated)

Total goodwill
Negative goodwill
CBB
Cervesursa
Incesa
Total negative goodwill
(i) Subsidiaries that made part of the total contributed by the Company and its subsidiaries in the Quinsa operation. Gains and losses in the transaction, determined
individually in the financial statements of these subsidiaries were eliminated in the Companys financial statements.
(ii) Goodwill reclassified to deferred charges in the consolidated financial statements arising from the mergers of subsidiaries between related parties.
6 Investments in direct subsidiaries continued

(c) Information on direct subsidiaries
2003
Description
2002
CBB
Arosuco
Agrega
Hohneck
CBB
Agrega
Eagle
Hohneck
Number of shares/quotas held

in thousands
Common shares/quotas
Preferred shares
19,881,631
35,206,009
0.3
1,375
10,000
3,442,186
6,073,132
1,375
276
10,000
Total shares/quotas
55,087,640
0.3
1,375
10,000
9,515,318
1,375
276
10,000
Percentage of direct holding

In relation to preferred shares
In relation to common
shares/quotas
In relation to total
shares/quotas
Financial statements:
Of direct subsidiaries
Adjusted shareholders
equity
Adjusted net income (loss)
99.9
99.5
99.9
99.7
50
0.009
100
50
99.9
100
99.9
99.7
50
0.009
99.7
50
99.9
100
5,222.2
224.7
1.2
1,315.1
756.7
1.1
3,217.8
215.4
2,046.7
176.3
(3.8)
(67.1)
(334.4)
(4.2)
1,484.7
363.0
Due to inter-company results, unrealized profits and fiscal incentives, the equity in the results of certain subsidiaries, as shown in note 6(a),
may not correspond to the holding percentage applied to the subsidiarys result in the period, as presented in this note.
(d) Main indirect holdings in subsidiaries
Total indirect holdings
%
Company name
2003
2002
Brazil
Arosuco
Eagle
IBA-Sudeste
100
100
99.3
100
100
98.8
100
100
100
100
100
70
Abroad
Monthiers (i)
Aspen (i)
CCBP S.A. (ii)
CCBA S.A. (ii)
(i) Wholly owned subsidiary of Jalua Spain S.A.
(ii) Subsidiaries that were part of the total contributed by the Company and its subsidiaries in the Quinsa operation.
52/53

7 Property, plant and equipment

(a) Composition of property, plant and equipment
Consolidated
2003
2002
Accumulated
depreciation
Residual
amounts
Residual
amounts
244.6
2,090.8
5,673.3
1,030.4
987.0
153.7
(903.5)
(4,323.1)
(423.6)
(363.3)
244.6
1,187.3
1,350.2
606.8
623.7
153.7
147.1
1,108.1
1,147.2
431.6
278.4
218.2
10,179.8
(6,013.5)
4,166.3
3,330.6
Cost
Land
Buildings and constructions
Machinery and equipment
Off-site equipment
Other assets and intangibles
Construction in progress
Annual
depreciation
rates %
4
10 to 20
10 to 20
4 to 20
On December 31, 2003, the subsidiaries held for sale properties with a book value of R$ 144.1 (December 31, 2002 R$ 121.6),
which are classified under long-term receivables, net of a provision for expected losses on realization, in the amount of R$ 89.1
(December 31, 2002 R$ 55.9).
During the year, a provision for potential losses on the sale of property, machinery and equipment was constituted in the amount of
R$ 58.7 (December 31, 2002 R$ 69.9), accounted for in the Companys consolidated financial statements in Non-operating expenses.
(b) Assets with restrictions
Pursuant to bank loans and leases taken by the Company and its subsidiaries, at December 31, 2003 the disposal of certain property,
machinery and equipment is restricted, the residual amount of which totals R$ 909.3 (December 31, 2002 R$ 963.5). Such restriction
has no impact on the use of such assets and on the Companys operations.
8
Deferred charges
Consolidated
2003
Cost
Pre-operating
Implementation and expansion expenses
Other
Accumulated amortization
2002
190.6
55.7
217.8(*)
247.3
214.0
107.1
464.1
568.4
(204.8)
(432.2)
259.3
136.2
(*) This includes the balance of goodwill in subsidiaries in the amount of R$ 146.3, reclassified from Investments to Deferred charges, arising from the mergers of
subsidiaries between related parties.
Loans and financing consolidated

Current
Types/purposes
Local currency
ICMS sales tax
incentives
Permanent assets
Other
Foreign currency
Syndicated loan
Bonds
Raw material
import financing
Permanent assets
Other (ii)
Long-term
Financial charges (p.a.)
Final maturity
2003
2002
2003
2002
5.21%
2.40% above the TJLP
2.62% above the TJLP
June 2013
December 2008
June 2007
34.6
227.2
0.2
31.4
237.7
340.5
298.6
0.4
310.7
408.3
262.0
269.1
639.5
719.0
2.4% above
quarterly LIBOR (i)
10.55%
August 2004
September 2013
1,063.0
53.7
7.1
9.2
2,889.2
1,150.8
1,766.6
4.77%
5.87%
89.57%
May 2005
January 2009
October 2008
183.7
303.5
110.2
207.6
51.0
63.4
22.1
418.4
35.1
81.4
160.2
1.3
1,714.1
338.3
3,364.8
3,160.3
1,976.1
607.4
4,004.3
3,879.3
(i) Fixed interest rate of 5.95% per annum through a LIBOR swap operation (note 9(d)).
(ii) This includes local currency loans (including interest) in Argentina, Ecuador, Peru, Uruguay and Venezuela.
Abbreviations used:
TJLP Long-Term Interest Rate.
LIBOR London Interbank Offered Rate.
ICMS Value-Added Tax on Sales and Services
(a) Guarantees
Loans and financings for expansion, construction of new plants and purchases of equipment are guaranteed by mortgages on the plant
properties and financial liens on equipment. Loans for the purchase of raw materials, mainly malt, syndicated loans and the issue of Notes
in the international market are guaranteed by collaterals of AmBev and its subsidiaries, which on December 31, 2003 totaled R$ 199.1.
(b) Maturities
As at December 31, 2003, long-term financings fall due as follows:
2005
2006
2007
2008
2009
2010
2011
2012 and 2013
232.5
390.9
152.8
150.0
20.4
53.2
1,498.1
1,506.4
4,004.3
54/55

9 Loans and financing consolidated continued

(c) ICMS sales tax incentives
Description
Short and long-term balances

Financings
2003
2002
375.1
393.6
342.1
461.0
768.7
803.1
Financings refer to programs offered by certain Brazilian states, through which a percentage of the ICMS sales tax due is financed by
the financial agent of the state, usually over five years as from the original due date.
The amount of R$ 393.6 (December 31, 2002 R$ 461.0) of Sales tax deferrals includes a current portion of R$ 161.8 (December 31,
2002 R$ 154.1) classified under Other taxes and contributions payable.
The remaining amounts refer to the deferrals of ICMS due for periods of up to 12 years, as part of industrial incentive programs.
The percentages deferred may be fixed during the program or vary regressively, from 75% in the first year to 40% in the final year.
The deferred amounts are partially indexed at 60% to 80% of a general price index.
(d) Syndicated loan
The syndicated loan in Yen is guaranteed by co-signatures of AmBev and its subsidiaries. On December 31, 2003 and 2002, by means
of a LIBOR swap, the interest on this loan was fixed at 5.95% per annum (originally 2.4% above quarterly LIBOR).
(e) Notes issued in the international market
In September 2003 CBB issued US$ 500 million in foreign securities (Bond 2013), with a guarantee from AmBev. These Notes bear
8.75% interest p.a. and will be repaid semi-annually as from March 2004 with final maturity in September 2013. The original contracted
interest rate may be increased by 0.5%, if Bond 2013 is not registered with the US Securities and Exchange Commission (SEC) by
September 18, 2004.
In December 2001 CBB issued US$ 500 million in foreign securities (Bond 2011), with a guarantee from AmBev. These Notes bear
10.7% interest p.a. and are repayable semi-annually as from July 2002 with final maturity in December 2011. The Company registered
Bond 2011 with the SEC on October 4, 2002, eliminating the possibility of a 0.5% p.a. increase in the original interest rate as set forth
in the contract.
(f) Contractual clauses
On December 31, 2003, the Company and its subsidiaries are in compliance with debt and liquidity ratio covenants in connection with
loans, except as mentioned in the following paragraph.
During 2003, certain subsidiaries of Quinsa in Argentina concluded a debt renegotiation process, covering also financings payment terms.
On December 31, 2003, the portion of long-term debt that was not in compliance with certain liquidity ratio covenants is recorded under
current liabilities, in the amount of US$ 4.2 million.
10 Other liabilities
Parent company
2003
Current liabilities
Profit sharing employees and management
Advance from customer
Deferred result from commodities swap and forward operations
Provision for medical assistance benefits and others
Suppliers
Consolidated
2002
2003
2002
15.6
0.1
11.5
196.1
31.0
3.0
134.6
113.1
9.8
15.7
241.6
257.5
72.9
26.2
33.2
0.8
53.4
25.7
55.1
29.4
133.1
163.6
11 Liabilities related to tax and other claims, and provision for contingencies
Consolidated
Social Integration Program (PIS) and Social Contribution on Revenue (COFINS)

Value-Added Tax on Sales and Services (ICMS) and Excise Tax (IPI)
Labor claims
Lawsuits involving distributors and resellers
Other
2003
2002
339.2
532.1
50.2
211.1
28.6
71.7
260.3
458.1
43.2
131.5
18.7
77.5
1,232.9
989.3
On December 31, 2003, the Company and its subsidiaries had other ongoing lawsuits which, in the opinion of legal counsel, are subject to
possible, but not probable, losses of approximately R$ 1,266.6 (December 31, 2002 R$ 976).
Principal liabilities related to fiscal claims and provisions for contingencies:
(a) PIS and COFINS
The Company obtained an injunction in the first quarter of 1999 granting the right to pay PIS (up to December 31, 2002) and COFINS on
billings, without paying these taxes on other revenues. On December 31, 2003, the provision primarily refers to amounts that were not paid
pursuant to this injunction and which will be subject to provisioning until they are assured by a final decision in favor of the Company and its
subsidiaries. Following the enactment of Law 10,637 of December 31, 2002, which established new rules for calculating PIS with effect as
from December 1, 2002, the Company began to pay such contribution including on other revenues.
(b) ICMS and IPI tax
This provision relates mainly to tax disputes of presumed zero-rated IPI credits and to extemporaneous ICMS credits on purchases of
property, plant and equipment prior to 1996. Such amounts, recorded as liabilities related to tax claims, will be subject to provisioning
until they are assured by a final decision in favor of the Company and its subsidiaries.
Zero-rated IPI credits, which have never been used by the Company, in the amount of R$ 228.1 on December 31, 2003, are recorded
under Other taxes and charges recoverable in long-term assets.
56/57

11 Liabilities related to tax and other claims, and provision for contingencies continued
(c) Income Tax and Social Contribution on Net Income (CSLL)
This provision relates substantially to the recognition of the deductibility of interest on own capital in the calculation of CSLL for the
year 1996.
(d) Labor claims
This provision relates to claims from former employees. On December 31, 2003, judicial deposits made by the Company and its
subsidiaries related to labor claims, restated based on official indices, amounted to R$ 111.6 (December 31, 2002 R$ 74.7).
(e) Claims of distributors and resellers
These relate mainly to the termination of agreements between Company subsidiaries and certain distributors, by virtue of the restructuring
process carried out in the distribution network, as well as the non-compliance with contractual directives by distributors in some cases.
(f) Other provisions
These provisions relate substantially to issues involving the National Social Security Institute (INSS), products and suppliers.
12 Social programs
(a) AmBev Pension Fund Instituto AmBev
CBB and its subsidiaries have two kinds of pension plans: one following the defined contribution model (open to new members) and the
other following the defined benefit model (no new members accepted since May 1998), with the possibility of migrating from the defined
benefit plan to the defined contribution plan. These plans are funded by members and the sponsor, and managed by Instituto AmBev
(IAAP). The main purpose is to supplement the retirement benefits of employees and management. During the year ended December 31,
2003, the Company and its subsidiaries made contributions of R$ 4.4 (December 31, 2002 R$ 4.2) to Instituto AmBev.
Based on the independent actuary reports, the position of Instituto AmBevs plans at December 31 is as follows:
2003
2002
Fair value of assets

Present value of actuarial liability
501.5
(334.4)
458.7
(325.6)
Surplus assets Instituto AmBev
167.1
133.1
The surplus of assets of Instituto AmBev is recognized by the Company in its consolidated financial statements under Surplus assets
Instituto AmBev, in the amount of R$ 22 (December 31, 2002 R$ 21.6), estimated as the maximum limit of its future use, also taking into
account the legal restrictions that prevent the return of a possible remaining actuarial surplus, not used in the payment of private security
benefits, in the event of a winding up of Instituto AmBev.
(b) Medical assistance and other post-employment benefits provided directly by CBB
CBB directly provides medical assistance, reimbursement of medicine expenses and other benefits to certain retired pensioners.
On December 31, 2003, the balance of R$ 72.9 (December 31, 2002 R$ 53.4) was recorded in the Companys consolidated financial
statements under Provision for employee benefits.
Changes in the provision for employee benefits, according to the independent actuary report:
Financial charges incurred
Actuarial calculation update
Payment of benefits
53.4
8.5
16.5
(5.5)
72.9
12 Social programs continued

(c) Fundao Antnio e Helena Zerrenner Instituio Nacional de Beneficncia (the Zerrenner Foundation)
The main purposes of the Zerrenner Foundation are to provide the sponsoring companies employees and management with healthcare
and dental benefits, to aid in professional specialization or university courses, and to maintain organizations that provide aid and assistance
to the elderly, amongst others, through direct actions or financial aid agreements with other entities.
The changes in the actuarial liabilities of Zerrenner Foundation, according to the independent actuary report, were as follows:
Financial charges incurred
Actuarial loss amortization
Payment of benefits
154.1
24.9
1.2
(16.7)
163.5
The actuarial liabilities related to the benefits provided by the Zerrenner Foundation were fully offset by an equivalent amount of assets
existing in the Zerrenner Foundation on the same date. The surplus assets were not recorded by the Company in its financial statements,
due to the possibility of using them for other purposes, not exclusively related to the payment of benefits.
(d) Actuarial assumptions
The medium and long-term assumptions adopted by the independent actuary, in the calculation of the actuarial liability were as follows:
Annual percentage
in nominal terms
Discount rate
Expected rate of return on assets
Increase in the remuneration factor
Increase in healthcare costs
2003
2002
10.9
16.6
7.3
7.3
10.6
18.0
7.5
7.5
58/59

13 Shareholders equity
(a) Subscribed and paid-in capital
The Companys capital stock on December 31, 2003 amounted to R$ 3,124.1 (December 31, 2002 R$ 3,046.2), represented by
38,537,333 thousand nominative and no-par value shares (December 31, 2002 38,620,730 thousand), comprised of 15,735,878
thousand common shares and 22,801,455 thousand preferred shares (December 31, 2002 15,795,903 thousand and 22,824,827
thousand, respectively).
In April 2003, the Company increased capital by R$ 77.4, through the private subscription of 259,007 thousand preferred shares,
exclusively to fulfill the provision in the stock ownership plan. In addition, the Company changed the destination of the reserve
constituted from the 2002 results, in the amount of R$ 853.2, from the reserve for future capital increase to investment reserve,
in accordance with its by-laws.
(b) Warrants
During the period for the exercise of warrants between April 1 and April 30, 2003, 25 thousand common and 489 thousand preferred
shares were subscribed, for the total amount of R$ 0.5. Certain warrant holders challenged in court the CVMs and Companys
understanding related to the warrant conversion criteria.
(c) Appropriation of net income for the year and transfers to statutory reserves
The Companys by-laws provide for the following appropriation of net income for the year, after statutory deductions:
(i) 27.5% as mandatory dividend payment to all shareholders. Preferred shareholders are legally entitled to a dividend 10% greater
than that paid to common shareholders.
(ii) An amount not lower than 5% and not higher than 68.875% of net income to 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 or the
foundation of enterprises. This reserve cannot exceed 80% of the capital stock. Should this limit be reached, a General Meeting
of shareholders must deliberate on the balance, either distributing it to shareholders or increasing capital.
(iii) Employee profit sharing of up to 10% of net income for the period, based on predetermined criteria. Directors are allotted a 5.0%
participation in net income for the period, limited to the amount equivalent to their annual remuneration, whichever is lower. Profit
sharing is conditioned to the achievement of collective and individual targets, which are established in advance by the Board of
Directors at the beginning of the fiscal year.
13 Shareholders equity continued

(d) Proposed dividends
The calculation of the dividends percentage approved by the Board of Directors on net income for the years ended December 31
is as follows:
2003
2002

Legal reserve (5%)
1,411.6
(70.6)
1,510.3
(75.5)
Dividends basis
1,341.0
1,434.8
Dividends prepaid as interest on own capital
Supplemental dividends as interest on own capital
Supplemental dividends
Withholding tax on dividends as interest on own capital
495.2
222.5
226.1
54.6
(67.3)
160.9
Total proposed dividends
931.1
502.3
Percentage of dividends on dividends basis %
69.43
35.01
Common
23.15(*)
12.40
Preferred
25.46(*)
13.64
341.4
Dividends net of withholding tax per thousand shares outstanding

(excluding treasury stock) at year-end R$
(*) Dividends per thousand shares outstanding (excluding treasury stock) at year-end before withholding tax (IRRF): common R$ 24.82 and preferred R$ 27.30.
60/61

13 Shareholders equity continued

(e) Interest on own capital
Companies legally have the option to distribute to shareholders interest on own capital based on the TJLP long-term interest rate on
shareholders equity, and such interest, which is tax deductible, can be considered as part of the mandatory dividend when distributed.
Although such interest is recorded in the results for tax purposes, it is reclassified to shareholders equity and shown as dividends.
(f) Reconciliation between the companys shareholders equity and consolidated shareholders equity at December 31, 2003
Shareholders equity of the parent company
4,413.2
Treasury stock acquired by the subsidiary CBB
(105.0)
Total consolidated shareholders equity
4,308.2
(g) Treasury stock

Changes in the Companys treasury stock for the year were as follows:
Number of shares (in thousands)
Preferred
Common
Total
In millions
of Reais

Purchases
Cancellations
121,788
529,339
(282,868)
40,400
63,464
(60,049)
162,188
592,803
(342,917)
78.1
310.0
(154.6)
368,259
43,815
412,074
233.5
Description
In addition, CBB holds 60,731 thousand common shares and 151,894 thousand preferred shares issued by the Company, in the amount
of R$ 105. On December 31, 2003, the balance of treasury stock totals R$ 338.5 in the Companys consolidated financial statements.
14 Stock ownership plan

AmBev has a plan for the purchase of shares by qualified employees, which is aimed at aligning the interests of both shareholders and
executives. As defined in the by-laws, the plan is managed by a committee including non-executive members of the Company.
This committee creates, periodically, stock purchase programs for common or preferred shares, defining the terms and categories or
employees to be benefited, and determines the price for which the shares will be acquired, which cannot be lower than 90% of the average
stock price traded on the So Paulo Stock Exchange (BOVESPA) during the three business days prior to granting such rights, indexed
to inflation up to the date of actual exercise. The number of shares that may be granted during each year cannot exceed 5% of the total
number of shares of each class on that date (1.0% and 0.03% in 2003 and 2002, respectively).
When shares are bought, the Company may issue new shares, or use the balance of treasury stock. The shares granted have no exercise
date. Should the existing labor agreement come to an end, the rights expire. Regarding the shares purchased by employees, the
Company has the right to repurchase them at a price equal to:
(i) the price paid by the employee, adjusted for inflation, if the employee sells the shares during the first 30 months after the purchase;
(ii) the price paid by the employee, adjusted for inflation, for 50% of the lot, and at the market price for the remainder, if the
employee sells the shares after the first 30 months, but before 60 months after the purchase;
(iii) the market price, if the sale takes place 60 months after the purchase.
Employees who do not apply at least 70% of their annual profit sharing bonuses (net of income tax and other charges) to subscribe shares
under the stock ownership plan, will forfeit their rights to the underlying shares in the same proportion of the bonuses not applied, unless
the equivalent amount had been previously subscribed in cash by the employee.
The Company and its subsidiaries could make advances to employees for the purchase of shares for plans granted until the year 2002.
Such financings normally do not exceed periods of up to four years and carry 8% interest p.a. above the General Market Price Index
(IGP-M). These financings are guaranteed by the shares issued at the time of purchase. On December 31, 2003, the outstanding
consolidated balance of these advances amounted to R$ 234,7 (December 31, 2002 R$ 324.8). Starting in 2003, the Company
and its subsidiaries will no longer finance the purchase of shares, and such shares must be purchased in cash, by the beneficiaries,
upon subscription.
The change in stock purchase rights during the years ended December 31 is as follows:
Stock purchase
rights in thousands
2003
2002
Balance of shares available for purchase exercisable at the beginning of the year
640,800
1,031,221
Changes during the year

Exercised
Cancelled
Granted
(259,007)
(34,104)
386,000
(384,074)
(16,847)
10,500
Balance of shares available for purchase exercisable at year-end
733,689
640,800
15 Treasury
(a) General considerations
The Company and its subsidiaries hold certain amounts of cash and cash equivalents in foreign currency, and enter into cross-currency
interest rate and commodities swaps and currency forward contracts to hedge against the effects of exchange rate variations on the
consolidated exposure in foreign currency, interest rate fluctuations, and changes in raw materials prices, particularly aluminum and sugar.
Financial assets are purchased to hedge against financial liabilities, which does not prevent the Company from redeeming them at any
time, even though its actual intention is to carry such assets to maturity on their respective due dates.
62/63

15 Treasury continued
(b) Derivative instruments
The following is the composition of nominal amounts of outstanding derivatives on December 31:
Description
Currency hedge
US$/R$
Yen/R$
Peso/US$
Interest rate hedge
Floating LIBOR vs. fixed LIBOR
IDC x Fixed
Commodities hedge
Aluminum
Sugar
2003
2002
4,686.5
775.7
152.4
2,300.0
1,059.7
944.6
(201.8)
1,277.4
(42.1)
22.3
166.3
0.2
6,379.7
4,761.5
(i) Currency and interest rate hedges

On December 31, 2003, unrealized gains on variable earnings in derivative operations were limited to the lower value of the
instruments yield curve and their relative market value, in accordance with the Brazilian Corporate Law.
Had the Company recorded its derivative instruments at market value, it would have had an additional gain amounting to
R$ 205.9 in the result for the year ended December 31, 2003 (December 31, 2002 R$ 240.3) as shown in the table below:
Financial instruments
Book value
Market
Unrealized
variable
gains
Public securities
Swaps/forwards
1,198.8
(49.2)
1,249.0
106.5
50.2
155.7
1,149.6
1,355.5
205.9
(ii) Commodities and currency hedges

These commodities operations were entered into to specifically minimize Company exposure to fluctuations in the prices of raw
materials to be acquired. Their net results, calculated at cost (equivalent to market value), are deferred and recognized in results
when the corresponding sales of final products occur.
During the year ended December 31, 2003, the following effect relating to the currency hedging operations was recorded in the
result under Cost of sales.
Description
Net increase in the

cost of sales
Currency hedge
Hedge of aluminum
(99.0)
16.7
(82.3)
On December 31, 2003, the amount of R$ 1.2 was deferred and will be recognized as a charge to the results, when the
corresponding finished product sale is made.
15 Treasury continued
(c) Financial liabilities
The Companys financial liabilities, represented mainly by the bonds, syndicated loan and import financings, are stated at cost plus
accrued interest and monetary and exchange variations, based on closing rates and indices of each period.
Had the Company been able to use a method where its financial liabilities could be recognized at market values, it would have determined
an additional loss, before income taxes, of approximately R$ 202.2, on December 31, 2003, as shown in the table below:
Financial instruments
Book value
Market
Unrealized
variable gains
Bonds
Syndicated loan
Import financing
2,942.9
1,063.0
115.0
3,270.7
938.7
113.7
(327.8)
124.3
1.3
4,120.9
4,323.1
(202.2)
The criteria used to estimate the market value of the financial liabilities are as follows:
bonds: secondary market value of the Notes based on the closing quotation on the base date of December 31, 2003 (approximately
116.99% of face value for Bond 2011 and 106.5% for Bond 2013);
syndicated loan: estimated value based on the secondary market for securities with a similar risk (on average, 2.14% p.a.);
import financing: estimated value for new operations with financial institutions on the base date of December 31, 2003, for outstanding
instruments with similar maturity terms (on average, 1.76% p.a.).
(d) Financial income and expenses
Consolidated
Financial income
Net gains on derivative instruments
Foreign exchange rate variation on financial investments
Financial income on cash equivalents
Financial charges on taxes, contributions and judicial deposits
Other
Financial expenses
Exchange rate variation on financings
Net losses on derivative instruments
Financial charges on foreign currency loans payable
Financial charges on loans in Reais
Taxes on financial transactions
Financial charges on contingencies and others
Other
2003
2002
319.8
(97.2)
233.7
77.4
68.1
1,202.4
1,007.2
120.5
34.2
166.0
601.8
2,530.3
524.3
(298.2)
(344.6)
(129.9)
(90.9)
(95.4)
(74.0)
(1,738.8)
(883.6)
(332.4)
(109.4)
(95.0)
(95.7)
(22.4)
(508.7)
(3,277.3)
(e) Concentration of credit risk

A substantial part of the Companys sales is made to distributors, supermarkets and retailers, through a broad distribution network.
Credit risk is low because of the large client portfolio and the risk control monitoring procedures. Historically, the subsidiaries have not
recorded significant losses on receivables from customers.
To minimize the credit risk of its investments, the Company has adopted procedures for the allocation of cash and investments, taking into
account the limits and credit ratings of financial institutions, and avoids any credit risk concentration.
64/65

16 Income tax and social contribution

(a) Reconciliation of the consolidated of income tax and CSLL benefit (expense) with nominal values
Consolidated net income, before income tax and CSLL

Profit sharing and contributions
Consolidated net income, before income tax, CSLL and minority interest
Income tax and CSLL expense at nominal rates
Adjustments to determine the effective rate
Tax losses from previous years
Interest on own capital
Effect of write-off of goodwill upon merger of subsidiary
Amortization of goodwill, non-deductible portion
Interest ownership gains arising from corporate restructuring
Results of subsidiaries abroad not subject to taxation
Equity gains in subsidiaries
Permanent additions, exclusions and other
(Expense) benefit of income tax and CSLL
2003
2002
1,864.2
1,307.4
(23.6)
(125.1)
1,840.6
1,182.3
(625.8)
(402.0)
147.9
152.7
37.1
(21.2)
(6.9)
(182.9)
59.8
13.2
(24.5)
(1.5)
621.5
51.7
35.4
(426.1)
280.6
(b) Composition of the benefit (expense) of income tax and CSLL

Parent company
Current
Deferred
Consolidated
2003
2002
2003
2002
1.2
99.2
20.4
(624.4)
198.3
(123.4)
404.0
100.4
20.4
(426.1)
280.6
16 Income tax and social contribution continued

(c) Composition of deferred taxes
Parent company
Tax loss carry-forwards
Temporary differences
Non-deductible provisions
Other
Temporary differences
Accelerated depreciation
Other
Consolidated
2003
2002
2003
2002
111.7
95.1
1,163.5
1,080.6
49.6
77.7
42.6
2.1
410.0
258.3
350.8
127.0
239.0
139.8
1,831.8
1,558.4
17.9
8.3
17.9
7.8
26.2
25.7
Based on projections of future taxable income of the Company and its subsidiaries located in Brazil and abroad, the estimated recovery
of the consolidated deferred income tax and social contribution asset on tax losses is as follows:
Nominal values
2004
2005
2006
2007
2008
178.5
249.6
292.7
308.0
134.7
1,163.5
66/67

16 Income tax and social contribution continued

(c) Composition of deferred taxes continued
The asset recorded is limited to the amounts for which an offset is supported by taxable income projections, discounted to present values,
to be realized by the Company over the next ten years, also considering that the offset of tax losses is limited to 30% of pre-tax income for
the year, under Brazilian tax legislation.
The deferred income tax asset as of December 31, 2003 includes the total effect of tax losses of Brazilian subsidiaries, which have no
expiration dates and are available for offset against future taxable income. Part of the tax benefit corresponding to the tax losses of foreign
subsidiaries was not recorded as an asset, as management cannot ascertain that realization is probable.
It is estimated that the balance of deferred taxes on temporary differences as of December 31, 2003 should be realized by the fiscal year
2008. However, it is not possible to estimate accurately when such temporary differences will be realized, because the major part depends
on legal decisions over which the Company has no control nor any means of anticipating exactly when a final decision will be reached.
The forecasts of future taxable income include several estimates relative to the performance of the Brazilian and the global economy,
the determination of foreign exchange rates, sales volume, sales prices, tax rates, and other factors that may differ from actual data
and amounts.
Since the income tax and social contribution derive not only from taxable income but also depend on the Companys tax and corporate
structure, the existence of non-taxable income, non-deductible expenses, tax exemptions and incentives, and several other variables,
there is no relevant correlation between the Companys net income and the result of income tax and social contribution. Therefore, the tax
loss carry-forwards should not be taken as an indicator of future profits.
17 Commitments with suppliers
The Company has agreements with certain suppliers to acquire certain quantities of materials for the production and packaging
processes, such as plastics for PET bottles, aluminum and natural gas.
18 Operating income (expenses), net
Parent company
2003
Operating income
Equity gains in subsidiaries
Exchange gains on investments abroad
Other operating income
Recovery of taxes and contributions
Write-off of goodwill on divestment
Reversal of provision for losses on unsecured liabilities
2002
Operating income (expenses), net
2002
175.9
151.9
128.8
45.4
23.5
16.6
24.6
14.8
190.0
204.8
Operating expenses
Provision for losses on unsecured liabilities
Exchange losses on investments abroad
Amortization of goodwill
Taxes on other income
Other operating expenses
Consolidated
2003
240.6
26.7
14.8
367.6
(42.4)
(84.8)
(84.7)
(0.9)
(3.8)
(142.4)
(252.4)
(31.2)
(54.7)
(85.7)
(130.9)
(480.7)
(168.2)
(85.7)
73.9
(240.1)
199.4
(105.3)
(62.9)
19 Non-operating income (expenses), net

Parent company
2003
Non-operating income
Gain of interest ownership in investments
Gain on disposal of property, plant and equipment
Other non-operating income
Non-operating expenses
Provision for loss on permanent assets
Loss on disposal of property, plant and equipment
Other non-operating expenses
Non-operating income (expenses), net
2002
Consolidated
2003
2002
31.8
38.5
5.6
4.0
44.1
35.8
(69.9)
(0.1)
(58.7)
(33.3)
(25.8)
(27.0)
(215.5)
(144.8)
(108.0)
(215.5)
(100.7)
(72.2)
(215.4)
(12.4)
(25.7)
20 Insurance
At December 31, 2003, the main assets of the Company and its subsidiaries, such as property, plant and equipment and inventories,
are insured against fire and other risks at replacement value. Insurance coverage is higher than the book values.
21 Subsequent events
(a) Activities abroad in 2004
On February 12, 2004, the Company announced an alliance with Embotelladora Dominicana CXA (Embodom), headquartered in the
Dominican Republic and a PepsiCo bottler in that country. This transaction will make AmBev and Embodom partners in a company that
will market and produce beer and soft drinks in the Dominican Republic.
(b) Distribution of dividends
On February 27, 2004, the Companys Board of Directors approved, based on the accumulated results to December 31, 2003, the
distribution of supplemental dividends in the total amount of R$ 54.6 (without withholding tax), and the distribution of interest on own
capital in the total amount of R$ 226.1. The payments will start on March 25, 2004, based on the shareholding position as of March 15,
2004 and record date for ADRs on March 18, 2004.
(c) Material information press release
The Company informed on March 1, 2004 that it is negotiating with Interbrew S.A. in respect to a possible worldwide transaction.
The Company mentioned, however, that no agreement has been reached yet and there can be no assurance that an agreement will
be reached, nor can the Company anticipate with details the final conditions of the operation or the effective structure of the alliance
under discussion.
68/69
Supplementary information
Consolidated statement of cash flows
Operating activities
Expenses (income) not affecting cash and cash equivalents
Financial charges on tax and fiscal contingencies
Provision for losses on inventory and permanent assets
Financial charges and variations on the stock ownership plan
Financial charges and variations on taxes and contributions
Loss on disposal of permanent assets
Exchange rate variation and charges on financings
Unrealized exchange rate variation and gains on financial assets
Reduction of deferred income tax and social contribution
Exchange rate gains or losses on subsidiaries abroad that do not affect cash
Amortization of goodwill, net of realized negative goodwill
Minority interest
2003
2002
1,411.6
1,510.3
766.3
187.9
59.8
(16.6)
64.6
(47.7)
(43.5)
41.3
(40.1)
183.3
(198.3)
203.5
252.4
2.9
6.2
33.3
659.5
123.7
32.9
113.4
(88.1)
(21.4)
63.3
2,120.4
(840.0)
(404.0)
(108.7)
90.5
(47.4)
Decrease (increase) in assets

Trade accounts receivable
Taxes recoverable
Inventories
Judicial deposits
Other
(12.8)
(253.2)
(48.6)
(102.9)
(120.5)
107.9
(35.6)
37.8
(51.5)
25.9
Increase (decrease) in liabilities

Suppliers
Salaries, profit sharing and social charges
Income tax, social contribution and other taxes
Disbursements linked to contingency provision
Other
(14.1)
(86.4)
491.3
(104.8)
(87.3)
260.6
50.6
(195.3)
(34.6)
224.8
2,527.6
3,595.0
Cash generated by operating activities
Consolidated statement of cash flows continued

2003
2002
Investing activities
Marketable securities (maturity over 90 days)
Securities and collateral
Acquisition of investments
Disposal of property, plant and equipment
Acquisition of property, plant and equipment
Expenditures on deferred charges
423.1
228.6
(1,745.3)
32.4
(862.2)
(91.3)
(808.7)
(249.3)
(75.5)
98.3
(522.4)
(45.5)
Cash used in investing activities
(2,014.7)
(1,603.1)
Financing activities
Financings
Funding obtained
Amortization
Changes in the capital of minority shareholders
Capital increase
Share buyback
Payment of dividends
3,359.2
(2,510.1)
4.8
4.6
130.2
(308.5)
(1,026.9)
620.1
(2,925.3)
10.5
29.0
26.2
(337.1)
(335.6)
Cash used in financing activities
(346.7)
(2,912.2)
Exchange rate gains or losses on cash and cash equivalents
(101.7)
639.1
64.5
(281.2)
1,131.6
1,196.1
1,412.8
1,131.6
64.5
(281.2)
Increase in cash and cash equivalents

Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
Increase (decrease) in cash and cash equivalents
70/71
Investor information
Shares outstanding at year end 2003:

37,913 million shares
379.1 million ADRs equivalents.
Stock Exchange
Bovespa
Ticker symbol: AMBV3 (ON), AMBV4 (PN)
Shares listed and traded: Bolsa de Valores de So Paulo (Bovespa)
The main indices AmBev stock participated in are:
IBX and Ibovespa
Dividend policy
AmBevs by-laws provide for a mandatory dividend of 35% of
the companys annual net income, as determined by Brazilian
Corporate Law accounting principles. The actual payout ratio was
69% in 2003 and 35% in 2002. The mandatory dividend includes
amounts paid as interest attributable to shareholders equity. This
is equivalent to a dividend but is a more tax efficient way to distribute
earnings as they are generally deductible by the Company for
Brazilian income tax purposes. However, shareholders (including
holders of ADRs) pay Brazilian withholding tax on the amounts
received as interest attributable to shareholders equity, whereas
no such payment is required in connection with dividends received.
Withholding tax is usually paid by Brazilian companies on behalf
of their shareholders.
NYSE
Ticker symbol: ABV.c (ON), ABV (PN)
ADRs listed and traded: New York Stock Exchange (NYSE)
Cash dividends declared
First payment date
Share type
R$ per
1,000 shares
US$ equivalent
per 1,000 shares
Second half 2003
25 Mar 2004
First half 2003
13 Oct 2003
Second half 2002
28 Feb 2003
First half 2002
25 Nov 2002
Second half 2001
19 Feb 2002
First half 2001
17 Sep 2001
Second half 2000
20 Feb 2001
preferred
common
preferred
common
preferred
common
preferred
common
preferred
common
preferred
common
preferred
common
6.75
6.14
18.70
17.00
9.27
8.43
4.37
3.97
4.78
4.34
3.11
2.83
4.11
3.74
2.30
2.09
6.59
5.99
2.60
2.37
1.15
1.04
1.97
1.79
1.16
1.06
2.05
1.86
Earnings generated
Share price performance

AMBV4 (PN) R$
AMBV3 (ON) R$
ABV (PN) US$
ABV.c (ON) US$
IBOVESPA R$
S&P 500 US$
31/12/2003
31/12/2002
% change
02/03
31/12/2001
% change
01/02
739.00
635.00
25.51
25.51
22,236.00
1,111.92
540.00
478.00
15.56
13.00
11,268.00
879.82
36.9
32.8
63.9
96.2
97.3
26.4
476.00
428.00
20.29
18.52
13,577.00
1,148.08
13.4
11.7
-23.3
-29.8
-17.0
-23.4
AmBev has two classes of shares, common (ON) and preferred (PN). Common shareholders are entitled to voting rights, while preferred
shares have priority in liquidation. As per Brazilian Corporate Law, dividend payments to preferred shareholders must be 10% greater than
those made to common shareholders.
Ratings
Agency
Fitch
Moodys
S&P
Local rating
Foreign rating
Outlook
BBBBaa3
BBB-
BBB1
BB-
Positive
Developing
Positive
Corporate offices
Rua Dr. Renato Paes de Barros, 1017 4th floor
So Paulo, SP 04530-000
Brazil
Tel 55 11 2122-1200
Fax 55 11 2122-1526
As of October 2004.
Shareholder account assistance

For address changes, dividend checks, account consolidations,
direct deposit of dividends, registration changes, lost stock
certificates, stock holdings and Dividend and Cash Investment
plan, please contact:
Retail shareholders in Brazil
Nilson Casemiro
Tel 55 11 2122-1402
Email acnilson@ambev.com.br
Depositary bank in Brazil
Banco Ita
Tel 55 11 5029-7780
Depositary bank and transfer agent in the USA
The Bank of New York
101 Barclay Street
New York, NY 10286
Tel 1 888 269-2377
Email adr@bankofny.com
Independent auditors
Deloitte Touche Tohmatsu
Rua Alexandre Dumas, 1981
Brazil
Tel 55 11 5185-2444
Information resources
Please direct all requests for information to:
AmBev Investor Relations Department
Rua Dr. Renato Paes de Barros, 1017 4th floor
Brazil
Tel 55 11 2122-1414/1415
Email ir@ambev.com.br
Investor website
Our investor website has additional Company financial and
operating information, as well as transcripts of conference calls.
Investors may also register to automatically receive press releases
by email and be notified of Company presentations and events.
www.ambev-ir.com
Publications
The Companys Annual Report, Proxy Statement, Form 20-F
reports are available free of charge from the Investor Relations
Department, listed above. If you are receiving duplicate or
unwanted copies of our Annual Report, please contact the
Investor Relations Department.
Send us your feedback
We value your views on this Annual Report.
Did it help you understand more about AmBev?
Please send your comments to ir@ambev.com.br
72/73
2003 Annual Report
/ 2003 Annual Report
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Ambev AnnualRepl 2003 Eng

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2003 Annual Report

/ 2003 Annual Report

Designed by williams and phoa, London.

AmBev is the worlds fifth largest brewer

Highlights /corporate and financial

* Includes payments of regular dividends and interest on capital.

Net sales /% total

70% Beer Brazil 1

EBITDA /R$ m and EBITDA margin (%)

Our operations in 2003 /AmBev at a glance

AmBev Annual Report 2003

Key highlights in 2003

Key highlights in 2003

2003 was a challenging

Chairmens letter /Dear shareholder

Victorio Carlos De Marchi

2003 was a challenging but important

This effort has been driven by our intense focus on four

AmBev Annual Report 2003

At the same time, we expanded our footprint in northwest

Moving forward /strategy

We compensate our outstanding employees accordingly;

People and culture

AmBev Annual Report 2003

Our commitment to top line growth has four drivers:

Margin pool share

Per capita consumption

Focused on top line

Significant growth potential on

Brazil beer net

Enhanced trade programs

Moving forward /strategy

In 2003, we made significant progress in this area through

1.7 million points of sale reached

83,000 new coolers in place

AmBev Annual Report 2003

Multi-brand thirdparty operators /%

Additionally, several fixed expense reduction programs

decrease in maintenance costs

Fixed costs reduced

Saving enough water for

Operating review /Beer Brazil

Brazils sizeable beer market

Promotion at the point

AmBev Annual Report 2003

have taken steps to ensure that

in a 7.5 percentage point decline

First, due to the real exchange

In keeping with this scenario,

In June 2003, we adjusted

Consequently, Beer Brazil

The Bohemia brand

competitive mindset to recover

in warehousing and delivery

Young adults party at Skol Beats,

In 2003 we were able to increase

Our brand awareness

Operating review /Brazil soft drinks

Although AmBevs primary

Our soft drinks business has

The positive results of the last

First, our core portfolio posted

Our Brazilian original,

AmBev Annual Report 2003