Exhibit 99.2
LATAM AIRLINES GROUP S.A. AND SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
(FREE TRANSLATION)
CONTENTS
Interim Consolidated Statement of Financial Position
Interim Consolidated Statement of Income by Function
Interim Consolidated Statement of Comprehensive Income
Interim Consolidated Statement of Changes in Equity
Interim Consolidated Statement of Cash Flows - Direct Method
Notes to the Interim Consolidated Financial Statements
CLP | - | CHILEAN PESO | ||
ARS | - | ARGENTINE PESO | ||
US$ | - | UNITED STATES DOLLAR | ||
THUS$ | - | THOUSANDS OF UNITED STATES DOLLARS | ||
COP | - | COLOMBIAN PESO | ||
BRL/R$ | - | BRAZILIAN REAL | ||
THR$ | - | THOUSANDS OF BRAZILIAN REAL |
Contents of the notes to the Interim consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries.
Notes | Page | |||||
1 - General information | 1 | |||||
2 - Summary of significant accounting policies | 9 | |||||
2.1. Preparation | 9 | |||||
2.2. Consolidation | 14 | |||||
2.3. Foreign currency transactions | 15 | |||||
2.4. Property, plant and equipment | 16 | |||||
2.5. Intangible assets other than goodwill | 17 | |||||
2.6. Goodwill | 17 | |||||
2.7. Borrowing costs | 18 | |||||
2.8. Losses for impairment of non-financial assets | 18 | |||||
2.9. Financial assets | 18 | |||||
2.10. Derivative financial instruments and hedging activities | 19 | |||||
2.11. Inventories | 21 | |||||
2.12. Trade and other accounts receivable | 21 | |||||
2.13. Cash and cash equivalents | 21 | |||||
2.14. Capital | 21 | |||||
2.15. Trade and other accounts payables | 22 | |||||
2.16. Interest-bearing loans | 22 | |||||
2.17. Deferred taxes | 22 | |||||
2.18. Employee benefits | 22 | |||||
2.19. Provisions | 23 | |||||
2.20. Revenue recognition | 24 | |||||
2.21. Leases | 24 | |||||
2.22. Non-current assets (or disposal groups) classified as held for sale | 25 | |||||
2.23. Maintenance | 25 | |||||
2.24. Environmental costs | 25 | |||||
3 - Financial risk management | 26 | |||||
3.1. Financial risk factors | 26 | |||||
3.2. Capital risk management | 41 | |||||
3.3. Estimates of fair value | 42 | |||||
4 - Accounting estimates and judgments | 47 | |||||
5 - Segmental information | 48 | |||||
6 - Cash and cash equivalents | 54 | |||||
7 - Financial instruments | 56 | |||||
7.1. Financial instruments by category | 56 | |||||
7.2. Financial instruments by currency | 58 | |||||
8 - Trade, other accounts receivable and non-current accounts receivable | 59 | |||||
9 - Accounts receivable from/payable to related entities | 63 | |||||
10 - Inventories | 65 | |||||
11 - Tax assets | 66 | |||||
12 - Other financial assets | 67 |
13 - Other non-financial assets | 70 | |||||
14 - Non current assets (or disposal groups) classified as held for sale | 72 | |||||
15 - Investments in subsidiaries | 73 | |||||
16 - Equity accounted investments | 76 | |||||
17 - Intangible assets other than goodwill | 80 | |||||
18 - Goodwill and Business combination | 82 | |||||
18.1. Goodwill | 82 | |||||
18.2. Business combination | 84 | |||||
19 - Property, plant and equipment | 93 | |||||
20 - Taxes and deferred tax | 106 | |||||
21 - Other financial liabilities | 112 | |||||
22 - Trade and other accounts payables | 126 | |||||
23 - Other provisions | 129 | |||||
24 - Tax liabilities | 133 | |||||
25 - Other non-financial liabilities | 134 | |||||
26 - Employee benefits | 135 | |||||
27 - Accounts payable non-current | 137 | |||||
28 - Equity | 138 | |||||
29 - Revenue | 146 | |||||
30 - Costs and expenses by nature | 147 | |||||
31 - Gains (losses) on the sale of non-current assets not classified as held for sale | 149 | |||||
32 - Other income, by function | 150 | |||||
33 - Foreign currency and exchange rate differences | 151 | |||||
34 - Earnings per share | 159 | |||||
35 - Contingencies | 160 | |||||
36 - Commitments | 172 | |||||
37 - Transactions with related parties | 178 | |||||
38 - Share based payments | 181 | |||||
39 - The environment | 186 | |||||
40 - Events subsequent to the date of the financial statements | 187 |
LATAM AIRLINES GROUP S.A AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Note | As of September 30, 2013 | As of December 31, 2012 | ||||||||
ThUS$ | ThUS$ | |||||||||
Unaudited | ||||||||||
Current assets | ||||||||||
Cash and cash equivalents | 6 - 7 | 1,024,196 | 650,263 | |||||||
Other financial assets | 7 - 12 | 837,787 | 636,543 | |||||||
Other non-financial assets | 13 | 226,207 | 169,821 | |||||||
Trade and other accounts receivable | 7 - 8 | 1,748,112 | 1,417,531 | |||||||
Accounts receivable from related entities | 7 - 9 | 671 | 15,187 | |||||||
Inventories | 10 | 232,361 | 176,818 | |||||||
Tax assets | 11 | 211,455 | 210,368 | |||||||
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Total current assets other than non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners | 4,280,789 | 3,276,531 | ||||||||
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Non-current assets (or disposal groups) classified as held for sale or as held for distribution to owners | 14 | 11,125 | 47,655 | |||||||
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Total current assets | 4,291,914 | 3,324,186 | ||||||||
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Non-current assets | ||||||||||
Other financial assets | 7 - 12 | 70,802 | 74,095 | |||||||
Other non-financial assets | 13 | 204,511 | 234,937 | |||||||
Accounts receivable | 7 - 8 | 73,732 | 50,612 | |||||||
Equity accounted investments | 16 | 6,731 | 3,757 | |||||||
Intangible assets other than goodwill | 17 | 2,180,958 | 2,382,399 | |||||||
Goodwill | 18 | 3,867,188 | 4,213,160 | |||||||
Property, plant and equipment | 19 | 11,242,447 | 11,807,076 | |||||||
Current tax assets, long term portion | 11 | 69,724 | 73,050 | |||||||
Deferred tax assets | 20 | 212,328 | 163,067 | |||||||
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Total non-current assets | 17,928,421 | 19,002,153 | ||||||||
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Total assets | 22,220,335 | 22,326,339 | ||||||||
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The accompanying Notes 1 to 40 form an integral part of these interim consolidated financial statements.
LATAM AIRLINES GROUP S.A AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
LIABILITIES AND EQUITY
Note | As of September 30, 2013 | As of December 31, 2012 | ||||||||
ThUS$ | ThUS$ | |||||||||
Unaudited | ||||||||||
LIABILITIES | ||||||||||
Current liabilities | ||||||||||
Other financial liabilities | 7 - 21 | 2,750,873 | 2,047,330 | |||||||
Trade and other accounts payables | 7 - 22 | 1,568,090 | 1,689,990 | |||||||
Accounts payable to related entities | 7 - 9 | 235 | 274 | |||||||
Other provisions | 23 | 30,767 | 59,574 | |||||||
Tax liabilities | 24 | 109,418 | 115,481 | |||||||
Other non-financial liabilities | 25 | 2,583,499 | 2,384,918 | |||||||
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Total current liabilities | 7,042,882 | 6,297,567 | ||||||||
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Non-current liabilities | ||||||||||
Other financial liabilities | 7 - 21 | 7,504,633 | 7,698,857 | |||||||
Accounts payable | 7 - 27 | 1,010,233 | 1,085,601 | |||||||
Other provisions | 23 | 1,206,939 | 1,306,872 | |||||||
Deferred tax liabilities | 20 | 560,203 | 579,339 | |||||||
Employee benefits | 26 | 45,554 | 38,095 | |||||||
Other non-financial liabilities | 25 | 83,887 | 99,323 | |||||||
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Total non-current liabilities | 10,411,449 | 10,808,087 | ||||||||
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Total liabilities | 17,454,331 | 17,105,654 | ||||||||
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EQUITY | ||||||||||
Share capital | 28 | 1,605,165 | 1,501,018 | |||||||
Retained earnings | 28 | 852,605 | 1,076,136 | |||||||
Treasury Shares | 28 | (178 | ) | (203 | ) | |||||
Other reserves | 28 | 2,215,676 | 2,535,100 | |||||||
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Parent’s ownership interest | 4,673,268 | 5,112,051 | ||||||||
Non-controlling interest | 92,736 | 108,634 | ||||||||
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Total equity | 4,766,004 | 5,220,685 | ||||||||
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Total liabilities and equity | 22,220,335 | 22,326,339 | ||||||||
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The accompanying Notes 1 to 40 form an integral part of these interim consolidated financial statements.
LATAM AIRLINES GROUP S.A AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF INCOME BY FUNCTION
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||||||
Nota | 2013 | 2012(*) | 2013 | 2012 | ||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||
Unaudited | ||||||||||||||||||||
Revenue | 29 | 9,608,395 | 6,313,658 | 3,269,967 | 3,259,247 | |||||||||||||||
Cost of sales | (7,571,631 | ) | (4,931,545 | ) | (2,433,849 | ) | (2,587,466 | ) | ||||||||||||
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Gross margin | 2,036,764 | 1,382,113 | 836,118 | 671,781 | ||||||||||||||||
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Other income | 32 | 260,161 | 146,364 | 90,711 | 79,736 | |||||||||||||||
Distribution costs | (751,325 | ) | (552,294 | ) | (263,057 | ) | (269,430 | ) | ||||||||||||
Administrative expenses | (833,314 | ) | (557,875 | ) | (312,458 | ) | (321,010 | ) | ||||||||||||
Other expenses | (305,692 | ) | (212,001 | ) | (96,928 | ) | (88,094 | ) | ||||||||||||
Other gains/(losses) | (33,263 | ) | 1,688 | (33,240 | ) | (361 | ) | |||||||||||||
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Gains (losses) from operating activities | 373,331 | 207,995 | 221,146 | 72,622 | ||||||||||||||||
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Financial income | 51,751 | 61,627 | 12,003 | 23,889 | ||||||||||||||||
Financial costs | 30 | (340,220 | ) | (185,728 | ) | (113,794 | ) | (105,249 | ) | |||||||||||
Equity accounted earnings | 16 | 995 | 63 | 469 | 153 | |||||||||||||||
Foreign exchange gains/(losses) | 33 | (360,892 | ) | 74,013 | (12,699 | ) | 10,203 | |||||||||||||
Result of indexation units | 138 | (88 | ) | 163 | 2 | |||||||||||||||
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Income (loss) before taxes | (274,897 | ) | 157,882 | 107,288 | 1,620 | |||||||||||||||
Income (loss) tax expense | 20 | 45,744 | (106,960 | ) | (52,078 | ) | (72,827 | ) | ||||||||||||
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NET INCOME (LOSS) FOR THE PERIOD | (229,153 | ) | 50,922 | 55,210 | (71,207 | ) | ||||||||||||||
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Income (loss) attributable to owners of the parent | (234,992 | ) | 47,080 | 52,093 | (78,712 | ) | ||||||||||||||
Income (loss) attributable to non-controlling interest | 5,839 | 3,842 | 3,117 | 7,505 | ||||||||||||||||
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Net income (loss) for the period | (229,153 | ) | 50,922 | 55,210 | (71,207 | ) | ||||||||||||||
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EARNINGS PER SHARE | ||||||||||||||||||||
Basic earnings (losses) per share (US$) | 34 | (0.48597 | ) | 0.12050 | 0.10773 | (0.16532 | ) | |||||||||||||
Diluted earnings (losses) per share (US$) | 34 | (0.48597 | ) | 0.12050 | 0.10773 | (0.16532 | ) |
(*) | The balances at September 30, 2012, consider information of TAM S.A. and Subsidiaries from June 22, 2012, date of the business combination materialized. |
The accompanying Notes 1 to 40 form an integral part of these interim consolidated financial statements.
LATAM AIRLINES GROUP S.A AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||||
Note | 2013 | 2012(*) | 2013 | 2012 | ||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||
Unaudited | ||||||||||||||||||
NET INCOME (LOSS) | (229,153 | ) | 50,922 | 55,210 | (71,207 | ) | ||||||||||||
Components of other comprehensive income, before taxes | ||||||||||||||||||
Currency translation differences | ||||||||||||||||||
Gains (losses) on currency translation, before tax | 33 | (391,143 | ) | 32,535 | (36,968 | ) | (40,873 | ) | ||||||||||
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Other comprehensive income, before taxes, currency translation differences | (391,143 | ) | 32,535 | (36,968 | ) | (40,873 | ) | |||||||||||
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Cash flow hedges | ||||||||||||||||||
Gains (losses) on cash flow hedges before taxes | 21 | 68,307 | (21,267 | ) | 25,154 | 33,905 | ||||||||||||
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Other comprehensive income (losses), before taxes, cash flow hedges | 68,307 | (21,267 | ) | 25,154 | 33,905 | |||||||||||||
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Other components of other comprehensive income (loss), before taxes | (322,836 | ) | 11,268 | (11,814 | ) | (6,968 | ) | |||||||||||
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Income tax relating to other comprehensive income | ||||||||||||||||||
Income tax related to currency translation differences in other comprehensive income | 20 | — | (6,024 | ) | — | 6,455 | ||||||||||||
Income tax related to cash flow hedges in other comprehensive income | 20 | (11,809 | ) | 10,797 | (3,451 | ) | (453 | ) | ||||||||||
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Income taxes related to components of other comprehensive income | (11,809 | ) | 4,773 | (3,451 | ) | 6,002 | ||||||||||||
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Other comprehensive income (loss) | (334,645 | ) | 16,041 | (15,265 | ) | (966 | ) | |||||||||||
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Total comprehensive income (loss) | (563,798 | ) | 66,963 | 39,945 | (72,173 | ) | ||||||||||||
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Comprehensive income (loss) attributable to owners of the parent | (548,685 | ) | 69,026 | 41,680 | (80,262 | ) | ||||||||||||
Comprehensive income (loss) attributable to non-controlling interests | (15,113 | ) | (2,063 | ) | (1,735 | ) | 8,089 | |||||||||||
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TOTAL COMPREHENSIVE INCOME (LOSS) | (563,798 | ) | 66,963 | 39,945 | (72,173 | ) | ||||||||||||
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(*) | The balances at September 30, 2012, consider information of TAM S.A. and Subsidiaries from June 22, 2012, date of the business combination materialized. |
The accompanying Notes 1 to 40 form an integral part of these interim consolidated financial statements.
LATAM AIRLINES GROUP S.A AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the parent | ||||||||||||||||||||||||||||||||||||||
Changes in other reserves | ||||||||||||||||||||||||||||||||||||||
Note | Share capital | Treasury shares | Other sundry reserve | Currency translation reserve | Cash flow hedging reserve | Retained earnings | Parent’s ownership interest | Non- controlling interest | Total equity | |||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||||||||||||||||||
Equity as of January 1, 2013 | 1,501,018 | (203 | ) | 2,672,256 | 3,574 | (140,730 | ) | 1,076,136 | 5,112,051 | 108,634 | 5,220,685 | |||||||||||||||||||||||||||
Total increase (decrease) in equity | ||||||||||||||||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||||||||||
Gain (losses) | 28 | — | — | — | — | — | (234,992 | ) | (234,992 | ) | 5,839 | (229,153 | ) | |||||||||||||||||||||||||
Other comprehensive income | — | — | — | (368,505 | ) | 54,812 | — | (313,693 | ) | (20,952 | ) | (334,645 | ) | |||||||||||||||||||||||||
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Total comprehensive income | — | — | — | (368,505 | ) | 54,812 | (234,992 | ) | (548,685 | ) | (15,113 | ) | (563,798 | ) | ||||||||||||||||||||||||
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Transactions with shareholders | ||||||||||||||||||||||||||||||||||||||
Equity issuance | 28-38 | 104,351 | — | — | — | — | — | 104,351 | — | 104,351 | ||||||||||||||||||||||||||||
Dividends | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Increase (decrease) through transactions with treasury shares | 28 | — | 25 | — | — | — | — | 25 | — | 25 | ||||||||||||||||||||||||||||
Increase (decrease) through transfers and other changes, equity | 28-38 | (204 | ) | — | (5,731 | ) | — | — | 11,461 | 5,526 | (785 | ) | 4,741 | |||||||||||||||||||||||||
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Total transactions with shareholders | 104,147 | 25 | (5,731 | ) | — | — | 11,461 | 109,902 | (785 | ) | 109,117 | |||||||||||||||||||||||||||
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Closing balance as of | ||||||||||||||||||||||||||||||||||||||
Current year ending balances | ||||||||||||||||||||||||||||||||||||||
September 30, 2013 (Unaudited) | 1,605,165 | (178 | ) | 2,666,525 | (364,931 | ) | (85,918 | ) | 852,605 | 4,673,268 | 92,736 | 4,766,004 | ||||||||||||||||||||||||||
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The accompanying Notes 1 to 40 form an integral part of these interim consolidated financial statements.
LATAM AIRLINES GROUP S.A AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the parent | ||||||||||||||||||||||||||||||||||||||
Other reserves | ||||||||||||||||||||||||||||||||||||||
Note | Share capital | Treasury shares | Other sundry reserve | Reserve for exchange on translation differences | Cash flow hedging reserve | Retained earnings | Parent’s ownership interest | Non- controlling interest | Total equity | |||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||||||||||||||||||
Equity as of January 1, 2012 | 473,907 | — | 8,492 | (13,317 | ) | (140,556 | ) | 1,116,798 | 1,445,324 | 12,048 | 1,457,372 | |||||||||||||||||||||||||||
Total increase (decrease) in equity | ||||||||||||||||||||||||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||||||||||||||
Gain (losses) | 28 | — | — | — | — | — | 47,080 | 47,080 | 3,842 | 50,922 | ||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | 26,624 | (4,678 | ) | — | 21,946 | (5,905 | ) | 16,041 | |||||||||||||||||||||||||||
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Total comprehensive income | — | — | — | 26,624 | (4,678 | ) | 47,080 | 69,026 | (2,063 | ) | 66,963 | |||||||||||||||||||||||||||
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Transactions with shareholders | ||||||||||||||||||||||||||||||||||||||
Equity issuance | 28-38 | 961,635 | — | 2,665,692 | — | — | — | 3,627,327 | — | 3,627,327 | ||||||||||||||||||||||||||||
Dividends | 28 | — | — | — | — | — | (37,091 | ) | (37,091 | ) | — | (37,091 | ) | |||||||||||||||||||||||||
Increase (decrease) through transactions with treasury shares | 28 | — | (203 | ) | — | — | — | — | (203 | ) | — | (203 | ) | |||||||||||||||||||||||||
Increase (decrease) through transfers and other changes, equity | 28-38 | (3,510 | ) | — | (1,387 | ) | — | — | 529 | (4,368 | ) | 29,878 | 25,510 | |||||||||||||||||||||||||
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Total transactions with shareholders | 958,125 | (203 | ) | 2,664,305 | — | — | (36,562 | ) | 3,585,665 | 29,878 | 3,615,543 | |||||||||||||||||||||||||||
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Closing balance as of | ||||||||||||||||||||||||||||||||||||||
Prior year ending balances | ||||||||||||||||||||||||||||||||||||||
September 30, 2012 (Unaudited) | 1,432,032 | (203 | ) | 2,672,797 | 13,307 | (145,234 | ) | 1,127,316 | 5,100,015 | 39,863 | 5,139,878 | |||||||||||||||||||||||||||
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The accompanying Notes 1 to 40 form an integral part of these interim consolidated financial statements.
LATAM AIRLINES GROUP S.A AND SUBSIDIARIES
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS DIRECT – METHOD
For the periods ended September 30, | ||||||||||
Note | 2013 | 2012 | ||||||||
ThUS$ | ThUS$ | |||||||||
Unaudited | ||||||||||
Cash flows from operating activities | ||||||||||
Cash collection from operating activities | ||||||||||
Proceeds from sales of goods and services | 9,816,232 | 6,652,138 | ||||||||
Other cash receipts from operating activities | 14,019 | 41,688 | ||||||||
Payments for operating activities | ||||||||||
Payments to suppliers for goods and services | (7,379,029 | ) | (4,763,380 | ) | ||||||
Payments to and on behalf of employees | (1,800,612 | ) | (1,165,185 | ) | ||||||
Other payments for operating activities | (18,355 | ) | (18,000 | ) | ||||||
Interest received | 7,855 | 25,913 | ||||||||
Income taxes refunded (paid) | (54,842 | ) | (27,518 | ) | ||||||
Other cash inflows (outflows) | 6 | 70,137 | (58,793 | ) | ||||||
|
|
|
| |||||||
Net cash flows from operating activities | 655,405 | 686,863 | ||||||||
|
|
|
| |||||||
Cash flows used in investing activities | ||||||||||
Cash flows used for acquisition of subsidiaries | (5,510 | ) | (3,236 | ) | ||||||
Other cash receipts from sales of equity or debt instruments of other entities | 79,069 | 316,532 | ||||||||
Other payments to acquire equity or debt instruments of other entities | (417,479 | ) | — | |||||||
Amounts raised from sale of property, plant and equipment | 208,956 | 29,175 | ||||||||
Purchases of property, plant and equipment | (1,219,718 | ) | (1,417,918 | ) | ||||||
Purchases of intangible assets | (21,081 | ) | (38,307 | ) | ||||||
Payment from other long-term assets | 14,529 | 14,158 | ||||||||
Dividends received | — | 351 | ||||||||
Other cash inflows (outflows) | 6 | 77,338 | 101,875 | |||||||
|
|
|
| |||||||
Net cash flow used in investing activities | (1,283,896 | ) | (997,370 | ) | ||||||
|
|
|
| |||||||
Cash flows from (used in) financing activities | ||||||||||
Amounts raised from issuance of shares | 104,351 | 12,889 | ||||||||
Payments to acquire or redeem the shares of the entity | (148 | ) | (203 | ) | ||||||
Amounts raised from long-term loans | 1,401,245 | 1,034,512 | ||||||||
Amounts raised from short-term loans | 1,044,446 | 152,000 | ||||||||
Loans repayments | (1,000,847 | ) | (366,031 | ) | ||||||
Payments of finance lease liabilities | (347,749 | ) | (171,872 | ) | ||||||
Dividends paid | (24,068 | ) | (104,780 | ) | ||||||
Interest paid | (256,381 | ) | (138,818 | ) | ||||||
Other cash inflows (outflows) | 6 | 61,616 | 83,027 | |||||||
|
|
|
| |||||||
Net cash flows from (used in) financing activities | 982,465 | 500,724 | ||||||||
|
|
|
| |||||||
Net increase (decrease) in cash and cash equivalents before effect of exchanges rate change | 353,974 | 190,217 | ||||||||
Effects of variation in the exchange rate on cash and cash equivalents | 19,959 | (39,545 | ) | |||||||
|
|
|
| |||||||
Net increase (decrease) in cash and cash equivalents | 373,933 | 150,672 | ||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 6 | 650,263 | 374,407 | |||||||
|
|
|
| |||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 6 | 1,024,196 | 525,079 | |||||||
|
|
|
|
The accompanying Notes 1 to 40 form an integral part of these interim consolidated financial statements.
LATAM AIRLINES GROUP S.A AND SUBSIDIARIES
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2013 (UNAUDITED)
NOTE 1 - GENERAL INFORMATION
LATAM Airlines Group S.A. (the “Company”) is a public company registered with the Chilean Superintendency of Securities and Insurance (SVS), under No.306, whose shares are quoted in Chile on the Stock Brokers - Stock Exchange (Valparaíso), the Chilean Electronic Stock Exchange and the Santiago Stock Exchange; it is also quoted in the United States of America on the New York Stock Exchange (“NYSE”) in New York in the form of American Depositary Receipts (“ADRs”) and in Brazil BM & FBOVESPA S.A. – Stock Exchange, Mercadorias e Futuros, in the form of Brazilian Depositary Receipts (“BDRs”).
Its principal business is passenger and cargo air transportation, both in the domestic markets of Chile, Peru, Argentina, Colombia, Ecuador and Brazil and in a developed series of regional and international routes in America, Europe and Oceania. These businesses are performed directly or through its subsidiaries in different countries. In addition, the Company has subsidiaries operating in the freight business in Mexico, Brazil and Colombia.
On August 13, 2010, the Company reported to the Superintendency of Securities and Insurance, as an Essential Matter, that at this date the Company Costa Verde Aeronáutica S.A. and Inversiones Mineras del Cantábrico S.A. (the latter two, “Cueto Subsidiaries”), TAM S.A. (“TAM”), and TAM Empreendimentos e Participações (“TEP”) signed a non-binding Memorandum of Understanding (“MOU”) in which the companies agreed to proceed with their intention of carrying out their operations jointly under one parent company, to be named LATAM Airlines Group S.A. (“LATAM”). The proposed affiliation would be within the world’s 10 largest airline groups, providing transport services for passengers and cargo to more than 115 destinations in 23 countries, operating with a fleet of over 300 aircraft, with over 50,000 employees. Both airlines would continue operating independently with their current operating licenses and brands. On October 20, 2010, the Company and TAM announced that the operating subsidiaries of TAM had presented the structure of the transaction to the Brazilian Civil Aviation Agency (“ANAC”), which was approved by this agency on March 1, 2011.
On January 18, 2011 the parties of the MOU and Mrs. Maria Cláudia Oliveira Amaro, Maurício Rolim Amaro, Noemy Almeida Olivera Amaro and Joao Francisco Amaro (“Amaro Family”), as the only shareholders of TEP, signed binding contracts written in English called (a) Implementation Agreement and (b) Exchange Offer Agreement (“Contracts Signed”) containing the final terms and conditions of the proposed partnership between the Company and TAM.
On September 21, 2011, the Court of Defense of Free Competition (“TDLC”) approved the merger between the Company and TAM, establishing 14 mitigation measures. On October 3, 2011, the Company and TAM filed an appeal to the Supreme Court objecting to certain mitigation measures. On April 5, 2012, the Supreme Court confirmed the TDLC resolution rejecting the appeal filed by both companies.
On December 21, 2011, the Board of the Company cited a special meeting of shareholders, carried out on November 11, 2011, in which their shareholders approved, among others, the following matters:
(a) | The merger of the Company with Sister Holdco S.A. and Holdco II S.A. companies (the “Absorbed Companies”), two companies specially constituted for the purpose of the association between the Company and TAM; |
(b) | The change of Company name and the rest of the transactions contemplated in the subscribed contracts. |
(c) | The increase in capital by US$ 1,465,372,970.09 by issuing 147,355,882 common shares without par value of which: |
(i) | US$ 1,417,639,617.60 through the issuance of 142,555,882 shares, which would be intended to be exchanged for shares of the Absorbed Companies as a result of the proposed merger, at a rate of 0.9 new shares of the Company for each share that is fully subscribed and paid for each of the Absorbed Companies, and that belongs to shareholders other than the Company’s. The shares that the Company holds in the acquired companies at the time of the merger, shall have no effect; and |
(ii) | US$ 47,733,352.49 through the issuance of 4,800,000 shares, which would go towards compensation plans for employees of the Company and its Subsidiaries, as provided in Article 24 of the Corporations Law. |
The effectiveness of these agreements was subject to compliance with the conditions established in the extraordinary shareholders’ meeting.
On May 10, 2012, the Company and Holdco II initiated the exchange offer of TAM shares. Having complied with the conditions for declaring the exchange offer successful and having received 95.9% of the total shares of TAM in circulation, on June 22, 2012, the Company and the Absorbed Companies granted the execution deed of Merger, through which the shares of the Absorbed Companies were exchanged for shares of the Company, as effected according to that described above. On that same date the change of the Company’s name to “LATAM Airlines Group S.A.” became effective. The execution deed was rectified by instrument dated July 10, 2012.
On September 4, 2012 the Board of the Company cited a special meeting of shareholders, carried out on August 3, 2012 in which their shareholders approved, among others, the following matters:
(a) | Total revocation of the Board and election of the new Board of the Company. |
2
(b) | Approval that the remaining 7,436,816 LATAM shares, out of the total 142,555,882 shares issued under the authorization of the Extraordinary Shareholders’ Meeting held on December 21, 2011, and that were not to be exchanged for shares of the Sister Holdco S.A. and Holdco II S.A., would be defined to be offered preferably to LATAM shareholders under Article 25 of the Corporations Law and that the unsubscribed balance would be offered and placed on the market in general. |
(c) | Authorization of the Board of the Company to agree and proceed with the broadest powers, the terms of the issue and placement of the referred remaining shares and delegation to the Board of the Company the authority to determine, fix and agree freely and with broadest powers the placement price of the shares in accordance with the second paragraph of Article 28 of the Corporate Regulations. |
(d) | Delegation to the Board of the Company the authority to determine, fix and agree freely and with the broadest powers the placement price of 4,800,000 shares defined under the Extraordinary Shareholders meeting dated December 21, 2011 to the compensation in terms of Article 24 of the Corporations Law, in accordance with the second paragraph of Article 28 of the Corporations Regulations, and determine the terms and conditions applicable to the latter. |
The placement of the shares referred to in paragraph (b) above was approved by the Superintendency of Securities and Insurance, on December 11, 2012. On December 20, 2012, the Board of Directors agreed to start, from December 21, 2012, at the period of preferred option of those shares and proceeded to fix the price of placement of them, all of which was reported to the Superintendency of Securities and Insurance by Essential Matter on the same date. At the end of the period of first refusal, that is, as of January 19, 2013, there were 6,857,190 shares remaining subscribed and paid, leaving a balance of 579,626 shares to be subscribed. This balance was auctioned on the Santiago Stock Exchange - Stock Exchange dated January 23, 2013 at a value of CLP$ 11,921 per share.
On June 11, 2013, the Company held an extraordinary shareholders’ meeting, which had been called by the board on April 30, 2013, at this meeting the shareholders adopted the following resolutions:
1) To increase the company’s capital by the sum of ThUS$ 1.000.000 through the issuance of 63,500,000 shares, that is, from the sum of US$ 1,652,896,812.43, represented by 488,347,819 shares, all of one single series and with no par value, to the sum of US$ 2,652,896,812.43, represented by 551,847,819 shares, all of one single series and with no par value.
2) To set aside 1,500,000 new shares from the aforementioned issuance, to be used for a compensation plan for executives at LATAM and its subsidiaries, as provided in Article 24 of the Corporations Law.
3
3) To empower the Board, acting freely and within the broadest faculties, to determine, fix, and agree the price, manner, time, procedure, and conditions for placing the aforementioned shares.
4) To empower the Board to proceed to issue the shares related with the capital increase; to enact all formal procedures necessary for said shares to be inscribed and floated; to act on behalf of the Company against all types of authorities, bodies, or persons related to the securities market; to determine all matters relating to the options that may form part of the compensation plans; to grant whatsoever powers may be necessary or desirable in order to implement all or part of the above; and, in general, to resolve all related matters approved at this Meeting.
5) To amend the articles of the Corporate Statutes that refer to equity in order to adjust them to the aforementioned modifications.
6) To delegate on the Board, for a five year period starting on December 21, 2011, the power to fix the new price of placement of the 4,800,000 shares destined for compensation plans, as provided in Article 24 of the Corporations Law, in conformity with the Extraordinary Shareholders’ Meeting held on December 21, 2011, as modified at the Extraordinary Shareholders’ Meeting held on September 4, 2012, and to amend and resolve the terms and conditions applicable thereto.
7) To empower the Board to adopt such further agreements as may be necessary in order to carry out the aforementioned matters.
On June 20, 2013, was presented to the Superintendency of Securities and Insurance a request for the inscription of 63,500,000 mentioned above. On July 22, 2013 the Superintendency of Securities and Insurance remitted the Company providing comments for said presentation by Deed No. 16141. The Company replied to these submissions on October 16, 2013.
The Company is located in Santiago, Chile, at Avenida Américo Vespucio Sur No. 901, commune of Renca.
Corporate Governance practices of the Company are set in accordance with Securities Market Law the Corporations Law and its regulations, and the regulations of the SVS and the laws and regulations of the United States of America and the U.S. Securities and Exchange Commission (“SEC”) of that country, with respect to the issuance of ADRs, and the Federal Republic of Brazil and the Comissão de Valores Mobiliarios (“CVM”) of that country, as it pertains to the issuance of BDRs.
The Board of the Company is composed of nine members who are elected every two years by the ordinary shareholders’ meeting. The Board meets in regular monthly sessions and in extraordinary sessions as the corporate needs demand. Of the nine board members, three form part of its Directors’ Committee which fulfills both the role foreseen in the Corporations Law and the functions of the Audit Committee required by the Sarbanes Oxley Law of the United States of America and the respective regulations of the SEC.
4
The majority shareholder of the Company is the Cueto Group, which through Costa Verde Aeronáutica S.A., Inversiones Nueva Costa Verde Aeronáutica Limitada, Costa Verde Aeronáutica SpA, Inversiones Priesca Dos y Cía. Ltda., Inversiones Caravia Dos y Cía. Ltda., Inversiones El Fano Dos y Cía. Ltda., Inversiones La Espada Dos S.A., Inversiones Puerto Claro Dos Limitada e Inversiones Mineras del Cantábrico S.A. owns 25.68% of the shares issued by the Company, and therefore is the controlling shareholder of the Company in accordance with the provisions of the letter b) of Article 97 and Article 99 of the Securities Market Law, given that there is a decisive influence on its administration.
As of September 30, 2013, the Company had a total of 1,541 registered shareholders. At that date approximately 5.49% of the Company’s share capital was in the form of ADRs and approximately 0.75% in the form of BDRs.
For the nine month period ending September 30, 2013, the Company had an average of 53,663 employees, ending this period with a total of 52,727 employees, spread over 9,763 administrative employees, 6,986 in Maintenance, 16,802 in Operations, 9,440 in Cabin Crew, 4,122 in Controls Crew, and 5,614 in Sales.
5
The subsidiaries included in these consolidated financial statements are as follows:
a) | As of September 30, 2013 |
Participation rate As of September 30, 2013 | Statement of financial position As of September 30, 2013 | Net Income As of September 30, 2013 | ||||||||||||||||||||||||||||||||
Tax No. | Company | Country of origin | Functional Currency | Direct ownership interest | Indirect ownership interest | Total ownership interest | Assets | Liabilities | Equity | Gain (loss) | ||||||||||||||||||||||||
% | % | % | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||||||||||||||||
Unaudited | Unaudited | Unaudited | ||||||||||||||||||||||||||||||||
96.518.860-6 | Lantours Division Servicios Terrestres S.A. and Subsidiaries | Chile | US$ | 99.9900 | 0.0100 | 100.0000 | 3,248 | 2,225 | 1,023 | 498 | ||||||||||||||||||||||||
96.763.900-1 | Inmobiliaria Aeronáutica S.A. | Chile | US$ | 99.0100 | 0.9900 | 100.0000 | 42,154 | 7,319 | 34,835 | 637 | ||||||||||||||||||||||||
96.969.680-0 | Lan Pax Group S.A. and Subsidiaries (1) | Chile | US$ | 99.8361 | 0.1639 | 100.0000 | 628,481 | 857,484 | (224,165 | ) | (80,491 | ) | ||||||||||||||||||||||
Foreign | Lan Perú S.A. | Peru | US$ | 49.0000 | 21.0000 | 70.0000 | 242,310 | 242,385 | (75 | ) | (7,727 | ) | ||||||||||||||||||||||
Foreign | Lan Chile Investments Limited and Subsidiaries (1) | Cayman Islands | US$ | 99.9900 | 0.0100 | 100.0000 | 4,419 | 5,248 | (829 | ) | (1 | ) | ||||||||||||||||||||||
93.383.000-4 | Lan Cargo S.A. | Chile | US$ | 99.8939 | 0.0041 | 99.8980 | 789,115 | 432,504 | 356,611 | 1,183 | ||||||||||||||||||||||||
Foreign | Connecta Corporation | U.S.A | US$ | 0.0000 | 100.0000 | 100.0000 | 97 | 1,902 | (1,805 | ) | 1 | |||||||||||||||||||||||
Foreign | Prime Airport Services Inc. and Subsidiary (1) | U.S.A | US$ | 0.0000 | 100.0000 | 100.0000 | 12,108 | 16,811 | (4,703 | ) | 103 | |||||||||||||||||||||||
96.951.280-7 | Transporte Aéreo S.A. | Chile | US$ | 0.0000 | 100.0000 | 100.0000 | 383,090 | 130,157 | 252,933 | 9,510 | ||||||||||||||||||||||||
96.634.020-7 | Ediciones Ladeco América S.A. | Chile | CLP | 0.0000 | 100.0000 | 100.0000 | — | 583 | (583 | ) | — | |||||||||||||||||||||||
Foreign | Aircraft International Leasing Limited | U.S.A | US$ | 0.0000 | 100.0000 | 100.0000 | — | 2,805 | (2,805 | ) | (5 | ) | ||||||||||||||||||||||
96.631.520-2 | Fast Air Almacenes de Carga S.A. | Chile | CLP | 0.0000 | 100.0000 | 100.0000 | 9,869 | 1,004 | 8,865 | (1,197 | ) | |||||||||||||||||||||||
96.631.410-9 | Ladeco Cargo S.A. | Chile | CLP | 0.0000 | 100.0000 | 100.0000 | 396 | 13 | 383 | (2 | ) | |||||||||||||||||||||||
Foreign | Laser Cargo S.R.L. | Argentina | ARS | 0.0000 | 100.0000 | 100.0000 | 59 | 229 | (170 | ) | (39 | ) | ||||||||||||||||||||||
Foreign | Lan Cargo Overseas Limited and Subsidiaries (1) | Bahamas | US$ | 0.0000 | 100.0000 | 100.0000 | 386,299 | 308,792 | 79,419 | 116,787 | ||||||||||||||||||||||||
96.969.690-8 | Lan Cargo Inversiones S.A. and Subsidiary (1) | Chile | CLP | 0.0000 | 100.0000 | 100.0000 | 37,249 | 44,111 | (7,935 | ) | 756 | |||||||||||||||||||||||
96.575.810-0 | Inversiones Lan S.A. and Subsidiaries (1) | Chile | CLP | 99.7100 | 0.0000 | 99.7100 | 15,350 | 8,791 | 6,555 | 137 | ||||||||||||||||||||||||
Foreign | TAM S.A. and Subsidiaries (1) (2) (3) | Brazil | BRL | 63.0901 | 36.9099 | 100.0000 | 8,982,021 | 8,110,280 | 774,843 | (408,050 | ) |
(1) | The Equity reported corresponds to Equity attributable to owners of the parent, does not include Non-controlling interest. |
(2) | The indirect participation percentage over TAM S.A. and Subsidiaries comes from Holdco I S.A., entity for which LATAM Airlines Group S.A. holds a 99.9983% participation. |
(3) | LATAM Airlines Group S.A. owns 226 voting shares of Holdco I S.A., equivalent to 19.42% of total voting shares of that company. |
6
b) | As of December 31, 2012 |
Participation rate As of December 31, 2012 | Statement of financial position As of December 31, 2012 | Net Income As of September 30, 2012 | ||||||||||||||||||||||||||||||||
Tax No. | Company | Country of origin | Functional Currency | Direct ownership interest | Indirect ownership interest | Total ownership interest | Assets | Liabilities | Equity | Gain (loss) | ||||||||||||||||||||||||
% | % | % | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||||
96.518.860-6 | Lantours Division Servicios Terrestres S.A. And Subsidiaries | Chile | US$ | 99.9900 | 0.0100 | 100.0000 | 2,678 | 2,153 | 525 | 973 | ||||||||||||||||||||||||
96.763.900-1 | Inmobiliaria Aeronáutica S.A. | Chile | US$ | 99.0100 | 0.9900 | 100.0000 | 57,227 | 23,029 | 34,198 | 14,323 | ||||||||||||||||||||||||
96.969.680-0 | Lan Pax Group S.A. and Subsidiaries (1) | Chile | US$ | 99.8361 | 0.1639 | 100.0000 | 522,408 | 637,851 | (112,395 | ) | (48,033 | ) | ||||||||||||||||||||||
Foreign | Lan Perú S.A. | Peru | US$ | 49.0000 | 21.0000 | 70.0000 | 159,361 | 150,319 | 9,042 | (2,782 | ) | |||||||||||||||||||||||
Foreign | Lan Chile Investments Limited and Subsidiaries (1) | Cayman Islands | US$ | 99.9900 | 0.0100 | 100.0000 | 4,419 | 5,247 | (828 | ) | (9 | ) | ||||||||||||||||||||||
93.383.000-4 | Lan Cargo S.A. | Chile | US$ | 99.8939 | 0.0041 | 99.8980 | 727,091 | 371,663 | 355,428 | (3,446 | ) | |||||||||||||||||||||||
Foreign | Connecta Corporation | U.S.A | US$ | 0.0000 | 100.0000 | 100.0000 | 234 | 2,041 | (1,807 | ) | 86 | |||||||||||||||||||||||
Foreign | Prime Airport Services Inc. and Subsidiary (1) | U.S.A | US$ | 0.0000 | 100.0000 | 100.0000 | 24,678 | 29,484 | (4,806 | ) | 663 | |||||||||||||||||||||||
96.951.280-7 | Transporte Aéreo S.A. | Chile | US$ | 0.0000 | 100.0000 | 100.0000 | 357,725 | 114,302 | 243,423 | 1,211 | ||||||||||||||||||||||||
96.634.020-7 | Ediciones Ladeco América S.A. | Chile | CLP | 0.0000 | 100.0000 | 100.0000 | — | 612 | (612 | ) | — | |||||||||||||||||||||||
Foreign | Aircraft International Leasing Limited | U.S.A | US$ | 0.0000 | 100.0000 | 100.0000 | — | 2,799 | (2,799 | ) | (5 | ) | ||||||||||||||||||||||
96.631.520-2 | Fast Air Almacenes de Carga S.A. | Chile | CLP | 0.0000 | 100.0000 | 100.0000 | 9,708 | 1,553 | 8,155 | 1,735 | ||||||||||||||||||||||||
96.631.410-9 | Ladeco Cargo S.A. | Chile | CLP | 0.0000 | 100.0000 | 100.0000 | 416 | 11 | 405 | 1 | ||||||||||||||||||||||||
Foreign | Laser Cargo S.R.L. | Argentina | ARS | 0.0000 | 100.0000 | 100.0000 | 70 | 228 | (158 | ) | (29 | ) | ||||||||||||||||||||||
Foreign | Lan Cargo Overseas Limited and Subsidiaries (1) | Bahamas | US$ | 0.0000 | 100.0000 | 100.0000 | 364,482 | 397,611 | (37,368 | ) | (9,463 | ) | ||||||||||||||||||||||
96.969.690-8 | Lan Cargo Inversiones S.A. and Subsidiary (1) | Chile | CLP | 0.0000 | 100.0000 | 100.0000 | 57,154 | 64,905 | (8,692 | ) | (6,931 | ) | ||||||||||||||||||||||
96.575.810-0 | Inversiones Lan S.A. and Subsidiaries (1) | Chile | CLP | 99.7100 | 0.0000 | 99.7100 | 16,181 | 9,714 | 6,466 | 511 | ||||||||||||||||||||||||
Foreign | TAM S.A. y Filiales (1) (2) (3) | Brazil | BRL | 63.0901 | 36.9099 | 100.0000 | 8,821,298 | 9,198,899 | (480,632 | ) | (8,235 | ) |
(1) | The Equity reported corresponds to Equity attributable to owners of the parent, does not include Non-controlling interest. |
(2) | The indirect participation percentage over TAM S.A. and Subsidiaries comes from Holdco I S.A., entity for which LATAM Airlines Group S.A. holds a 99.9983% participation. |
(3) | LATAM Airlines Group S.A. owns 226 voting shares of Holdco I S.A., equivalent to 19.42% of total voting shares of that company. |
7
Additionally, has proceeded to consolidate special purpose entities, denominated: JOL, destined to the aircraft financing and Chercán Leasing Limited, destined to the aircraft advance financing, as the Company has major risks and benefits associated to them according to standards issued by the Standing Interpretations Committee of the International Accounting Information: Consolidation - Special Purpose Entities (“SIC 12”) and private investment funds in which the parent company and subsidiaries are contributors.
All the entities controlled have been included in the consolidation.
Changes in the scope of consolidation between January 1, 2012 and September 30, 2013, are detailed below:
(1) | Incorporation or acquisition of companies |
• | TAM S.A. and Subsidiaries became part of LATAM Airlines Group S.A. as of June 22, 2012 date on which merger was materialized with the companies Sister Holdco S.A. and Holdco II S.A. (see Note 18.2.(a)). |
• | Lantours Division II Land Services S.A. On November 22, 2012, by public deed in the Notary of Santiago of Mr. Patricio Raby Benavente, was incorporated LANTOURS Division II Land Services S.A., which is owned by 99.99% to LANTOURS Division Land Services S.A. and 0.01% Lan Investment S.A., motionless. |
8
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following describes the principal accounting policies adopted in the preparation of these consolidated financial statements.
2.1. | Preparation |
The consolidated financial statements of LATAM Airlines Group S.A. are for the period ended September 30, 2013, and have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and IFRIC interpretations.
The consolidated financial statements have been prepared under the historic-cost criterion, although modified by the valuation at fair value of certain financial instruments.
The preparation of the consolidated financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to use its judgment in applying the Company’s accounting policies. Note 4 shows the areas that imply a greater degree of judgment or complexity or the areas where the assumptions and estimates are significant to the consolidated financial statements. These consolidated interim financial statements have been prepared under IAS 34.
The comparative consolidated financial statements have been revised as a result of modifications made to the fair values calculated in the business combination with TAM S.A. and Subsidiaries, during the measurement period established in IFRS 3, and observed errors not material in the subsidiary (Note 18.2.(c)). Additionally, in order to facilitate comparison, there have been some minor reclassifications to the consolidated financial statements corresponding to the previous year.
(a) | Accounting pronouncements with implementation effective from January 1, 2013: |
Standards and amendments | Mandatory Annual periods | |
Amendment to IAS 1: Presentation of financial statements Issued in June 2011. The main change in this amendment requires that items of Other Comprehensive Income are classified and grouped evaluating if they potentially will be reclassified to results in future periods. | 07-01-2012 | |
IAS 27: Separate financial statements Issued in May 2011, replaces IAS 27 (2008). The scope of this standard is restricted beginning with this change only for separate financial statements, as the aspects related to the definition of control and consolidation were removed and included in IFRS 10. Early adoption is permitted in conjunction with IFRS 10, IFRS11 and IFRS 12 and the amendment to IAS 28. | 01/01/2013 |
9
Standards and amendments | Mandatory Annual periods | |
Amendment IFRS 7: Financial Instruments: Disclosures Issued in December 2011. Requires improvement of current disclosures over compensation of financial assets and liabilities, with the aim of increasing convergence between IFRS and USGAAP. These revelations are focused on quantitative information over the financial instruments recognized that offset in the Statement of Financial Position. | 01/01/2013 | |
IFRS 10: Consolidated financial statements Issued in May 2011, replaces SIC 12 “Consolidation of special purpose entities” and orientation on control and consolidation in IAS 27 “Consolidated Financial Statements”. Sets clarifications and new parameters for the definition of control, and the principles for the preparation of consolidated financial statements. | 01/01/2013 | |
IFRS 11: Joint arrangements Issued in May 2011, replaces IAS 31 “Interests in Joint Ventures” and SIC 13 “Jointly controlled entities”. Provides a more realistic reflection of joint arrangements by focusing on rights and obligations arising from the agreements rather than their legal form. Within its modifications include the elimination of the concept of jointly controlled assets and the possibility of proportional consolidation of entities under joint control. | 01/01/2013 | |
IFRS 12: Disclosures of interests in other entities Issued in May 2011, brings together in one standard all required disclosures in the financial statements related to investments in other entities, whether they are classified as subsidiaries, associates or joint ventures. Applicable for entities that hold investments in subsidiaries, joint ventures, and associates. | 01/01/2013 | |
IFRS 13: Fair value measurement Issued in May 2011, brings together in one standard the way to measure the fair value of assets and liabilities and disclosures required on it, and incorporates new concepts and explanations for measurement. | 01/01/2013 |
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Standards and amendments | Mandatory Annual periods | |
IAS 19 Revised: Employee benefits Issued in June 2011, replaces IAS 19 (1998). This revised standard changes the recognition and measurement of costs for defined benefit plans and termination benefits. Additionally, it includes modifications to disclosures for all employee benefits. | 01/01/2013 | |
Improvements issued in May 2012 | 01/01/2013 | |
IAS 1: Presentation of financial statements – Clarifies requirements for comparative information when an entity has a 3rd Statement of Financial Position column.
IAS 16: Property plant and equipment - Clarifies that the parts and service equipment will be classified as Property, plant and equipment rather than inventory, as it meets the definition of Property, plant and equipment.
IAS 32: Financial instrument: Presentation - Clarifies the treatment income tax distributions and related transaction costs.
IAS 34 Interim Financial Reporting - Clarifies the disclosure requirements of segment assets and liabilities in interim periods, confirming the same requirements applicable to annual financial statements. | ||
Amendments to IFRS 10: Consolidated Financial Statements, IFRS 11: Joint Arrangements and IFRS 12: Disclosure of interests in other entities. Issued in June 2012. Clarifies the transitional provisions for IFRS 10, indicating that it is necessary to apply the first day of the annual period in adopting the rule. | 01/01/2013 |
The application of standards, amendments and interpretations had no material impact on the interim consolidated financial statements of the Company.
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(b) Accounting pronouncements effective implementation starting on January 1, 2014 and following:
Standards and amendments | Mandatory Annual periods | |
Amendment to IAS 32: Financial instruments: Presentation Issued in December 2011. Clarifies the requirements for off-setting financial assets and liabilities in the Statement of Financial Position. Specifically, that the right to compensation should be available at the reporting date and not depend on a future event. It also indicates that it must be legally binding upon both counterparties in the normal course of business, as well as in the case of default, insolvency or bankruptcy. Early adoption is permitted. | 01/01/2014 | |
IFRS 9: Financial instruments Issued in December 2009, amending the classification and measurement of financial assets. Later this standard was amended in November 2010 to include treatment and classification of financial liabilities. Early adoption is permitted. | 01/01/2015 | |
IAS 27: Separate Financial Statements and IFRS 10: Consolidated Financial Statements and IFRS 12: Disclosure of interests in other entities - issued in October 2012. The modifications include the definition of an investment entity and introduce an exception to consolidate certain subsidiaries pertaining to investment entities. This amendment requires an entity to measure the investment of these subsidiaries at fair value through profit or loss according to IFRS 9 “Financial Instruments” in the consolidated and separate financial statements. The amendment also introduces new disclosure requirements on investment firms in IFRS 12 and IAS 27. | 01/01/2014 | |
Amendment to IAS 36: Impairment of Assets Issued in May 2013. Requires disclosure of the recoverable amount of the impaired assets if that amount is based on fair value less costs of disposal. | 01/01/2014 | |
Amendment to IAS 39: Financial Instruments: Recognition and Measurement Issued in June 2013. Lets continue hedge accounting if novation of a derivative contract provided they meet certain criteria. | 01/01/2014 |
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Interpretations | Mandatory Annual periods | |
IFRIC 21: Levies Issued in May 2013. It is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets, this interpretation considers how an entity should account for accounts payable taxes established by governments, other than income taxes or raises when an entity should recognize a liability for the payment of a tax. | 01/01/2014 |
The Company’s management believes that the adoption of the standards, amendments and interpretations described above would not have had a significant impact on the Company’s consolidated financial statements in the year of their first application. The Company has not early adopted any of the above standards.
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2.2. | Consolidation |
(a) | Subsidiaries |
Subsidiaries are all the entities (including special-purpose entities) over which the Company has the power to control the financial and operating policies, which are generally accompanied by a holding of more than half of the voting rights. In evaluating whether the Company controls another entity, the existence and effect of potential voting rights that are currently exercisable or convertible at the date of the consolidated financial statements are considered. The subsidiaries are consolidated from the date on which control is passed to the Company and they are excluded from the consolidation on the date they cease to be so controlled. The results and flows are incorporated from the date of acquisition.
To account for and identify the financial information to be revealed when carrying out a business combination, such as the acquisition of an entity by the Company, shall apply the acquisition method provided for in IFRS 3 (or IFRS 3 for its acronym in Spanish - http://www.normasinternacionalesdecontabilidad.es/nic/pdf/niif3.pdf). According to IFRS 3, the cost of acquisition is the fair value of the assets acquired, the equity instruments issued and the liabilities incurred or assumed on the date of the business combination. The identifiable assets acquired and the liabilities and contingent liabilities assumed in a business combination are initially valued at their fair value on the date of acquisition, regardless of the extent of the non-controlling interests. The excess of the acquisition cost over the fair value of the Company’s holding in the net identifiable assets acquired is shown as Goodwill. If the cost is less than the fair value of the net assets of the acquired subsidiary, the difference is recorded directly in the consolidated statement of income (Note 2.6). The transaction costs in a business combination are recognized in the consolidated income statement when they are incurred. Additionally, IFRS 3 allows adjustments to the initial accounting for a business combination within the period of twelve months from the acquisition date. In connection with the business combination process with TAM SA and Subsidiaries, this period of 12 months from the day June 22, 2012.
Inter-company transactions, balances and unrealized gains on transactions between the Company’s entities are eliminated. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment loss of the asset transferred. When necessary in order to ensure uniformity with the policies adopted by the Company, the accounting policies of the subsidiaries are modified.
(b) | Transactions with non-controlling interests |
The Company applies the policy of considering transactions with non-controlling interests, when not related to loss of control, as equity transactions without an effect on income.
(2) | Sales of subsidiaries |
When a subsidiary is sold and a percentage of participation is not retained, the Company derecognizes assets and liabilities of the subsidiary, the non-controlling and other components of equity related to the subsidiary. Any gain or loss resulting from the loss of control is recognized in the consolidated income statement in Other gains (losses).
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If LATAM Airlines Group S.A. and Subsidiaries retain an ownership of participation in the sold subsidiary, and does not represent control, this is recognized at fair value on the date that control is lost, the amounts previously recognized in Other comprehensive income are accounted as if the Company had disposed directly from the assets and related liabilities, which can cause these amounts are reclassified to profit or loss. The percentage retained valued at fair value are subsequently accounted using the equity method.
(3) | Investees or associates |
Investees or associates are all entities over which LATAM Airlines Group S.A. and Subsidiaries have significant influence but have no control. This usually arises from holding between 20% and 50% of the voting rights. Investments in associates are booked using the equity method and are initially recognized at their cost.
The participation of LATAM Airlines Group S.A. and Subsidiaries in the losses or gains after the acquisition of its investees or associates is shown in results, and its participation in post-acquisition movements in reserves of investees or associates are shown in reserves.
Post-acquisition movement is adjusted against the book value of the investment. When the participation of LATAM Airlines Group S.A. and Subsidiaries in the losses of an investee or associate is equal to or more than its holding in it, including any other non-guaranteed account receivable, LATAM Airlines Group S.A. and Subsidiaries will not show the additional losses unless it has incurred obligations or made payments on behalf of the investee or associate.
Gains or losses for dilution in investees or associates are shown in the consolidated statement of income.
2.3. | Foreign currency transactions |
(a) | Presentation and functional currencies |
The items included in the financial statements of each of the entities of LATAM Airlines Group S.A. and Subsidiaries are valued using the currency of the main economic environment in which the entity operates (the functional currency). The functional currency of LATAM Airlines Group S.A. is the United States dollar which is also the presentation currency of the consolidated financial statements of LATAM Airlines Group S.A. and Subsidiaries.
(b) | Transactions and balances |
Foreign currency transactions are translated to the functional currency using the exchange rates on the transaction dates. Foreign currency gains and losses resulting from the liquidation of these transactions and from the translation at the closing exchange rates of the monetary assets and liabilities denominated in foreign currency are shown in the consolidated statement of income.
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(c) | Group entities |
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency other than the presentation currency are translated to the presentation currency as follows:
(i) Assets and liabilities of each consolidated statement of financial position presented are translated at the closing exchange rate on the consolidated statement of financial position date;
(ii) The revenues and expenses of each income statement account are translated at the exchange rates prevailing on the transaction dates,
(iii) All the resultant exchange differences are shown as a separate component in Other comprehensive income.
The exchange rates used correspond to those fixed in the country where the subsidiary is located, whose functional currency is different to the U.S. dollar.
In the consolidation, exchange differences arising from the translation of a net investment in foreign entities (or local with a functional currency different to that of the parent), and of loans and other foreign currency instruments designated as hedges for these investments, are recorded within net equity. When the investment is sold, these exchange differences are shown in the consolidated statement of income as part of the loss or gain on the sale.
Adjustments to the Goodwill and fair value arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate.
2.4. | Property, plant and equipment |
The land of LATAM Airlines Group S.A. and Subsidiaries is recognized at cost less any accumulated impairment loss. The rest of the Property, plant and equipment are measured, initially and subsequently, at historic cost less the corresponding depreciation and any impairment loss.
The amounts of advance payments to aircraft manufacturers are capitalized by the Company under Construction in progress until receipt of the aircraft.
Subsequent costs (replacement of components, improvements, extensions, etc.) are included in the value of the initial asset or shown as a separate asset only when it is probable that the future economic benefits associated with the elements of Property, plant and equipment are going to flow to the Company and the cost of the element can be determined reliably. The value of the component replaced is written off in the books at the time of replacement. The rest of the repairs and maintenance are charged to the results of the year in which they are incurred.
Depreciation of Property, plant and equipment is calculated using the straight-line method over their estimated technical useful lives; except in the case of certain technical components which are depreciated on the basis of cycles and hours flown.
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The residual value and useful life of assets are reviewed, and adjusted if necessary, once per year.
When the carrying amount of an asset is higher than its estimated recoverable amount, its value is reduced immediately to its recoverable amount (Note 2.8).
Losses and gains on the sale of Property, plant and equipment are calculated by comparing the proceeds obtained with the book value and are included in the consolidated statement of income.
2.5. | Intangible assets other than goodwill |
Brands, airport Slots and Loyalty program
Brands, airport Slots and coalition and loyalty program are intangible assets of indefinite useful life and are subject to impairment tests annually.
The airport slots correspond to an administrative authorization to carry out an operation of arrival and departure of aircraft at a specific airport, within a specified period.
The Loyalty program corresponds to the system of accumulation and redemption of points that has developed Multiplus
Computer software
Licenses for computer software acquired are capitalized on the basis of the costs incurred in acquiring them and preparing them for using the specific software. These costs are amortized over their estimated useful lives.
Expenses related to the development or maintenance of computer software which do not qualify for capitalization, are shown as an expense when incurred. Certain costs directly related to the production of unique and identifiable computer software controlled by the Company, are shown as intangible Assets others than Goodwill when they have met all the criteria for capitalization.
The direct costs include the expenses of the personnel who develop the computer software and other costs directly associated.
Development costs of computer software shown as assets are amortized over their estimated useful lives.
2.6. | Goodwill |
Goodwill represents the excess of acquisition cost over the fair value of the Company’s participation in the net identifiable assets of the subsidiary or associate on the acquisition date. Goodwill related to acquisition of subsidiaries is not amortized but tested for impairment annually. Gains and losses on the sale of an entity include the book amount of the goodwill related to the entity sold.
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2.7. | Borrowing costs |
Interest costs incurred for the construction of any qualified asset are capitalized over the time necessary for completing and preparing the asset for its intended use. Other interest costs are charged to income and expenses.
2.8. | Losses for impairment of non-financial assets |
Intangible assets that have an indefinite useful life, and developing IT projects, are not subject to amortization and are subject to annual testing for impairment losses. Assets subject to amortization are subjected to impairment tests whenever any event or change in circumstances indicates that the book value of the assets may not be recoverable. An impairment loss is recorded when the book value is greater than the recoverable amount. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. In evaluating the impairment, the assets are grouped at the lowest level for which cash flows are separately identifiable (CGUs). Non-financial assets other than goodwill that have suffered an impairment loss are reviewed if there are indicators of reverse losses.
2.9. | Financial assets |
The Company classifies its financial instruments in the following categories: financial assets at fair value through profit and loss, loans and receivables and financial assets held to maturity. The classification depends on the purpose for which the financial instruments were acquired. Management determines the classification of its financial instruments at the time of initial recognition, which occurs on the date of transaction.
(a) | Financial assets at fair value through profit and loss |
Financial assets at fair value through profit and loss are financial instruments held for trading and those which have been designated at fair value through profit or loss in their initial classification. A financial asset is classified in this category if acquired mainly for the purpose of being sold in the near future or when these assets are managed and measured using fair value. Derivatives are also classified as acquired for trading unless they are designated as hedges. Assets in this category are classified as Cash and cash equivalents, held for trading, and other financial assets, designated on initial recognition.
(b) | Loans and receivables |
Loans and receivables are non-derivative financial instruments with fixed or determinable payments not traded on an active market. These items are classified in current assets except for those with maturity over 12 months from the date of the consolidated statement of financial position, which are classified as non-current assets. Loans and receivables are included in trade and other accounts receivable in the consolidated statement of financial position (Note 2.12).
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(c) | Financial assets held to maturity |
Financial assets held to maturity are non-derivative financial instruments with fixed or determinable payments and fixed maturities that the Company’s management has the positive intention and capacity to hold until their maturity. Should the Company sell a not-insignificant amount of the financial assets held to their maturity, the whole category is reclassified as available for sale. These financial instruments held to maturity are included in non-current assets, except for those maturity equal to or less than 12 months from the consolidated statement of financial position, which are classified as Other current financial assets.
Regular purchases and sales of financial assets are recognized on the trade date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.
The financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective interest rate method. Held to maturity investments are carried at amortized cost using the effective interest rate.
At the date of each consolidated statement of financial position, the Company assesses if there is objective evidence that a financial asset or group of financial assets may have suffered an impairment loss. For the case of financial assets held to maturity, if there is any evidence of impairment, the amount of the provision is the difference between the book value of the assets and the present value of the estimated future cash flows, discounted at the original effective interest rate.
2.10. | Derivative financial instruments and hedging activities |
Derivatives are booked initially at fair value on the date the derivative contracts are signed and later they continue to be valued at their fair value. The method for booking the resultant loss or gain depends on whether the derivative has been designated as a hedging instrument and if so, the nature of the item hedged. The Company designates certain derivatives as:
(a) | Hedge of the fair value of recognized assets (fair value hedge); |
(b) | Hedge of an identified risk associated with a recognized liability or an expected highly-Probable transaction (cash-flow hedge), or |
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(c) | Derivatives that do not qualify for hedge accounting. |
The Company documents, at the inception of each transaction, the relationship between the hedging instrument and the hedged item, as well as its objectives for managing risk and the strategy for carrying out various hedging transactions. The Company also documents its assessment, both at the beginning and on an ongoing basis, as to whether the derivatives used in the hedging transactions are highly effective in offsetting the changes in the fair value or cash flows of the items being hedged.
The total fair value of the hedging derivatives is booked as Other non-current financial asset or liability if the remaining maturity of the item hedged is over 12 months, and as an other current financial asset or liability if the remaining term of the item hedged is less than 12 months. Derivatives not booked as hedges are classified as Other financial assets or liabilities.
(a) | Fair value hedges |
Changes in the fair value of designated derivatives that qualify as fair value hedges are shown in the consolidated statement of income, together with any change in the fair value of the asset or liability hedged that is attributable to the risk being hedged.
(b) | Cash flow hedges |
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is shown in the statement of other comprehensive income. The loss or gain relating to the ineffective portion is recognized immediately in the consolidated statement of income under Other gains (losses). Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss.
In case of variable interest-rate hedges, the amounts recognized in the statement of Other comprehensive income are reclassified to results within financial costs at the same time the associated debts accrue interest.
For fuel price hedges, the amounts shown in the statement of Other comprehensive income are reclassified to results under the line item Cost of sales to the extent that the fuel subject to the hedge is used.
For foreign currency hedges, the amounts recognized in the statement of Other comprehensive income are reclassified to income as deferred revenue resulting from the use of points, are recognized as income.
When hedging instruments mature or are sold or when they do not meet the requirements to be accounted for as hedges, any gain or loss accumulated in the statement of Other comprehensive income until that moment remains in the statement of other comprehensive income and is reclassified to the consolidated statement of income when the hedged transaction is finally recognized. When it is expected that the hedged transaction is no longer going to occur, the gain or loss accumulated in the statement of other comprehensive income is taken immediately to the consolidated statement of income as “Other gains (losses)”.
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(c) | Derivatives not booked as a hedge |
Certain derivatives are not booked as a hedge. The changes in fair value of any derivative instrument that is not booked as a hedge are shown immediately in the consolidated statement of income in “Other gains (losses)”.
2.11. | Inventories |
Inventories, detailed in Note 10, are shown at the lower of cost and their net realizable value. The cost is determined on the basis of the weighted average cost method (WAC). The net realizable value is the estimated selling price in the normal course of business, less estimated costs necessary to make the sale.
2.12. | Trade and other accounts receivable |
Trade accounts receivable are shown initially at their fair value and later at their amortized cost in accordance with the effective interest rate method, less the allowance for impairment losses. An allowance for impairment loss of trade accounts receivable is made when there is objective evidence that the Company will not be able to recover all the amounts due according to the original terms of the accounts receivable.
The existence of significant financial difficulties on the part of the debtor, the probability that the debtor is entering bankruptcy or financial reorganization and the default or delay in making payments are considered indicators that the receivable has been impaired. The amount of the provision is the difference between the book value of the assets and the present value of the estimated future cash flows, discounted at the original effective interest rate. The book value of the asset is reduced by the amount of the allowance and the loss is shown in the consolidated statement of income in Cost of sales. When an account receivable is written off, it is charged to the allowance account for accounts receivable.
2.13. | Cash and cash equivalents |
Cash and cash equivalents include cash and bank balances, time deposits in financial institutions, and other short-term and highly liquid investments.
2.14. | Capital |
The common shares are classified as net equity.
Incremental costs directly attributable to the issuance of new shares or options are shown in net equity as a deduction from the proceeds received.
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2.15. | Trade and other accounts payables |
Trade payables and other accounts payable are initially recognized at fair value and subsequently at amortized cost and are valued according to the method of the effective interest rate.
2.16. | Interest-bearing loans |
Financial liabilities are shown initially at their fair value, net of the costs incurred in the transaction. Later, these financial liabilities are valued at their amortized cost; any difference between the proceeds obtained (net of the necessary arrangement costs) and the repayment value, is shown in the consolidated statement of income during the term of the debt, according to the effective interest rate method.
Financial liabilities are classified in current and non-current liabilities according to the contractual payment dates of the nominal principal.
2.17. | Deferred taxes |
Deferred taxes are calculated on the temporary differences arising between the tax bases of assets and liabilities and their book values. However, if the temporary differences arise from the initial recognition of a liability or an asset in a transaction different from a business combination that at the time of the transaction does not affect the accounting result or the tax gain or loss, they are not booked. The deferred tax is determined using the tax rates (and laws) that have been enacted or substantially enacted at the consolidated financial statements close, and are expected to apply when the related deferred tax asset is realized or the deferred tax liability discharged.
Deferred tax assets are recognised when it is probable that there will be sufficient future tax earnings with which to compensate the temporary differences.
The Company does not record deferred tax on temporary differences arising on investments in subsidiaries, provided that the opportunity to reverse the temporary differences is controlled by the Company and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred tax on temporary differences arising on investments in associates is immaterial.
2.18. | Employee benefits |
(a) | Personnel vacations |
The Company recognizes the expense for personnel vacations on an accrual basis.
Consistent with the foregoing, the Company presents the deferred revenues in heading Other financial liabilities in the Statement of Financial Position.
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(b) | Share-based compensation |
The compensation plans implemented by the granting of options for the subscription and payment of shares are shown in the consolidated financial statements in accordance with IFRS 2: Share based payments, showing the effect of the fair value of the options granted as a charge to remuneration on a straight-line basis between the date of granting such options and the date on which these become vested.
(c) | Post-employment and other long-term benefits |
Provisions are made for these obligations by applying the method of the actuarial value of the accrued cost, and taking into account estimates of future permanence, mortality rates and future wage increases determined on the basis of actuarial calculations. The discount rates are determined by reference to market interest-rate curves. Actuarial gains or losses are shown in results for the period when they occur.
(d) | Incentives |
The Company has an annual incentives plan for its personnel for compliance with objectives and individual contribution to the results. The incentives eventually granted consist of a given number or portion of monthly remuneration and the provision is made on the basis of the amount estimated for distribution.
2.19. | Provisions |
Provisions are recognised when:
(i) | The Company has a present legal or implicit obligation as a result of past events. |
(ii) | It is probable that payment is going to be necessary to settle an obligation, and |
(iii) | The amount has been reliably estimated. |
Provisions are shown at the present value of the disbursements expected to be necessary for settling the obligation using the Company’s best estimates. The pre-tax discount rate used for determining the present value reflects current market evaluations on the date of the consolidated financial statements, time value of money, as well as the specific risks related to the liability in question.
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2.20. | Revenue recognition |
Revenues include the fair value of the proceeds received or to be received on sales of goods and rendering services in the ordinary course of the Company’s business. Revenues are shown net of refunds, rebates and discounts.
(a) | Rendering of services |
(i) | Passenger and cargo transport |
The Company shows revenue from the transportation of passengers and cargo once the service has been provided.
(ii) | Frequent flyer program |
The Company currently has a frequent flyer program, whose objective is customer loyalty through the delivery of kilometers or points fly whenever the program holders make certain flights, use the services of entities registered with the program or make purchases with an associated credit card. The kilometers or points earned can be exchanged for flight tickets or other services of associated entities.
The consolidated financial statements include liabilities for this concept (deferred income), according to the estimate of the valuation established for the kilometers or points accumulated pending use at that date, in accordance with IFRIC 13: Customer loyalty programs.
(iii) | Other revenues |
The Company records revenues for other services when these have been provided.
(b) | Interest income |
Interest income is booked using the effective interest rate method.
(c) | Dividend income |
Dividend income is booked when the right to receive the payment is established.
2.21. | Leases |
(a) | When the Company is the lessee – financial lease |
The Company leases certain Property, plant and equipment in which it has substantially all the risk and benefits deriving from the ownership; they are therefore classified as financial leases. Financial leases are initially recorded at the lower of the fair value of the asset leased and the present value of the minimum lease payments
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Every lease payment is separated between the liability component and the financial expenses so as to obtain a constant interest rate over the outstanding amount of the debt. The corresponding leasing obligations, net of financial charges, are included in Other financial liabilities. The element of interest in the financial cost is charged to the consolidated statement of income over the lease period so that it produces a constant periodic rate of interest on the remaining balance of the liability for each year. The asset acquired under a financial lease is depreciated over its useful life and is included in Property, plant and equipment.
(b) | When the Company is the lessee – operating lease |
Leases, in which the lessor retains an important part of the risks and benefits deriving from ownership, are classified as operating leases. Payments with respect to operating leases (net of any incentive received from the lessor) are charged in the consolidated statement of income on a straight-line basis over the term of the lease.
2.22. | Non-current assets or disposal groups classified as held for sale |
Non-current assets (or disposal groups) classified as assets held for sale are shown at the lesser of their book value and the fair value less costs to sell.
2.23. | Maintenance |
The costs incurred for scheduled major maintenance of the aircraft’s fuselage and engines are capitalized and depreciated until the next maintenance. The depreciation rate is determined on technical grounds, according to its use expressed in terms of cycles and flight hours.
In case of aircraft under operating leasing, a liability is accrued based on the use of the main components, as there is the contractual obligation to return the aircraft to the lessor in agreed terms of maintenance levels.
Additionally, some leases establish the obligation of the lessee to make deposits to the lessor as a guarantee of compliance with the maintenance and return conditions. These deposits, often called maintenance reserves, accumulate until a major maintenance is performed, once made, is request the recovery to the lessor. At the end of the contract period, the balance between paid reservations and conditions agreed with levels of maintain in delivering, be offset the parties if applicable.
The unscheduled maintenance of aircraft and engines, as well as minor maintenance, are charged to results as incurred.
2.24. | Environmental costs |
Disbursements related to environmental protection are charged to results when incurred.
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NOTE 3 - FINANCIAL RISK MANAGEMENT
3.1. | Financial risk factors |
The Company’s activities are exposed to different financial risks: (a) market risk, (b) credit risk, and (c) liquidity risk. The Company’s global risk management program is focused on uncertainty in the financial markets and tries to minimize the potential adverse effects on the net margin. The Company uses derivatives to hedge part of these risks.
(a) | Market risk |
Due to the nature of its operations, the Company is exposed to market risks such as:
(i) fuel-price risk, (ii) interest-rate risk, and (iii) local exchange-rate risk. In order to fully or partially hedge all of these risks, the Company operates with derivative instruments to fix or limit rises in the underlying assets.
(i) | Fuel-price risk: |
Fluctuations in fuel prices largely depend on the global supply and demand for oil, decisions taken by Organization of Petroleum Exporting Countries (“OPEC”), global refining capacity, stock levels maintained, and weather and geopolitical factors.
The Company purchases an aircraft fuel called Jet Fuel grade 54. There is a benchmark price in the international market for this underlying asset, which is US Gulf Coast Jet 54. However, the futures market for this asset has a low liquidity index and as a result the Company hedges its exposure using West Texas Intermediate (“WTI”) crude, Brent (“BRENT”) crude and distillate Heating Oil (“HO”), which have a high correlation with Jet Fuel and are highly liquid assets and therefore have advantages in comparison to the use of the U.S. Gulf Coast Jet 54 index.
For the nine month period ending September 30, 2013, the Company recognized gains of US$ 14.5 million on fuel hedging. During the same period 2012, the Company recognized gains of US$ 6.94 million for the same reason.
At September 30, 2013, the market value of its fuel positions amounted to US$ 5.6 million (positive). At December 31, 2012, this market value was US$ 9.9 million (negative).
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The following tables show the notional value of the purchase positions together with the derivatives contracted for the different periods:
Positions as of September 30, 2013 (*) (Unaudited) | ||||||||||||
Q413 | Q114 | Total | ||||||||||
Volume (thousands of barrels) | 4,612 | 1,809 | 6,421 | |||||||||
Contracted future price (US$ per barrel)(**) | 111 | 115 | 112 | |||||||||
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|
|
|
|
| |||||||
Total (ThUS$ ) | 511,932 | 208,035 | 719,152 | |||||||||
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|
|
|
|
| |||||||
Percentage of the hedge of expected consumption value | 61 | % | 21 | % | 40 | % |
(*) | The volume shown in the table considers all the hedging instruments (swaps and options) in Brent, WTI and JET. |
(**) | Weighted average between collars and options when activated. Correspond to equivalent in Brent. |
Positions as of December 31, 2012 (*) | Maturities | |||||||||||||||||||||||||||
Q113 | Q213 | Q313 | Q413 | Q114 | Q214 | Total | ||||||||||||||||||||||
Volume (thousands of barrels) | 4,824 | 600 | 525 | 525 | 525 | 75 | 7,074 | |||||||||||||||||||||
Contracted future price (US$ per barrel)(**) | 122 | 132 | 132 | 131 | 111 | 104 | 123 | |||||||||||||||||||||
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Total (ThUS$ ) | 588,528 | 79,200 | 69,300 | 68,775 | 58,275 | 7,800 | 870,102 | |||||||||||||||||||||
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Percentage of the hedge of expected consumption value | 61 | % | 7 | % | 6 | % | 6 | % | 6 | % | 1 | % | 19 | % |
(*) | The volume shown in the table considers all the hedging instruments (swaps and options) in WTI and Brent. |
(**) | Weighted average between collars and options, when activated. Correspond to equivalent in Brent. |
Given that current derivatives portfolio comprises mainly contracts based on Brent, a decision has been made to change the equivalence applied to this underlying index in order to calculate the agreed future value for different periods.
Sensitivity analysis
A drop in fuel price positively affects the Company through a reduction in costs. However, this drop also negatively affects contracted positions as these are acquired to protect the Company against the risk of a rise in price. The policy therefore is to maintain a hedge-free percentage in order to be competitive in the event of a drop in price.
27
Due to the fact that current positions do not represent changes in cash flows, but a variation in the exposure to the market value, the current hedge positions have no impact on income (they are booked as cash flow hedge contracts, so a variation in the fuel price has an impact on the Company’s net equity).
The following table shows the sensitivity analysis of the financial instruments according to reasonable changes in the fuel price and their effect on equity. The term of the projection was defined until the end of the last current fuel hedge contract, being the last business day of the second quarter of 2014.
The calculations were made considering a parallel movement of US$ 5 per barrel in the curve of the WTI, BRENT and JET crude futures benchmark price at the end of September, 2013 and the end of December, 2012.
Benchmark price (US$ per barrel) | Positions as of September 30, 2013 effect on equity (millions of US$) | Positions as of December 31, 2012 effect on equity (millions of US$) | ||||||||
Unaudited | ||||||||||
+ 5 | + 14.35 | +12.60 | ||||||||
-5 | -10.64 | -11.30 |
The Company seeks to reduce the risk of fuel price rises to ensure it is not left at a disadvantage compared to its competitors in the event of a sharp price fall. The Company therefore uses hedge instruments like swaps, call options and collars to partially hedge the fuel volumes by consume.
Beginning with the third quarter of 2012 the company meets the required criteria of IAS 39, presented to apply hedge accounting in respect of fuel hedging TAM society. Until June 30, 2012, the Company did not apply hedge accounting to fuel hedging instruments of TAM. During the periods presented the Company has not recorded inefectiveness within the income statement.
Given the fuel hedge structure during the first three quarter of 2013, which considers a hedge-free portion, a vertical fall by 5 dollars in the WTI, BRENT and JET benchmark price (the monthly daily average), would have meant a impact of approximately US$ 101.4 million in the cost of total fuel consumption for the same period. For the first three quarter of 2013, a vertical rise by 5 dollars in the WTI, BRENT and JET benchmark price (the monthly daily average) would have meant an impact of approximately US$ 99.7 million of increased fuel costs.
28
(ii) | Cash flow interest-rate risk: |
The fluctuation in interest rates depends heavily on the state of the global economy. An improvement in long-term economic prospects moves long-term rates upward while a drop causes a decline through market effects. However, if we consider government intervention in periods of economic recession, it is usual to reduce interest rates to stimulate aggregate demand by making credit more accessible and increasing production (in the same way interest rates are raised in periods of economic expansion).
The present uncertainty about how the market and governments will react, and thus how interest rates will change, creates a risk related to the Company’s debt at floating interest rates and its investments.
Cash flow interest rate risk equates to the risk of future cash flows of the financial instruments due to the fluctuation in interest rates on the market. The Company’s exposure to risks of changes in market interest rates is mainly related to long-term obligations with variable interest rates.
In order to reduce the risk of an eventual rise in interest rates, the Company has signed interest-rate swap and call option contracts. Currently a 71% of the debt is fixed to fluctuations in interest rate. Therefore the Company is exposed in one portion to the variations of London Inter-Bank Offer Rate (“LIBOR”) of 30 days, 90 days, 180 days and 360 days. Other interest rates of less relevance are Brazilian Interbank Deposit Certificate (“ILC”), and the Interest Rate Term of Brazil (“TJLP”).
The following table shows the sensitivity of changes in financial obligations that are not hedged against interest-rate variations. These changes are considered reasonably possible based on current market conditions.
Increase (decrease) | Positions as of September 30, 2013 effect on pre-tax earnings (millions of US$) | Positions as of December 31, 2012 effect on pre-tax earnings (millions of US$) | ||||||
Unaudited | ||||||||
+100 basis points | -33.78 | -33.69 | ||||||
-100 basis points | +33.78 | +33.69 |
29
Changes in market conditions produce a change in the valuation of current financial instruments hedging interest rates, causing an effect on the Company’s equity (because they are booked as cash-flow hedges). These changes are considered reasonably possible based on current market conditions. The calculations were made increasing (decreasing) vertically 100 basis points of the three-month Libor futures curve.
Increase (decrease) futures curve in libor 3 months | Positions as of September 30, 2013 effect on equity (millions of US$) | Positions as of December 31, 2012 effect on equity (millions of US$) | ||||||||
Unaudited | ||||||||||
+100 basis points | +25.60 | +33.60 | ||||||||
-100 basis points | -26.80 | -35.50 |
There are limitations in the method used for the sensitivity analysis and relate to those provided by the market because the levels indicated by the futures curves are not necessarily met and will change in each period.
In accordance with the requarements of IAS 39, during the periods presented, the Company has not recorded amounts for ineffectiveness in the consolidated income statement.
(iii) | Foreign exchange rate risk: |
The functional currency used by the Company is the US dollar in terms of setting prices for its services, the composition of its statement of financial position and effects on its operating income.
Balance Sheet Risk
Balance sheet risk arises when items listed on the balance sheet are exposed to exchange rate variations, due to their being listed in a currency other than the functional currency.
In the case of the subsidiary TAM S.A, which operates with the Brazilian Real as its functional currency, a large proportion of the company’s liabilities are expressed in dollars. Therefore, this subsidiary’s profit and loss varies when its financial assets and liabilities, an its accounts receivable listed in dollars are converted to Brazilian Reals. This impact on profit and loss is consolidated, directly affecting the Company.
In order to reduce the impacts on the Company’s profit and loss caused by rises and falls in the R$/US$ exchange rate, during the third quarter of 2013 the Company conducted transactions to reduce the net US$ liabilities held by TAM S.A.
30
The following table shows the variation of financial performance to appreciate or depreciate 10% exchange rate R$/US$:
Appreciation (depreciation) of R$/US$ | Effect at September 30, 2013 MUS$ | |||||
Unaudited | ||||||
-10 | % | +214.48 | ||||
+10 | % | -214.48 |
Transactional risk
The Company sells most of its services in US dollars, prices equivalent to the US dollar and Brazilian real. A large part of its expenses are denominated in US dollars or equivalents to the US dollar, particularly fuel costs, aeronautic charges, aircraft leases, insurance and aircraft components and accessories. Remuneration expenses are denominated in local currencies.
The Company maintains its cargo and passenger international business tariffs in US dollars. There is a mix in the domestic markets as sales in Peru are in local currency but the prices are indexed to the US dollar. In domestic markets of Brazil, Chile, Argentina and Colombia the tariffs are in local currency without any kind of indexation. In the case of the domestic business in Ecuador, both tariffs and sales are in US dollar. The Company is therefore exposed to fluctuations in the different currencies, mainly: Brazilian real, Chilean peso, Argentine peso, Paraguayan guaraní, Mexican peso, Euro, Esterling libra, Peruvian sol, Colombian peso, Australian dollar and New Zealand dollar. Of these currencies, the largest exposure is presented by brazilian real and chilean peso.
The Company may acquire derivatives contracts to hedge variations in other currencies against the Company’s functional currency, partially hedging exchange rate risk through currency forwards.
The prices of frequent flyer points in the subsidiary Multiplus S.A. are denominated in US dollars. As functional currency is the Brazilian real, the sale of these points are assigned to variations in the exchange rate R$/US$. To decrease exposure, Multiplus S.A. contract rate collars.
The following table presents the notional amount and market value of derivatives exchange rate for each maturity date. The expiration date of the derivatives coincide with the probable date of collection points. The highly probable sale of the points are expected to be recognized in income after being exchanged, on average, six months later.
Position at September 30, 2013 Maturity (Unaudited) | ||||||||||||
Foreign currency derivative Multiplus | 2013 | 2014 | Total | |||||||||
Notional Value (MUS$) | +60.00 | +18.00 | +78.00 | |||||||||
Market Value (MUS$) | -13.36 | -2.94 | -16.30 |
31
Sensitivity exchange rate Multiplus S.A.
If the Brazilian real appreciates or depreciates by 10% against the US dollar and all other variables are held constant, the financial results would have varied approximately MUS$ 14.7/ MUS$ 16.9, mainly as the effect of gains or losses from exchange rate in the time value of derivatives, which are recognized immediately through profit and loss.
Effects of exchange rate derivatives in the Financial Statements
The profit or loss caused by changes in the fair value of hedging instruments are segregated between intrinsic value and time value. The intrinsic value is the percentage of cash flow cash covered, initially shown in equity and later transferred to income, while the hedge transaction is recorded in income. The time value corresponds to the ineffective portion of cash flow hedge and is recognized in the financial results of the Company (Note 21).
Due to the functional currency of TAM S.A. and Subsidiaries is the Brazilian real, the Company presents effects by the exchange rate fluctuations in Other comprehensive income by converting the Statement of financial position and Income statement of TAM S.A. and Subsidiaries from their functional currency to the U.S. dollar, being these last currency the presentation currency of the consolidated financial statement of LATAM Airlines Group S.A. and Subsidiaries. The Goodwill generated in the Business combination is recognized as an asset of TAM S.A. and Subsidiaries in Brazilian real whose conversion to U.S. dollar also produces effects in Other comprehensive income.
The following table shows the change in Other comprehensive income recognized in Total equity to appreciate or depreciate 10% exchange rate R$/US$:
Appreciation (depreciation) of R$/US$ | Effect at September 30, 2013 MUS$ | Effect at December 31, 2012 MUS$ | ||||||||
Unaudited | ||||||||||
-10 | % | +508.17 | +407.00 | |||||||
+10 | % | -415.77 | -332.98 |
(b) | Credit risk |
Credit risk occurs when the counterparty to a financial agreement or instrument fails to discharge an obligation due or financial instrument, leading to a loss in market value of a financial instrument (only financial assets, not liabilities).
The Company is exposed to credit risk due to its operative and financial activities, including deposits with banks and financial institutions, investments in other kinds of instruments, exchange-rate transactions and the contracting of derivative instruments or options.
To reduce the credit risk associated with operational activities, the Company has established credit limits to abridge the exposure of their debtors which are monitored permanently (mainly in case of operational activities in Brazil with travel agents).
32
As a way to mitigate credit risk related to financial activities, the Company requires that the counterparty to the financial activities remain at least investment grade by major Risk Assessment Agencies. Additionally the company has established maximum limits for investments which are monitored regularly.
(i) | Financial activities |
Cash surpluses that remain after the financing of assets necessary for the operation are invested according to credit limits approved by the Company’s Board, mainly in time deposits with different financial institutions, private investment funds, short-term mutual funds, and easily-liquidated corporate and sovereign bonds with short remaining maturities. These investments are booked as Cash and cash equivalents and Other current financial assets.
In order to reduce counterparty risk and to ensure that the risk assumed is known and managed by the Company, investments are diversified among different banking institutions (both local and international). The Company evaluates the credit standing of each counterparty and the levels of investment, based on (i) their credit rating, (ii) the equity size of the counterparty, and (iii) investment limits according to the Company’s level of liquidity. According to these three parameters, the Company chooses the most restrictive parameter of the previous three and based on this, establishes limits for operations with each counterparty.
The Company has no guarantees to mitigate this exposure.
(ii) | Operational activities |
The Company has four large sales “clusters”: travel agencies, cargo agents, airlines and credit-card administrators. The first three are governed by International Air Transport Association, international (“IATA”) organization comprising most of the airlines that represent over 90% of scheduled commercial traffic and one of its main objectives is to regulate the financial transactions between airlines and travel agents and cargo. When an agency or airline does not pay their debt, they are excluded from operating with IATA’s member airlines. In the case of credit-card administrators, they are fully guaranteed by 100% by the issuing institutions.
The exposure consists of the term granted, which fluctuates between 1 and 45 days.
One of the tools the Company uses for reducing credit risk is to participate in global entities related to the industry, such as IATA, Business Sales Processing (“BSP”), Cargo Account Settlement Systems (“CASS”), IATA Clearing House (“ICH”) and banks (credit cards). These institutions fulfill the role of collectors and distributors between airlines and travel and cargo agencies. In the case of the Clearing House, it acts as an offsetting entity between airlines for the services provided between them. A reduction in term and implementation of guarantees has been achieved through these entities. Currently the sales invoicing of TAM Linhas Aéreas S.A. related with travel agents and cargo agents for domestic transportation in Brazil is done directly by TAM Linhas Aéreas S.A.
33
Credit quality of financial assets
The external credit evaluation system used by the Company is provided by IATA. Internal systems are also used for particular evaluations or specific markets based on trade reports available on the local market. The internal classification system is complementary to the external one, i.e. for agencies or airlines not members of IATA, the internal demands are greater.
To reduce the credit risk associated with operational activities, the Company has established credit limits to abridge the exposure of their debtors which are monitored permanently (mainly in case of operational activities of TAM Linhas Aéreas S.A. with travel agents).The bad-debt rate in the principal countries where the Company has a presence is insignificant.
(c) | Liquidity risk |
Liquidity risk represents the risk that the Company has no funds to meet its obligations.
Because of the cyclical nature of the business, the operation, and its investment and financing needs related to the acquisition of new aircraft and renewal of its fleet, plus the financing needs related to market-risk hedges, the Company requires liquid funds to meet its payment obligations.
The Company therefore manages its cash and cash equivalents and its financial assets, matching the term of investments with those of its obligations. The Company’s policy is that the average term of its investments may not exceed the average term of its obligations. This cash and cash equivalents position is invested in highly-liquid short-term instruments through first-class financial entities.
The Company has future obligations related to financial leases, operating leases, maturities of other bank borrowings, derivative contracts and aircraft purchase contracts.
34
Class of liability for the analysis of liquidity risk ordered by date of maturity as of September 30, 2013 (Unaudited)
Class of | Debtor Tax No. | Debtor | Debtor | Creditor Tax No. | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total | Amortization | Effective rate | Nominal value | Nominal rate | |||||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | % | ThUS$ | % | ||||||||||||||||||||||||||||||||||||||||||||||
Loans to exporters | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.004.000-5 | BANCO DE CHILE | Chile | US$ | 15,156 | 20,209 | — | — | — | 35,365 | At expiration | 1.70 | % | 35,000 | 1.70 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.006.000-6 | BCI | Chile | US$ | — | 100,726 | — | — | — | 100,726 | At expiration | 1.58 | % | 100,000 | 1.58 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.645.030-K | ITAU | Chile | US$ | 75,294 | — | — | — | — | 75,294 | At expiration | 1.57 | % | 75,000 | 1.57 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.032.000-8 | BBVA | Chile | US$ | 25,059 | 72,930 | — | — | — | 97,989 | At expiration | 1.56 | % | 97,000 | 1.56 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US$ | 35,095 | 217,018 | — | — | — | 252,113 | At expiration | 1.77 | % | 250,000 | 1.77 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ESTADO | Chile | US$ | 120,304 | — | — | — | — | 120,304 | At expiration | 0.95 | % | 120,000 | 0.95 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.023.000-9 | CORPBANCA | Chile | US$ | 80,129 | — | — | — | — | 80,129 | At expiration | 1.93 | % | 80,000 | 1.93 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.100.458-1 | BLADEX | Chile | US$ | — | 100,934 | — | — | — | 100,934 | At expiration | 1.87 | % | 100,000 | 1.87 | % | |||||||||||||||||||||||||||||||||||||
Bankloans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US$ | 877 | 789 | 130,084 | — | — | 131,750 | At expiration | 2.99 | % | 130,084 | 2.99 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ESTADO | Chile | US$ | 22,605 | — | — | — | — | 22,605 | Semiannual | 1.64 | % | 22,419 | 1.63 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.023.000-9 | CORPBANCA | Chile | US$ | 19,668 | 57,876 | 145,476 | 104,397 | — | 327,417 | Quarterly | 5.00 | % | 292,778 | 4.85 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | Argentina | ARS$ | 883 | 18,734 | — | — | — | 19,617 | Monthly | 1.71 | % | 17,262 | 1.71 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BBVA | Argentina | ARS$ | 1,907 | 32,300 | — | — | — | 34,207 | Monthly | 1.95 | % | 31,072 | 1.95 | % | |||||||||||||||||||||||||||||||||||||
Guaranteed obligations | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US$ | 4,019 | 12,077 | 32,208 | 32,203 | 32,260 | 112,767 | Quarterly | 5.69 | % | 94,360 | 5.01 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDIT AGRICOLE | France | US$ | 16,885 | 35,733 | 87,905 | 18,171 | — | 158,694 | Quarterly | 2.14 | % | 154,908 | 2.14 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US$ | 2,280 | 6,839 | 2,280 | — | — | 11,399 | Quarterly | 3.06 | % | 11,167 | 2.73 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP PARIBAS | U.S.A. | US$ | 10,437 | 31,510 | 85,666 | 88,325 | 204,952 | 420,890 | Quarterly | 2.60 | % | 372,034 | 2.41 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | WELLS FARGO | U.S.A. | US$ | 55,289 | 165,588 | 439,972 | 437,677 | 1,260,132 | 2,358,658 | Quarterly | 2.47 | % | 2,145,610 | 1.76 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US$ | 11,527 | 34,692 | 93,505 | 95,034 | 180,911 | 415,669 | Quarterly | 2.65 | % | 381,720 | 2.05 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US$ | 5,414 | 16,329 | 44,234 | 45,321 | 102,442 | 213,740 | Quarterly | 1.34 | % | 205,593 | 0.80 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BTMU | U.S.A. | US$ | 2,883 | 8,713 | 23,664 | 24,338 | 68,093 | 127,691 | Quarterly | 1.66 | % | 120,626 | 1.06 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | APPLE BANK | U.S.A. | US$ | 1,417 | 4,278 | 11,630 | 11,976 | 33,982 | 63,283 | Quarterly | 1.66 | % | 59,758 | 1.06 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | US BANK | U.S.A. | US$ | 17,569 | 56,067 | 148,778 | 147,669 | 468,083 | 838,166 | Quarterly | 2.81 | % | 717,752 | 2.81 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | DEUTSCHE BANK | U.S.A. | US$ | 5,780 | 17,439 | 47,066 | 41,184 | 97,556 | 209,025 | Quarterly | 3.29 | % | 177,333 | 3.29 | % | |||||||||||||||||||||||||||||||||||||
Financial leases | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US$ | 5,981 | 10,912 | 45,677 | 12,861 | — | 75,431 | Quarterly | 3.25 | % | 69,847 | 3.04 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDIT AGRICOLE | France | US$ | 5,062 | 15,359 | 30,683 | 26,340 | 19,624 | 97,068 | Quarterly | 1.23 | % | 93,101 | 1.23 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US$ | 2,009 | 6,028 | 16,075 | 16,075 | 10,047 | 50,234 | Quarterly | 6.38 | % | 41,974 | 5.65 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | S.CHARTERED | U.S.A. | US$ | 1,914 | — | — | — | — | 1,914 | Quarterly | 1.25 | % | 1,909 | 1.25 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US$ | 17,546 | 52,674 | 140,474 | 123,894 | 32,808 | 367,396 | Quarterly | 5.34 | % | 322,460 | 4.75 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP PARIBAS | U.S.A. | US$ | 7,968 | 24,010 | 64,750 | 65,914 | 8,872 | 171,514 | Quarterly | 4.67 | % | 153,679 | 4.17 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BANC OF AMERICA | U.S.A. | US$ | 874 | 2,108 | 6,202 | — | — | 9,184 | Monthly | 1.43 | % | 8,544 | 1.43 | % | |||||||||||||||||||||||||||||||||||||
Other loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | BOEING | U.S.A. | US$ | 827 | 652 | 142,078 | — | — | 143,557 | At expiration | 1.81 | % | 141,813 | 1.81 | % | |||||||||||||||||||||||||||||||||||
Hedging derivatives | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | — | OTHERS | — | US$ | 10,687 | 29,578 | 60,203 | 20,028 | 1,149 | 121,645 | — | — | 114,980 | — | |||||||||||||||||||||||||||||||||||||
Non-hedging derivatives | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | — | OTHERS | — | US$ | 1,157 | 3,283 | 2,645 | — | — | 7,085 | — | — | 6,080 | — | |||||||||||||||||||||||||||||||||||||
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Total | 584,502 | 1,155,385 | 1,801,255 | 1,311,407 | 2,520,911 | 7,373,460 | 6,745,863 | |||||||||||||||||||||||||||||||||||||||||||||||
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35
Class of liability for the analysis of liquidity risk ordered by date of maturity as of September 30, 2013 (Unaudited)
Class of | Debtor Tax No. | Debtor | Debtor | Creditor | Nombre de empresa Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total | Amortization | Effective rate | Total Nominal rate | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | MUS$ | % | ThUS$ | |||||||||||||||||||||||||||||||||||||||||||||
Bank loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | Brazil | US$ | 1,586 | 45,588 | — | — | — | 47,174 | At Expiration | 4.02 | % | 44,986 | 3.42 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO Brazil S.A. | Brazil | US$ | 8,236 | 128,207 | — | — | — | 136,443 | At Expiration | 5.99 | % | 128,357 | 5.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO IT AU BBA | Brazil | US$ | 36,448 | 73,647 | — | — | — | 110,095 | At Expiration | 6.19 | % | 101,195 | 4.65 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | US$ | — | 65,631 | — | — | — | 65,631 | At Expiration | 4.00 | % | 62,357 | 3.15 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | BRL | 210 | 573 | 167 | — | — | 950 | Monthly | 7.42 | % | 922 | 7.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | US$ | 39,735 | 129,429 | — | — | — | 169,164 | At Expiration | 3.89 | % | 159,544 | 3.30 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | BRL | 47,477 | — | — | — | — | 47,477 | At Expiration | 10.63 | % | 44,843 | 10.15 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NEDERLANDSCHE | |||||||||||||||||||||||||||||||||||||||||||||||||
CREDIETVERZEKERING | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MAATSCHAPPIJ | Holland | US$ | 187 | 495 | 1,320 | 1,320 | 2,200 | 5,522 | Monthly | 6.01 | % | 4,315 | 6.01 | % | ||||||||||||||||||||||||||||||||||||||
Obligation with | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | THE BANK OF NEW YORK | U.S.A. | US$ | 55,861 | 67,512 | 190,819 | 468,838 | 975,304 | 1,758,334 | At Expiration | 8.60 | % | 1,100,000 | 8.41 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO Brazil S.A. | Brazil | BRL | 224,464 | — | — | — | — | 224,464 | Semiannual | 11.35 | % | 179,372 | 10.80 | % | |||||||||||||||||||||||||||||||||||
Financial leases | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | AFS INVESTMENT IX LLC | U.S.A. | US$ | 2,858 | 7,728 | 20,609 | 20,609 | 21,468 | 73,272 | Monthly | 1.25 | % | 60,058 | 1.25 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AIRBUS FINANCIAL | |||||||||||||||||||||||||||||||||||||||||||||||||
SERVICES | U.S.A. | US$ | 3,526 | 10,323 | 28,716 | 23,598 | 17,748 | 83,911 | Monthly | 1.42 | % | 78,332 | 1.42 | % | ||||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AWAS | U.S.A. | US$ | 5,650 | 9,418 | — | — | — | 15,068 | Monthly | 0.00 | % | 8,642 | 0.00 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | U.S.A. | US$ | 716 | 1,985 | 5,637 | 6,206 | 9,467 | 24,011 | Quarterly | 1.00 | % | 22,654 | 1.00 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | France | US$ | 875 | 2,397 | 6,387 | 6,394 | 11,184 | 27,237 | Quarterly | 0.86 | % | 22,929 | 0.75 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | England | US$ | 8,026 | 19,968 | 48,989 | 49,984 | 116,243 | 243,210 | Quarterly | 1.05 | % | 229,498 | 0.91 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE-CIB | U.S.A. | US$ | 4,982 | 14,169 | 60,861 | 12,151 | 15,908 | 108,071 | Quarterly | 1.40 | % | 102,183 | 1.40 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE-CIB | France | US$ | 8,928 | 26,246 | 63,729 | 51,260 | 59,884 | 210,047 | Semiannual/ Quarterly | 0.77 | % | 203,310 | 0.67 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | Germany | US$ | 3,422 | 9,882 | 15,963 | — | — | 29,267 | Quarterly | 2.50 | % | 28,125 | 2.50 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | U.S.A. | US$ | 215 | 625 | 1,328 | 404 | — | 2,572 | Monthly | 1.77 | % | 2,476 | 1.77 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | GENERAL ELECTRIC CAPITAL CORPORATION | |||||||||||||||||||||||||||||||||||||||||||||||||
U.S.A. | US$ | 3,700 | 52,441 | — | — | — | 56,141 | Monthly | 1.25 | % | 55,382 | 1.25 | % | |||||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HSBC | France | US$ | 1,609 | 4,467 | 12,110 | 12,421 | 39,279 | 69,886 | Quarterly | 1.45 | % | 65,595 | 1.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | KFW IP EX-BANK | Germany | US$ | 4,444 | 12,999 | 32,210 | 22,481 | 20,473 | 92,607 | Monthly/ Quarterly | 1.73 | % | 86,546 | 1.73 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NATIXIS | France | US$ | 6,863 | 22,110 | 58,447 | 62,239 | 131,346 | 281,005 | Quarterly/ Semiannual | 2.78 | % | 251,055 | 2.75 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | PK AIRFINANCE US, INC. | U.S.A. | US$ | 3,462 | 10,038 | 28,208 | 35,313 | 41,435 | 118,456 | Monthly | 1.72 | % | 109,140 | 1.72 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WA CAP OU LEASING S.A. | Luxembourg | US$ | 645 | 1,718 | 4,039 | 3,298 | 14,949 | 24,649 | Quarterly | 2.00 | % | 22,200 | 2.00 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WELLS FARGO BANK | |||||||||||||||||||||||||||||||||||||||||||||||||
NORTHWEST N.A. | U.S.A. | US$ | 1,791 | 3,204 | — | — | — | 4,995 | Monthly | 1.25 | % | 4,964 | 1.25 | % | ||||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIÉTÉ GÉNÉRALE | |||||||||||||||||||||||||||||||||||||||||||||||||
MILAN BRANCH | Italy | US$ | 14,060 | 39,785 | 96,910 | 101,597 | 118,591 | 370,943 | Quarterly | 3.91 | % | 345,738 | 3.83 | % | ||||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | THE TORONTO- | |||||||||||||||||||||||||||||||||||||||||||||||||
DOMINION BANK | U.S.A. | US$ | 579 | 1,668 | 4,521 | 4,631 | 7,206 | 18,605 | Quarterly | 0.57 | % | 17,906 | 0.57 | % | ||||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DE LAGE | |||||||||||||||||||||||||||||||||||||||||||||||||
LANDEN Brazil S.A | Brazil | BRL | 236 | 686 | 229 | — | — | 1,151 | Monthly | 9.32 | % | 1,234 | 9.32 | % | ||||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A | Brazil | BRL | 715 | 434 | 898 | 443 | — | 2,490 | Monthly | 10.58 | % | 1,712 | 10.58 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HP FINANCIAL SERVICE | Brazil | BRL | 461 | 1,074 | 2,634 | 658 | — | 4,827 | Monthly | 9.81 | % | 4,095 | 9.81 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIETE AIR FRANCE | Francia | EUR | 789 | 591 | 681 | — | — | 2,061 | Monthly | 6.82 | % | 1,421 | 6.82 | % | |||||||||||||||||||||||||||||||||||
Other loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | COMPANHIA | |||||||||||||||||||||||||||||||||||||||||||||||
BRASILEIRA DE MEIOS | ||||||||||||||||||||||||||||||||||||||||||||||||||||
DE PAGAMENTO | Brazil | BRL | 33,163 | 5,666 | — | — | — | 38,829 | Monthly | 2.80 | % | 38,829 | 2.80 | % | ||||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | OTHERS | Brazil | US$ | 2,192 | 5,115 | — | — | — | 7,307 | — | — | 7,307 | — | |||||||||||||||||||||||||||||||||||||
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Total | 528,111 | 775,819 | 685,412 | 883,845 | 1,602,685 | 4,475,872 | 3,597,222 | |||||||||||||||||||||||||||||||||||||||||||||
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36
Class of liability for the analysis of liquidity risk ordered by date of maturity as of September 30, 2013 (Unaudited)
Class of | Debtor | Debtor | Debtor | Creditor Tax No. | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total | Amortization | Effective rate | Nominal value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | % | ThUS$ | % | ||||||||||||||||||||||||||||||||||||||||||||
Trade and other accounts payable | — | LATAM Airlines Group S.A. y Filiales | Others | — | Others | — | US$ | 642,867 | 10,579 | — | — | — | 653,446 | — | — | 653,446 | — | |||||||||||||||||||||||||||||||||||
CLP | 1,544 | — | — | — | — | 1,544 | — | — | 1,544 | — | ||||||||||||||||||||||||||||||||||||||||||
BRL | 272,620 | — | — | — | — | 272,620 | — | — | 272,620 | — | ||||||||||||||||||||||||||||||||||||||||||
Others currencies | 270,914 | 772 | — | — | — | 271,686 | — | — | 271,686 | — | ||||||||||||||||||||||||||||||||||||||||||
BRL | 4,664 | 14,600 | — | — | — | 19,264 | Monthly | 8.86 | % | 15,304 | 8.86 | % | ||||||||||||||||||||||||||||||||||||||||
Accounts payable, non-current | — | LATAM Airlines Group S.A. y Filiales | Others | — | Others | — | BRL | — | — | 43,799 | 51,905 | 224,717 | 320,421 | Monthly | 8.86 | % | 185,550 | 8.86 | % | |||||||||||||||||||||||||||||||||
US$ | — | — | 12,664 | — | — | 12,664 | Quarterly | 2.01 | % | 12,445 | 2.01 | % | ||||||||||||||||||||||||||||||||||||||||
Accounts payable to related parties currents | — | LATAM Airlines Group S.A. y Filiales | Others | 96.847.880-K | Lufthansa Lan | Chile | US$ | 7 | — | — | — | — | 7 | — | — | 7 | — | |||||||||||||||||||||||||||||||||||
Others | 78.59 1.370-1 | Bethia S.A . y Filiales | Chile | CLP | 3 | — | — | — | — | 3 | — | — | 3 | — | ||||||||||||||||||||||||||||||||||||||
Others | 0-E | Inversora Aeronautical | Argentina | US$ | 225 | — | — | — | — | 225 | — | — | 225 | — | ||||||||||||||||||||||||||||||||||||||
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Total | 1,192,844 | 25,951 | 56,463 | 51,905 | 224,717 | 1,551,880 | 1,412,830 | |||||||||||||||||||||||||||||||||||||||||||||
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Total Consolidated | 2,305,457 | 1,957,155 | 2,543,130 | 2,247,157 | 4,348,313 | 13,401,212 | 11,755,915 | |||||||||||||||||||||||||||||||||||||||||||||
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37
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2012
Class of | Debtor Tax No. | Debtor | Debtor | Creditor Tax No. | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total | Amortization | Effective rate | Nominal value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | % | ThUS$ | % | ||||||||||||||||||||||||||||||||||||||||||||
Loans to exporters | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.004.000-5 | BANCO DE CHILE | Chile | US$ | 30,331 | — | — | — | — | 30,331 | Semiannual | 2.17 | % | 30,000 | 2.17 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.006.000-6 | BCI | Chile | US$ | 35,102 | — | — | — | — | 35,102 | Semiannual | 1.70 | % | 35,000 | 1.70 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.645.030-K | ITAU | Chile | US$ | 75,205 | — | — | — | — | 75,205 | Quarterly | 1.32 | % | 75,000 | 1.32 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.032.000-8 | BBVA | Chile | US$ | 102,770 | — | — | — | — | 102,770 | Annual | 1.83 | % | 102,000 | 1.79 | % | |||||||||||||||||||||||||||||||||||
Bank loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US$ | 181 | 195 | 214,373 | — | — | 214,749 | — | 2.57 | % | 214,373 | 2.57 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ESTADO | Chile | US$ | — | 45,430 | — | — | — | 45,430 | Semiannual | 1.76 | % | 44,848 | 1.74 | % | |||||||||||||||||||||||||||||||||||
Guaranteed obligations | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US$ | 4,025 | 12,070 | 32,208 | 32,203 | 44,336 | 124,842 | Quarterly | 5.69 | % | 102,649 | 5.01 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDIT AGRICOLE | France | US$ | 12,945 | 34,730 | 36,019 | 6,757 | — | 90,451 | Quarterly | 3.42 | % | 87,448 | 3.37 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US$ | 4,209 | 12,695 | 24,726 | 15,597 | 19,493 | 76,720 | Quarterly | 4.96 | % | 66,148 | 4.41 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP P ARIBAS | U.S.A. | US$ | 17,740 | 53,435 | 144,037 | 146,463 | 152,574 | 514,249 | Quarterly | 4.15 | % | 451,090 | 3.67 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | WELLS FARGO | U.S.A. | US$ | 48,067 | 144,221 | 383,034 | 380,772 | 1,207,825 | 2,163,919 | Quarterly | 2.57 | % | 1,959,463 | 1.76 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US$ | 11,508 | 34,628 | 93,287 | 94,699 | 217,034 | 451,156 | Quarterly | 2.71 | % | 409,908 | 2.10 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US$ | 5,405 | 16,281 | 44,085 | 45,085 | 119,771 | 230,627 | Quarterly | 1.39 | % | 220,449 | 0.85 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BTMU | U.S.A. | US$ | 2,876 | 8,680 | 23,567 | 24,190 | 77,456 | 136,769 | Quarterly | 1.73 | % | 128,222 | 1.13 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | APPLE BANK | U.S.A. | US$ | 1,410 | 4,262 | 11,576 | 11,898 | 38,593 | 67,739 | Quarterly | 1.71 | % | 63,480 | 1.11 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BANK OF AMERICA MERRIL LYNCH | U.S.A. | US$ | 3,714 | 11,194 | 30,188 | 30,703 | 111,059 | 186,858 | Quarterly | 1.97 | % | 172,789 | 1.26 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | DEVELOPMENT BANK OF JAP AN | U.S.A. | US$ | 2,309 | 6,958 | 18,759 | 19,079 | 68,662 | 115,767 | Quarterly | 1.98 | % | 107,072 | 1.27 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0 -E | DEUTSCHE BANK | U.S.A. | US$ | 5,777 | 17,413 | 46,958 | 47,790 | 109,099 | 227,037 | Quarterly | 3.35 | % | 190,000 | 3.35 | % | |||||||||||||||||||||||||||||||||||
Financial leases | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US$ | 7,260 | 17,848 | 38,443 | 26,596 | 1,865 | 92,012 | Quarterly | 3.71 | % | 85,491 | 3.42 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDIT AGRICOLE | France | US$ | 4,992 | 15,145 | 31,093 | 31,375 | 26,226 | 108,831 | Quarterly | 1.32 | % | 103,684 | 1.29 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US$ | 2,009 | 6,028 | 16,075 | 16,075 | 16,075 | 56,262 | Quarterly | 6.38 | % | 46,086 | 5.65 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | S .CHARTERED | U.S.A. | US$ | 1,849 | 5,676 | — | — | — | 7,525 | Quarterly | 1.31 | % | 7,462 | 1.31 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US$ | 15,604 | 46,825 | 124,870 | 122,783 | 51,501 | 361,583 | Quarterly | 5.29 | % | 314,261 | 4.70 | % | |||||||||||||||||||||||||||||||||||
Other loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | BOEING | U.S.A. | US$ | 596 | 2,248 | 146,189 | — | — | 149,033 | — | 1.86 | % | 146,189 | 1.86 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | — | OTHERS | — | US$ | 3,539 | 10,733 | 29,473 | 15,214 | — | 58,959 | Quarterly | 2.08 | % | 58,960 | 2.08 | % | |||||||||||||||||||||||||||||||||||
Hedging derivatives | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | — | OTHERS | — | US$ | 10,393 | 31,344 | 68,360 | 30,509 | 5,678 | 146,284 | — | — | 141,624 | — | |||||||||||||||||||||||||||||||||||
Non- hedging derivatives | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | — | OTHERS | — | US$ | 1,235 | 3,557 | 5,926 | — | — | 10,718 | — | — | 10,300 | — | |||||||||||||||||||||||||||||||||||
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Total | 411,051 | 541,596 | 1,563,246 | 1,097,788 | 2,267,247 | 5,880,928 | 5,373,996 | |||||||||||||||||||||||||||||||||||||||||||||
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38
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2012
Class of | Debtor Tax No. | Debtor | Debtor country | Creditor Tax No. | Creditor | Creditor country | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total | Amortization | Effective rate | Nominal rate | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | % | ThUS$ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank loans | 02.012.862/ 0001-60 | TAMS.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE | France | US$ | 1,093 | 64,533 | — | — | — | 65,626 | Quarterly | 2.81 | % | 50,322 | 2.81 | % | |||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | CITIBANK | Brazil | US$ | 26,520 | 5,945 | — | — | — | 32,465 | At Expiration | 4.03 | % | 29,986 | 4.03 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A | Brazil | US$ | 45,946 | 118,821 | — | — | — | 164,767 | At Expiration | 5.35 | % | 151,980 | 5.35 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A | Brazil | BRL | 356 | — | — | — | — | 356 | Semiannual | 10.72 | % | 92 | 10.72 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO ITAU BBA | Brazil | US$ | 52,628 | 129,638 | — | — | — | 182,266 | At Expiration | 5.65 | % | 163,391 | 5.65 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | BRL/ US$ | 18,893 | 15,391 | 861 | — | — | 35,145 | Monthly / At Expiration |
| 7,69 4,01 | %/ % | 32,446 |
| 7,69 4,01 | %/ % | |||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO UNIBANCO | Brazil | BRL | 72 | 29 | — | — | — | 101 | Monthly | 8.94 | % | 88 | 8.94 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | BRL | — | 28,563 | — | — | — | 28,563 | At Expiration | 3.34 | % | 27,484 | 3.34 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | NCM-NEDERLANDSCHE | |||||||||||||||||||||||||||||||||||||||||||||||||
CREDIETVERZEKERING | ||||||||||||||||||||||||||||||||||||||||||||||||||||
MAATSCHAPPIJ | Holland | US$ | 231 | 495 | 1,320 | 1,320 | 2,695 | 6,061 | Monthly | 0.96 | % | 4,608 | 0.95 | % | ||||||||||||||||||||||||||||||||||||||
Obligation with the public | 02.012.862/ 0001-60 | TAMS.A. and Subsidiaries | Brazil | 0-E | THE BANK OF NEW YORK | U.S.A. | US$ | 27,009 | 87,902 | 191,720 | 480,708 | 1,028,161 | 1,815,500 | At Expiration | 8.60 | % | 1,100,000 | 8.41 | % | |||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A | Brazil | BRL | 42,222 | 271,490 | — | — | — | 313,712 | Semiannual | 8.96 | % | 244,678 | 8.56 | % | |||||||||||||||||||||||||||||||||||
Financial leases | 02.012.862/ 0001-60 | TAMS.A. and Subsidiaries | Brazil | 0-E | AFS INVESTMENT IX LLC | U.S.A. | US$ | 3,482 | 7,728 | 20,609 | 20,609 | 29,196 | 81,624 | Monthly | N/ A | 65,127 | N/ A | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | AIR CANADA | U.S.A. | US$ | 3,521 | 9,350 | — | — | — | 12,871 | Monthly | N/ A | 12,750 | N/ A | |||||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | AIRBUS FINANCIAL SERVICES | U.S.A. | US$ | 3,689 | 10,105 | 28,056 | 28,642 | 23,687 | 94,179 | Monthly | 2.25 | % | 87,033 | 2.25 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | AWAS | U.S.A. | US$ | 5,957 | 14,958 | 9,418 | — | — | 30,333 | Monthly | N/ A | 17,617 | N/ A | |||||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | U.S.A. | US$ | 775 | 1,919 | 5,445 | 5,983 | 11,867 | 25,989 | Quarterly | 1.50 | % | 24,326 | 1.50 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | France | US$ | 2,938 | 8,487 | 19,824 | 19,476 | 45,939 | 96,664 | Quarterly | 3.84 | % | 87,986 | 3.84 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | CITIBANK N.A | England | US$ | 13,119 | 44,695 | 90,296 | 87,083 | 241,694 | 476,887 | Quarterly | 3.69 | % | 451,284 | 3.69 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRIOLE-CIB | U.S.A. | US$ | 5,392 | 14,164 | 70,758 | 11,728 | 20,603 | 122,645 | Quarterly | 2.29 | % | 114,810 | 2.29 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE-CIB | France | US$ | 20,355 | 50,931 | 132,830 | 124,825 | 184,734 | 513,675 | Quarterly/ Semiannual |
| 2,01 0,82 | %/ % | 494,721 |
| 2,01 0,37 | %/ % | |||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | Germay | US$ | 3,482 | 10,103 | 25,845 | — | — | 39,430 | Quarterly | 2.89 | % | 37,500 | 2.89 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | U.S.A. | US$ | 509 | 1,456 | 2,918 | 768 | — | 5,651 | Monthly | 2.25 | % | 5,402 | 2.25 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | GENERAL ELECTRIC CAPITAL CORPORATION | U.S.A. | US$ | 10,898 | 20,745 | 51,339 | — | — | 82,982 | Monthly | 2.59 | % | 81,086 | 2.59 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | HSBC | France | US$ | 1,601 | 4,427 | 12,000 | 12,302 | 43,975 | 74,305 | Quarterly | 1.70 | % | 69,458 | 0.85 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | KFW IP EX-BANK | Germay | US$ | 4,568 | 12,801 | 35,134 | 25,246 | 27,784 | 105,533 | Monthly/ Quarterly |
| 2,11 2,21 | %/ % | 97,770 |
| 2,11 2,21 | %/ % | |||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | NATIXIS | France | US$ | 12,126 | 26,169 | 73,710 | 78,388 | 178,957 | 369,350 | Quarterly/ Semiannual |
| 2,62 3,32 | %/ % | 316,425 |
| 2,62 3,32 | %/ % | |||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | P K AIRFINANCE US, INC. | U.S.A. | US$ | 3,618 | 9,773 | 27,406 | 38,907 | 48,681 | 128,385 | Monthly | 1.96 | % | 117,092 | 1.96 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | WACAP OU LEASING S.A. | Luxembourg | US$ | 1,340 | 1,835 | 4,332 | 3,569 | 15,599 | 26,675 | Quarterly | 2.42 | % | 23,647 | 2.42 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | WELLS FARGO BANK | |||||||||||||||||||||||||||||||||||||||||||||||||
NORTHWEST N.A. | U.S.A. | US$ | 1,836 | 5,379 | 3,205 | — | — | 10,420 | Monthly | 1.98 | % | 10,271 | 1.98 | % | ||||||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | SOCIÉTÉ GÉN��RALE | |||||||||||||||||||||||||||||||||||||||||||||||||
MILAN BRANCH | Italy | US$ | 14,786 | 39,102 | 100,197 | 99,264 | 157,422 | 410,771 | Quarterly | 1.95 | % | 380,025 | 1.95 | % | ||||||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | THE TORONTO- DOMINION BANK | U.S.A. | US$ | 661 | 1,654 | 4,481 | 4,589 | 8,956 | 20,341 | Quarterly | 0.88 | % | 19,431 | 0.08 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO DE LAGE LANDEN BRASIL S.A | Brazil | BRL | 493 | 1,458 | 1,891 | — | — | 3,842 | Monthly | 7.51 | % | 2,025 | 7.51 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A | Brazil | BRL | 604 | 1,882 | 136 | — | — | 2,622 | Monthly | 10.58 | % | 2,255 | 10.58 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | CISLATINA ARRENDAMENTO MERCANTIL S.A | Brazil | BRL | 41 | 13 | — | — | — | 54 | Monthly | 5.31 | % | 53 | 5.31 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | HP FINANCIAL SERVICE | Brazil | BRL | 177 | 529 | 93 | — | — | 799 | Monthly | 9.08 | % | 747 | 9.08 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | SOCIETE AIR FRANCE | France | EUR | 629 | 108 | 1,203 | — | — | 1,940 | Monthly | 6.82 | % | 1,572 | 6.82 | % | |||||||||||||||||||||||||||||||||||
TAMS.A. and Subsidiaries | Brazil | 0-E | SOCIETE GENERALE LEASING S.A | Brazil | BRL | 2,766 | — | — | — | — | 2,766 | Monthly | 0.00 | % | 2,520 | 0.00 | % | |||||||||||||||||||||||||||||||||||
Other loans | 02.012.862/ 0001-60 | TAMS.A. and Subsidiaries | Brazil | 0-E | COMPANHIA BRASILEIRA DE MEIOS DE P AGAMENTO | Brazil | BRL | 31,882 | 9,143 | — | — | — | 41,025 | Monthly | 2.20 | % | 41,025 | 2.20 | % | |||||||||||||||||||||||||||||||||
Hedging derivatives | 02.012.862/ 0001-60 | TAMS.A. and Subsidiaries | Brazil | 0-E | OTHERS | Brazil | US$ | 4,008 | 9,353 | 1,963 | — | — | 15,324 | — | 0.00 | % | 15,324 | 0.00 | % | |||||||||||||||||||||||||||||||||
Non-hedging derivatives | 02.012.862/ 0001-60 | TAMS.A. and Subsidiaries | Brazil | 0-E | OTHERS | Brazil | US$ | 3,603 | 6,903 | 4,529 | — | — | 15,035 | — | 0.00 | % | 15,035 | 0.00 | % | |||||||||||||||||||||||||||||||||
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Total | 373,826 | 1,047,977 | 921,519 | 1,043,407 | 2,069,950 | 5,456,679 | 4,399,392 | |||||||||||||||||||||||||||||||||||||||||||||
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39
Class of liability for the analysis of liquidity risk ordered by date of maturity as of December 31, 2012
Class of | Debtor | Debtor | Debtor | Creditor Tax No. | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total | Amortization | Effective rate | Nominal value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | % | ThUS$ | % | ||||||||||||||||||||||||||||||||||||||||||||
Trade and other accounts payable | — | LATAM Airlines Group S.A. and Subsidiaries | Others | — | Others | — | US$ | 606,885 | 82,049 | — | — | — | 688,934 | — | — | 688,934 | — | |||||||||||||||||||||||||||||||||||
CLP | 5,761 | — | — | — | — | 5,761 | — | — | 5,761 | — | ||||||||||||||||||||||||||||||||||||||||||
BRL | 420,407 | 31,190 | — | — | — | 451,597 | — | — | 451,597 | — | ||||||||||||||||||||||||||||||||||||||||||
BRL | 29,758 | 8,860 | — | — | — | 38,618 | — | — | 38,618 | — | ||||||||||||||||||||||||||||||||||||||||||
BRL | 5,389 | 14,480 | — | — | — | 19,869 | Monthly | 6.60 | % | 19,668 | 6.60 | % | ||||||||||||||||||||||||||||||||||||||||
Others currencies | 198,968 | — | — | — | — | 198,968 | — | — | 198,968 | — | ||||||||||||||||||||||||||||||||||||||||||
Accounts payable, non-current | — | LATAM Airlines Group S.A. and Subsidiaries | Others | — | Others | — | US$ | — | — | 18,000 | — | — | 18,000 | — | — | 18,000 | — | |||||||||||||||||||||||||||||||||||
US$ | — | — | 15,994 | — | — | 15,994 | Quarterly | 2.06 | % | 15,541 | 2.06 | % | ||||||||||||||||||||||||||||||||||||||||
BRL | — | — | 3,594 | — | — | 3,594 | — | — | 3,594 | — | ||||||||||||||||||||||||||||||||||||||||||
BRL | — | — | 39,251 | 44,872 | 142,914 | 227,037 | Monthly | 6.60 | % | 207,089 | 6.60 | % | ||||||||||||||||||||||||||||||||||||||||
Accounts payable to related parties currents | — | LATAM Airlines Group S.A. and Subsidiaries | Others | 78.591.370-1 | Bethia S.A. y Filiales | Chile | CLP | 14 | — | — | — | — | 14 | — | — | — | — | |||||||||||||||||||||||||||||||||||
Others | 96.847.880-K | Lufthansa Lan Technical | Chile | US$ | 237 | — | — | — | — | 237 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
Others | 0-E | Made in Everywhere Rep. | Brazil | BRL | 23 | — | — | — | — | 23 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
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Subtotal of page | 1,267,442 | 136,579 | 76,839 | 44,872 | 142,914 | 1,668,646 | 1,647,770 | |||||||||||||||||||||||||||||||||||||||||||||
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Total consolidated | 2,052,319 | 1,726,152 | 2,561,604 | 2,186,067 | 4,480,111 | 13,006,253 | 11,421,158 | |||||||||||||||||||||||||||||||||||||||||||||
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40
The Company has fuel, interest rate and exchange rate hedging strategies involving derivatives contracts with different financial institutions. The Company has margin facilities with each financial institution in order to regulate the mutual exposure produced by changes in the market valuation of the derivatives.
At the end of 2012, the Company provided US$ 189.9 million in derivative margin guarantees, for cash and stand-by letters of credit. At the end of September 30, 2013, the Company had provided US$ 107.9 million in guarantees for Cash and cash equivalent and stand-by letters of credit. The fall was due at maturity and fuel purchase contracts and rates, and changes in fuel prices and interest rates.
3.2. | Capital risk management |
The Company’s objectives, with respect to the management of capital, are (i) to safeguard it in order to continue as an on-going business, (ii) to seek a return for its shareholders, and (iii) to maintain an optimum capital structure and reduce its costs.
In order to maintain or adjust the capital structure, the Company may adjust the amount of the dividends payable to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors the adjusted leverage ratio, in line with industry practice. This index is calculated as net adjusted debt divided by the sum of adjusted equity and net adjusted debt. Net adjusted debt is total financial debt plus 8 times the operating lease payments of the last 12 months, less total cash (measured as the sum of cash and cash equivalents plus marketable securities). Adjusted capital is the amount of net equity without the impact of the market value of derivatives.
The Company’s strategy, which has not changed since 2007, has consisted of maintaining a leverage ratio of between 70% and 80% and an international credit rating of higher than BBB-(the minimum required for being considered investment grade). As a result of consolidation with TAM S.A. and Subsidiaries, the rating agency Fitch has issued on May 3, 2013 a new long-term rating for the Company of BB + with stable perspective (which is not an investment grade rating). Additionally, on June 10, 2013, S&P issued a long term rating of BB, with a positive outlook.
41
The leverage ratios as of September 30, 2013, and December 31, 2012, were as follows:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Total financial loans | 10,263,852 | 9,759,507 | ||||||
Last twelve months Operating lease payment x 8 | 3,459,528 | 3,390,664 | ||||||
Less: | ||||||||
Cash and marketable securities | (1,761,674 | ) | (1,120,335 | ) | ||||
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Total net adjusted debt | 11,961,706 | 12,029,836 | ||||||
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Net Equity | 4,673,268 | 5,112,051 | ||||||
Cash flow hedging reserve | 85,918 | 140,730 | ||||||
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Adjusted equity | 4,759,186 | 5,252,781 | ||||||
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Total adjusted debt and equity | 16,720,892 | 17,282,617 | ||||||
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Adjusted leverage | 71.5 | % | 69.6 | % |
See information related to financial covenants in Note 36 (a).
3.3. | Estimates of fair value |
At September 30, 2013, the Company maintained financial instruments that should be recorded at fair value. These are grouped into two categories:
1. | Hedge Instruments: |
This category includes the following instruments:
• | Interest rate derivative contracts, |
• | Fuel derivative contracts, |
• | Currency derivative contracts |
2. | Financial Investments: |
This category includes the following instruments:
• | Investments in short-term Mutual Funds (cash equivalent), |
• | Bank certificate of deposit – CBD, |
• | Private investment funds and |
• | Financial letters |
42
The Company has classified the fair value measurement using a hierarchy that reflects the level of information used in the assessment. This hierarchy consists of 3 levels (I) fair value based on quoted prices in active markets for identical assets or liabilities, (II) fair value calculated through valuation methods based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) and (III) fair value based on inputs for the asset or liability that are not based on observable market data.
The fair value of financial instruments traded in active markets, such as investments acquired for trading, is based on quoted market prices at the close of the period using the current price of the buyer. The fair value of financial assets not traded in active markets (derivative contracts) is determined using valuation techniques that maximize use of available market information. Valuation techniques generally used by the Company are quoted market prices of similar instruments and / or estimating the present value of future cash flows using forward price curves of the market at period end.
43
The following table shows the classification of financial instruments at fair value, depending on the level of information used in the assessment:
As of September 30, 2013 (Unaudited) | ||||||||||||||||
Fair value measurements using values considered as | ||||||||||||||||
Fair value | Level I | Level II | Level III | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | 390,402 | 390,402 | — | — | ||||||||||||
Short-term mutual funds | 390,402 | 390,402 | — | — | ||||||||||||
Other financial assets, current | 743,602 | 731,573 | 12,029 | |||||||||||||
Fair value of interest rate derivatives | 5 | — | 5 | — | ||||||||||||
Fair value of fuel derivatives | 5,345 | — | 5,345 | — | ||||||||||||
Interest accrued since the last payment date of Currency Swap | 774 | — | 774 | — | ||||||||||||
Private investment funds | 701,257 | 701,257 | — | — | ||||||||||||
Certificate of deposit CDB | 43 | — | 43 | — | ||||||||||||
Financial letter | 5,862 | — | 5,862 | — | ||||||||||||
Domestic and foreign bonds | 234 | 234 | — | — | ||||||||||||
Time deposit | 28,404 | 28,404 | — | |||||||||||||
Other investments | 1,678 | 1,678 | — | — | ||||||||||||
Liabilities | ||||||||||||||||
Other financial liabilities, current | 70,990 | — | 70,990 | |||||||||||||
Fair value of interest rate derivatives | 36,214 | — | 36,214 | — | ||||||||||||
Fair value of foreign currency derivatives | 24,461 | — | 24,461 | — | ||||||||||||
Interest accrued since the last payment date of Currency Swap | 5,890 | — | 5,890 | |||||||||||||
Interest rate derivatives not recognized as a hedge | 4,171 | — | 4,171 | — | ||||||||||||
Foreign currency derivatives not recognized as hedge | 254 | — | 254 | — | ||||||||||||
Other financial liabilities, non current | 65,088 | — | 65,088 | — | ||||||||||||
Fair value of interest rate derivatives | 62,662 | — | 62,662 | — | ||||||||||||
Interest rate derivatives not recognized as a hedge | 2,426 | — | 2,426 | — |
44
As of December 31, 2012 | ||||||||||||||||
Fair value measurements using values considered as | ||||||||||||||||
Fair value | Level I | Level II | Level III | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | 311,675 | 311,675 | — | — | ||||||||||||
Short-term mutual funds | 311,675 | 311,675 | — | — | ||||||||||||
Other financial assets, current | 474,176 | 319,145 | 155,031 | |||||||||||||
Fair value of interest rate derivatives | 6 | — | 6 | — | ||||||||||||
Fair value of fuel derivatives | 4,098 | — | 4,098 | — | ||||||||||||
Private investment funds | 317,598 | 317,598 | — | — | ||||||||||||
Certificate of deposit CDB | 77,316 | — | 77,316 | — | ||||||||||||
Financial letter | 73,611 | — | 73,611 | — | ||||||||||||
Domestic and foreign bonds | 748 | 748 | — | — | ||||||||||||
Other investments | 799 | 799 | — | — | ||||||||||||
Other financial assets, non current | 1,118 | — | 1,118 | |||||||||||||
Fair value of fuel derivatives | 1,023 | — | 1,023 | — | ||||||||||||
Fair value of foreign currency derivatives | 95 | — | 95 | — | ||||||||||||
Liabilities | ||||||||||||||||
Other financial liabilities, current | 70,075 | — | 70,075 | |||||||||||||
Interest accrued since the last payment date of Currency Swap | 4,660 | 4,660 | ||||||||||||||
Fair value of interest rate derivatives | 37,076 | — | 37,076 | — | ||||||||||||
Fair value of fuel derivatives | 10,502 | — | 10,502 | — | ||||||||||||
Fair value of foreign currency derivatives | 13,360 | — | 13,360 | — | ||||||||||||
Interest rate derivatives not recognized as a hedge | 4,477 | — | 4,477 | — | ||||||||||||
Other financial liabilities, non current | 116,555 | — | 116,555 | — | ||||||||||||
Fair value of interest rate derivatives | 104,547 | — | 104,547 | — | ||||||||||||
Fair value of fuel derivatives | 4,530 | — | 4,530 | — | ||||||||||||
Fair value of foreign currency derivatives | 1,963 | — | 1,963 | — | ||||||||||||
Interest rate derivatives not recognized as a hedge | 5,515 | — | 5,515 | — |
45
Additionally, at September 30, 2013, the Company has financial instruments which are not recorded at fair value. In order to meet the disclosure requirements of fair values, the Company has valued these instruments as shown in the table below:
As of September 30, 2013 | As of December 31, 2012 | |||||||||||||||
Book value | Fair value | Book value | Fair value | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Cash and cash equivalents | 633,794 | 633,794 | 338,588 | 338,588 | ||||||||||||
Cash on hand | 6,558 | 6,558 | 6,835 | 6,835 | ||||||||||||
Bank balance | 144,792 | 144,792 | 147,373 | 147,373 | ||||||||||||
Overnight | 159,446 | 159,446 | 119,713 | 119,713 | ||||||||||||
Time deposits | 322,998 | 322,998 | 64,667 | 64,667 | ||||||||||||
Other financial assets | 94,185 | 94,185 | 162,367 | 162,367 | ||||||||||||
Other financial assets | 94,185 | 94,185 | 162,367 | 162,367 | ||||||||||||
Trade and other accounts receivable current | 1,748,112 | 1,748,112 | 1,417,531 | 1,417,531 | ||||||||||||
Accounts receivable from related entities | 671 | 671 | 15,187 | 15,187 | ||||||||||||
Other financial assets, non current | 70,802 | 70,802 | 72,977 | 72,977 | ||||||||||||
Accounts receivable | 73,732 | 73,732 | 50,612 | 50,612 | ||||||||||||
Other financial liabilities, current | 2,679,883 | 2,889,845 | 1,977,255 | 2,090,726 | ||||||||||||
Trade and other accounts payables | 1,568,090 | 1,568,090 | 1,689,990 | 1,689,990 | ||||||||||||
Accounts payable to related entities | 235 | 235 | 274 | 274 | ||||||||||||
Other financial liabilities, non current | 7,439,545 | 7,739,594 | 7,582,302 | 7,806,643 | ||||||||||||
Accounts payable, non-current | 1,010,233 | 1,010,233 | 1,085,601 | 1,085,601 |
The book values of accounts receivable and payable are assumed to approximate their fair values, due to their short-term nature. In the case of cash on hand, bank balances, deposits and accounts payable, non-current, fair value approximates their carrying values.
The fair value of Other financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate for similar financial instruments. In the case of Other financial assets, the valuation was performed according to market prices at period end.
46
NOTE 4 - ACCOUNTING ESTIMATES AND JUDGMENTS
The Company has used estimates to value and book some of the assets, liabilities, revenues, expenses and commitments; these relate principally to:
(a) | The evaluation of possible impairment losses for certain assets. |
(b) | The useful lives and residual values of fixed and intangible assets. |
(c) | The criteria employed in the valuation of certain assets. |
(d) | Air tickets sold that are not actually used. |
(e) | The calculation of deferred income at the end of the period, corresponding to the valuation of kilometers or points credited to holders of the loyalty programs which have not yet been used. |
(f) | The need for provisions and where required, the determination of their values. |
(g) | The recoverability of deferred tax assets. |
These estimates are made on the basis of the best information available on the matters analyzed.
In any case, it is possible that events will require modification of the estimates in the future, in which case the effects would be accounted for prospectively.
Additionally, the management has applied judgment in determining that LATAM Airlines Group S.A. has control over TAM S.A. and Subsidiaries for accounting purposes and therefore has consolidated their financial statements. The above on the basis that LATAM issued their ordinary shares in exchange for all of the outstanding common and preferred shares of TAM (except those shareholders of TAM who did not accept exchange and which were subject of the squeeze-out described in Note 18.2.a), entitling LATAM to substantially all of the economic benefits that will be generated by the LATAM Group and also, consequently, exposing it to substantially all the risks incidental to the operations of TAM. This exchange aligns the economic interests of LATAM and all of its shareholders, including the TAM controlling shareholders, ensuring that the shareholders and directors of TAM will have no incentive to exercise their rights in a manner that is beneficial to TAM but detrimental to LATAM. Further, all significant actions required for the operation of the airlines require the affirmative vote of both LATAM and the TAM controlling shareholders.
In addition, LATAM is in process of integrating operations with TAM, and both entities will be operated as a single company. Within this, most critical airline activities will be managed in Brazil under the TAM CEO and globally by the LATAM CEO, who will be in charge of the overall operation of the LATAM Group and who will report to the LATAM board. Further, the LATAM CEO will evaluate performance of the LATAM Group executives and, together with the LATAM board, determine compensation. Although there are restrictions on voting interests that currently may be held by foreign investors under Brazilian law, LATAM believes that the economic substance of these arrangements satisfies the requirements established by the applicable accounting standards and that consolidation by LATAM of TAM’s operations is appropriate.
47
NOTE 5 - SEGMENTAL INFORMATION
The Company reports information by segments as established in IFRS 8 “Operating segments”. This standard sets rules for the reporting of information by segments in the financial statements, plus reporting about products and services, geographical areas and principal customers.
An operating segment is defined as a component of an entity on which financial information is held separately and which is evaluated regularly by the senior management in making decisions with respect to the assignment of resources and evaluation of results.
The Company has determined that it has two operating segments: the air transportation business and the coalition and loyalty program Multiplus.
The air transport business segment corresponds to the route network for air transport and it is based on the way that the business is run and managed, according to the centralized nature of its operations, the ability to open and close routes and reallocate resources (aircraft, crew, staff, etc.) within the network, which is a functional relationship between all of them, making them inseparable. This segment definition is the most common level used by the global airline industry.
The segment of loyalty coalition called Multiplus, unlike Lan Pass and TAM Fidelidade, is a frequent flyer programs which operate as a unilateral system of loyalty that offers a flexible coalition system, interrelated among its members, with eleven millions of members, along with being a government entity with a separately business and not directly related to air transport.
48
(a) | For the nine months ended |
Air transportation business At September 30, | Coalition and loyalty program Multiplus At September 30, | Eliminations At September 30, | Consolidated At September 30, | |||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||
Income from ordinary activities from external customers | 9,148,818 | 6,163,343 | 459,577 | 150,315 | — | — | 9,608,395 | 6,313,658 | ||||||||||||||||||||||||
LAN passenger | 3,497,045 | 3,331,610 | — | — | — | — | 3,497,045 | 3,331,610 | ||||||||||||||||||||||||
TAM passenger | 4,268,490 | 1,626,094 | — | — | — | — | 4,268,490 | 1,626,094 | ||||||||||||||||||||||||
Freight | 1,383,283 | 1,205,639 | — | — | — | — | 1,383,283 | 1,205,639 | ||||||||||||||||||||||||
Income from ordinary activities from transactions with other operating segments | 459,673 | 150,320 | 70,472 | 28,016 | (530,145 | ) | (178,336 | ) | — | — | ||||||||||||||||||||||
Income from ordinary activities from interest | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other operating income | 209,827 | 138,511 | 50,334 | 21,666 | — | (13,813 | ) | 260,161 | 146,364 | |||||||||||||||||||||||
Interest income | 37,827 | 45,108 | 21,486 | 16,519 | (7,562 | ) | — | 51,751 | 61,627 | |||||||||||||||||||||||
Interest expense | (346,243 | ) | (185,596 | ) | (1,539 | ) | (132 | ) | 7,562 | — | (340,220 | ) | (185,728 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total net interest expense | (308,416 | ) | (140,488 | ) | 19,947 | 16,387 | — | — | (288,469 | ) | (124,101 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49
(a) | For the nine months ended |
Air | Coalition and | |||||||||||||||||||||||||||||||
transportation | loyalty program | |||||||||||||||||||||||||||||||
business | Multiplus | Eliminations | Consolidated | |||||||||||||||||||||||||||||
At September 30, | At September 30, | At September 30, | At September 30, | |||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||
Depreciation and amortization | (788,645 | ) | (514,294 | ) | (2,916 | ) | (44 | ) | — | — | (791,561 | ) | (514,338 | ) | ||||||||||||||||||
Material non-cash items other than depreciation and amortization | (378,860 | ) | 59,364 | 73 | 1,993 | — | — | (378,787 | ) | 61,357 | ||||||||||||||||||||||
Disposal of fixed assets and inventory losses | (14,182 | ) | (9,063 | ) | (101 | ) | 1,829 | — | — | (14,283 | ) | (7,234 | ) | |||||||||||||||||||
Doubtful accounts | (3,932 | ) | (5,519 | ) | 182 | 185 | — | — | (3,750 | ) | (5,334 | ) | ||||||||||||||||||||
Exchange differences | (360,884 | ) | 74,034 | (8 | ) | (21 | ) | — | — | (360,892 | ) | 74,013 | ||||||||||||||||||||
Result of indexation units | 138 | (88 | ) | — | — | — | — | 138 | (88 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Segment profit | (310,871 | ) | 12,293 | 75,879 | 34,787 | — | — | (234,992 | ) | 47,080 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Participation of the entity in the income of associates | 995 | 63 | — | — | — | — | 995 | 63 | ||||||||||||||||||||||||
Expenses for income tax | 83,718 | (88,471 | ) | (37,974 | ) | (18,489 | ) | — | — | 45,744 | (106,960 | ) | ||||||||||||||||||||
Assets of segment | 21,841,270 | 19,900,710 | 513,465 | 574,756 | (134,400 | ) | (10,163 | ) | 22,220,335 | 20,465,303 | ||||||||||||||||||||||
Investments in associates | 2,614 | 709 | 4,117 | 3,236 | — | — | 6,731 | 3,945 | ||||||||||||||||||||||||
Amount of non-current asset additions (*) | 1,518,730 | 11,340,186 | — | 846,285 | — | — | 1,518,730 | 12,186,471 | ||||||||||||||||||||||||
Property, plant and equipment | 1,482,417 | 5,858,531 | — | — | — | — | 1,482,417 | 5,858,531 | ||||||||||||||||||||||||
Intangibles other than goodwill | 36,313 | 2,311,953 | — | — | — | — | 36,313 | 2,311,953 | ||||||||||||||||||||||||
Goodwill | — | 3,169,702 | — | 846,285 | — | — | — | 4,015,987 | ||||||||||||||||||||||||
Segment liabilities | 16,767,324 | 14,688,572 | 783,072 | 784,539 | (96,065 | ) | (162,703 | ) | 17,454,331 | 15,310,408 | ||||||||||||||||||||||
Purchase of non-monetary assets of segment | 1,240,799 | 1,456,225 | — | — | — | — | 1,240,799 | 1,456,225 |
(*) | Includes additions by business combination with TAM S.A. and Subsidiaries by nine months ended September 30, 2012. |
50
(b) | For the three months ended |
Air | Coalition and | |||||||||||||||||||||||||||||||
transportation | loyalty program | |||||||||||||||||||||||||||||||
business | Multiplus | Eliminations | Consolidated | |||||||||||||||||||||||||||||
At September 30, | At September 30, | At September 30, | At September 30, | |||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||
Income from ordinary activities from external customers | 3,111,550 | 3,108,932 | 158,417 | 150,315 | — | — | 3,269,967 | 3,259,247 | ||||||||||||||||||||||||
LAN passenger | 1,245,013 | 1,166,631 | — | — | — | — | 1,245,013 | 1,166,631 | ||||||||||||||||||||||||
TAM passenger | 1,430,175 | 1,494,286 | — | — | — | — | 1,430,175 | 1,494,286 | ||||||||||||||||||||||||
Freight | 436,362 | 448,015 | — | — | — | — | 436,362 | 448,015 | ||||||||||||||||||||||||
Income from ordinary activities from transactions with other operating segments | 158,417 | 150,315 | 23,095 | 28,016 | (181,512 | ) | (178,331 | ) | — | — | ||||||||||||||||||||||
Income from ordinary activities from interest | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other operating income | 67,376 | 72,505 | 23,335 | 7,231 | — | — | 90,711 | 79,736 | ||||||||||||||||||||||||
Interest income | 5,974 | 8,601 | 10,015 | 15,288 | (3,986 | ) | — | 12,003 | 23,889 | |||||||||||||||||||||||
Interest expense | (117,551 | ) | (105,220 | ) | (229 | ) | (29 | ) | 3,986 | — | (113,794 | ) | (105,249 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total net interest expense | (111,577 | ) | (96,619 | ) | 9,786 | 15,259 | — | — | (101,791 | ) | (81,360 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
(b) | For the three months ended |
Air | Coalition and | |||||||||||||||||||||||||||||||
transportation | loyalty program | |||||||||||||||||||||||||||||||
business | Multiplus | Eliminations | Consolidated | |||||||||||||||||||||||||||||
At September 30, | At September 30, | At September 30, | At September 30, | |||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||
Depreciation and amortization | (248,713 | ) | (290,815 | ) | (1,011 | ) | 56 | — | — | (249,724 | ) | (290,759 | ) | |||||||||||||||||||
Material non-cash items other than depreciation and amortization | (16,801 | ) | 4,530 | 909 | 1,976 | — | — | (15,892 | ) | 6,506 | ||||||||||||||||||||||
Disposal of fixed assets and inventory losses | (2,548 | ) | (3,243 | ) | 852 | 1,827 | — | — | (1,696 | ) | (1,416 | ) | ||||||||||||||||||||
Doubtful accounts | (1,744 | ) | (2,468 | ) | 84 | 185 | — | — | (1,660 | ) | (2,283 | ) | ||||||||||||||||||||
Exchange differences | (12,672 | ) | 10,239 | (27 | ) | (36 | ) | — | — | (12,699 | ) | 10,203 | ||||||||||||||||||||
Result of indexation units | 163 | 2 | — | — | — | — | 163 | 2 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Segment profit | 29,925 | (111,321 | ) | 22,168 | 32,609 | — | — | 52,093 | (78,712 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Participation of the entity in the income of associates | 469 | 153 | — | — | — | — | 469 | 153 | ||||||||||||||||||||||||
Expenses for income tax | (38,328 | ) | (55,531 | ) | (13,750 | ) | (17,296 | ) | — | — | (52,078 | ) | (72,827 | ) | ||||||||||||||||||
Assets of segment | 21,841,270 | 19,900,710 | 513,465 | 574,756 | (134,400 | ) | (10,163 | ) | 22,220,335 | 20,465,303 | ||||||||||||||||||||||
Investments in associates | 2,614 | 709 | 4,117 | 3,236 | — | — | 6,731 | 3,945 | ||||||||||||||||||||||||
Amount of non-current asset additions | 386,624 | 1,305,917 | — | — | — | — | 386,624 | 1,305,917 | ||||||||||||||||||||||||
Property, plant and equipment | 374,119 | 1,285,999 | — | — | — | — | 374,119 | 1,285,999 | ||||||||||||||||||||||||
Intangibles other than goodwill | 12,505 | 19,918 | — | — | — | — | 12,505 | 19,918 | ||||||||||||||||||||||||
Goodwill | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Segment liabilities | 16,767,324 | 14,688,572 | 783,072 | 784,539 | (96,065 | ) | (162,703 | ) | 17,454,331 | 15,310,408 | ||||||||||||||||||||||
Purchase of non-monetary assets of segment | 319,924 | 985,786 | — | — | — | — | 319,924 | 985,786 |
52
The Company’s revenues by geographic area are as follows:
For the nine months ended | For the three months ended | |||||||||||||||
At September 30, | At September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Peru | 469,386 | 439,473 | 177,037 | 165,252 | ||||||||||||
Argentina | 722,463 | 641,424 | 230,124 | 240,191 | ||||||||||||
U.S.A . | 962,269 | 904,347 | 324,199 | 339,388 | ||||||||||||
Europe | 687,634 | 479,310 | 235,696 | 220,012 | ||||||||||||
Colombia | 284,455 | 266,272 | 103,062 | 88,188 | ||||||||||||
Brazil | 4,246,708 | 1,774,877 | 1,336,356 | 1,535,996 | ||||||||||||
Ecuador | 209,588 | 195,958 | 70,992 | 69,699 | ||||||||||||
Chile | 1,262,375 | 1,104,732 | 419,010 | 385,407 | ||||||||||||
Asia Pacific and rest of Latin America | 763,517 | 507,265 | 373,491 | 215,114 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income from ordinary activities | 9,608,395 | 6,313,658 | 3,269,967 | 3,259,247 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other operating income | 260,161 | 146,364 | 90,711 | 79,736 | ||||||||||||
|
|
|
|
|
|
|
|
The Company allocates revenues by geographic area based on the point of sale of the passenger ticket or cargo. Assets are composed primarily of aircraft and aeronautical equipment, which are used throughout the different countries, so it is not possible to assign a geographic area.
The Company has no customers that individually represent more than 10% of sales.
53
NOTE 6 - CASH AND CASH EQUIVALENTS
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Cash on hand | 6,558 | 6,835 | ||||||
Bank balances | 144,792 | 147,373 | ||||||
Overnight | 159,446 | 119,713 | ||||||
|
|
|
| |||||
Total Cash | 310,796 | 273,921 | ||||||
|
|
|
| |||||
Cash equivalents | ||||||||
Time deposits | 322,998 | 64,667 | ||||||
Mutual funds | 390,402 | 311,675 | ||||||
|
|
|
| |||||
Total cash equivalents | 713,400 | 376,342 | ||||||
|
|
|
| |||||
Total cash and cash equivalents | 1,024,196 | 650,263 | ||||||
|
|
|
|
Cash and cash equivalents are denominated in the following currencies at September 30, 2013, and December 31, 2012:
As of | As of | |||||||
Currency | September 30, | December 31, | ||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Argentine peso | 17,253 | 70,381 | ||||||
Brazilian real | 254,754 | 149,723 | ||||||
Chilean peso | 36,754 | 40,212 | ||||||
Colombian peso | 28,007 | 28,758 | ||||||
Euro | 14,514 | 15,502 | ||||||
US Dollar | 498,182 | 230,776 | ||||||
Strong bolivar (*) | 141,037 | 51,346 | ||||||
Other currencies | 33,695 | 63,565 | ||||||
|
|
|
| |||||
Total | 1,024,196 | 650,263 | ||||||
|
|
|
|
(*) | In Venezuela, effective 2003, the authorities decreed that all remittances abroad should be approved by the Currency Management Commission (“CADIVI”). Despite having free availability of bolivars in Venezuela, the Company has certain restrictions for freely remitting these funds outside Venezuela. At September 30, 2013, the restricted amount, in US dollars is ThUS$ 141,037 (ThUS$ 51,346 at December 31, 2012). |
54
The Company has no significant non-cash transactions that must be disclosed.
Other inflows (outflows) of cash at September 30, 2013 and September 30, 2012 are detailed as follow.
For the periods ended | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Fuel hedge | 6,331 | 16,681 | ||||||
Hedging margin guarantees | 75,473 | 3,795 | ||||||
Guarantees | (994 | ) | (9,984 | ) | ||||
Commodities fuel derivatives | (2,801 | ) | (15,700 | ) | ||||
Bank commissions, taxes paid and other | (7,872 | ) | (53,585 | ) | ||||
|
|
|
| |||||
Total Other inflows (outflows) Operation flow | 70,137 | (58,793 | ) | |||||
|
|
|
| |||||
Opening balance Cash and cash equivalents acquired companies | — | 269,464 | ||||||
Amount paid by Squeeze Out TAM S.A . (*) | — | (167,589 | ) | |||||
Certificate of bank deposits | 77,338 | — | ||||||
|
|
|
| |||||
Total Other inflows (outflows) Investment flow | 77,338 | 101,875 | ||||||
|
|
|
| |||||
Aircraft Financing advances | (4,375 | ) | 28,019 | |||||
Credit card loan manager | 126,886 | 97,468 | ||||||
Settlement of derivative contracts | (48,021 | ) | (40,030 | ) | ||||
Breakage | (13,353 | ) | (2,432 | ) | ||||
Other | 479 | 2 | ||||||
|
|
|
| |||||
Total Other inflows (outflows) Financing flow | 61,616 | 83,027 | ||||||
|
|
|
|
(*) | See note 18.2 Business combination |
55
NOTE 7 - FINANCIAL INSTRUMENTS
7.1. | Financial instruments by category |
As of September 30, 2013 (Unaudited)
Assets | ||||||||||||||||||||
Initial designation | ||||||||||||||||||||
Loans | Held | as fair value | ||||||||||||||||||
and | Hedge | for | through | |||||||||||||||||
receivables | derivatives | trading | profit and loss | Total | ||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||||
Cash and cash equivalents | 633,794 | — | — | 390,402 | 1,024,196 | |||||||||||||||
Other financial assets, current (*) | 94,185 | 6,124 | 6,096 | 731,382 | 837,787 | |||||||||||||||
Trade and others accounts receivable, current | 1,748,112 | — | — | — | 1,748,112 | |||||||||||||||
Accounts receivable from related entities, current | 671 | — | — | — | 671 | |||||||||||||||
Other financial assets, non current (*) | 70,295 | — | 507 | — | 70,802 | |||||||||||||||
Accounts receivable, non current | 73,732 | — | — | — | 73,732 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 2,620,789 | 6,124 | 6,603 | 1,121,784 | 3,755,300 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Liabilities | Other | Held | ||||||||||||||
financial | Hedge | for | ||||||||||||||
liabilities | derivatives | trading | Total | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Other liabilities, current | 2,679,883 | 66,565 | 4,425 | 2,750,873 | ||||||||||||
Trade and others accounts payable, current | 1,568,090 | — | — | 1,568,090 | ||||||||||||
Accounts payable to related entities, current | 235 | — | — | 235 | ||||||||||||
Other financial liabilities, non current | 7,439,545 | 62,662 | 2,426 | 7,504,633 | ||||||||||||
Accounts payable, non current | 1,010,233 | — | — | 1,010,233 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 12,697,986 | 129,227 | 6,851 | 12,834,064 | ||||||||||||
|
|
|
|
|
|
|
|
(*) | The value presented as initial designation as fair value through profit and loss, corresponds to private investment funds; and loans and receivables corresponds to guarantees given. |
56
At December 31, 2012
Assets | Initial designation | |||||||||||||||||||
Loans | Held | as fair value | ||||||||||||||||||
and | Hedge | for | through | |||||||||||||||||
receivables | derivatives | trading | profit and loss | Total | ||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ||||||||||||||||
Cash and cash equivalents | 338,588 | — | — | 311,675 | 650,263 | |||||||||||||||
Other financial assets, current (*) | 162,367 | 4,104 | 74,359 | 395,713 | 636,543 | |||||||||||||||
Trade and others accounts receivable, current | 1,417,531 | — | — | — | 1,417,531 | |||||||||||||||
Accounts receivable from related entities, current | 15,187 | — | — | — | 15,187 | |||||||||||||||
Other financial assets, non current (*) | 72,470 | 1,118 | 507 | — | 74,095 | |||||||||||||||
Accounts receivable, non current | 50,612 | — | — | — | 50,612 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 2,056,755 | 5,222 | 74,866 | 707,388 | 2,844,231 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
Liabilities | Other | Held | ||||||||||||||
financial | Hedge | for | ||||||||||||||
liabilities | derivatives | trading | Total | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Other liabilities, current | 1,977,255 | 65,598 | 4,477 | 2,047,330 | ||||||||||||
Trade and others accounts payable, current | 1,689,990 | — | — | 1,689,990 | ||||||||||||
Accounts payable to related entities, current | 274 | — | — | 274 | ||||||||||||
Other financial liabilities, non current | 7,582,302 | 111,040 | 5,515 | 7,698,857 | ||||||||||||
Accounts payable, non current | 1,085,601 | — | — | 1,085,601 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 12,335,422 | 176,638 | 9,992 | 12,522,052 | ||||||||||||
|
|
|
|
|
|
|
|
(*) | The value presented as initial designation as fair value through profit and loss, corresponds to private investment funds; and loans and receivables corresponds to guarantees given. |
57
7.2. | Financial instruments by currency |
a) | Assets |
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Cash and cash equivalents | 1,024,196 | 650,263 | ||||||
Argentine peso | 17,253 | 70,381 | ||||||
Brazilian real | 254,754 | 149,723 | ||||||
Chilean peso | 36,754 | 40,212 | ||||||
Colombian peso | 28,007 | 28,758 | ||||||
Euro | 14,514 | 15,502 | ||||||
US Dollar | 498,182 | 230,776 | ||||||
Strong bolívar | 141,037 | 51,346 | ||||||
Other currencies | 33,695 | 63,565 | ||||||
Other financial assets (current and non current) | 908,589 | 710,638 | ||||||
Argentine peso | 1,062 | 131 | ||||||
Brazilian real | 773,243 | 545,426 | ||||||
Chilean peso | 26,658 | 648 | ||||||
Colombian peso | 2,622 | 2,828 | ||||||
Euro | 5,348 | 7,825 | ||||||
US Dollar | 98,755 | 142,254 | ||||||
Strong bolívar | 12 | 601 | ||||||
Other currencies | 889 | 10,925 | ||||||
Trade and other accounts receivable, current | 1,748,112 | 1,417,531 | ||||||
Argentine peso | 50,526 | 33,049 | ||||||
Brazilian real | 939,366 | 552,947 | ||||||
Chilean peso | 96,842 | 132,869 | ||||||
Colombian peso | 21,845 | 8,086 | ||||||
Euro | 59,159 | 67,287 | ||||||
US Dollar | 399,762 | 530,380 | ||||||
Strong bolívar | 3,454 | 2,759 | ||||||
Other currencies | 177,158 | 90,154 | ||||||
Accounts receivable, non-current | 73,732 | 50,612 | ||||||
Brazilian real | 1,431 | 6,677 | ||||||
Chilean peso | 9,787 | 9,564 | ||||||
US Dollar | 62,314 | 34,123 | ||||||
Other currencies | 200 | 248 | ||||||
Accounts receivable from related entities, current | 671 | 15,187 | ||||||
Brazilian real | 35 | 611 | ||||||
Chilean peso | 636 | 14,565 | ||||||
US Dollar | — | 11 | ||||||
Total assets | 3,755,300 | 2,844,231 | ||||||
Argentine peso | 68,841 | 103,561 | ||||||
Brazilian real | 1,968,829 | 1,255,384 | ||||||
Chilean peso | 170,677 | 197,858 | ||||||
Colombian peso | 52,474 | 39,672 | ||||||
Euro | 79,021 | 90,614 | ||||||
US Dollar | 1,059,013 | 937,544 | ||||||
Strong bolívar | 144,503 | 54,706 | ||||||
Other currencies | 211,942 | 164,892 |
b) | Liabilities |
Liabilities information is detailed in the table within Note 3 Financial risk management.
58
NOTE 8 - TRADE, OTHER ACCOUNTS RECEIVABLE AND NON-CURRENT ACCOUNTS RECEIVABLE
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Trade accounts receivable | 1,648,305 | 1,360,666 | ||||||
Other accounts receivable | 250,258 | 182,980 | ||||||
|
|
|
| |||||
Total trade and other accounts receivable | 1,898,563 | 1,543,646 | ||||||
Less: Allowance for impairment loss | (76,719 | ) | (75,503 | ) | ||||
|
|
|
| |||||
Total net trade and accounts receivable | 1,821,844 | 1,468,143 | ||||||
Less: non-current portion – accounts receivable | (73,732 | ) | (50,612 | ) | ||||
|
|
|
| |||||
Trade and other accounts receivable, current | 1,748,112 | 1,417,531 | ||||||
|
|
|
|
The fair value of trade and other accounts receivable does not differ significantly from the book value.
The maturity of these accounts at the end of each period is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Day | 1,479,882 | 1,231,937 | ||||||
Expired from 1 to 90 days | 67,685 | 33,160 | ||||||
Expired from 91 to 180 days | 11,410 | 10,705 | ||||||
More than 180 days overdue (*) | 12,609 | 9,361 | ||||||
Judicial, pre-judicial collection and protested documents | 21,787 | 29,556 | ||||||
Debtor under pre-judicial collection process and portfolio sensitization | 54,932 | 45,947 | ||||||
|
|
|
| |||||
Total | 1,648,305 | 1,360,666 | ||||||
|
|
|
|
(*) | Value of this segment corresponds primarily to accounts receivable that were evaluated in their ability to recover, therefore not requiring a provision. |
59
The receivable past due but not impaired at the end of each period is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Expired from 1 to 90 days | 67,685 | 33,160 | ||||||
Expired from 91 to 180 days | 11,410 | 10,705 | ||||||
More than 180 days overdue | 12,609 | 9,361 | ||||||
|
|
|
| |||||
Total | 91,704 | 53,226 | ||||||
|
|
|
|
The amounts of individually impaired Trade and other accounts receivable are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Judicial, pre-judicial collection and protested documents | 21,787 | 29,556 | ||||||
Debtors under pre-judicial collection process and portfolio sensitization | 54,932 | 45,947 | ||||||
|
|
|
| |||||
Total | 76,719 | 75,503 | ||||||
|
|
|
|
Currency balances that make up the Trade and other accounts receivable and Accounts receivable, at September 30, 2013 and December 31, 2012, are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
Currency | 2013 | 2012 | ||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Argentine Peso | 50,526 | 33,049 | ||||||
Brazilian Real | 940,797 | 559,624 | ||||||
Chilean Peso | 106,629 | 142,433 | ||||||
Colombian peso | 21,845 | 8,086 | ||||||
Euro | 59,159 | 67,287 | ||||||
US Dollar | 462,076 | 564,503 | ||||||
Strong bolivar | 3,454 | 2,759 | ||||||
Other currency | 177,358 | 90,402 | ||||||
|
|
|
| |||||
Total | 1,821,844 | 1,468,143 | ||||||
|
|
|
|
60
The Company records allowances when there is evidence of impairment of trade receivables. The criteria used to determine that there is objective evidence of impairment losses are the maturity of the portfolio, specific acts of damage (default) and specific market signals.
Maturity | Impairment | |||
Judicial and pre-judicial collection assets | 100 | % | ||
Over 1 year | 100 | % | ||
Between 6 and 12 months | 50 | % |
The movement in the allowance for impairment loss of Trade and other accounts receivables between January 1, 2012 and September 30, 2013 is as follows:
ThUS$ | ||||
As of January 1, 2012 | (20,525 | ) | ||
Write-offs | 1,674 | |||
(Increase) decrease in allowance | 206 | |||
Addition for business combination | (54,511 | ) | ||
Conversion difference affiliates | (922 | ) | ||
|
| |||
Closing balance as of September 30, 2012 (Unaudited) | (74,078 | ) | ||
|
| |||
As of October 1, 2012 | (74,078 | ) | ||
Write-offs | 1,638 | |||
(Increase) decrease in allowance | (3,063 | ) | ||
|
| |||
Closing balance as of December 31, 2012 | (75,503 | ) | ||
|
| |||
As of January 1, 2013 | (75,503 | ) | ||
Write-offs | 4,243 | |||
(Increase) decrease in allowance | (5,459 | ) | ||
|
| |||
Closing balance as of September 30, 2013 (Unaudited) | (76,719 | ) | ||
|
|
Once pre-judicial and judicial collection efforts are exhausted, the assets are written off against the allowance. The Company only uses the allowance method rather than direct write-off, to ensure control.
Historic and current re-negotiations are not relevant and the policy is to analyze case by case in order to classify them according to the existence of risk, determining whether it is appropriate to re-classify accounts to pre-judicial recovery. If such re-classification is justified, an allowance is made for the account, whether overdue or falling due.
61
The maximum credit-risk exposure at the date of presentation of the information is the fair value of each one of the categories of accounts receivable indicated above.
As of September 30, 2013 | As of December 31, 2012 | |||||||||||||||||||||||
Gross exposure | Gross | Exposure net | Gross exposure | Gross | Exposure net | |||||||||||||||||||
according to | impaired | of risk | according to | Impaired | of risk | |||||||||||||||||||
balance | exposure | concentrations | balance | exposure | concentrations | |||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||
Unaudited | ||||||||||||||||||||||||
Trade accounts receivable | 1,648,305 | (76,719 | ) | 1,571,586 | 1,360,666 | (75,503 | ) | 1,285,163 | ||||||||||||||||
Other accounts receivable | 250,258 | — | 250,258 | 182,980 | — | 182,980 |
There are no relevant guarantees covering credit risk and these are valued when they are settled; no materially significant direct guarantees exist. Existing guarantees, if appropriate, are made through IATA.
62
NOTE 9 - ACCOUNTS RECEIVABLE FROM/PAYABLE TO RELATED ENTITIES
The Accounts receivable from and payable to related entities as of September 30, 2013 and December 31, 2012, respectively, are as follows:
(a) | Accounts Receivable |
As of | As of | |||||||||||||||||||
Country | September 30, | December 31, | Transaction | Nature of | ||||||||||||||||
Tax No. | Related party | Relationship | of origin | 2013 | 2012 | Currency | deadlines | transaction | ||||||||||||
ThUS$ | ThUS$ | |||||||||||||||||||
Unaudited | ||||||||||||||||||||
96.810.370-9 | Inversiones Costa Verde Ltda. y CPA. | Controlling shareholder | Chile | — | 1 | CLP | 30 to 45 days | Monetary | ||||||||||||
78.591.370-1 | Bethia S.A. y Filiales | Others related parties | Chile | 612 | 14,534 | CLP | 30 to 45 days | Monetary | ||||||||||||
87.752.000-5 | Granja Marina Tornagaleones S.A. | Others related parties | Chile | 24 | 30 | CLP | 30 to 45 days | Monetary | ||||||||||||
Foreign | Made In Everywhere Repr. Com. Distr. Ltda. | Others related parties | Brazil | 2 | — | BRL | 30 to 45 days | Monetary | ||||||||||||
Foreign | TAM Aviação Executiva e Taxi Aéreo S.A. | Others related parties | Brazil | 10 | 14 | BRL | 30 to 45 days | Monetary | ||||||||||||
Foreign | Prisma Fidelidade S.A. | Others related parties | Brazil | 23 | 597 | BRL | 30 to 45 days | Monetary | ||||||||||||
Foreign | Inversora Aeronautica Argentina | Others related parties | Argentina | — | 11 | US$ | 30 to 45 days | Monetary | ||||||||||||
|
|
|
| |||||||||||||||||
Total current assets | 671 | 15,187 | ||||||||||||||||||
|
|
|
|
On December 28, 2012, Inmobiliaria Aeronáutica S.A. as seller and Sotraser S.A. (Subsidiary of Bethia S.A.) as purchaser, entered into an agreement to purchase the land called “Lot No. 12 of parcellation project Lo Echevers”. The value of the sale amounts to ThUS$ 14,217. On September 30, 2013, this balance is paid.
63
(b) | Accounts payable |
Tax No. | Related party | Relationship | Country of origin | As of September 30, 2013 | As of December 31, 2012 | Currency | Transaction deadlines | Nature of transaction | ||||||||||||
ThUS$ | ThUS$ | |||||||||||||||||||
Unaudited | ||||||||||||||||||||
96.847.880-K | Lufthansa Lan Technical Training S.A. | Associate | Chile | 7 | 237 | US$ | 30 to 45 days | Monetary | ||||||||||||
78.591.370-1 | Bethia S.A. y Filiales | Other related parties | Chile | 3 | 14 | CLP | 30 to 45 days | Monetary | ||||||||||||
Foreign | Made In Everywhere Repr. Com. Distr. Ltda. | Other related parties | Brazil | — | 23 | BRL | 30 to 45 days | Monetary | ||||||||||||
Foreign | Inversora Aeronaútica Argentina | Other related parties | Argentina | 225 | — | US$ | 30 to 45 days | Monetary | ||||||||||||
|
|
|
| |||||||||||||||||
Total current liabilities | 235 | 274 | ||||||||||||||||||
|
|
|
|
Transactions between related parties have been carried out on free-trade conditions between interested and duly-informed parties.
64
NOTE 10 - INVENTORIES
The Inventories at September 30, 2013 and December 31, 2012 respectively, are detailed below:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Technical stock | 186,997 | 145,665 | ||||||
Non-technical stock | 45,364 | 31,153 | ||||||
|
|
|
| |||||
Total production suppliers | 232,361 | 176,818 | ||||||
|
|
|
|
The items included in this heading are spare parts and materials that will be used mainly in consumption in in-flight and maintenance services provided to the Company and third parties, which are valued at average cost, net of provision for obsolescence that as of September 30, 2013 amounts to ThUS$ 1,568 (ThUS$ 1,174 as of December 31, 2012). The resulting amounts do not exceed the respective net realizable values.
As of September 30, 2013, the Company recorded ThUS$ 121,800 (ThUS$ 60,620 as of September 30, 2012) within the income statement, mainly due to in-flight consumption and maintenance, which forms part of Cost of sales.
65
NOTE 11 - TAX ASSETS
The composition of Tax assets is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Sales tax | 118,077 | 106,736 | ||||||
Income tax | 87,569 | 95,785 | ||||||
Others | 5,809 | 7,847 | ||||||
|
|
|
| |||||
Total current | 211,455 | 210,368 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Sales tax | 69,724 | 73,050 | ||||||
|
|
|
| |||||
Total non-current | 69,724 | 73,050 | ||||||
|
|
|
|
66
NOTE 12 - OTHER FINANCIAL ASSETS
The composition of Other financial assets is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
(a) Other financial assets | 831,663 | 632,439 | ||||||
(b) Hedging asset | 6,124 | 4,104 | ||||||
|
|
|
| |||||
Total current | 837,787 | 636,543 | ||||||
|
|
|
| |||||
Non-current | ||||||||
(a) Other financial assets | 70,802 | 72,977 | ||||||
(b) Hedging asset | — | 1,118 | ||||||
|
|
|
| |||||
Total non-current | 70,802 | 74,095 | ||||||
|
|
|
|
67
(a) | Other financial assets |
Other financial assets as of September 30, 2013 and December 31, 2012, respectively, are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Private investment funds | 701,257 | 317,598 | ||||||
Deposits in guarantee (aircraft) | 46,459 | 33,012 | ||||||
Guarantees for margins of derivatives | 40,987 | 121,889 | ||||||
Time deposits | 28,404 | — | ||||||
Other guarantees given | 6,739 | 7,466 | ||||||
Financial letters | 5,862 | 73,611 | ||||||
Other investments | 1,678 | 799 | ||||||
Domestic and foreign bonds | 234 | 748 | ||||||
Certificate of deposit (CBD) | 43 | 77,316 | ||||||
|
|
|
| |||||
Total current | 831,663 | 632,439 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Deposits in guarantee (aircraft) | 50,019 | 37,247 | ||||||
Deposits in guarantee (loan) | 10,823 | 29,344 | ||||||
Other guarantees given | 9,453 | 5,879 | ||||||
Other investments | 507 | 507 | ||||||
|
|
|
| |||||
Total non-current | 70,802 | 72,977 | ||||||
|
|
|
| |||||
Total other financial assets | 902,465 | 705,416 | ||||||
|
|
|
|
68
(b) | Hedging assets |
Hedging assets as of September 30, 2013 and December 31, 2012, are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Interest accrued since the last payment date of currency Swap | 774 | — | ||||||
Fair value of interest rate derivatives | 5 | 6 | ||||||
Fair value of fuel price derivatives | 5,345 | 4,098 | ||||||
|
|
|
| |||||
Total current | 6,124 | 4,104 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Fair value of foreign currency derivatives | — | 95 | ||||||
Fair value of fuel price derivatives | — | 1,023 | ||||||
|
|
|
| |||||
Total non-current | — | 1,118 | ||||||
|
|
|
| |||||
Total hedging asset | 6,124 | 5,222 | ||||||
|
|
|
|
The foreign currency derivatives exchange is collars and cross currency swap.
The types of derivative hedging contracts maintained by the Company at the end of each period are presented in Note 21.
69
NOTE 13 - OTHER NON-FINANCIAL ASSETS
The composition of Other non-financial assets is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
(a) Advance payments | 63,274 | 45,826 | ||||||
(b) Other assets | 162,933 | 123,995 | ||||||
|
|
|
| |||||
Total current | 226,207 | 169,821 | ||||||
|
|
|
| |||||
Non-Current | ||||||||
(a) Advance payments | 54,167 | 39,707 | ||||||
(b) Other assets | 150,344 | 195,230 | ||||||
|
|
|
| |||||
Total non-current | 204,511 | 234,937 | ||||||
|
|
|
|
(a) | Advance payments |
Advance payments as of September 30, 2013 as of December 31, 2012 are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Handling and ground handling services | 212 | 158 | ||||||
Aircraft leases | 27,611 | 18,703 | ||||||
Aircraft insurance and other | 18,170 | 12,643 | ||||||
Others | 17,281 | 14,322 | ||||||
|
|
|
| |||||
Total current | 63,274 | 45,826 | ||||||
|
|
|
| |||||
Non-Current | ||||||||
Aircraft leases | 21,772 | 20,732 | ||||||
Others | 32,395 | 18,975 | ||||||
|
|
|
| |||||
Total non-current | 54,167 | 39,707 | ||||||
|
|
|
| |||||
Total advance payments | 117,441 | 85,533 | ||||||
|
|
|
|
70
(b) | Other assets |
Other assets as of September 30, 2013, and December 31, 2012 are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Aircraft maintenance reserve (*) | 162,224 | 123,299 | ||||||
Contributions to SITA | 709 | 696 | ||||||
|
|
|
| |||||
Total current | 162,933 | 123,995 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Aircraft maintenance reserve (*) | 84,513 | 140,116 | ||||||
Judicial deposits | 65,116 | 54,336 | ||||||
Contributions to SITA | 462 | 474 | ||||||
Others | 253 | 304 | ||||||
|
|
|
| |||||
Total non-current | 150,344 | 195,230 | ||||||
|
|
|
| |||||
Total other assets | 313,277 | 319,225 | ||||||
|
|
|
|
(*) | Some leases establish the obligation of the lessee to make deposits to the lessor as a guarantee of compliance with the maintenance and return conditions. These deposits, often called maintenance reserves, accumulate until a major maintenance is performed, once made, is request the recovery to the lessor. At the end of the contract period, the balance between paid reservations and conditions agreed with levels of maintain in delivering, be offset the parties if applicable (Note 2.23). |
71
NOTE 14 - NON-CURRENT ASSETS (OR DISPOSAL GROUPS) CLASSIFIED AS HELD FOR SALE
Non-current assets and disposal groups held for sale as of September 30, 2013, and December 31, 2012 are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Aircraft | 8,649 | 44,878 | ||||||
Rotables | 1,430 | 1,184 | ||||||
Inventories on consignment | 139 | 686 | ||||||
Engines | 542 | 542 | ||||||
Scrapped aircraft | 365 | 365 | ||||||
|
|
|
| |||||
Total | 11,125 | 47,655 | ||||||
|
|
|
|
During 2012, two A318-100 aircraft were transferred from the heading of Property, plant, and equipment to Non-current assets or groups of assets for disposal classed as held for sale. These two aircraft were sold during the first quarter of 2013.
The figures shown in this item are presented at book value or fair value minus sales cost, whichever is lower.
The Company has no discontinued operations as of September 30, 2013.
72
NOTE 15 - INVESTMENTS IN SUBSIDIARIES
The Company has investments in companies recognized as investments in subsidiaries. All the companies defined as subsidiaries have been consolidated within the financial statements of LATAM Airlines Group S.A. and Subsidiaries. The consolidation also includes special-purpose entities and private investment funds.
The following is a summary of financial information with respect to the sum of the financial statements of subsidiary companies, special-purpose entities and private investment funds that have been consolidated:
As of September 30, 2013 (Unaudited) | ||||||||
Assets | Liabilities | |||||||
ThUS$ | ThUS$ | |||||||
Current | 3,027,820 | 4,094,084 | ||||||
Non-current | 6,383,745 | 5,292,306 | ||||||
|
|
|
| |||||
Total | 9,411,565 | 9,386,390 | ||||||
|
|
|
|
As of December 31, 2012 | ||||||||
Assets | Liabilities | |||||||
ThUS$ | ThUS$ | |||||||
Current | 2,430,337 | 4,264,346 | ||||||
Non-current | 8,186,335 | 6,553,289 | ||||||
|
|
|
| |||||
Total | 10,616,672 | 10,817,635 | ||||||
|
|
|
|
For the nine months ended | For the three months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Total operating revenues | 6,661,946 | 3,959,568 | 2,362,457 | 2,476,987 | ||||||||||||
Total expenses | (6,879,781 | ) | (3,950,343 | ) | (2,320,052 | ) | (2,495,767 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total net income | (217,835 | ) | 9,225 | 42,405 | (18,780 | ) | ||||||||||
|
|
|
|
|
|
|
|
73
Significant subsidiaries detailed as of September 30, 2013
Name of significant subsidiary | Country of incorporation | Functional currency | % Ownership | Nature and scope of significant restrictions on transferring funds to controller | ||||||
Lan Perú S.A. | Peru | US$ | 69.97858 | Without significant restrictions | ||||||
Lan Cargo S.A. | Chile | US$ | 99.89803 | Without significant restrictions | ||||||
Lan Argentina S.A. | Argentina | ARS | 94.99055 | Without significant restrictions | ||||||
Transporte Aéreo S.A. | Chile | US$ | 99.89804 | Without significant restrictions | ||||||
Aerolane Líneas Aéreas Nacionalesdel Ecuador S.A. | Ecuador | US$ | 71.94990 | Without significant restrictions | ||||||
Aerovías de Integración Regional, AIRES S.A. | Colombia | COP | 98.81112 | Without significant restrictions | ||||||
TAM S.A. | Brazil | BRL | 99.99938 | Without significant restrictions |
Summary financial information of significant subsidiaries
Results for the period | ||||||||||||||||||||||||||||||||
Statement of financial position as of September 30, 2013 | ended September 30, 2013 | |||||||||||||||||||||||||||||||
Total | Current | Non-current | Total | Current | Non-current | Net | ||||||||||||||||||||||||||
Name of significant subsidiary | Assets | Assets | Assets | Liabilities | Liabilities | Liabilities | Revenue | Income | ||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Unaudited | Unaudited | |||||||||||||||||||||||||||||||
Lan Perú S.A. | 242,310 | 213,801 | 28,509 | 242,385 | 240,916 | 1,469 | 319,306 | (7,727 | ) | |||||||||||||||||||||||
Lan Cargo S.A. | 789,115 | 328,184 | 460,931 | 432,504 | 229,711 | 202,793 | 73,629 | 1,183 | ||||||||||||||||||||||||
Lan Argentina S.A. | 208,517 | 176,550 | 31,967 | 197,980 | 195,623 | 2,357 | 125,655 | (7,694 | ) | |||||||||||||||||||||||
Transporte Aéreo S.A. | 383,090 | 90,876 | 292,214 | 130,157 | 40,374 | 89,783 | 96,636 | 9,510 | ||||||||||||||||||||||||
Aerolane Líneas Aéreas Nacionalesdel Ecuador S.A. | 100,096 | 63,723 | 36,373 | 119,842 | 116,005 | 3,837 | 89,469 | (22,666 | ) | |||||||||||||||||||||||
Aerovías de Integración Regional, AIRES S.A. | 173,044 | 56,811 | 116,233 | 54,355 | 43,205 | 11,150 | 90,091 | (55,993 | ) | |||||||||||||||||||||||
TAM S.A. (*) | 8,982,021 | 2,631,607 | 6,350,414 | 8,110,280 | 3,486,626 | 4,623,654 | 5,021,902 | (408,050 | ) |
(*) | Corresponds to consolidated information of TAM S.A. and Subsidiaries. |
74
Significant subsidiaries detailed as of December 31, 2012
Name of significant subsidiary | Country of incorporation | Functional currency | % Ownership | Nature and scope of significant restrictions on transferring funds to controller | ||||||
Lan Perú S.A. | Peru | US$ | 69.97858 | Without significant restrictions | ||||||
Lan Cargo S.A. | Chile | US$ | 99.89803 | Without significant restrictions | ||||||
Lan Argentina S.A. | Argentina | ARS | 94.99055 | Without significant restrictions | ||||||
Transporte Aéreo S.A. | Chile | US$ | 99.89804 | Without significant restrictions | ||||||
Aerolane Líneas Aéreas Nacionalesdel Ecuador S.A. | Ecuador | US$ | 71.94990 | Without significant restrictions | ||||||
Aerovías de Integración Regional, AIRES S.A. | Colombia | COP | 98.21089 | Without significant restrictions | ||||||
TAM S.A. | Brazil | BRL | 99.99938 | Without significant restrictions |
Summary financial information of significant subsidiaries
Results for the period | ||||||||||||||||||||||||||||||||
Statement of financial position as of December 31, 2012 | ended September 30, 2012 | |||||||||||||||||||||||||||||||
Total | Current | Non-current | Total | Current | Non-current | Net | ||||||||||||||||||||||||||
Name of significant subsidiary | Assets | Assets | Assets | Liabilities | Liabilities | Liabilities | Revenue | Income | ||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||||||
Lan Perú S.A. | 159,361 | 133,448 | 25,913 | 150,319 | 149,263 | 1,056 | 774,489 | (2,782 | ) | |||||||||||||||||||||||
Lan Cargo S.A. | 727,091 | 172,856 | 554,235 | 371,663 | 169,501 | 202,162 | 196,462 | (3,446 | ) | |||||||||||||||||||||||
Lan Argentina S.A. | 165,961 | 144,463 | 21,498 | 141,454 | 139,653 | 1,801 | 404,609 | 3,724 | ||||||||||||||||||||||||
Transporte Aéreo S.A. | 357,725 | 249,174 | 108,551 | 114,302 | 26,731 | 87,571 | 264,043 | 1,211 | ||||||||||||||||||||||||
Aerolane Líneas Aéreas Nacionalesdel Ecuador S.A. | 74,204 | 40,531 | 33,673 | 71,284 | 68,068 | 3,216 | 229,386 | (7,214 | ) | |||||||||||||||||||||||
Aerovías de Integración Regional, AIRES S.A. | 165,032 | 58,457 | 106,575 | 58,398 | 46,434 | 11,964 | 198,760 | (47,067 | ) | |||||||||||||||||||||||
TAM S.A. (*) | 8,821,298 | 2,003,122 | 6,818,176 | 9,198,899 | 3,556,778 | 5,642,121 | 1,875,230 | (8,235 | ) |
(*) | Corresponds to consolidated information of TAM S.A. and Subsidiaries. |
75
NOTE 16 - EQUITY ACCOUNTED INVESTMENTS
The composition of investments accounted for using the equity method is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
(a) Related companies | 2,614 | 1,619 | ||||||
(b) Joint Ventures | 4,117 | 2,138 | ||||||
|
|
|
| |||||
Equity accounted investments | 6,731 | 3,757 | ||||||
|
|
|
|
(a) | Related Companies |
The following summarized financial information is the sum of the financial statements of the investees, corresponding to the statements of financial position as of September 30, 2013 and December 31, 2012, and the statements of income, for the periods January to September, 2013 and January to September, 2012.
As of September 30, 2013 (Unaudited) | ||||||||
Assets | Liabilities | |||||||
ThUS$ | ThUS$ | |||||||
Current | 2,225 | 916 | ||||||
Non-current | 359 | 109 | ||||||
|
|
|
| |||||
Total | 2,584 | 1,025 | ||||||
|
|
|
|
As of December 31, 2012 | ||||||||
Assets | Liabilities | |||||||
ThUS$ | ThUS$ | |||||||
Current | 3,193 | 1,421 | ||||||
Non-current | 419 | 109 | ||||||
|
|
|
| |||||
Total | 3,612 | 1,530 | ||||||
|
|
|
|
For the nine months ended | For the three months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Total operating revenues | 2,229 | 2,472 | 1,080 | 1,159 | ||||||||||||
Total expenses | (1,773 | ) | (1,977 | ) | (658 | ) | (841 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Sum of net income | 456 | 495 | 422 | 318 | ||||||||||||
|
|
|
|
|
|
|
|
76
As an investment in associates, the Company has shown its holdings in the following companies: Austral Sociedad Concesionaria S.A. and Lufthansa Lan Technical Training S.A. The Company made no investments in associates during the present period.
Percentage of ownership | Cost of investment | |||||||||||||||||||
As of | As of | As of | As of | |||||||||||||||||
Country of | Functional | September 30, | December 31, | September 30, | December 31, | |||||||||||||||
Company | incorporation | currency | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
% | % | ThUS$ | ThUS$ | |||||||||||||||||
Unaudited | Unaudited | |||||||||||||||||||
Austral Sociedad Concesionaria S.A. | Chile | CLP | 20.00 | 20.00 | 661 | 661 | ||||||||||||||
Lufthansa Lan Technical Training S.A. | Chile | CLP | 50.00 | 50.00 | 702 | 702 |
These companies do not have significant restrictions on the ability to transfer funds.
The movement of investments in associates between January 1, 2012 and September 30, 2013 is as follows:
ThUS$ | ||||
Opening balance as of January 1, 2012 | 991 | |||
|
| |||
Participation in profits | 248 | |||
Adjustment to participation in previous years profits | (178 | ) | ||
Dividends received | (352 | ) | ||
|
| |||
Total changes in investments in associated entities | (282 | ) | ||
|
| |||
Closing balance as of September 30, 2012 (Unaudited) | 709 | |||
|
| |||
Opening balance as of October 1, 2012 | 709 | |||
|
| |||
Participation in profits | 47 | |||
Other increases, investments in associated entities | 863 | |||
|
| |||
Total changes in investments in associated entities | 910 | |||
|
| |||
Closing balance as of December 31, 2012 | 1,619 | |||
|
| |||
Opening balance as of January 1, 2013 | 1,619 | |||
|
| |||
Participation in profits | 233 | |||
Other increases, investments in associated entities | 762 | |||
|
| |||
Total changes in investments in associated entities | 995 | |||
|
| |||
Closing balance as of September 30, 2013 (Unaudited) | 2,614 | |||
|
|
The Company records the gain or loss on its investments in associates on a monthly basis in the consolidated statement of income, using the equity method. The Company has no investments in associates which are not accounted for using the equity method.
77
(b) | Joint Venture |
Multiplus S.A., a subsidiary of TAM S.A. and AIMIA Newco UK LLP (“Aimia”) jointly control the Companhia Brasileira de Serviços de Fidelização S.A. (“CBSF”). The company was incorporated on April 2, 2012, whose corporate name was changed to Prismah Fidelidade S.A. (“Prismah”).
The purpose of Prismah Fidelidade S.A. is the provision of various services, the development of programs related to loyalty programs/customer relationships and sales incentive programs for companies. Their activities include but are not limited to: the customer relationship management, technical and technological consulting, and through points programs or other ways of possible changes, the conversion of loyalty program points.
The shareholding participation in Prismah Fidelidade S.A., does not allow unilateral decisions that affect investment returns. Multiplus S.A. owns 50% of company shares and participation is accounted by the equity method proportional investment, initially recognized at cost. The participation in earnings of the company are recognized in income and the participation in changes in reserves are recognized in reserves of Multiplus S.A.
Movement investment at September 30, 2013 | ||||||||
Amount of | ||||||||
shares | ThUS$ | |||||||
Capital aware - AAG Constituent (*) | 500 | 1 | ||||||
Capital increase - AGE (**) 09/18/2012 | 6,571,500 | 3,215 | ||||||
Equity accounted earnings | — | (1,078 | ) | |||||
|
|
|
| |||||
Closing balance at December 31, 2012 | 6,572,000 | 2,138 | ||||||
|
|
|
| |||||
Future advance capital increase | — | 4,977 | ||||||
Equity accounted earnings | — | (2,910 | ) | |||||
Conversion difference affiliates | — | (88 | ) | |||||
|
|
|
| |||||
Closing balance at September 30, 2013 (Unaudited) | 6,572,000 | 4,117 | ||||||
|
|
|
|
(*) | General Assembly Act |
(**) | Extraordinary General Assembly |
78
The company Prismah Fidelidade S.A. as of September 30, 2013, has the following items:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
Unaudited | ||||||||
Social capital ThUS$ | 16,323 | 6,432 | ||||||
Number of ordinary shares | 35,200,194 | 13,144,000 | ||||||
Ordinary shares owned by Multiplus S.A. | 17,600,097 | 6,572,000 | ||||||
Participation % | 50 | 50 |
ThUS$ | ThUS$ | |||||||
Equity accounted investments | 4,117 | 2,138 | ||||||
Current assets | 8,107 | 4,356 | ||||||
Non-current assets | 1,766 | 2,275 | ||||||
Current liabilities | 1,639 | 2,356 |
For the periods ended | ||||||||
September 30, | ||||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Result of the period | (5,819 | ) | (1,065 | ) | ||||
Equity accounted earnings | (2,910 | ) | (533 | ) | ||||
Revenues in the period | 414 | 9 | ||||||
Expense in the period | (6,233 | ) | (1,075 | ) |
79
NOTE 17 - INTANGIBLE ASSETS OTHER THAN GOODWILL
The details of intangible assets are as follows:
Classes of intangible assets (net) | As of September 30, 2013 | As of December 31, 2012 | ||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Computer software | 129,596 | 144,244 | ||||||
Developing software | 50,557 | 54,635 | ||||||
Airport slots | 1,430,569 | 1,561,130 | ||||||
Loyalty program | 476,826 | 520,344 | ||||||
Trademarks | 92,773 | 101,240 | ||||||
Other assets | 637 | 806 | ||||||
|
|
|
| |||||
Total | 2,180,958 | 2,382,399 | ||||||
|
|
|
| |||||
Classes of intangible assets (gross) | As of September 30, 2013 | As of December 31, 2012 | ||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Computer software | 251,897 | 223,586 | ||||||
Developing software | 50,557 | 54,635 | ||||||
Airport slots | 1,430,569 | 1,561,130 | ||||||
Loyalty program | 476,826 | 520,344 | ||||||
Trademarks | 92,773 | 101,240 | ||||||
Other assets | 1,324 | 1,372 | ||||||
|
|
|
| |||||
Total | 2,303,946 | 2,462,307 | ||||||
|
|
|
|
80
The movement in Intangible assets other than goodwill between January 1, 2012 and September 30, 2013 is as follows:
Computer software Net | Developing software | Airport slots | Trademarks and loyalty program | Other assets Net | Total | |||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||
Opening balance as of January 1, 2012 | 25,124 | 39,395 | — | — | 404 | 64,923 | ||||||||||||||||||
Additions | 4,146 | 36,302 | — | 24 | — | 40,472 | ||||||||||||||||||
Withdrawals | (60 | ) | — | — | (2 | ) | — | (62 | ) | |||||||||||||||
Transfer software | 3,375 | (3,313 | ) | — | — | — | 62 | |||||||||||||||||
Acquisitions through business combinations | 78,106 | 22,864 | 1,552,016 | 617,934 | 561 | 2,271,481 | ||||||||||||||||||
Difference by subsidiaries conversion | 2,016 | 354 | 19,031 | 7,578 | 7 | 28,986 | ||||||||||||||||||
Amortization | (21,225 | ) | — | — | — | (121 | ) | (21,346 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Closing balance as of September 30, 2012 (Unaudited) | 91,482 | 95,602 | 1,571,047 | 625,534 | 851 | 2,384,516 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Opening balance as of October 1, 2012 | 91,482 | 95,602 | 1,571,047 | 625,534 | 851 | 2,384,516 | ||||||||||||||||||
Additions | 14,623 | 7,330 | — | — | — | 21,953 | ||||||||||||||||||
Withdrawals | (1,576 | ) | — | — | — | — | (1,576 | ) | ||||||||||||||||
Transfer software | 52,243 | (48,078 | ) | — | — | — | 4,165 | |||||||||||||||||
Subsidiaries conversion difference | (2,773 | ) | (219 | ) | (9,917 | ) | (3,950 | ) | (4 | ) | (16,863 | ) | ||||||||||||
Amortization | (9,755 | ) | — | — | — | (41 | ) | (9,796 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Closing balance as of December 31, 2012 | 144,244 | 54,635 | 1,561,130 | 621,584 | 806 | 2,382,399 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Opening balance as of January 1, 2013 | 144,244 | 54,635 | 1,561,130 | 621,584 | 806 | 2,382,399 | ||||||||||||||||||
Additions | 5,303 | 31,010 | — | — | — | 36,313 | ||||||||||||||||||
Withdrawals | (135 | ) | (1,954 | ) | — | — | — | (2,089 | ) | |||||||||||||||
Transfer software | 27,203 | (29,928 | ) | — | — | — | (2,725 | ) | ||||||||||||||||
Subsidiaries conversion difference | (4,060 | ) | (3,206 | ) | (130,561 | ) | (51,985 | ) | (48 | ) | (189,860 | ) | ||||||||||||
Amortization | (42,959 | ) | — | — | — | (121 | ) | (43,080 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Closing balance as of September 30, 2013 (Unaudited) | 129,596 | 50,557 | 1,430,569 | 569,599 | 637 | 2,180,958 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
The airport slots correspond to an administrative authorization for the arrival and departure of aircraft, in a specific airport, within a period of time.
The coalition and loyalty program corresponds to the system of accumulation and redemption of points that has developed Multiplus.
Intangible assets with defined useful lives consist primarily of licensing and computer software, for which the Company has established useful lives of between 3 and 7 years.
The amortization of the period is shown in the consolidated statement of income in administrative expenses. The accumulated amortization of computer programs as of September 30, 2013 amounts to ThUS$ 122,301 (ThUS$ 79,342 as of December 31, 2012). The accumulated amortization of other identifiable intangible assets as of September 30, 2013 amounts to ThUS$ 687 (ThUS$ 566 as of December 31, 2012).
81
NOTE 18 - GOODWILL AND BUSINESS COMBINATION
18.1. | Goodwill |
The goodwill represents the excess of cost of acquisition over the fair value of the participation of the Company in the identifiable net assets of the subsidiaries at the acquisition date. Goodwill at September 30, 2013 amounted to ThUS$ 3,867,188 (ThUS$ 4,213,160 as revised at December 31, 2012).
At June 30, 2013 and December 31, 2012, the Company performed impairment tests based on value in use and no impairment was identified. These tests are done at least once per year.
The recoverable amounts of cash generating units have been determined based on the value in use calculations. These values were determined from estimated cash flows, which have been approved by the Administration. Cash flows beyond this period are extrapolated using the rate long-term growth described below. The main assumptions used are disclosed as follows:
• | Long-term growth rate: We used a growth rate between 4.0% and 5.0% per year. |
• | Exchange rate R$ / US$: we used a rate between 2.03 and 2.15 R$ / US $, in line with the expectations of the central bank of Brazil. |
• | Discount rate: based on the weighted average cost of capital (WACC - Weighted Average Cost of Capital) we used a rate between 15% and 17%. |
• | Fuel Price (Jet Fuel) prices are used in a range of 2.88 and 3.10 US$ / gallon, from futures price curves commodities markets. |
The result of the impairment test, which includes a sensitivity analysis of the main variables, showed that the estimated recoverable amount is higher than carrying value of the goodwill allocated to the cash generating units, and therefore impairment was not detected.
The sensitivity analysis included individual impact of variations in the key assumptions with impact on the determination of the recoverable amounts, namely:
• | Using a discount rate up to 18% |
• | Using a minimum growth rate of 3.5% |
• | Using an exchange rate of up to 2.30 R$ / US$ |
In none of the previous cases was determined an impairment. Additionally, management believes that no reasonable possible combinations of changes in key assumptions would result in an impairment.
82
The movement of Goodwill from January 1, 2012 to September 30, 2013, is as follows:
Air transportation business TAM (**) | Coalition and loyalty program Multiplus (**) | Other | Total | |||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | |||||||||||||
Opening balance as of January 1, 2012 | — | — | 163,777 | 163,777 | ||||||||||||
Additions by business combinations | 2,118,057 | — | — | 2,118,057 | ||||||||||||
Amendment initial recognition (*) | 1,051,645 | 846,285 | — | 1,897,930 | ||||||||||||
Increase (decrease) due to exchange rate differences | 38,868 | 10,378 | 7,862 | 57,108 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Closing balance as of September 30, 2012 (Unaudited) | 3,208,570 | 856,663 | 171,639 | 4,236,872 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Opening balance as of October 1, 2012 | 3,208,570 | 856,663 | 171,639 | 4,236,872 | ||||||||||||
Increase (decrease) due to exchange rate differences | (20,254 | ) | (5,409 | ) | 1,951 | (23,712 | ) | |||||||||
|
|
|
|
|
|
|
| |||||||||
Closing balance as of December 31, 2012 | 3,188,316 | 851,254 | 173,590 | 4,213,160 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Opening balance as of January 1, 2013 | 3,188,316 | 851,254 | 173,590 | 4,213,160 | ||||||||||||
Increase (decrease) due to exchange rate differences | (266,647 | ) | (71,192 | ) | (8,133 | ) | (345,972 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Closing balance as of September 30, 2013 (Unaudited) | 2,921,669 | 780,062 | 165,457 | 3,867,188 | ||||||||||||
|
|
|
|
|
|
|
|
(*) | The amendments to initial recognition includes: changes in fair values determined in accordance with IFRS 3 during the measurement period, including Goodwill allocation to loyalty coalition program of Multiplus and correction of non-significant errors originated before the date of acquisition. |
(**) | The amounts presented in September 2012 and December 2012 have been revised in accordance with IFRS 3. |
83
18.2. Business combination
The following information summarizes the business combination process with TAM S.A. and subsidiaries:
(a) | Description of the business combination process with TAM S.A. and Subsidiaries |
(b) | Business combination in accordance with IFRS 3 |
(c) | Revision of the consolidated financial statements for the 2012 accounting period |
(d) | Other information |
(a) | Description of the Business Combination process with TAM S.A and Subsidiaries |
Dated June 22, 2012 the merger was successfully completed between LAN Airlines S.A. (today LATAM Airlines Group S.A.), with Sister Holdco S.A. and Holdco II S.A., two companies specially constituted for the purpose of the association between the Company and TAM S.A. which was reflected in the deed of execution of merger issued by such companies at the same time, and it was rectified by deed dated July 10, 2012. These scriptures recorded the share exchange of Sister Holdco S.A. and Holdco II S.A. for LAN’s shares in one related of 0.9 of LAN’s shares for each Sister Holdco S.A. and Holdco II S.A.. That exchange occurred with the delivery of the respective LAN shares to shareholders of Sister Holdco S.A. and the respective BDRs (“Brazilian Depositary Receipts”) and ADRs (“American Depositary Receipts”) from LAN to the shareholders of Holdco II S.A. abroad on June 27, 2012, that is, TAM shareholders who accepted the exchange offer.
The share exchange offer materialized with the exchange previously referenced was 99.9% of the TAM shares that accepted that TAM would stop being a public company in Brazil, which fulfilled the condition for the cancellation of registration, requirement for the success of the exchange offer.
The capital increase in LATAM Airline S.A originated in the merger is determined by the social capital amount of Sister Holdco S.A. and Holdco II S.A., equivalent to ThUS$ 951,409. The difference between this value and the purchase price (Note 18.2.b), amounting to ThUS$ 2,665,692 was included in “Other reserves” during 2012.
On July 27, 2012, TAM made use of the Squeeze-Out granted by the Brazilian legislation, under which a compulsory could rescue all TAM shares that were not exchanged in the exchange offer or contributed by controlling shareholders of TAM. Since TAM shares received in the exchange offer, plus the shares committed by the controlling shareholders of TAM, represented 95.9% of the total outstanding shares of TAM, the aforementioned condition was met on the remaining 4.1% through the disbursement by TAM of ThUS$ 165,143.
As a consequence of the end of that process: (i) concluded the process of Business Combination of LAN and TAM, and (ii) the renaming of LAN Airlines S.A. to LATAM Airlines Group S.A. became effective.
The costs incurred by LATAM Airline Group S.A. to make the Business Combination amounts to ThUS$ 50,647, and were recorded in the Income statement when they were incurred.
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The ownership structure of TAM, after the business combination, is as follows:
TAM S.A.
Holdco I S.A. | LATAM Airlines Group S.A. | Total Shares | ||||||||||||||||||
Class of shares | Shares | % | Shares | % | ||||||||||||||||
ON (voting rights) | 55,413,784 | 100.00 | — | 55,413,784 | ||||||||||||||||
PN (non-votings rights) | — | 94,718,931 | 100.00 | 94,718,931 | ||||||||||||||||
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Total | 55,413,784 | 94,718,931 | 150,132,715 | |||||||||||||||||
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Holdco I S.A.
TEP Chile S.A. (owned by the controlling shareholders of TAM) | LATAM Airlines Group S.A. | Total shares | ||||||||||||||||||
Class of shares | Shares | % | Shares | % | ||||||||||||||||
Series A (voting rights) | 938 | 80.58 | 226 | 19.42 | 1,164 | |||||||||||||||
Series B (economic right) | — | 55,413,621 | 100.00 | 55,413,621 | ||||||||||||||||
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Total | 938 | 55,413,847 | 55,414,785 | |||||||||||||||||
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TAM is a leading airline in Brazil, with more than 35 years in operation, and as of the date of the business combination it boasted: over 30,000 employees, a fleet of more than 160 aircraft, annual sales surpassing US$7.3 billion, and a 2011 Brazilian market share of 41.2% domestically, and 88.1% of international flights operated by Brazilian-flagged airlines. It is appropriate to point out that Multiplus S.A., a company controlled by TAM S.A., is engaged in the development and administration of client loyalty programs. Multiplus S.A. has been registered in the “Novo Mercado” section on the BMF&Bovespa exchange since February 3, 2010.
Under IFRS 3 this operation has been registered as a business combination consigning to the Company as purchaser of TAM. Besides the fact that LATAM is the one who issuing the shares in the combination, this is based on the economic rights and relative vote relating of the former shareholders of LAN and TAM over the combined entity.
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(b) Business combination in accordance with IFRS 3 (*)
IFRS 3 establishes principles and requirements for how the acquirer:
i. | Recognizes and measure the consideration paid; |
ii. | Recognizes and measure fair value of identifiable net assets acquired; and |
iii. | Recognizes and measure the goodwill acquired. |
IFRS 3 provides the acquirer with a reasonable time (measurement period) to obtain the information necessary to identify and measure the three points mentioned above as of the acquisition date. During the measurement period, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. The measurement period shall not exceed one year from the acquisition date (June 22, 2012). Therefore, some amounts reported in previous financial statements as provisional amounts because the accounting was incomplete have been retrospectively adjusted.
(i) | Consideration paid |
The following summarizes the consideration paid for TAM S.A. and subsidiaries:
Number of shares LAN Exchange (a) | Share price at fair value at June 22 exchange rate at June 22 US$ (b) | Total exchange of shares ThUS$ (a) times (b) | Squeeze Out At July 27 at t/c June 22 ThUS$ | Total purchase price ThUS$ | ||||||||||||||
135,119,066 | 26.76973 | 3,617,101 | 165,143 | 3,782,244 | ||||||||||||||
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Value of the share at June 22, 2012 CLP$ 13,489
Exchange rate as of June 22, 2012 503.89 CLP$/US$
Consideration paid was calculated, in accordance with IFRS 3, as the sum of the fair value of the LAN shares provided and the Squeeze-Out cash payment explained in Note 18.2.(a).
(*) | See note 2.2 |
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(ii) | Fair value of identifiable assets acquired and liabilities assumed. |
The following table summarizes the fair value of recognized amounts of identifiable assets acquired and liabilities assumed at the acquisition date.
Fair value | ||||
ThUS$ | ||||
Cash and cash equivalents | 263,986 | |||
Other financial assets | 810,079 | |||
Other non-financial assets | 324,170 | |||
Trade and other accounts receivable | 1,004,331 | |||
Inventories | 66,287 | |||
Tax assets | 145,626 | |||
Assets held for sale | 8,865 | |||
Airport Slots | 1,472,625 | |||
Loyalty program | 517,304 | |||
Other intangible assets | 281,552 | |||
Fleet | 3,178,065 | |||
Other property, plant and equipment | 1,063,036 | |||
Other financial liabilities | (4,802,902 | ) | ||
Other non-financial liabilities | (1,445,463 | ) | ||
Trade and other accounts payables | (1,473,579 | ) | ||
Other provisions | (1,429,012 | ) | ||
Employee benefits | (18,580 | ) | ||
Tax liabilities | (65,185 | ) | ||
Deferred tax | (31,940 | ) | ||
Accounts payable to related entities | (82 | ) | ||
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| |||
Net assets at fair value | (130,817 | ) | ||
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• | The airport slots (landing and take-offs) have been measured at fair value at the date of the combination, using the net present value of projected EBIT of those routes going through those airports where slots were acquired as part of the business combination (Congonhas, JFK and Heathrow); and its useful lives are classified as indefinite, which shall be subject to impairment test annually. |
• | Customer loyalty program “Multiplus” fair value has been measured using estimated discounted cash flows related to the mentioned intangible as of the acquisition date and its useful lives are classified as indefinite, which shall be subject to impairment test annually. |
• | Fair value of fleet was measured using market values and considering model, age and actual maintenance conditions of each airplane. Additionally, in relation with those airplanes under operative lease, maintenance cost and devolution cost have been provided for. |
• | Fair value of Other provisions is related with the recognition of contingent liabilities assumed in a business combination even if it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, according to IFRS 3. |
• | As part of the purchase price allocation required under IFRS 3 carried out during the first half of 2013, errors were identified and corrected that were not material at the LATAM level. These errors originated from TAM S.A. and Subsidiaries. |
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iii. | Goodwill acquired |
The financial statements of LATAM Airlines Group S.A. include goodwill recorded to the value of ThUS$ 4,015,987 calculated and assigned to corresponding segments. The following table summarizes the consideration paid, the fair value of assets acquired, liabilities assumed, non-controlling interest and goodwill acquired at the acquisition date.
ThUS$ | ThUS$ | |||||||
Purchase price | �� | 3,782,244 | ||||||
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| |||||||
Less: | ||||||||
Historic net assets | 578,559 | |||||||
Fair value adjustment: | ||||||||
Airport Slots | (1,472,625 | ) | ||||||
Loyalty program | (517,304 | ) | ||||||
Fleet (included maintenance) | 723,364 | |||||||
Other provisions | 1,157,419 | |||||||
Error correction | 584,126 | |||||||
Deferred tax | 104,342 | |||||||
Other | 130,054 | |||||||
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Total Fair value adjustment | 709,376 | |||||||
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Total net assets at fair value | (130,817 | ) | (130,817 | ) | ||||
Non-controlling interest | 102,926 | |||||||
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Goodwill restated at June 22, 2012 | 4,015,987 | |||||||
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Exchange rate differences | (314,256 | ) | ||||||
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Goodwill at September 30, 2013 (Unaudited) | 3,701,731 | |||||||
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The following table summarizes Goodwill acquired by segments.
Goodwill restated at June 22, 2012 | Conversion adjustment | Goodwill at September 30, 2013 | ||||||||||
ThUS$ | ThUS$ | ThUS$ | ||||||||||
Unaudited | ||||||||||||
Goodwill assigned to the air transportation business TAM | 3,169,702 | (248,033 | ) | 2,921,669 | ||||||||
Goodwill assigned to the coalition and loyalty program Multiplus | 846,285 | (66,223 | ) | 780,062 | ||||||||
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| |||||||
Total Goodwill | 4,015,987 | (314,256 | ) | 3,701,731 | ||||||||
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Non-controlling interest have been measured and recognized at fair value.
(c) | Retrospective revision to 2012 consolidated financial statements. |
88
As required by IFRS, during the first half of 2013, based on new information obtained about facts and circumstances that existed as of the acquisition date, Latam Airlines Group S.A. has retrospectively adjusted the amounts presented in the December 31, 2012 consolidated financial statements. Adjustments are related to the fair value of: fleet, customer loyalty programs and provisions, and to non-material errors identified related to Deferred income and Tax liabilities that existed before the acquisition date.
• | The impact of the fair value adjustments mentioned above at December 31, 2012 increased total assets by US$ 485 million, increased total liabilities by US$ 1.039 million and decreased net results by US$ 19 million for the period then ended. |
• | The impact of errors adjustments mentioned above at December 31, 2012 had an impact of US$ 416 million in relation with Revenue and deferred revenue, US$ 183 million in relation with Taxes and Income taxes, and US$ 11 million (loss) for the period then ended. |
The revised amounts of the statement of financial position at June 22, 2012, date of the business combination of TAM S.A. and its subsidiaries are as follows:
Fair value at June 22, 2012 | Variation | Fair value modification | Errors on Revenue and deferred revenue cycle | Errors on Tax and deferred taxes cycle | ||||||||||||||||||||
publicated at June 30, 2013 | publicated at december 31, 2012 | |||||||||||||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | |||||||||||||||||||
Unaudited | ||||||||||||||||||||||||
Cash and cash equivalents | 263,986 | 263,986 | — | — | — | — | ||||||||||||||||||
Other financial assets | 810,079 | 810,079 | — | — | — | — | ||||||||||||||||||
Other non-financial assets | 324,170 | 333,086 | (8,916 | ) | (8,916 | ) | — | — | ||||||||||||||||
Trade and other accounts receivable | 1,004,331 | 1,035,692 | (31,361 | ) | (15,686 | ) | (15,675 | ) | — | |||||||||||||||
Inventories | 66,287 | 69,823 | (3,536 | ) | (3,434 | ) | (102 | ) | — | |||||||||||||||
Tax assets | 145,626 | 156,215 | (10,589 | ) | (28,897 | ) | (22 | ) | 18,330 | |||||||||||||||
Assets held for sale | 8,865 | 8,865 | — | — | — | — | ||||||||||||||||||
Airport slots | 1,472,625 | 1,472,625 | — | — | — | — | ||||||||||||||||||
Loyalty programs | 517,304 | — | 517,304 | 517,304 | (a) | — | — | |||||||||||||||||
Other intangible assets | 281,552 | 268,190 | 13,362 | 13,385 | (23 | ) | — | |||||||||||||||||
Fleet | 3,178,065 | 3,176,372 | 1,693 | 1,693 | — | — | ||||||||||||||||||
Other property, plant and equipment | 1,063,036 | 1,057,220 | 5,816 | 5,816 | — | — | ||||||||||||||||||
Other financial liabilities | (4,802,902 | ) | (4,802,902 | ) | — | — | — | — | ||||||||||||||||
Other non-financial liabilities | (1,445,463 | ) | (1,064,782 | ) | (380,681 | ) | 16,847 | (397,528 | ) | — | ||||||||||||||
Trade and other accounts payables | (1,473,579 | ) | (1,077,784 | ) | (395,795 | ) | (406,153 | ) (b) | 10,358 | — | ||||||||||||||
Other provisions | (1,429,012 | ) | (634,076 | ) | (794,936 | ) | (742,180 | ) (c) | — | (52,756 | ) | |||||||||||||
Employee benefits | (18,580 | ) | — | (18,580 | ) | (18,580 | ) | — | — | |||||||||||||||
Tax liabilities | (65,185 | ) | (65,185 | ) | — | — | — | — | ||||||||||||||||
Deferred taxes | (31,940 | ) | (22,109 | ) | (9,831 | ) | 136,877 | — | (146,708 | ) | ||||||||||||||
Accounts payable to related entities | (82 | ) | (82 | ) | — | — | — | — | ||||||||||||||||
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Net assets at fair value | (130,817 | ) | 985,233 | (1,116,050 | ) | (531,924 | ) | (402,992 | ) | (181,134 | ) | |||||||||||||
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The main changes made to the fair value correspond to:
(a) | Loyalty program |
Complementing the mentioned in Note 18.2 (b) ii, the company has recognized as an intangible asset the loyalty program and coalition of Multiplus. The program provides a system of coalition flexible and interrelated among its partners and members, which allows a considerable increase in consumer loyalty. This program has been valued at fair value using the income approach, through cash flows from the margins attributed to intangible. His life has been regarded as indefinite, based on the ability to maintain and renew the relationship between strategic partners among others aspects.
(b) | Trade and other accounts payables |
The main fair values reflected in this category are:
• | Maintenance liability: It has been adjusted the initial valuation of major maintenance of the leased fleet, taking into consideration the detailed review of all lease contracts and updates the initial calculation (ThUS$ 303,377). |
• | Aircraft return provision: There was registered a provision to cover the additional cost related with the return of aircraft. This is for the portion accrued at the date of the business combination (ThUS$ 38,818). |
• | Aircraft operating leasing adjustment: There was registered a provision for the difference between the fair value and the real value of future rents under operating leasing (ThUS$ 53,600). |
(c) | Other provision |
The fair value of other provision, correspond to those contingencies with a probability of loss under 50%, which are not provided for the normal application of IFRS enforcement and that only must be registered in the context of a business combination in accordance with IFRS 3.
The detailed fair values for other provision are as follows:
ThUS$ | ThUS$ | |||||||
Civil cases | 3,398 | |||||||
Labor disputes | (5,524 | ) | ||||||
Litigation and tax criteria | 744,306 | |||||||
Direct taxes | 516,292 | |||||||
Indirect taxes | 228,014 | |||||||
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Total | 742,180 | |||||||
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Civil cases correspond to approximately 7,000 cases involving different demands of civil order, filed against the company and whose loss probability is less than 50%.
The labor disputes are approximately 2,200 cases involving different demands of labor order, filed against the company and whose loss probability is less than 50%.
The litigation and tax criteria correspond to approximately 500 cases involving to the tax treatment applicable to direct and indirect taxes, which are found in both administrative and judicial stage, and whose probability of loss is less than 50%.
In the process of determining the fair values of the net assets of TAM S.A. and its Subsidiaries, at the date of the business combination, non-significant errors were detected, at the LATAM level, in Deferred income and Tax liabilities, the nature of these errors correspond to:
• | Revenue and deferred revenue cycle |
Differences between the general ledger and the sub-ledger, corresponding to deferred revenue not recognized related with unused tickets.
The correction of this difference resulted in decreases in the following items of the Statement of financial position of TAM S.A. and its Subsidiaries at June 22, 2012: Trade and other accounts receivable for ThUS$ 15,675, other items of assets for ThUS$ 147 and Trade payables and other accounts payable ThUS$ 10,358, and increases in Other financial liabilities non-current of ThUS$ 397,528.
• | Tax and deferred taxes cycle |
Errors in the determination of annual taxable income used to calculate of deferred tax and the re-calculation and correction of statements, product of changes in the method of determination of tax credits.
The corrections of this errors resulted in the increase of the following items of the Statement of financial position of TAM S.A. and its Subsidiaries at June 22, 2012: Tax assets for ThUS$ 18,330, Other long term provision for ThUS$ 52,756 and Deferred tax liabilities for ThUS$ 146,708.
The adjustments to LATAM Airlines Group SA and subsidiaries, for each type of error between the acquisition date and December 31, 2012 were:
• | Revenue and deferred revenue cycle |
During this period the adjustments are complementary to the error correction made at the acquisition date, and the main modified items are: Trade and other accounts receivables (increase of ThUS$ 40,856) and Other financial liabilities non-current (increase of ThUS$ 50,393) with effect Revenue (loss of ThUS$ 10,236).
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• | Tax and deferred taxes cycle |
During this period the adjustments are complementary to the error correction made at the acquisition date, and the main modified items are: Other provisions non-current (increase of ThUS$ 1,581) and Deferred tax liabilities (decrease of ThUS$ 1,139) with effect on Revenue (loss of ThUS$ 1,581) and loss tax expense (less expense of ThUS$ 1,139).
The effects resulting from the fair value adjustments and errors at December 31, 2012 were the following:
Revised amount for the year ended at december 31, 2012 | Historical amounts for the year ended at december 31, 2012 | Variation | Fair value modification | Errors on Revenue and deferred revenue cycle | Errors on Tax and deferred taxes cycle | |||||||||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | |||||||||||||||||||
Unaudited | ||||||||||||||||||||||||
Revenue | 9,710,372 | 9,722,189 | (11,817 | ) | — | (10,236 | ) | (1,581 | ) | |||||||||||||||
Cost of sale | (7,634,453 | ) | (7,642,643 | ) | 8,190 | 8,190 | (*) | — | — | |||||||||||||||
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Gross margin | 2,075,919 | 2,079,546 | (3,627 | ) | 8,190 | (10,236 | ) | (1,581 | ) | |||||||||||||||
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Other income | 220,156 | 220,156 | — | — | — | — | ||||||||||||||||||
Distribution cost | (803,619 | ) | (803,619 | ) | — | — | — | — | ||||||||||||||||
Administrative expenses | (888,654 | ) | (869,504 | ) | (19,150 | ) | (19,150 | ) (**) | — | — | ||||||||||||||
Other expenses | (311,753 | ) | (311,753 | ) | — | — | — | — | ||||||||||||||||
Other gains / (losses) | (45,831 | ) | (38,750 | ) | (7,081 | ) | (7,081 | ) (*) | — | — | ||||||||||||||
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Gains (losses) from operating activities | 246,218 | 276,076 | (29,858 | ) | (18,041 | ) | (10,236 | ) | (1,581 | ) | ||||||||||||||
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Financial income | 77,489 | 77,489 | — | — | — | — | ||||||||||||||||||
Financial cost | (294,598 | ) | (294,598 | ) | — | — | — | — | ||||||||||||||||
— | — | — | — | |||||||||||||||||||||
Equity accounted earning | 972 | 972 | — | — | — | — | ||||||||||||||||||
Foreign exchange gains / (losses) | 66,685 | 66,685 | — | — | — | — | ||||||||||||||||||
Result of indexation units | (22 | ) | (22 | ) | — | — | — | — | ||||||||||||||||
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Income (loss) before taxes | 96,744 | 126,602 | (29,858 | ) | (18,041 | ) | (10,236 | ) | (1,581 | ) | ||||||||||||||
Income (loss) tax expenses | (102,386 | ) | (102,212 | ) | (174 | ) | (1,313 | ) | — | 1,139 | ||||||||||||||
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NET INCOME (LOSS) FOR THE PERIOD | (5,642 | ) | 24,390 | (30,032 | ) | (19,354 | ) | (10,236 | ) | (442 | ) | |||||||||||||
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Income (loss) attributable to owners of the parent | (19,076 | ) | 10,956 | (30,032 | ) | (19,354 | ) | (10,236 | ) | (442 | ) | |||||||||||||
Income (loss) attributable to non-controlling interest | 13,434 | 13,434 | — | — | — | — | ||||||||||||||||||
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Net income (loss) for the period | (5,642 | ) | 24,390 | (30,032 | ) | (19,354 | ) | (10,236 | ) | (442 | ) | |||||||||||||
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(*) | Correspond mainly to the impact on the results of fair value operational leasing adjustments. |
(**) | Correspond mainly to the impact on the results of fair value credit card chargeback adjustments. |
(d) | Other information |
The income contribution of TAM S.A. and Subsidiaries during the first nine months of 2013 was ThUS$ 5,021,902, the net result considered in the consolidated financial statements of the group, for the nine month period ended at September 30, 2013, was a loss of ThUS$ (408,050).
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NOTE 19 - PROPERTY, PLANT AND EQUIPMENT
The composition by category of Property, plant and equipment is as follows:
Gross Book Value | Accumulated depreciation | Net Book Value | ||||||||||||||||||||||
As of September 30, 2013 | As of December 31, 2012 | As of September 30, 2013 | As of December 31, 2012 | As of September 30, 2013 | As of December 31, 2012 | |||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||
Unaudited | Unaudited | Unaudited | ||||||||||||||||||||||
Construction in progress | 874,579 | 1,153,003 | — | — | 874,579 | 1,153,003 | ||||||||||||||||||
Land | 61,406 | 65,307 | — | — | 61,406 | 65,307 | ||||||||||||||||||
Buildings | 252,807 | 245,939 | (75,148 | ) | (70,869 | ) | 177,659 | 175,070 | ||||||||||||||||
Plant and equipment | 8,658,353 | 7,942,957 | (1,813,156 | ) | (1,635,532 | ) | 6,845,197 | 6,307,425 | ||||||||||||||||
Own aircraft | 7,640,446 | 6,979,985 | (1,448,208 | ) | (1,278,739 | ) | 6,192,238 | 5,701,246 | ||||||||||||||||
Other | 1,017,907 | 962,972 | (364,948 | ) | (356,793 | ) | 652,959 | 606,179 | ||||||||||||||||
Machinery | 75,958 | 76,956 | (41,827 | ) | (41,799 | ) | 34,131 | 35,157 | ||||||||||||||||
Information technology equipment | 181,212 | 171,568 | (135,607 | ) | (131,105 | ) | 45,605 | 40,463 | ||||||||||||||||
Fixed installations and accessories | 92,278 | 81,252 | (44,342 | ) | (38,909 | ) | 47,936 | 42,343 | ||||||||||||||||
Motor vehicles | 75,097 | 70,706 | (51,019 | ) | (48,451 | ) | 24,078 | 22,255 | ||||||||||||||||
Leasehold improvements | 30,722 | 87,004 | (13,959 | ) | (65,276 | ) | 16,763 | 21,728 | ||||||||||||||||
Other property, plants and equipment | 4,963,536 | 5,814,689 | (1,848,443 | ) | (1,870,364 | ) | 3,115,093 | 3,944,325 | ||||||||||||||||
Financial leasing aircraft | 4,792,022 | 5,659,575 | (1,806,634 | ) | (1,830,273 | ) | 2,985,388 | 3,829,302 | ||||||||||||||||
Other | 171,514 | 155,114 | (41,809 | ) | (40,091 | ) | 129,705 | 115,023 | ||||||||||||||||
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Total | 15,265,948 | 15,709,381 | (4,023,501 | ) | (3,902,305 | ) | 11,242,447 | 11,807,076 | ||||||||||||||||
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93
The movement in the different categories of Property, plant and equipment from January 1, 2012 to September 30, 2013 is shown below:
(a) | As of September 30, 2012 |
Construction in progress | Land | Buildings net | Plant and equipment net | Information technology equipment net | Fixed installations & accessories net | Motor vehicles net | Leasehold improvements net | Other property, plant and equipment net | Property, Plant and equipment net | |||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||||||||
Opening balance as of January 1, 2012 | 1,087,563 | 35,673 | 77,938 | 4,141,985 | 22,591 | 35,098 | 1,637 | 31,499 | 493,998 | 5,927,982 | ||||||||||||||||||||||||||||||
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Additions | 25,332 | — | 2,758 | 1,437,469 | 8,151 | 3,180 | 326 | 422 | 139,792 | 1,617,430 | ||||||||||||||||||||||||||||||
Acquisitions through business combinations | 553,781 | 46,373 | 87,338 | 469,650 | 16,990 | 1,696 | 4,099 | — | 3,061,174 | 4,241,101 | ||||||||||||||||||||||||||||||
Disposals | (27 | ) | — | — | (24,546 | ) | (16 | ) | — | — | — | (6 | ) | (24,595 | ) | |||||||||||||||||||||||||
Transfers (to) from non-current assets (or disposal groups) | (2,256 | ) | (11,895 | ) | — | (6,655 | ) | — | — | — | — | — | (20,806 | ) | ||||||||||||||||||||||||||
Retirements | (168 | ) | — | (1,100 | ) | (69,530 | ) | (147 | ) | (259 | ) | (55 | ) | — | (9,894 | ) | (81,153 | ) | ||||||||||||||||||||||
Depreciation expenses | — | — | (2,301 | ) | (215,787 | ) | (7,560 | ) | (4,250 | ) | (773 | ) | (12,854 | ) | (169,836 | ) | (413,361 | ) | ||||||||||||||||||||||
Conversion difference subsidiaries | 6,032 | 569 | 1,250 | 6,122 | 184 | (3 | ) | 5 | 770 | 45,553 | 60,482 | |||||||||||||||||||||||||||||
Other increases (decreases) | (47,878 | ) | — | 67 | (465,838 | ) | (155 | ) | 1,347 | 8 | 231 | 491,325 | (20,893 | ) | ||||||||||||||||||||||||||
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Changes, total | 534,816 | 35,047 | 88,012 | 1,130,885 | 17,447 | 1,711 | 3,610 | (11,431 | ) | 3,558,108 | 5,358,205 | |||||||||||||||||||||||||||||
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Closing balance as of September 30, 2012 (Unaudited) | 1,622,379 | 70,720 | 165,950 | 5,272,870 | 40,038 | 36,809 | 5,247 | 20,068 | 4,052,106 | 11,286,187 | ||||||||||||||||||||||||||||||
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94
(b) | As of December 31, 2012 |
Construction in progress | Land | Buildings net | Plant and equipment net | Information technology equipment net | Fixed installations & accessories net | Motor vehicles net | Leasehold improvements net | Other property, plant and equipment net | Property, plant and equipment net | |||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||||||||
Opening balance as of October 1, 2012 | 1,622,379 | 70,720 | 165,950 | 5,272,870 | 40,038 | 36,809 | 5,247 | 20,068 | 4,052,106 | 11,286,187 | ||||||||||||||||||||||||||||||
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Additions | 9,553 | — | 14,591 | 1,365,773 | 3,475 | 4,656 | 132 | 4,246 | 14,207 | 1,416,633 | ||||||||||||||||||||||||||||||
Disposals | — | (5,116 | ) | (4,821 | ) | (49,108 | ) | 1 | — | (28 | ) | — | 1 | (59,071 | ) | |||||||||||||||||||||||||
Transfers (to) from non-current grupos en desapropiación | — | — | — | (43,255 | ) | — | — | — | — | — | (43,255 | ) | ||||||||||||||||||||||||||||
Retirements | (113 | ) | — | — | (67,349 | ) | (804 | ) | (2 | ) | (7 | ) | (82 | ) | (8,904 | ) | (77,261 | ) | ||||||||||||||||||||||
Depreciation expenses | — | — | (1,010 | ) | (103,791 | ) | (7,422 | ) | (2,276 | ) | (543 | ) | (3,578 | ) | (80,493 | ) | (199,113 | ) | ||||||||||||||||||||||
Conversion difference subsidiaries | (4,188 | ) | (297 | ) | (3,620 | ) | (3,497 | ) | 3,784 | 533 | (106 | ) | (770 | ) | (28,828 | ) | (36,989 | ) | ||||||||||||||||||||||
Other increases (decreases) | (474,628 | ) | — | 3,980 | (11,528 | ) | 1,391 | 2,623 | 27 | 1,844 | (3,764 | ) | (480,055 | ) | ||||||||||||||||||||||||||
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Changes, total | (469,376 | ) | (5,413 | ) | 9,120 | 1,087,245 | 425 | 5,534 | (525 | ) | 1,660 | (107,781 | ) | 520,889 | ||||||||||||||||||||||||||
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Closing balance as of December 31, 2012 | 1,153,003 | 65,307 | 175,070 | 6,360,115 | 40,463 | 42,343 | 4,722 | 21,728 | 3,944,325 | 11,807,076 | ||||||||||||||||||||||||||||||
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95
(c) As of September 30, 2013
Construction in progress | Land | Buildings net | Plant and equipment net | Information technology equipment net | Fixed installations & accessories net | Motor vehicles net | Leasehold improvements net | Other property, plant and equipment net | Property, plant and equipment net | |||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||||||||
Opening balance as of January 1, 2013 | 1,153,003 | 65,307 | 175,070 | 6,360,115 | 40,463 | 42,343 | 4,722 | 21,728 | 3,944,325 | 11,807,076 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Additions | 13,042 | — | 10,154 | 1,400,176 | 16,604 | 5,953 | 288 | — | 36,200 | 1,482,417 | ||||||||||||||||||||||||||||||
Disposals | — | — | — | (118,295 | ) | (31 | ) | — | (73 | ) | — | (644,637 | ) | (763,036 | ) | |||||||||||||||||||||||||
Retirements | (466 | ) | — | (55 | ) | (47,693 | ) | (257 | ) | (15 | ) | (10 | ) | — | (14,298 | ) | (62,794 | ) | ||||||||||||||||||||||
Depreciation expenses | — | — | (8,880 | ) | (343,874 | ) | (10,264 | ) | (6,134 | ) | (235 | ) | (6,302 | ) | (257,565 | ) | (633,254 | ) | ||||||||||||||||||||||
Conversion difference subsidiaries | (39,280 | ) | (3,901 | ) | (7,375 | ) | (48,539 | ) | (2,106 | ) | (995 | ) | (263 | ) | — | (230,348 | ) | (332,807 | ) | |||||||||||||||||||||
Other increases (decreases) | (251,720 | ) | — | 8,745 | (300,298 | ) | 1,196 | 6,784 | (2,615 | ) | 1,337 | 281,416 | (255,155 | ) | ||||||||||||||||||||||||||
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Changes, total | (278,424 | ) | (3,901 | ) | 2,589 | 541,477 | 5,142 | 5,593 | (2,908 | ) | (4,965 | ) | (829,232 | ) | (564,629 | ) | ||||||||||||||||||||||||
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Closing balance as of September 30, 2013 (Unaudited) | 874,579 | 61,406 | 177,659 | 6,901,592 | 45,605 | 47,936 | 1,814 | 16,763 | 3,115,093 | 11,242,447 | ||||||||||||||||||||||||||||||
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96
(d) | Composition of the fleet |
Aircraft included in the Company’s Property, plant and equipment:
Aircraft | Model | As of September 30, 2013 | As of December 31, 2012 | |||||||
Unaudited | ||||||||||
Boeing 767 | 300 | 3 | 3 | |||||||
Boeing 767 | 300ER | 34 | 30 | |||||||
Boeing 767 | 300F | 8 | 8 | |||||||
Boeing 777 | 300ER | 8 | 8 | |||||||
Boeing 777 | Freighter | 2 | 2 | |||||||
Boeing 787 | 800 | 3 | 3 | |||||||
Airbus A318 | 100 | 1 | 5 | |||||||
Airbus A319 | 100 | 39 | 39 | |||||||
Airbus A320 | 200 | 93 | 76 | |||||||
Airbus A321 | 200 | 9 | 8 | |||||||
Airbus A330 | 200 | 8 | 18 | |||||||
Airbus A340 | 300 | 2 | 2 | |||||||
Airbus A340 | 500 | 2 | 2 | |||||||
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| |||||||
Total | 212 | 204 | ||||||||
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|
Operating leases:
Aircraft | Model | As of September 30, 2013 | As of December 31, 2012 | |||||||
Unaudited | ||||||||||
Boeing 767 | 300ER | 6 | 8 | |||||||
Boeing 767 | 300F | 4 | 4 | |||||||
Boeing 777 | 300ER | 2 | — | |||||||
Boeing 777 | Freighter | 2 | 2 | |||||||
Boeing 787 | 800 | 1 | — | |||||||
Airbus A319 | 100 | 16 | 18 | |||||||
Airbus A320 | 200 | 64 | 65 | |||||||
Airbus A321 | 200 | 1 | 1 | |||||||
Airbus A330 | 200 | 12 | 2 | |||||||
Airbus A340 | 300 | 3 | 3 | |||||||
Boeing 737 | 700 | 6 | 6 | |||||||
Bombardier | Dhc8-200 | 7 | 10 | |||||||
Bombardier | Dhc8-400 | 3 | 4 | |||||||
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Total | 127 | 123 | ||||||||
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Total fleet | 339 | 327 | ||||||||
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97
(e) | Method used for the depreciation of Property, plant and equipment: |
Method | Useful life | |||||||||
minimum | maximum | |||||||||
Buildings | Straight line without residual value | 20 | 50 | |||||||
Plant and equipment | Straight line with residual value of 20% in the short-haul fleet and 36% in the long-haul fleet. (*) | 5 | 20 | |||||||
Information technology equipment | Straight line without residual value | 5 | 10 | |||||||
Fixed installations and accessories | Straight line without residual value | 10 | 10 | |||||||
Motor vehicle | Straight line without residual value | 10 | 10 | |||||||
Leasehold improvements | Straight line without residual value | 5 | 5 | |||||||
Other property, plant and equipment | Straight line with residual value of 20% in the short-haul fleet and 36% in the long-haul fleet. (*) | 3 | 20 |
(*) | Except for certain technical components, which are depreciated on the basis of cycles and flight hours. |
As a result of the business combination with TAM S.A. and Subsidiaries 65 aircraft were incorporated with remarketing clause (**) under modality of financial leasing, which are depreciated according to the duration of their contracts, between 12 and 18 years. Its residual values are estimated according to market value at the end of such contracts.
Additionally, for the same business combination, 5 aircraft were added under operating lease contracts, which according to the stated policy, are classified as finance leases because the present value of the payments represents most of the economic value of the property. The useful life assigned is 6 years, according to the duration of the contracts.
(**) | Aircraft with remarketing clause are those that are required to sell at the end of the contract. |
The depreciation charged to income in the period, which is included in the consolidated statement of income, amounts to ThUS$ 633,254 (ThUS$ 413,361 for the period ended September 30, 2012). Depreciation charges for the year are recognized in Cost of sales and administrative expenses in the consolidated statement of income.
98
(f) | Additional information regarding Property, plant and equipment: |
(i) | Property, plant and equipment pledged as guarantee: |
In the period ended September 30, 2013, we added direct guarantees for four Boeing 767-300 aircraft, seventeen Airbus A320 and one Airbus A321 aircraft. Moreover, the Company sold its interest in the permanent establishments Mirlo Leasing LLC, Osprey Leasing Limited, and subsidiary Conure Leasing Limited. Product of the above direct guarantees associated with a Boeing 767-300 aircraft, two aircraft Airbus A320-200s and eight Airbus A319-100 aircraft were eliminated. Additionally, guarantees for six A318-100 aircraft were removed from their sale.
Description of Property, plant and equipment pledged as guarantee:
As of September 30, 2013 | As of December 31, 2012 | |||||||||||||||||||
Creditor of guarantee | Assets committed | Fleet | Existing Debt | Book Value | Existing Debt | Book Value | ||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||
Unaudited | ||||||||||||||||||||
Wilmington | Aircraft and engines | Boeing 767 | 1,471,382 | 1,859,497 | 1,296,704 | 1,640,071 | ||||||||||||||
Trust Company | Boeing 777 / 787 | 798,001 | 905,890 | 858,221 | 937,074 | |||||||||||||||
Banco Santander S.A. | Aircraft and engines | Airbus A319 | 75,960 | 106,879 | 81,698 | 111,458 | ||||||||||||||
Airbus A320 | 658,460 | 849,163 | 626,317 | 782,609 | ||||||||||||||||
Airbus A321 | 43,892 | 49,510 | — | — | ||||||||||||||||
BNP Paribas | Aircraft and engines | Airbus A318 | 16,367 | 20,477 | 121,172 | 150,026 | ||||||||||||||
Airbus A319 | 215,334 | 286,433 | 360,100 | 501,836 | ||||||||||||||||
Airbus A320 | 203,839 | 265,810 | 261,139 | 333,105 | ||||||||||||||||
Credit Agricole | Aircraft and engines | Airbus A319 | 35,248 | 101,482 | 44,002 | 107,625 | ||||||||||||||
Airbus A320 | 61,517 | 127,430 | 68,096 | 156,355 | ||||||||||||||||
Airbus A340 | 5,001 | 128,832 | 19,531 | 105,349 | ||||||||||||||||
JP Morgan | Aircraft and engines | Boeing 777 | 264,664 | 302,447 | 280,698 | 324,159 | ||||||||||||||
Wells Fargo | Aircraft and engines | Airbus A320 | 338,241 | 390,318 | — | — | ||||||||||||||
Bank of Utah | Aircraft and engines | Airbus A320 | 210,720 | 262,429 | — | — | ||||||||||||||
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| |||||||||||||
Total direct guarantee | 4,398,626 | 5,656,597 | 4,017,678 | 5,149,667 | ||||||||||||||||
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|
The amounts of existing debt are presented at nominal value. Book value corresponds to the carrying value of the goods provided as guarantees.
Additionally, there are indirect guarantees related to assets recorded in Property, plant and equipment whose total debt at September 30, 2013 amounted to ThUS$ 2,249,849 (ThUS$ 2,888,753 at December 31, 2012). The book value of assets with indirect guarantees as of September 30, 2013 amounts to ThUS$ 2,926,572 (ThUS$ 3,777,715 as of December 31, 2012).
99
(ii) | Commitments and others |
Fully depreciated assets and commitments for future purchases are as follows:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Gross book value of fully depreciated property, plant and equipment still in use | 266,719 | 188,214 | ||||||
Commitments for the acquisition of aircraft (*) | 24,800,000 | 24,500,000 |
In December 2009, the Company signed a purchase commitment with Airbus S.A.S. for the purchase of 30 aircraft of the A320 family with deliveries between 2011 and 2016. Later, in December 2010 the Company signed a new commitment to this manufacturer for the acquisition of 50 aircraft of the same family with deliveries between 2012 and 2016. Additionally, in June 2011, a contract was signed for 20 additional aircraft of the A320 NEO family with deliveries between 2017 and 2018.
With regards to the above, as of September 30, 2013, and as a result of different aircraft purchase contracts signed with Airbus S.A.S., there remain 67 Airbus aircraft of the A320 family to be delivered between 2013 and 2018. The approximate amount is ThUS$ 5,900,000, according to the manufacturer’s price list. Additionally, the Company has active purchase options for 4 A320 NEO aircraft.
On October 2007, we signed a binding purchase agreement with The Boeing Company for the purchase of 26 Boeing 787 aircraft with deliveries starting in 2012. Moreover, purchase contracts were signed with the same manufacturer in February, May and December 2011, 3, 5 and 2 aircraft 767-300, respectively.
As of September 30, 2013, and as a result of different aircraft purchase contracts signed with The Boeing Company, remain to receive a total of 22 787 Dreamliner aircraft, with delivery dates between 2013 and 2018. The approximate amount, according to the manufacturer’s price list, is ThUS$ 4,500,000. Additionally, the Company has valid purchase options for 15 787 Dreamliner aircraft.
100
The acquisition of these aircraft is part of the strategic plan for the long-term fleet. This plan also involves the sale of 15 Airbus A318 model between 2011 and 2013. It is estimated that this sale will have no significant impact on results. During 2011 the first 5 aircraft were sold and during 2012 another 3 were sold. In the first quarter of 2013, 2 aircraft were sold, in the second quarter of 2013, 2 aircraft were sold, in the third quarter of 2013, 2 aircraft were sold and there are plans to sell the last A318 during the last quarter of 2013.
Additionally, as a result of the business combination with TAM S.A. and Subsidiaries the following commitments are incorporated:
In November 2006, a purchase commitment was signed with Airbus S.A.S. for the acquisition of 31 A320 family aircraft and 6 A330-200 aircraft, with deliveries between 2007 and 2010. Subsequently, in January 2008 signed a new commitment for the acquisition of 20 additional A320 family aircraft and 4 aircraft A330-200, with deliveries between 2010 and 2014, also signed a purchase commitment for 22 A350 aircraft. In July 2010, signed a purchase commitment with Airbus S.A.S. for the acquisition of 20 A320 family aircraft with deliveries between 2014 and 2015 and on the same date the option was exercised to purchase 5 A350. In October 2011, a new commitment was signed to this manufacturer for the acquisition of 10 additional aircraft of the A320 family with deliveries between 2016 and 2017, plus 22 family aircraft A320 NEO with deliveries between 2016 and 2018.
With the above, at September 30, 2013, as a result of the different aircraft purchase agreements signed with Airbus S.A.S., remain to receive 62 aircraft Airbus A320 family, with deliveries between 2013 and 2018, and 27 Airbus aircraft A350 family with delivery dates starting from 2015. Additionally, the Company has valid purchase options for 10 A320 NEO family aircraft and 5 Airbus A350.
In December 2008, a new commitment purchase agreement was signed with The Boeing Company for 2 777 aircraft with deliveries in 2013, and in February 2011 an agreement was signed for the purchase of another 2 777 aircraft with deliveries in 2014.
With the above, at September 30, 2013, due to the various purchase contracts signed with The Boeing Company, remain to receive 2 777 aircraft. Additionally, the Company has valid purchase options for 2 777 aircraft.
The approximate amount of individual purchase contracts incorporated for the effect of the business combination with TAM S.A. and Subsidiaries is ThUS$ 14,400,000, according to the manufacturers price list.
101
(iii) | Capitalized interest costs with respect to Property, plant and equipment. |
For the periods ended September 30, | ||||||||||
2013 | 2012 | |||||||||
Unaudited | ||||||||||
Average rate of capitalization of capitalized interest costs | % | 3.48 | 3.14 | |||||||
Costs of capitalized interest | ThUS$ | 23,837 | 42,700 |
102
(iv) | Financial leases |
The detail of the main financial leases is as follows:
Lessor | Aircraft | Model | As of September 30, 2013 | As of December 31, 2012 | ||||||||
Unaudited | ||||||||||||
Agonandra Statutory Trust | Airbus A319 | 100 | 4 | 4 | ||||||||
Agonandra Statutory Trust | Airbus A320 | 200 | 2 | 2 | ||||||||
Air Canada | Airbus A340 | 500 | 2 | 2 | ||||||||
AW MSI (AW AS) | Boeing 767 | 300 | 3 | 3 | ||||||||
Bluebird Leasing LLC | Boeing 767 | 300F | 2 | 2 | ||||||||
Caiquen Leasing LLC | Boeing 767 | 300F | 1 | 1 | ||||||||
Cernicalo Leasing LLC | Boeing 767 | 300F | 2 | 2 | ||||||||
Codorniz Leasing Limited | Airbus A319 | 100 | 2 | 2 | ||||||||
Conure Leasing Limited | Airbus A320 | 200 | 2 | — | ||||||||
Eagle Leasing LLC | Boeing 767 | 300ER | 1 | 1 | ||||||||
FLYAFI 1 S.R.L. | Boeing 777 | 300ER | 1 | 1 | ||||||||
FLYAFI 2 S.R.L. | Boeing 777 | 300ER | 1 | 1 | ||||||||
FLYAFI 3 S.R.L. | Boeing 777 | 300ER | 1 | 1 | ||||||||
Forderum Holding B.V. (GECAS) | Airbus A320 | 200 | 2 | 2 | ||||||||
Garza Leasing LLC | Boeing 767 | 300ER | 1 | 1 | ||||||||
General Electric Capital Corporation | Airbus A330 | 200 | 3 | 6 | ||||||||
Intraelo BETA Corporation (KFW) | Airbus A320 | 200 | 1 | 1 | ||||||||
Juliana Leasing Limited | Airbus A320 | 200 | 2 | 2 | ||||||||
Linnet Leasing Limited | Airbus A320 | 200 | 4 | 4 | ||||||||
Mirlo Leasing LLC | Boeing 767 | 300ER | 1 | — | ||||||||
NBB Rio de Janeiro Lease CO and Brasilia Lease LLC (BBAM) | Airbus A320 | 200 | 1 | 1 | ||||||||
NBB São Paulo Lease CO. Limited (BBAM) | Airbus A321 | 200 | 1 | 1 | ||||||||
Osprey Leasing Limited | Airbus A319 | 100 | 8 | — | ||||||||
Petrel Leasing LLC | Boeing 767 | 300ER | 1 | 1 | ||||||||
Pochard Leasing LLC | Boeing 767 | 300ER | 2 | 2 | ||||||||
Quetro Leasing LLC | Boeing 767 | 300ER | 3 | 3 | ||||||||
SG Infraestructure Italia S.R.L. | Boeing 777 | 300ER | 1 | 1 | ||||||||
SL Alcyone LT D (Showa) | Airbus A320 | 200 | 1 | 1 | ||||||||
TMF Interlease Aviation B.V. | Airbus A320 | 200 | 12 | 12 | ||||||||
TMF Interlease Aviation B.V. | Airbus A330 | 200 | 1 | 1 | ||||||||
TMF Interlease Aviation II B.V. | Airbus A319 | 100 | 5 | 5 | ||||||||
TMF Interlease Aviation II B.V. | Airbus A320 | 200 | 2 | 2 | ||||||||
TMF Interlease Aviation III B.V. | Airbus A319 | 100 | 3 | 3 | ||||||||
TMF Interlease Aviation III B.V. | Airbus A320 | 200 | 12 | 12 | ||||||||
TMF Interlease Aviation III B.V. | Airbus A321 | 200 | 7 | 7 | ||||||||
TMF Interlease Aviation III B.V. | Airbus A330 | 200 | — | 10 | ||||||||
Wacapou Leasing S.A | Airbus A320 | 200 | 1 | 1 | ||||||||
Wells Fargo Bank North National Association (ILFC) | Airbus A330 | 200 | 1 | 1 | ||||||||
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|
|
| |||||||||
Total | 100 | 102 | ||||||||||
|
|
|
|
103
Financial leasing contracts where the Company acts as the lessee of aircrafts establish duration between 12 and 18 year terms and semi-annual, quarterly and monthly payments of obligations.
Additionally, the lessee will have the obligation to contract and maintain active the insurance coverage for the aircraft, perform maintenance on the aircraft and update the airworthiness certificates at their own cost.
Fixed assets acquired under financial leases are classified as Other property, plant and equipment. As of September 30, 2013 the Company had one hundred aircraft (one hundred and two aircraft as of December 31, 2012).
During the first quarter of 2013, due to the sale of its participation in the permanent establishments Mirlo Leasing LLC, Osprey Leasing Limited, and subsidiary Conure Leasing Limited, the Company increased its number of aircraft on lease by one Boeing 767-300, two A320-200 and eight Airbus A319-100. Therefore, these aircraft were reclassified from the Plant and equipment category to the category Other property plant and equipment.
Additionally, during the second quarter of 2013 the contracts system applied to ten A330-200 aircraft was changed from financial leasing to operative leasing. As a result, the mentioned aircraft are no longer included under Property, plant, and equipment.
During to the third quarter of 2013, the option was exercised to purchase 3 A330-200. Therefore, these aircraft were reclassified from the Other property plant and equipment category to the category Plant and equipment.
As a result of the business combination 81 aircraft capital leases were added as financial leasing, and during the third quarter of 2012 two more Airbus A320-200 were added in this way.
The book value of assets under financial leases as of September 30, 2013 amounts to ThUS$ 2,999,425 (ThUS$ 3,863,193 as of December 31, 2012).
104
The minimum payments under financial leases are as follows:
As of September 30, 2013 (Unaudited) | ||||||||||||
Gross Value | Interest | Present Value | ||||||||||
ThUS$ | ThUS$ | ThUS$ | ||||||||||
No later than one year | 691,739 | (277,661 | ) | 414,078 | ||||||||
Between one and five years | 1,515,569 | (198,833 | ) | 1,316,736 | ||||||||
Over five years | 696,530 | (22,646 | ) | 673,884 | ||||||||
|
|
|
|
|
| |||||||
Total | 2,903,838 | (499,140 | ) | 2,404,698 | ||||||||
|
|
|
|
|
| |||||||
As of December 31, 2012 | ||||||||||||
Gross Value | Interest | Present Value | ||||||||||
ThUS$ | ThUS$ | ThUS$ | ||||||||||
No later than one year | 523,033 | (66,090 | ) | 456,943 | ||||||||
Between one and five years | 1,687,596 | (186,145 | ) | 1,501,451 | ||||||||
Over five years | 1,135,262 | (57,455 | ) | 1,077,807 | ||||||||
|
|
|
|
|
| |||||||
Total | 3,345,891 | (309,690 | ) | 3,036,201 | ||||||||
|
|
|
|
|
|
105
NOTE 20 - TAXES AND DEFERRED TAXES
Deferred tax assets and liabilities are offset if there is a legal right to offset assets and liabilities for income taxes relating to the same tax authority.
The balances of deferred taxes are as follows:
Assets | Liabilities | |||||||||||||||
Concept | As of September 30, 2013 | As of December 31, 2012 | As of September 30, 2013 | As of December 31, 2012 | ||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | Unaudited | |||||||||||||||
Depreciation | (18,485 | ) | (662 | ) | 549,278 | 454,183 | ||||||||||
Leased assets | (73,730 | ) | — | 136,131 | 268,619 | |||||||||||
Amortization | (58,826 | ) | 15,148 | 66,931 | 91,911 | |||||||||||
Provisions | 476,290 | 34,704 | (87,467 | ) | (520,719 | ) | ||||||||||
Revaluation of financial instruments | — | 5,178 | (14,609 | ) | (31,741 | ) | ||||||||||
Tax losses | 300,423 | 105,652 | (266,734 | ) | (314,926 | ) | ||||||||||
Revaluation property, plant and equipment | 12,170 | — | — | (22,892 | ) | |||||||||||
Intangibles | (461,163 | ) | — | 162,121 | 680,167 | |||||||||||
Others | 35,649 | 3,047 | 14,552 | (25,263 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 212,328 | 163,067 | 560,203 | 579,339 | ||||||||||||
|
|
|
|
|
|
|
|
The balance of deferred tax assets and liabilities are composed principally of temporary differences to reverse in the long term.
106
Movements of Deferred tax assets and liabilities from January 1, 2012 to September 30, 2013 are as follows:
(a) | From January 1 to September 30, 2012 |
Opening balance assets/ (liabilities) | Recognized in consolidated income | Recognized in comprehensive income | Incorporation by business combination | Exchange rate variation | Effect from change in tax rate | Others | Ending balance asset (liability) | |||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Depreciation | (339,288 | ) | (41,791 | ) | — | (34,512 | ) | (423 | ) | (59,776 | ) | — | (475,790 | ) | ||||||||||||||||||
Leased assets | (65,240 | ) | (38,243 | ) | — | (31,533 | ) | (387 | ) | (11,513 | ) | — | (146,916 | ) | ||||||||||||||||||
Amortization | (22,412 | ) | (7,211 | ) | — | (18,614 | ) | (228 | ) | (6,471 | ) | — | (54,936 | ) | ||||||||||||||||||
Provisions | (37,759 | ) | (8,712 | ) | — | 512,487 | 6,285 | (8,353 | ) | — | 463,948 | |||||||||||||||||||||
Revaluation of financial instruments | 28,788 | (8,169 | ) | 10,797 | 12,785 | 157 | 5,080 | — | 49,438 | |||||||||||||||||||||||
Tax losses | 118,597 | 117,363 | — | 134,833 | 1,653 | 14,334 | — | 386,780 | ||||||||||||||||||||||||
Revaluation property, plant and equipment | — | — | — | 59,474 | 729 | — | — | 60,203 | ||||||||||||||||||||||||
Intangibles | — | — | — | (676,197 | ) | (8,292 | ) | — | — | (684,489 | ) | |||||||||||||||||||||
Others | 7,837 | (41,792 | ) | (6,024 | ) | 34,577 | 423 | 1,080 | 1,021 | (2,878 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | (309,477 | ) | (28,555 | ) | 4,773 | (6,700 | ) | (83 | ) | (65,619 | ) | 1,021 | (404,640 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) | From October 1 to December 31, 2012 |
Opening balance assets/ (liabilities) | Recognized in consolidated income | Recognized in comprehensive income | Incorporation by business combination | Exchange rate variation | Effect from change in tax rate | Others | Ending balance asset (liability) | |||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||||||||
Depreciation | (475,790 | ) | 20,725 | — | — | 220 | — | — | (454,845 | ) | ||||||||||||||||||||||
Leased assets | (146,916 | ) | (121,904 | ) | — | — | 201 | — | — | (268,619 | ) | |||||||||||||||||||||
Amortization | (54,936 | ) | (21,946 | ) | — | — | 119 | — | — | (76,763 | ) | |||||||||||||||||||||
Provisions | 463,948 | 94,751 | — | — | (3,276 | ) | — | — | 555,423 | |||||||||||||||||||||||
Revaluation of financial instruments | 49,438 | 920 | (13,420 | ) | — | (19 | ) | — | — | 36,919 | ||||||||||||||||||||||
Tax losses | 386,780 | 34,659 | — | — | (861 | ) | — | — | 420,578 | |||||||||||||||||||||||
Revaluation property, plant and equipment | 60,203 | (36,931 | ) | — | — | (380 | ) | — | — | 22,892 | ||||||||||||||||||||||
Intangibles | (684,489 | ) | — | — | — | 4,322 | — | — | (680,167 | ) | ||||||||||||||||||||||
Others | (2,878 | ) | 44,479 | 3,290 | — | (589 | ) | — | (15,992 | ) | 28,310 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | (404,640 | ) | 14,753 | (10,130 | ) | — | (263 | ) | — | (15,992 | ) | (416,272 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
107
(c) | From January 1 to September 30, 2013 (Unaudited) |
Beginning balance asset (liability) | Recognized in consolidated income | Recognized in comprehensive income | Exchange rate variation | Others | Ending balance asset (liability) | |||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||
Depreciation | (454,845 | ) | (115,822 | ) | — | 2,904 | — | (567,763 | ) | |||||||||||||||
Leased assets | (268,619 | ) | 56,105 | — | 2,653 | — | (209,861 | ) | ||||||||||||||||
Amortization | (76,763 | ) | (50,560 | ) | — | 1,566 | — | (125,757 | ) | |||||||||||||||
Provisions | 555,423 | 51,445 | — | (43,111 | ) | — | 563,757 | |||||||||||||||||
Revaluation of financial instruments | 36,919 | (9,363 | ) | (11,809 | ) | (1,138 | ) | — | 14,609 | |||||||||||||||
Tax losses | 420,578 | 157,922 | — | (11,343 | ) | — | 567,157 | |||||||||||||||||
Revaluation property, plant and equipment | 22,892 | (5,719 | ) | — | (5,003 | ) | — | 12,170 | ||||||||||||||||
Intangibles | (680,167 | ) | — | — | 56,883 | — | (623,284 | ) | ||||||||||||||||
Others | 28,310 | 14,114 | — | (2,541 | ) | (18,786 | ) | 21,097 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | (416,272 | ) | 98,122 | (11,809 | ) | 870 | (18,786 | ) | (347,875 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets not recognized:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Tax losses | 3,720 | 1,439 | ||||||
|
|
|
| |||||
Total Deferred tax assets not recognized | 3,720 | 1,439 | ||||||
|
|
|
|
Deferred tax assets on tax loss carry-forwards, are recognized to the extent that it is likely to provide relevant tax benefit through future taxable profits. The Company has not recognized deferred tax assets of ThUS$ 3,720 (ThUS$ 1,439 at December 31, 2012) compared to a loss of ThUS$ 15,512 (ThUS$ 5,265 at December 31, 2012) to offset against future years tax benefits.
108
Expense (income) for deferred and current income taxes for the periods ended at September 30, 2013 and September 30, 2012, respectively, are as follows:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Expense for current income tax | ||||||||||||||||
Current tax expense | 57,101 | 20,445 | 20,687 | 21,889 | ||||||||||||
Adjustment to previous period’s current tax | (4,423 | ) | (7,673 | ) | (4,669 | ) | 1,702 | |||||||||
Other current tax expense | (300 | ) | 14 | (300 | ) | 4 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current tax expense, net | 52,378 | 12,786 | 15,718 | 23,595 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Expense for deferred income taxes | ||||||||||||||||
Deferred expense for taxes related to the creation and reversal of temporary differences | (98,199 | ) | 89,608 | 35,803 | 46,978 | |||||||||||
Reduction (increase) in value of deferred tax assets during the evaluation of its usefulness | 77 | 4,566 | 557 | 2,254 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total deferred tax expense, net | (98,122 | ) | 94,174 | 36,360 | 49,232 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Income tax expense | (45,744 | ) | 106,960 | 52,078 | 72,827 | |||||||||||
|
|
|
|
|
|
|
|
Composition of income tax expense (income):
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Current tax expense, net, foreign | 44,202 | 17,174 | 13,524 | 19,466 | ||||||||||||
Current tax expense, net, Chile | 8,176 | (4,388 | ) | 2,194 | 4,129 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total current tax expense, net | 52,378 | 12,786 | 15,718 | 23,595 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Deferred tax expense, net, foreign | (126,524 | ) | (34,382 | ) | 22,199 | (34,135 | ) | |||||||||
Deferred tax expense, net, Chile | 28,402 | 128,556 | 14,161 | 83,367 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Deferred tax expense, net, total | (98,122 | ) | 94,174 | 36,360 | 49,232 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Income tax expense | (45,744 | ) | 106,960 | 52,078 | 72,827 | |||||||||||
|
|
|
|
|
|
|
|
109
Reconciliation of tax expense using the legal rate to the tax expense using the effective rate:
For the periods ended September 30, | ||||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Tax expense using the legal rate | (56,145 | ) | 30,808 | |||||
|
|
|
| |||||
Tax effect of legal rate change | — | 70,442 | ||||||
Tax effect of rates in other jurisdictions | (41,840 | ) | (11,340 | ) | ||||
Tax effect of non-taxable operating revenues | (25,702 | ) | (833 | ) | ||||
Tax effect of disallowable expenses | 77,410 | 18,722 | ||||||
Other increases (decreases) in legal tax charge | 533 | (839 | ) | |||||
|
|
|
| |||||
Total adjustments to tax expense using the legal rate | 10,401 | 76,152 | ||||||
|
|
|
| |||||
Tax expense using the effective rate | (45,744 | ) | 106,960 | |||||
|
|
|
|
Reconciliation of legal tax rate to effective tax rate:
For the periods ended September 30, | ||||||||
2013 | 2012 | |||||||
% | % | |||||||
Unaudited | ||||||||
Legal tax rate (*) | 20.00 | 20.00 | ||||||
|
|
|
| |||||
Effect of tax rates for legal rate change | — | 45.73 | ||||||
Effect of tax rates in other jurisdictions | 14.90 | (7.36 | ) | |||||
Effect of tax rate on non-taxable operating revenues | 9.15 | (0.54 | ) | |||||
Effect of tax rate on disallowable expenses | (27.57 | ) | 12.15 | |||||
Other increase (decrease) in legal tax rate | (0.19 | ) | (0.54 | ) | ||||
|
|
|
| |||||
Total adjustment to the legal tax rate | (3.71 | ) | 49.44 | |||||
|
|
|
| |||||
Total effective tax rate | 16.29 | 69.44 | ||||||
|
|
|
|
(*) | On September 27, 2012, the Law N° 20,630 was published in the Official Journal that “Improves Tax Legislation and Finance Education Reform”. Among the major tax reforms that the amending Law contains, the First Category Tax Rate was modified which must be declared and paid beginning in the 2013 tax year. |
110
The above implies, that the rate of income tax for the tax year 2013 is 20%. Therefore, for purposes of the closing financial statements beginning as of September 30, 2012, this should be considered in determining the provision for income taxes and the determination of deferred tax rate of 20%.
Deferred taxes related to items charged to net equity:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Aggregate deferred taxation of components of other comprehensive income | (11,809 | ) | 4,773 | (3,451 | ) | 6,002 | ||||||||||
Aggregate deferred taxation related to items charged to net equity | — | (257 | ) | — | (257 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total deferred taxes related to items charged to net equity | (11,809 | ) | 4,516 | (3,451 | ) | 5,745 | ||||||||||
|
|
|
|
|
|
|
|
Deferred tax effects of the components of other comprehensive income:
As of September 30, 2013 (Unaudited) | ||||||||||||
Amount before taxes | Income tax expense (income) | Amount after taxes | ||||||||||
ThUS$ | ThUS$ | ThUS$ | ||||||||||
Cash-flow hedges | (68,307 | ) | 11,809 | (56,498 | ) | |||||||
Translation adjustment | 391,143 | — | 391,143 | |||||||||
|
| |||||||||||
11,809 | ||||||||||||
|
| |||||||||||
As of September 30, 2012 (Unaudited) | ||||||||||||
Amount before taxes | Income tax expense (income) | Amount after taxes | ||||||||||
ThUS$ | ThUS$ | ThUS$ | ||||||||||
Cash-flow hedges | 21,267 | (10,797 | ) | 10,470 | ||||||||
Translation adjustment | (32,535 | ) | 6,024 | (26,511 | ) | |||||||
|
| |||||||||||
(4,773 | ) | |||||||||||
|
|
111
NOTE 21 - OTHER FINANCIAL LIABILITIES
The composition of Other financial liabilities is as follows:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
(a) Interest bearing loans | 2,679,883 | 1,977,255 | ||||||
(b) Derivatives not recognized as a hedge | 4,425 | 4,477 | ||||||
(c) Hedge derivatives | 66,565 | 65,598 | ||||||
|
|
|
| |||||
Total current | 2,750,873 | 2,047,330 | ||||||
|
|
|
| |||||
Non-current | ||||||||
(a) Interest bearing loans | 7,439,545 | 7,582,302 | ||||||
(b) Derivatives not recognized as a hedge | 2,426 | 5,515 | ||||||
(c) Hedge derivatives | 62,662 | 111,040 | ||||||
|
|
|
| |||||
Total non -current | 7,504,633 | 7,698,857 | ||||||
|
|
|
|
112
(a) | Interest bearing loans |
Obligations with credit institutions and debt instruments:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Loans to exporters | 857,949 | 242,955 | ||||||
Bank loans | 690,707 | 519,762 | ||||||
Guaranteed obligations | 452,425 | 411,313 | ||||||
|
|
|
| |||||
Subtotal bank loans | 2,001,081 | 1,174,030 | ||||||
Obligation with the public | 212,501 | 273,682 | ||||||
Financial leases | 425,036 | 471,896 | ||||||
Other loans | 41,265 | 57,647 | ||||||
|
|
|
| |||||
Total current | 2,679,883 | 1,977,255 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Bank loans | 359,608 | 219,319 | ||||||
Guaranteed obligations | 3,826,471 | 3,432,919 | ||||||
|
|
|
| |||||
Subtotal bank loans | 4,186,079 | 3,652,238 | ||||||
Obligation with the public | 1,118,711 | 1,123,840 | ||||||
Financial leases | 1,992,942 | 2,615,924 | ||||||
Other loans | 141,813 | 190,300 | ||||||
|
|
|
| |||||
Total non-current | 7,439,545 | 7,582,302 | ||||||
|
|
|
| |||||
Total obligations with financial institutions | 10,119,428 | 9,559,557 | ||||||
|
|
|
|
All interest-bearing liabilities are recorded using the effective interest rate method. Under IFRS, the effective interest rate for loans with a fixed interest rate does not vary throughout the loan, while in the case of loans with variable interest rates, the effective rate changes on each date of repricing of the loan.
Currency balances that make the interest bearing loans at September 30, 2013 and December 31, 2012, are as follows:
As of September 30, 2013 | As of December 31, 2012 | |||||||
Currency | ThUS$ | ThUS$ | ||||||
Unaudited | ||||||||
Argentine peso | 48,722 | — | ||||||
Brazilian real | 273,938 | 326,394 | ||||||
Chilean peso | 291,752 | — | ||||||
Euro | 1,964 | 1,785 | ||||||
US Dollar | 9,503,052 | 9,231,378 | ||||||
|
|
|
| |||||
Total | 10,119,428 | 9,559,557 | ||||||
|
|
|
|
113
Interest-bearing loans due in installments due at September 30, 2013, at nominal value. (Unaudited)
Class of | Debtor tax No | Debtor | Debtor | Creditor tax No | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total nominal value | Amortization | Effective rate | Total accounting value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | % | ThUS $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Loans to exporters | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.004.000-5 | BANCO DE CHILE | Chile | US $ | 15,000 | 20,000 | — | — | — | 35,000 | At Expiration | 1.70 | % | 35,149 | 1.70 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.006.000-6 | BCI | Chile | US $ | — | 100,000 | — | — | — | 100,000 | At Expiration | 1.58 | % | 100,079 | 1.58 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.645.030-K | ITAU | Chile | US $ | 75,000 | — | — | — | — | 75,000 | At Expiration | 1.57 | % | 75,229 | 1.57 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.032.000-8 | BBVA | Chile | US $ | 25,000 | 72,000 | — | — | — | 97,000 | At Expiration | 1.56 | % | 97,218 | 1.56 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US $ | 35,000 | 215,000 | — | — | — | 250,000 | At Expiration | 1.77 | % | 250,305 | 1.77 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ESTADO | Chile | US $ | 120,000 | — | — | — | — | 120,000 | At Expiration | 0.95 | % | 120,090 | 0.95 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.023.000-9 | CORP BANCA | Chile | US $ | 80,000 | — | — | — | — | 80,000 | At Expiration | 1.93 | % | 80,060 | 1.93 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.100.458-1 | BLADEX | Chile | US $ | — | 100,000 | — | — | — | 100,000 | At Expiration | 1.87 | % | 99,819 | 1.87 | % | |||||||||||||||||||||||||||||||||||
Bank loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US $ | — | — | 130,084 | — | — | 130,084 | At Expiration | 2.99 | % | 130,235 | 2.99 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ESTADO | Chile | US $ | 22,419 | — | — | — | — | 22,419 | Semiannual | 1.64 | % | 22,580 | 1.63 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.023.000-9 | CORP BANCA | Chile | UF | 16,069 | 48,209 | 128,556 | 99,944 | — | 292,778 | Quarterly | 5.00 | % | 291,752 | 4.85 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | Argentina | ARS $ | — | 17,262 | — | — | — | 17,262 | Monthly | 1.71 | % | 17,262 | 1.71 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BBVA | Argentina | ARS $ | — | 31,072 | — | — | — | 31,072 | Monthly | 1.95 | % | 31,460 | 1.95 | % | |||||||||||||||||||||||||||||||||||
Guaranteed obligations | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A | US $ | 2,818 | 8,708 | 24,863 | 27,503 | 30,468 | 94,360 | Quarterly | 5.69 | % | 93,440 | 5.01 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDIT AGRICOLE | France | US $ | 16,292 | 34,440 | 86,187 | 17,989 | — | 154,908 | Quarterly | 2.14 | % | 155,077 | 2.14 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A | US $ | 2,203 | 6,700 | 2,264 | — | — | 11,167 | Quarterly | 3.06 | % | 11,163 | 2.73 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP PARIBAS | U.S.A | US $ | 8,136 | 25,068 | 70,719 | 77,056 | 191,055 | 372,034 | Quarterly | 2.60 | % | 370,629 | 2.41 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | WELLS FARGO | U.S.A | US $ | 45,834 | 138,509 | 376,919 | 388,302 | 1,196,046 | 2,145,610 | Quarterly | 2.47 | % | 2,044,694 | 1.76 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A | US $ | 9,529 | 29,091 | 81,024 | 86,470 | 175,606 | 381,720 | Quarterly | 2.65 | % | 373,136 | 2.05 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US $ | 4,993 | 15,161 | 41,553 | 43,321 | 100,565 | 205,593 | Quarterly | 1.34 | % | 200,416 | 0.80 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BTMU | U.S.A | US $ | 2,557 | 7,794 | 21,518 | 22,661 | 66,096 | 120,626 | Quarterly | 1.66 | % | 116,868 | 1.06 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | APPLE BANK | U.S.A | US $ | 1,255 | 3,823 | 10,566 | 11,140 | 32,974 | 59,758 | Quarterly | 1.66 | % | 57,951 | 1.06 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | US BANK | U.S.A | US $ | 13,759 | 41,757 | 114,895 | 120,239 | 427,102 | 717,752 | Quarterly | 2.81 | % | 666,833 | 2.81 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | DEUTSCHE BANK | U.S.A | US $ | 4,298 | 13,255 | 37,583 | 34,318 | 87,879 | 177,333 | Quarterly | 3.29 | % | 178,055 | 3.29 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | - | SWAP Aviones llegados | - | US $ | 699 | 1,971 | 4,267 | 2,713 | 984 | 10,634 | - | 0.00 | % | 10,634 | 0.00 | % | |||||||||||||||||||||||||||||||||||
Financial leases | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A | US $ | 5,292 | 9,185 | 42,968 | 12,402 | — | 69,847 | Quarterly | 3.25 | % | 69,996 | 3.04 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDIT AGRICOLE | France | US $ | 4,766 | 14,560 | 29,137 | 25,475 | 19,163 | 93,101 | Quarterly | 1.23 | % | 93,256 | 1.23 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A | US $ | 1,410 | 4,351 | 12,532 | 14,051 | 9,630 | 41,974 | Quarterly | 6.38 | % | 41,500 | 5.65 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | S.CHARTERED | U.S.A | US $ | 1,909 | — | — | — | — | 1,909 | Quarterly | 1.25 | % | 1,909 | 1.25 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A | US $ | 13,687 | 42,192 | 119,981 | 114,992 | 31,608 | 322,460 | Quarterly | 5.34 | % | 319,982 | 4.75 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP PARIBAS | U.S.A | US $ | 6,344 | 19,579 | 56,230 | 62,670 | 8,856 | 153,679 | Quarterly | 4.67 | % | 151,996 | 4.17 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BANC OF AMERICA | U.S.A | US $ | 609 | 1,983 | 5,952 | — | — | 8,544 | Monthly | 1.43 | % | 8,600 | 1.43 | % | |||||||||||||||||||||||||||||||||||
Other loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | BOEING | U.S.A | US $ | — | — | 141,813 | — | — | 141,813 | At Expiration | 1.81 | % | 144,249 | 1.81 | % | |||||||||||||||||||||||||||||||||
Total | 534,878 | 1,021,670 | 1,539,611 | 1,161,246 | 2,378,032 | 6,635,437 | 6,461,622 | |||||||||||||||||||||||||||||||||||||||||||||
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114
Interest-bearing loans due in installments due at September 30, 2013, at nominal value. (Unaudited)
Class of | Debtor tax No | Debtor | Debtor | Creditor tax No | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total nominal value | Amortization | Effective rate | Total accounting value | nominal rate | |||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | % | ThUS$ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | Brazil | US$ | 1,454 | 43,532 | — | — | — | 44,986 | At Expiration | 4.02 | % | 45,434 | 3.42 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A. | Brazil | US$ | 7,497 | 120,860 | — | — | — | 128,357 | At Expiration | 5.99 | % | 129,639 | 5.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO ITAU BBA | Brazil | US$ | 32,410 | 68,785 | — | — | — | 101,195 | At Expiration | 6.19 | % | 104,526 | 4.65 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | US$ | — | 62,357 | — | — | — | 62,357 | At Expiration | 4.00 | % | 63,416 | 3.15 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | BRL | 203 | 560 | 159 | — | — | 922 | Monthly | 7.42 | % | 901 | 7.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | US$ | 37,203 | 122,341 | — | — | — | 159,544 | At Expiration | 3.89 | % | 163,167 | 3.30 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | BRL | 44,843 | — | — | — | — | 44,843 | At Expiration | 10.63 | % | 45,608 | 10.15 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ | Holland | US$ | 101 | 311 | 901 | 1,015 | 1,987 | 4,315 | Monthly | 6.01 | % | 4,335 | 6.01 | % | |||||||||||||||||||||||||||||||||||
Obligations with the publics | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | THE BANK OF NEW YORK | U.S.A. | US$ | — | — | — | 300,000 | 800,000 | 1,100,000 | At Expiration | 8.60 | % | 1,149,584 | 8.41 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A. | Brazil | BRL | 179,372 | — | — | — | — | 179,372 | Semiannual | 11.35 | % | 181,628 | 10.80 | % | |||||||||||||||||||||||||||||||||||
Financial leases | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | AFS INVESTMENT IX LLC | U.S.A. | US$ | 1,737 | 5,361 | 15,454 | 17,296 | 20,210 | 60,058 | Monthly | 1.25 | % | 60,340 | 1.25 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AIRBUS FINANCIAL SERVICES | U.S.A. | US$ | 2,980 | 9,185 | 26,424 | 22,427 | 17,316 | 78,332 | Monthly | 1.42 | % | 78,469 | 1.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AWAS | U.S.A. | US$ | 2,992 | 5,650 | — | — | — | 8,642 | Monthly | — | 9,307 | — | |||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | U.S.A. | US$ | 571 | 1,782 | 5,178 | 5,886 | 9,237 | 22,654 | Quarterly | 1.00 | % | 22,727 | 1.00 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | France | US$ | 570 | 1,743 | 4,910 | 5,318 | 10,388 | 22,929 | Quarterly | 0.86 | % | 23,006 | 0.75 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | England | US$ | 6,908 | 18,066 | 44,728 | 46,763 | 113,033 | 229,498 | Quarterly | 1.05 | % | 229,929 | 0.91 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE-CIB | U.S.A. | US$ | 4,239 | 12,856 | 58,579 | 11,224 | 15,285 | 102,183 | Quarterly | 1.40 | % | 102,451 | 1.40 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE-CIB | France | US$ | 7,913 | 24,828 | 61,330 | 50,017 | 59,222 | 203,310 | Quarterly/ Semiannual | 0.77 | % | 203,770 | 0.67 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | Germany | US$ | 3,125 | 9,375 | 15,625 | — | — | 28,125 | Quarterly | 2.50 | % | 28,205 | 2.50 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | U.S.A. | US$ | 197 | 590 | 1,288 | �� | 401 | — | 2,476 | Monthly | 1.77 | % | 2,481 | 1.77 | % | ||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | GENERAL ELECTRIC CAPITAL CORP ORATION | U.S.A. | US$ | 3,403 | 51,979 | — | — | — | 55,382 | Monthly | 1.25 | % | 55,458 | 1.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HSBC | France | US$ | 1,299 | 3,959 | 10,908 | 11,462 | 37,967 | 65,595 | Quarterly | 1.45 | % | 65,728 | 1.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | KFW IP EX-BANK | Germany | US$ | 3,828 | 11,741 | 29,827 | 21,197 | 19,953 | 86,546 | Monthly/ Quarterly | 1.73 | % | 86,701 | 1.73 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NATIXIS | France | US$ | 4,927 | 17,269 | 48,627 | 54,928 | 125,304 | 251,055 | Quarterly/ Semiannual | 2.78 | % | 252,077 | 2.75 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | PK AIRFINANCE US, INC. | U.S.A. | US$ | 2,736 | 8,475 | 24,682 | 33,352 | 39,895 | 109,140 | Monthly | 1.72 | % | 109,318 | 1.72 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WACAPOU LEASING S.A. | Luxembourg | US$ | 463 | 1,330 | 3,163 | 2,673 | 14,571 | 22,200 | Quarterly | 2.00 | % | 22,245 | 2.00 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WELLS FARGO BANK NORTHWEST N.A. | U.S.A. | US$ | 1,769 | 3,195 | — | — | — | 4,964 | Monthly | 1.25 | % | 4,969 | 1.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIÉTÉ GÉNÉRALE MILAN BRANCH | Italy | US$ | 11,642 | 35,687 | 87,914 | 95,352 | 115,143 | 345,738 | Quarterly | 3.91 | % | 346,689 | 3.83 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | THE TORONTO- DOMINION BANK | U.S.A. | US$ | 513 | 1,557 | 4,273 | 4,461 | 7,102 | 17,906 | Quarterly | 0.57 | % | 17,933 | 0.57 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DE LAGE LANDEN BRASIL S.A | Brazil | BRL | 245 | 737 | 252 | — | — | 1,234 | Monthly | 9.32 | % | 1,146 | 9.32 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A | Brazil | BRL | 542 | 224 | 555 | 391 | — | 1,712 | Monthly | 10.58 | % | 1,736 | 10.58 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HP FINANCIAL SERVICE | Brazil | BRL | 356 | 824 | 2,275 | 640 | — | 4,095 | Monthly | 9.81 | % | 4,090 | 9.81 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIETE AIR FRANCE | France | EUR | 66 | 662 | 693 | — | — | 1,421 | Monthly | 6.82 | % | 1,964 | 6.82 | % | |||||||||||||||||||||||||||||||||||
Other loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | COMPANHIA BRASILEIRA DE MEIOS DE PAGAMENTO | Brazil | BRL | 33,163 | 5,666 | — | — | — | 38,829 | Monthly | 2.80 | % | 38,829 | 2.80 | % | |||||||||||||||||||||||||||||||||
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Total | 399,267 | 651,487 | 447,745 | 684,803 | 1,406,613 | 3,589,915 | 3,657,806 | |||||||||||||||||||||||||||||||||||||||||||||
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Total Consolidated | 934,145 | 1,673,157 | 1,987,356 | 1,846,049 | 3,784,645 | 10,225,352 | 10,119,428 | |||||||||||||||||||||||||||||||||||||||||||||
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115
Interest-bearing loans due in installments to September 30, 2013, at accounting values (Unaudited)
Class of | Debtor tax No | Debtor | Debtor | Creditor Tax No | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total accounting value | amortization | Effective rate | Total nominal value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | % | ThUS $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Loans to export | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.004.000-5 | BANCO DE CHILE | Chile | US $ | 15,110 | 20,039 | — | — | — | 35,149 | At Expiration | 1.70 | % | 35,000 | 1.70 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.006.000-6 | BCI | Chile | US $ | — | 100,079 | — | — | — | 100,079 | At Expiration | 1.58 | % | 100,000 | 1.58 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.645.030-K | ITAU | Chile | US $ | 75,229 | — | — | — | — | 75,229 | At Expiration | 1.57 | % | 75,000 | 1.57 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.032.000-8 | BBVA | Chile | US $ | 25,037 | 72,181 | — | — | — | 97,218 | At Expiration | 1.56 | % | 97,000 | 1.56 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US $ | 35,069 | 215,236 | — | — | — | 250,305 | At Expiration | 1.77 | % | 250,000 | 1.77 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ESTADO | Chile | US $ | 120,090 | — | — | — | — | 120,090 | At Expiration | 0.95 | % | 120,000 | 0.95 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.023.000-9 | CORP BANCA | Chile | US $ | 80,060 | — | — | — | — | 80,060 | At Expiration | 1.93 | % | 80,000 | 1.93 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.100.458-1 | BLADEX | Chile | US $ | — | 99,819 | — | — | — | 99,819 | At Expiration | 1.87 | % | 100,000 | 1.87 | % | |||||||||||||||||||||||||||||||||||
Bank loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US $ | 151 | — | 130,084 | — | — | 130,235 | At Expiration | 2.99 | % | 130,084 | 2.99 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ESTADO | Chile | US $ | 22,580 | — | — | — | — | 22,580 | Semiannual | 1.64 | % | 22,419 | 1.63 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.023.000-9 | CORP BANCA | Chile | UF | 18,087 | 48,208 | 126,462 | 98,995 | — | 291,752 | Quarterly | 5.00 | % | 292,778 | 4.85 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | Argentina | ARS $ | — | 17,262 | — | — | — | 17,262 | Monthly | 1.71 | % | 17,262 | 1.71 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BBVA | Argentina | ARS $ | 388 | 31,072 | — | — | — | 31,460 | Monthly | 1.95 | % | 31,072 | 1.95 | % | |||||||||||||||||||||||||||||||||||
Guaranteed obligations | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US $ | 3,599 | 8,708 | 23,796 | 27,056 | 30,281 | 93,440 | Quarterly | 5.69 | % | 94,360 | 5.01 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDIT AGRICOLE | France | US $ | 16,461 | 34,440 | 86,187 | 17,989 | — | 155,077 | Quarterly | 2.14 | % | 154,908 | 2.14 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US $ | 2,227 | 6,700 | 2,236 | — | — | 11,163 | Quarterly | 3.06 | % | 11,167 | 2.73 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP PARIBAS | U.S.A. | US $ | 9,616 | 25,068 | 68,914 | 76,304 | 190,727 | 370,629 | Quarterly | 2.60 | % | 372,034 | 2.41 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | WELLS FARGO | U.S.A. | US $ | 52,712 | 138,508 | 327,777 | 363,593 | 1,162,104 | 2,044,694 | Quarterly | 2.47 | % | 2,145,610 | 1.76 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US $ | 10,805 | 29,091 | 75,777 | 84,022 | 173,441 | 373,136 | Quarterly | 2.65 | % | 381,720 | 2.05 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US $ | 5,334 | 15,161 | 38,669 | 41,966 | 99,286 | 200,416 | Quarterly | 1.34 | % | 205,593 | 0.80 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BTMU | U.S.A. | US $ | 2,769 | 7,795 | 19,612 | 21,718 | 64,974 | 116,868 | Quarterly | 1.66 | % | 120,626 | 1.06 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | APPLE BANK | U.S.A. | US $ | 1,427 | 3,823 | 9,622 | 10,671 | 32,408 | 57,951 | Quarterly | 1.66 | % | 59,758 | 1.06 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | US BANK | U.S.A. | US $ | 15,480 | 41,757 | 91,921 | 108,375 | 409,300 | 666,833 | Quarterly | 2.81 | % | 717,752 | 2.81 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | DEUTSCHE BANK | U.S.A. | US $ | 5,019 | 13,255 | 37,583 | 34,319 | 87,879 | 178,055 | Quarterly | 3.29 | % | 177,333 | 3.29 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | - | SWAP Aviones llegados | - | US $ | 699 | 1,971 | 4,267 | 2,713 | 984 | 10,634 | Quarterly | — | 10,634 | — | |||||||||||||||||||||||||||||||||||||
Financial leases | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US $ | 5,767 | 9,185 | 42,683 | 12,361 | — | 69,996 | Quarterly | 3.25 | % | 69,847 | 3.04 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDITE AGRICOLE | France | US $ | 4,922 | 14,559 | 29,137 | 25,475 | 19,163 | 93,256 | Quarterly | 1.23 | % | 93,101 | 1.23 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US $ | 1,631 | 4,351 | 12,056 | 13,871 | 9,591 | 41,500 | Quarterly | 6.38 | % | 41,974 | 5.65 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | S.CHARTERED | U.S.A. | US $ | 1,909 | — | — | — | — | 1,909 | Quarterly | 1.25 | % | 1,909 | 1.25 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US $ | 15,805 | 42,192 | 116,449 | 114,049 | 31,487 | 319,982 | Quarterly | 5.34 | % | 322,460 | 4.75 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP PARIBAS | U.S.A. | US $ | 6,812 | 19,580 | 54,551 | 62,226 | 8,827 | 151,996 | Quarterly | 4.67 | % | 153,679 | 4.17 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BANC OF AMERICA | U.S.A. | US $ | 665 | 1,983 | 5,952 | — | — | 8,600 | Monthly | 1.43 | % | 8,544 | 1.43 | % | |||||||||||||||||||||||||||||||||||
Other loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | BOEING | U.S.A. | US $ | 2,436 | — | 141,813 | — | — | 144,249 | At Expiration | 1.81 | % | 141,813 | 1.81 | % | |||||||||||||||||||||||||||||||||
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Total | 557,896 | 1,022,023 | 1,445,548 | 1,115,703 | 2,320,452 | 6,461,622 | 6,635,437 | |||||||||||||||||||||||||||||||||||||||||||||
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116
Interest-bearing loans due in installments to September 30, 2013, at accounting value (Unaudited)
Class of | Debtor tax No | Debtor | Debtor | Creditor Tax No | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total accounting value | Amortization | Effective rate | Total nominal value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | % | ThUS$ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | Brazil | US$ | 1,518 | 43,916 | — | — | — | 45,434 | At expiration | 4.02 | % | 44,986 | 3.42 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A. | Brazil | US$ | 7,769 | 121,870 | — | — | — | 129,639 | At expiration | 5.99 | % | 128,357 | 5.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO ITAU BBA | Brazil | US$ | 34,268 | 70,258 | — | — | — | 104,526 | At expiration | 6.19 | % | 101,195 | 4.65 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | US$ | — | 63,416 | — | — | — | 63,416 | At expiration | 4.00 | % | 62,357 | 3.15 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | BRL | 192 | 545 | 164 | — | — | 901 | Monthly | 7.42 | % | 922 | 7.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | US$ | 38,305 | 124,862 | — | — | — | 163,167 | At expiration | 3.89 | % | 159,544 | 3.30 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | BRL | 45,608 | — | — | — | — | 45,608 | At expiration | 10.63 | % | 44,843 | 10.15 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ | Holland | US$ | 122 | 310 | 901 | 1,015 | 1,987 | 4,335 | Monthly | 6.01 | % | 4,315 | 6.01 | % | |||||||||||||||||||||||||||||||||||
Obligations with the publics | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | THE BANK OF NEW YORK | U.S.A | US$ | 23,861 | 7,012 | 5,819 | 305,963 | 806,929 | 1,149,584 | At expiration | 8.60 | % | 1,100,000 | 8.41 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A | Brazil | BRL | 181,628 | — | — | — | — | 181,628 | Semiannual | 11.35 | % | 179,372 | 10.80 | % | |||||||||||||||||||||||||||||||||||
Financial leases | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | AFS INVESTMENT IX LLC | U.S.A | US$ | 2,020 | 5,361 | 15,454 | 17,295 | 20,210 | 60,340 | Monthly | 1.25 | % | 60,058 | 1.25 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AIRBUS FINANCIAL SERVICES | U.S.A | US$ | 3,117 | 9,185 | 26,424 | 22,427 | 17,316 | 78,469 | Monthly | 1.42 | % | 78,332 | 1.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AWAS | U.S.A | US$ | 3,656 | 5,651 | — | — | — | 9,307 | Monthly | — | 8,642 | — | |||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | U.S.A | US$ | 644 | 1,781 | 5,178 | 5,886 | 9,238 | 22,727 | Quarterly | 1.00 | % | 22,654 | 1.00 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | France | US$ | 646 | 1,743 | 4,910 | 5,318 | 10,389 | 23,006 | Quarterly | 0.86 | % | 22,929 | 0.75 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | England | US$ | 7,339 | 18,067 | 44,727 | 46,763 | 113,033 | 229,929 | Quarterly | 1.05 | % | 229,498 | 0.91 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE - CIB | U.S.A | US$ | 4,506 | 12,856 | 58,579 | 11,224 | 15,286 | 102,451 | Quarterly | 1.40 | % | 102,183 | 1.40 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE - CIB | France | US$ | 8,373 | 24,828 | 61,330 | 50,017 | 59,222 | 203,770 | Quarterly/ Semiannual | 0.77 | % | 203,310 | 0.67 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | Germany | US$ | 3,205 | 9,375 | 15,625 | — | — | 28,205 | Quarterly | 2.50 | % | 28,125 | 2.50 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | U.S.A | US$ | 202 | 590 | 1,288 | 401 | — | 2,481 | Monthly | 1.77 | % | 2,476 | 1.77 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | GENERAL ELECTRIC CAPITAL CORPORATION | U.S.A | US$ | 3,479 | 51,979 | — | — | — | 55,458 | Monthly | 1.25 | % | 55,382 | 1.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HSBC | France | US$ | 1,431 | 3,959 | 10,908 | 11,462 | 37,968 | 65,728 | Quarterly | 1.45 | % | 65,595 | 1.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | KFW IPEX-BANK | Germany | US$ | 3,983 | 11,741 | 29,827 | 21,197 | 19,953 | 86,701 | Monthly/ Quarterly | 1.73 | % | 86,546 | 1.73 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NATIXIS | France | US$ | 5,950 | 17,269 | 48,627 | 54,928 | 125,303 | 252,077 | Quarterly/ Semiannual | 2.78 | % | 251,055 | 2.75 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | PK AIRFINANCE US, INC. | U.S.A | US$ | 2,915 | 8,474 | 24,682 | 33,352 | 39,895 | 109,318 | Monthly | 1.72 | % | 109,140 | 1.72 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WACAPOU LEASING S.A. | Luxembourg | US$ | 508 | 1,330 | 3,163 | 2,673 | 14,571 | 22,245 | Quarterly | 2.00 | % | 22,200 | 2.00 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WELLS FARGO BANK NORTHWEST N.A. | U.S.A | US$ | 1,775 | 3,194 | — | — | — | 4,969 | Monthly | 1.25 | % | 4,964 | 1.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIÉTÉ GÉNÉRALE MILAN BRANCH | Italy | US$ | 12,593 | 35,687 | 87,914 | 95,352 | 115,143 | 346,689 | Quarterly | 3.91 | % | 345,738 | 3.83 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | THE TORONTO- DOMINION BANK | U.S.A | US$ | 539 | 1,557 | 4,274 | 4,461 | 7,102 | 17,933 | Quarterly | 0.57 | % | 17,906 | 0.57 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DE LAGE LANDEN BRASIL S.A | Brazil | BRL | 234 | 683 | 229 | — | — | 1,146 | Monthly | 9.32 | % | 1,234 | 9.32 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A | Brazil | BRL | 558 | 221 | 566 | 391 | — | 1,736 | Monthly | 10.58 | % | 1,712 | 10.58 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HP FINANCIAL SERVICE | Brazil | BRL | 352 | 821 | 2,277 | 640 | — | 4,090 | Monthly | 9.81 | % | 4,095 | 9.81 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIETE AIR FRANCE | France | EUR | 765 | 533 | 666 | — | — | 1,964 | Monthly | 6.82 | % | 1,421 | 6.82 | % | |||||||||||||||||||||||||||||||||||
Other loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | COMPANHIA BRASILEIRA DE MEIOS DE PAGAMENTO | Brazil | BRL | 33,163 | 5,666 | — | — | — | 38,829 | Monthly | 2.80 | % | 38,829 | 2.80 | % | |||||||||||||||||||||||||||||||||
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Total | 435,224 | 664,740 | 453,532 | 690,765 | 1,413,545 | 3,657,806 | 3,589,915 | |||||||||||||||||||||||||||||||||||||||||||||
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Total Consolidated | 993,120 | 1,686,763 | 1,899,080 | 1,806,468 | 3,733,997 | 10,119,428 | 10,225,352 | |||||||||||||||||||||||||||||||||||||||||||||
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117
Interest-bearing loans due in installments due at December 31, 2012, at nominal value
Class of | Debtor tax No | Debtor | Debtor country | Creditor Tax No | Creditor | Creditor country | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total nominal value | Amortization | Effective rate | Total accounting value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | % | ThUS $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Loans to exporters | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.004.000-5 | BANCO DE CHILE | Chile | US $ | 30,000 | — | — | — | 30,000 | Semiannual | 2.17 | % | 30,253 | 2.17 | % | ||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.006.000-6 | BCI | Chile | US $ | 35,000 | — | — | — | 35,000 | Semiannual | 1.70 | % | 35,056 | 1.70 | % | ||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.645.030-K | ITAU | Chile | US $ | 75,000 | — | — | — | 75,000 | Quarterly | 1.32 | % | 75,084 | 1.32 | % | ||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.032.000-8 | BBVA | Chile | US $ | 102,000 | — | — | — | 102,000 | Annual | 1.83 | % | 102,562 | 1.79 | % | ||||||||||||||||||||||||||||||||||||
Bank loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US $ | — | — | 214,373 | — | 214,373 | - | 2.57 | % | 214,586 | 2.57 | % | ||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ES TADO | Chile | US $ | — | 44,848 | — | — | 44,848 | Semiannual | 1.76 | % | 44,972 | 1.74 | % | ||||||||||||||||||||||||||||||||||||
Guaranteed obligations | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US $ | 2,732 | 8,374 | 23,951 | 26,478 | 41,114 | 102,649 | Quarterly | 5.69 | % | 101,461 | 5.01 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDITE AGRICOLE | France | US $ | 12,203 | 33,402 | 35,129 | 6,714 | — | 87,448 | Quarterly | 3.42 | % | 87,719 | 3.37 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US $ | 3,474 | 10,696 | 20,753 | 13,014 | 18,211 | 66,148 | Quarterly | 4.96 | % | 65,494 | 4.41 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP PARIBAS | U.S.A. | US $ | 13,578 | 41,635 | 118,769 | 130,877 | 146,231 | 451,090 | Quarterly | 4.15 | % | 444,700 | 3.67 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | WELLS FARGO | U.S.A. | US $ | 39,546 | 119,458 | 324,890 | 334,407 | 1,141,162 | 1,959,463 | Quarterly | 2.57 | % | 1,872,616 | 1.76 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US $ | 9,311 | 28,406 | 79,112 | 84,369 | 208,710 | 409,908 | Quarterly | 2.71 | % | 399,854 | 2.10 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US $ | 4,931 | 14,919 | 40,930 | 42,645 | 117,024 | 220,449 | Quarterly | 1.39 | % | 214,434 | 0.85 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0- E | BTMU | U.S.A. | US $ | 2,514 | 7,638 | 21,116 | 22,221 | 74,733 | 128,222 | Quarterly | 1.73 | % | 123,920 | 1.13 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | APPLE BANK | U.S.A. | US $ | 1,231 | 3,748 | 10,359 | 10,919 | 37,223 | 63,480 | Quarterly | 1.71 | % | 61,411 | 1.11 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BANK OF AMERICA | |||||||||||||||||||||||||||||||||||||||||||||||||
MERRIL LYNCH | U.S.A. | US $ | 3,159 | 9,602 | 26,388 | 27,586 | 106,054 | 172,789 | Quarterly | 1.97 | % | 165,394 | 1.26 | % | ||||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | DEVELOPMENT BANK OF JAPAN | U.S.A. | US $ | 1,962 | 5,974 | 16,404 | 17,153 | 65,579 | 107,072 | Quarterly | 1.98 | % | 102,662 | 1.27 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | 0- E | DEUTSCHE BANK | U.S.A. | US $ | 4,151 | 12,813 | 36,339 | 39,791 | 96,906 | 190,000 | Quarterly | 3.35 | % | 190,813 | 3.35 | % | ||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | - | SWAP Avionesllegados | - | US $ | 815 | 2,316 | 5,158 | 3,549 | 1,916 | 13,754 | - | — | 13,754 | — | ||||||||||||||||||||||||||||||||||||||
Financial leases | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US $ | 6,510 | 16,075 | 35,499 | 25,563 | 1,844 | 85,491 | Quarterly | 3.71 | % | 85,670 | 3.42 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0 E | CREDITE AGRICOLE | France | US $ | 4,646 | 14,192 | 29,145 | 30,216 | 25,485 | 103,684 | Quarterly | 1.32 | % | 103,869 | 1.29 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US $ | 1,358 | 4,164 | 12,014 | 13,461 | 15,089 | 46,086 | Quarterly | 6.38 | % | 45,480 | 5.65 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | S.CHARTERED | U.S.A. | US $ | 1,825 | 5,637 | — | — | — | 7,462 | Quarterly | 1.31 | % | 7,466 | 1.31 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US $ | 11,899 | 36,603 | 104,071 | 112,116 | 49,572 | 314,261 | Quarterly | 5.29 | % | 311,418 | 4.70 | % | |||||||||||||||||||||||||||||||||||
Other loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | BOEING | U.S.A. | US $ | — | — | 146,189 | — | — | 146,189 | - | 1.86 | % | 148,582 | 1.86 | % | |||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | - | OTROS | - | US $ | 3,524 | 10,706 | 29,472 | 15,258 | — | 58,960 | Quarterly | 2.08 | % | 58,340 | 2.08 | % | |||||||||||||||||||||||||||||||||||
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Total | 371,369 | 431,206 | 1,330,061 | 956,337 | 2,146,853 | 5,235,826 | 5,107,570 | |||||||||||||||||||||||||||||||||||||||||||||
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118
Interest-bearing loans due in installments due at December 31, 2012, at nominal value
Class of | Debtor tax No | Debtor | Debtor | Creditor Tax No | Creditor | Creditor | Currency | Up to 90 days | 90 days to one year | one to three years | three to five years | More than five years | Total nominal value | Amortization | Effective rate | Total accounting value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | % | ThUS $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE | France | US$ | — | 50,322 | — | — | — | 50,322 | Quarterly | 2.81 | % | 64,480 | 2.81 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | Brazil | US$ | 24,363 | 5,623 | — | — | — | 29,986 | At Expiration | 4.03 | % | 30,419 | 4.03 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A. | Brazil | US$ | 42,106 | 109,874 | — | — | — | 151,980 | At Expiration | 5.35 | % | 152,517 | 5.35 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A. | Brazil | BRL | 92 | — | — | — | — | 92 | Semiannual | 10.72 | % | 336 | 10.72 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO ITAU BBA | Brazil | US$ | 45,539 | 117,852 | — | — | — | 163,391 | At Expiration | 5.65 | % | 166,916 | 5.65 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | BRL/ US$ | 17,306 | 14,356 | 784 | — | — | 32,446 | Monthly/ At Expiration | 7,69%/ 4,01 | % | 32,596 | 7,69%/ 4,01 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO UNIBANCO | Brazil | BRL | 61 | 27 | — | — | — | 88 | Monthly | 8.94 | % | 78 | 8.94 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | BRL | — | 27,484 | — | — | — | 27,484 | At Expiration | 3.34 | % | 27,506 | 3.34 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NEDERLANDSCHE CREDIET VERZEKERING MAATSCHAPPIJ | Holland | US$ | 96 | 297 | 861 | 971 | 2,383 | 4,608 | Monthly | 0.96 | % | 4,674 | 0.95 | % | |||||||||||||||||||||||||||||||||||
Obligations with the publics | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | THE BANK OF NEW YORK | U.S.A. | US$ | — | — | — | 300,000 | 800,000 | 1,100,000 | At Expiration | 8.60 | % | 1,146,251 | 8.41 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A. | Brazil | BRL | 24,468 | 220,210 | — | — | — | 244,678 | Semiannual | 8.96 | % | 251,271 | 8.56 | % | |||||||||||||||||||||||||||||||||||
Financial leases | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | AFS INVESTMENT IX LLC | U.S.A. | US$ | 1,666 | 5,140 | 14,816 | 16,580 | 26,925 | 65,127 | Monthly | N/A | 66,032 | N/A | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AIR CANADA | U.S.A. | US$ | 3,400 | 9,350 | — | — | — | 12,750 | Monthly | N/A | 12,871 | N/A | |||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AIRBUS FINANCIAL SERVICES | U.S.A. | US$ | 2,862 | 8,819 | 25,357 | 27,070 | 22,925 | 87,033 | Monthly | 2.25 | % | 87,409 | 2.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AWAS | U.S.A. | US$ | 2,991 | 8,975 | 5,651 | — | — | 17,617 | Monthly | N/A | 18,588 | N/A | |||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP P ARIBAS | U.S.A. | US$ | 544 | 1,699 | 4,939 | 5,609 | 11,535 | 24,326 | Quarterly | 1.50 | % | 24,479 | 1.50 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP P ARIBAS | France | US$ | 2,372 | 7,237 | 17,064 | 17,384 | 43,929 | 87,986 | Quarterly | 3.84 | % | 88,109 | 3.84 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | England | US$ | 11,862 | 41,043 | 82,593 | 81,129 | 234,657 | 451,284 | Quarterly | 3.69 | % | 451,201 | 3.69 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE-CIB | U.S.A. | US$ | 4,182 | 12,683 | 67,629 | 10,627 | 19,689 | 114,810 | Quarterly | 2.29 | % | 115,493 | 2.29 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE-CIB | France | US$ | 15,945 | 47,894 | 126,930 | 121,391 | 182,561 | 494,721 | Quarterly/ Semiannual | 2,01%/ 0,82 | % | 497,986 | 2,01%/ 0,37 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | Germany | US$ | 3,125 | 9,375 | 25,000 | — | — | 37,500 | Quarterly | 2.89 | % | 37,570 | 2.89 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | U.S.A. | US$ | 456 | 1,369 | 2,821 | 756 | — | 5,402 | Monthly | 2.25 | % | 5,420 | 2.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | GENERAL ELECTRIC CAPITAL CORPORATION | U.S.A. | US$ | 9,140 | 19,967 | 51,979 | — | — | 81,086 | Monthly | 2.59 | % | 81,379 | 2.59 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HSBC | France | US$ | 1,275 | 3,887 | 10,713 | 11,249 | 42,334 | 69,458 | Quarterly | 1.70 | % | 69,596 | 0.85 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | KFW IP EX-BANK | Germany | US$ | 3,709 | 11,343 | 32,226 | 23,604 | 26,888 | 97,770 | Monthly/ Quarterly | 2,11%/ 2,21 | % | 98,111 | 2,11%/ 2,21 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NATIXIS | France | US$ | 5,972 | 20,421 | 59,579 | 66,989 | 163,464 | 316,425 | Quarterly/ Semiannual | 2,62%/ 3,32 | % | 319,002 | 2,62%/ 3,32 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | PK AIRFINANCE US, INC. | U.S.A. | US$ | 2,609 | 8,080 | 23,530 | 36,373 | 46,500 | 117,092 | Monthly | 1.96 | % | 117,520 | 1.96 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WACAPOU LEASING S.A. | Luxembourg | US$ | 493 | 1,417 | 3,369 | 2,847 | 15,521 | 23,647 | Quarterly | 2.42 | % | 23,844 | 2.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WELLS FARGO BANK NORTHWEST N.A. | U.S.A. | US$ | 1,769 | 5,308 | 3,194 | — | — | 10,271 | Monthly | 1.98 | % | 10,300 | 1.98 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIÉTÉ GÉNÉRALE MILAN BRANCH | Italy | US$ | 11,355 | 34,574 | 90,164 | 91,964 | 151,968 | 380,025 | Quarterly | 1.95 | % | 381,847 | 1.95 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | THE TORONTO-DOMINION BANK | U.S.A. | US$ | 504 | 1,532 | 4,207 | 4,390 | 8,798 | 19,431 | Quarterly | 0.88 | % | 19,545 | 0.08 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DE LAGE LANDEN BRASIL S.A | Brazil | BRL | 252 | 758 | 1,015 | — | — | 2,025 | Monthly | 7.51 | % | 1,344 | 7.51 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A | Brazil | BRL | 543 | 1,631 | 81 | — | — | 2,255 | Monthly | 10.58 | % | 2,192 | 10.58 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CISLATINA ARRENDAMENTO MERCANTIL S.A | Brazil | BRL | 40 | 13 | — | — | — | 53 | Monthly | 5.31 | % | 50 | 5.31 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HP FINANCIAL SERVICE | Brazil | BRL | 189 | 484 | 74 | — | — | 747 | Monthly | 9.08 | % | 711 | 9.08 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIETE AIR FRANCE | France | EUR | 61 | 191 | 1,320 | — | — | 1,572 | Monthly | 6.82 | % | 1,785 | 6.82 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIETE GENERALE LEASING S.A | Brazil | BRL | 2,520 | — | — | — | — | 2,520 | Monthly | 0.00 | % | 1,534 | 0.00 | % | |||||||||||||||||||||||||||||||||||
Others loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | COMPANHIA BRASILEIRA DE MEIOS DE PAGAMENTO | Brazil | BRL | 31,882 | 9,143 | — | — | — | 41,025 | Monthly | 2.20 | % | 41,025 | 2.20 | % | |||||||||||||||||||||||||||||||||
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Total | 275,749 | 818,378 | 655,896 | 818,933 | 1,800,077 | 4,369,033 | 4,451,987 | |||||||||||||||||||||||||||||||||||||||||||||
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Total Consolidated | 647,118 | 1,249,584 | 1,985,957 | 1,775,270 | 3,946,930 | 9,604,859 | 9,559,557 | |||||||||||||||||||||||||||||||||||||||||||||
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119
Interest-bearing loans due in installments to December 31, 2012, at accounting values
Class of | Debtor tax No | Debtor | Debtor country | Creditor Tax No | Creditor | Creditor country | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total accounting value | Amortization | Effective rate | Total nominal value | Nominal rate | |||||||||||||||||||||||||||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | % | ThUS $ | % | ||||||||||||||||||||||||||||||||||||||||||||||
Loans to export | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.004.000-5 | BANCO DE CHILE | Chile | US$ | 30,253 | — | — | — | — | 30,253 | Semiannual | 2.17 | % | 30,000 | 2.17 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.006.000-6 | BCI | Chile | US$ | 35,056 | — | — | — | — | 35,056 | Semiannual | 1.70 | % | 35,000 | 1.70 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 76.645.030-K | ITAU | Chile | US$ | 75,084 | — | — | — | — | 75,084 | Quarterly | 1.32 | % | 75,000 | 1.32 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.032.000-8 | BBVA | Chile | US$ | 102,562 | — | — | — | — | 102,562 | Annual | 1.83 | % | 102,000 | 1.79 | % | |||||||||||||||||||||||||||||||||||||
Bank loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US$ | 214 | — | 214,372 | — | — | 214,586 | - | 2.57 | % | 214,373 | 2.57 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.030.000-7 | ESTADO | Chile | US$ | — | 44,988 | (16 | ) | — | — | 44,972 | Semiannual | 1.76 | % | 44,848 | 1.74 | % | ||||||||||||||||||||||||||||||||||||
Guaranteed obligations | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US$ | 3,590 | 8,374 | 22,767 | 25,947 | 40,783 | 101,461 | Quarterly | 5.69 | % | 102,649 | 5.01 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDIT AGRICOLE | France | US$ | 12,475 | 33,402 | 35,128 | 6,714 | — | 87,719 | Quarterly | 3.42 | % | 87,448 | 3.37 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US$ | 3,829 | 10,696 | 20,126 | 12,764 | 18,079 | 65,494 | Quarterly | 4.96 | % | 66,148 | 4.41 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BNP PARIBAS | U.S.A. | US$ | 15,428 | 41,635 | 113,648 | 128,765 | 145,224 | 444,700 | Quarterly | 4.15 | % | 451,090 | 3.67 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | WELLS FARGO | U.S.A. | US$ | 45,109 | 119,458 | 284,423 | 313,700 | 1,109,926 | 1,872,616 | Quarterly | 2.57 | % | 1,959,463 | 1.76 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US$ | 10,711 | 28,406 | 73,422 | 81,588 | 205,727 | 399,854 | Quarterly | 2.71 | % | 409,908 | 2.10 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 97.036.000-K | SANTANDER | Chile | US$ | 5,308 | 14,919 | 37,797 | 41,117 | 115,293 | 214,434 | Quarterly | 1.39 | % | 220,449 | 0.85 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BTMU | U.S.A. | US$ | 2,746 | 7,638 | 19,070 | 21,177 | 73,289 | 123,920 | Quarterly | 1.73 | % | 128,222 | 1.13 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | APPLE BANK | U.S.A. | US$ | 1,418 | 3,748 | 9,347 | 10,401 | 36,497 | 61,411 | Quarterly | 1.71 | % | 63,480 | 1.11 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | BANK OF AMERICA MERRIL LYNCH | U.S.A. | US$ | 3,566 | 9,602 | 23,088 | 25,860 | 103,278 | 165,394 | Quarterly | 1.97 | % | 172,789 | 1.26 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | DEVELOPMENT BANK OF JAPAN | U.S.A. | US$ | 2,373 | 5,974 | 14,360 | 16,085 | 63,870 | 102,662 | Quarterly | 1.98 | % | 107,072 | 1.27 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | DEUTS CHE BANK | U.S.A. | US$ | 4,964 | 12,813 | 36,339 | 39,791 | 96,906 | 190,813 | Quarterly | 3.35 | % | 190,000 | 3.35 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | - | SWAP Aviones llegados | - | US$ | 815 | 2,316 | 5,158 | 3,549 | 1,916 | 13,754 | - | — | 13,754 | — | |||||||||||||||||||||||||||||||||||||||
Financial leases | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | ING | U.S.A. | US$ | 7,167 | 16,076 | 35,155 | 25,431 | 1,841 | 85,670 | Quarterly | 3.71 | % | 85,491 | 3.42 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CREDITE AGRICOLE | France | US$ | 4,831 | 14,191 | 29,145 | 30,216 | 25,486 | 103,869 | Quarterly | 1.32 | % | 103,684 | 1.29 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | CITIBANK | U.S.A. | US$ | 1,603 | 4,164 | 11,481 | 13,237 | 14,995 | 45,480 | Quarterly | 6.38 | % | 46,086 | 5.65 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | S.CHARTERED | U.S.A. | US$ | 1,828 | 5,638 | — | — | — | 7,466 | Quarterly | 1.31 | % | 7,462 | 1.31 | % | |||||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | 0-E | PEFCO | U.S.A. | US$ | 13,960 | 36,603 | 100,514 | 110,981 | 49,360 | 311,418 | Quarterly | 5.29 | % | 314,261 | 4.70 | % | |||||||||||||||||||||||||||||||||||||
Other loans | 89.862.200-2 | LATAM Airlines Group S.A. | Chile | 0-E | BOEING | U.S.A. | US$ | 563 | 1,829 | 146,190 | — | — | 148,582 | - | 1.86 | % | 146,189 | 1.86 | % | |||||||||||||||||||||||||||||||||||
LATAM Airlines Group S.A. | Chile | - | OTHERS | U.S.A. | US$ | 3,524 | 10,706 | 29,472 | 14,638 | — | 58,340 | Quarterly | 2.08 | % | 58,960 | 2.08 | % | |||||||||||||||||||||||||||||||||||||
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Total | 388,977 | 433,176 | 1,260,986 | 921,961 | 2,102,470 | 5,107,570 | 5,235,826 | |||||||||||||||||||||||||||||||||||||||||||||||
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120
Interest-bearing loans due in installments to December 31, 2012, at accounting value
Class of | Debtor tax No | Debtor | Debtor | Creditor Tax No | Creditor | Creditor | Currency | Up to 90 days | More than 90 days to one year | More than one to three years | More than three to five years | More than five years | Total accounting value | Amortization | Effective rate | Total nominal value | Nominal rate | |||||||||||||||||||||||||||||||||||
ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | ThUS $ | % | ThUS $ | % | ||||||||||||||||||||||||||||||||||||||||||||
Bank loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE | France | US$ | 733 | 63,747 | — | — | — | 64,480 | Quarterly | 2.81 | % | 50,322 | 2.81 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | Brazil | US$ | 24,735 | 5,684 | — | — | — | 30,419 | At Expiration | 4.03 | % | 29,986 | 4.03 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A. | Brazil | US$ | 41,444 | 111,073 | — | — | — | 152,517 | At Expiration | 5.35 | % | 151,980 | 5.35 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A | Brazil | BRL | 336 | — | — | — | — | 336 | Semiannual | 10.72 | % | 92 | 10.72 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO ITAU BBA | Brazil | US$ | 47,205 | 119,711 | — | — | — | 166,916 | At Expiration | 5.65 | % | 163,391 | 5.65 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO SAFRA | Brazil | BRL/ US$ | 17,288 | 14,560 | 748 | — | — | 32,596 | Monthly/ At Expiration | 7,69%/ 4,01 | % | 32,446 | 7,69%/ 4,01 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO UNIBANCO | Brazil | BRL | 50 | 28 | — | — | — | 78 | Monthly | 8.94 | % | 88 | 8.94 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO BRADESCO | Brazil | BRL | — | 27,506 | — | — | — | 27,506 | At Expiration | 3.34 | % | 27,484 | 3.34 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NEDERLANDSCHE CREDIETVERZEKERING MAATSCHAPPIJ | Holland | US$ | 162 | 298 | 861 | 971 | 2,382 | 4,674 | Monthly | 0.96 | % | 4,608 | 0.95 | % | |||||||||||||||||||||||||||||||||||
Obligations with the public | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | THE BANK OF NEW YORK | U.S.A. | US$ | 12,759 | 9,652 | 6,720 | 306,771 | 810,349 | 1,146,251 | At Expiration | 8.60 | % | 1,100,000 | 8.41 | % | |||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DO BRASIL S.A | Brazil | BRL | 31,061 | 220,210 | — | — | — | 251,271 | Semiannual | 8.96 | % | 244,678 | 8.56 | % | |||||||||||||||||||||||||||||||||||
Financial leases | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | AFS INVESTMENT IX LLC | U.S.A. | US$ | 2,571 | 5,140 | 14,816 | 16,580 | 26,925 | 66,032 | Monthly | N/A | 65,127 | N/A | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AIR CANADA | U.S.A. | US$ | 3,521 | 9,350 | — | — | — | 12,871 | Monthly | N/A | 12,750 | N/A | |||||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | AIRBUS FINANCIAL SERVICES | U.S.A. | US$ | 3,238 | 8,819 | 25,357 | 27,070 | 22,925 | 87,409 | Monthly | 2.25 | % | 87,033 | 2.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries |
Brazil |
0-E |
AWAS |
U.S.A. |
US$ |
|
3,962 |
|
|
8,975 |
|
|
5,651 |
|
|
— |
|
|
— |
|
|
18,588 |
|
Monthly |
|
N/A |
|
|
17,617 |
|
|
N/A |
| |||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | U.S.A. | US$ | 697 | 1,699 | 4,939 | 5,609 | 11,535 | 24,479 | Quarterly | 1.50 | % | 24,326 | 1.50 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BNP PARIBAS | France | US$ | 2,495 | 7,237 | 17,064 | 17,384 | 43,929 | 88,109 | Quarterly | 3.84 | % | 87,986 | 3.84 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CITIBANK | England | US$ | 11,779 | 41,043 | 82,593 | 81,129 | 234,657 | 451,201 | Quarterly | 3.69 | % | 451,284 | 3.69 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE - CIB | U.S.A. | US$ | 4,865 | 12,683 | 67,629 | 10,627 | 19,689 | 115,493 | Quarterly | 2.29 | % | 114,810 | 2.29 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CREDIT AGRICOLE - CIB | France | US$ | 19,209 | 47,894 | 126,929 | 121,392 | 182,562 | 497,986 | Quarterly/ Semiannual | 2,01% / 0,82 | % | 494,721 | 2,01%/ 0,37 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | Germany | US$ | 3,195 | 9,375 | 25,000 | — | — | 37,570 | Quarterly | 2.89 | % | 37,500 | 2.89 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | DVB BANK SE | U.S.A. | US$ | 474 | 1,369 | 2,821 | 756 | — | 5,420 | Monthly | 2.25 | % | 5,402 | 2.25 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | GENERAL ELECTRIC CAPITAL CORPORATION | U.S.A. | US$ | 10,536 | 19,967 | 50,876 | — | — | 81,379 | Monthly | 2.59 | % | 81,086 | 2.59 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HSBC | France | US$ | 1,413 | 3,887 | 10,713 | 11,249 | 42,334 | 69,596 | Quarterly | 1.70 | % | 69,458 | 0.85 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | KFW IPEX-BANK | Germany | US$ | 4,049 | 11,343 | 32,226 | 23,605 | 26,888 | 98,111 | Monthly/ Quarterly | 2,11%/ 2,21 | % | 97,770 | 2,11%/ 2,21 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | NATIXIS | France | US$ | 8,549 | 20,421 | 59,579 | 66,989 | 163,464 | 319,002 | Quarterly/ Semiannual | 2,62%/ 3,32 | % | 316,425 | 2,62%/ 3,32 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | PK AIRFINANCE US, INC. | U.S.A. | US$ | 3,037 | 8,080 | 23,530 | 36,373 | 46,500 | 117,520 | Monthly | 1.96 | % | 117,092 | 1.96 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WACAPOU LEASING S.A. | Luxembourg | US$ | 1,192 | 1,417 | 3,370 | 2,847 | 15,018 | 23,844 | Quarterly | 2.42 | % | 23,647 | 2.42 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | WELLS FARGO BANK NORTHWEST N.A. | U.S.A. | US$ | 1,798 | 5,308 | 3,194 | — | — | 10,300 | Monthly | 1.98 | % | 10,271 | 1.98 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIÉTÉ GÉNÉRALE MILAN BRANCH | Italy | US$ | 13,177 | 34,574 | 90,164 | 91,964 | 151,968 | 381,847 | Quarterly | 1.95 | % | 380,025 | 1.95 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | THE TORONTO- DOMINION BANK | U.S.A. | US$ | 618 | 1,533 | 4,206 | 4,390 | 8,798 | 19,545 | Quarterly | 0.88 | % | 19,431 | 0.08 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO DE LAGE LANDEN BRASIL S.A | Brazil | BRL | 103 | 302 | 939 | — | — | 1,344 | Monthly | 7.51 | % | 2,025 | 7.51 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | BANCO IBM S.A | Brazil | BRL | 505 | 1,585 | 102 | — | — | 2,192 | Monthly | 10.58 | % | 2,255 | 10.58 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | CISLATINA ARRENDAMENTO MERCANTIL S.A | Brazil | BRL | 37 | 13 | — | — | — | 50 | Monthly | 5.31 | % | 53 | 5.31 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | HP FINANCIAL SERVICE | Brazil | BRL | 158 | 472 | 81 | — | — | 711 | Monthly | 9.08 | % | 747 | 9.08 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIETE AIR FRANCE | France | EUR | 602 | 35 | 1,148 | — | — | 1,785 | Monthly | 6.82 | % | 1,572 | 6.82 | % | |||||||||||||||||||||||||||||||||||
TAM S.A. and Subsidiaries | Brazil | 0-E | SOCIETE GENERALE LEASING S.A | Brazil | BRL | 1,534 | — | — | — | — | 1,534 | Monthly | 0.00 | % | 2,520 | 0.00 | % | |||||||||||||||||||||||||||||||||||
— | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Others loans | 02.012.862/ 0001-60 | TAM S.A. and Subsidiaries | Brazil | 0-E | COMPANHIA BRASILEIRA DE MEIOS DE PAGAMENTO | Brazil | BRL | 31,882 | 9,143 | — | — | — | 41,025 | Monthly | 2.20 | % | 41,025 | 2.20 | % | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total | 310,969 | 844,133 | 661,256 | 825,706 | 1,809,923 | 4,451,987 | 4,369,033 | |||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||||||||
Total Consolidated | 699,946 | 1,277,309 | 1,922,242 | 1,747,667 | 3,912,393 | 9,559,557 | 9,604,859 | |||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121
Summary of other financial non-current loans (other than bank loans, obligations with the public and financial leases)
As of | As of | |||||||
September 30, | December 31 | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
a) Other interest bearing loans (see note 21 a) | 41,265 | 57,647 | ||||||
b) Derivative not recognized as a hedge (see note 21 b) | 4,425 | 4,477 | ||||||
c) Hedge derivatives (see note 21 c) | 66,565 | 65,598 | ||||||
|
|
|
| |||||
Total currents | 112,255 | 127,722 | ||||||
|
|
|
| |||||
Non-current | ||||||||
a) Other interest bearing loans (see note 21 a) | 141,813 | 190,300 | ||||||
b) Derivative not recognized as a hedge (see note 21 b) | 2,426 | 5,515 | ||||||
c) Hedge derivatives (see note 21 c) | 62,662 | 111,040 | ||||||
|
|
|
| |||||
Total non-currents | 206,901 | 306,855 | ||||||
|
|
|
|
(b) | Derivatives not recognized as a hedge. |
Derivatives not recognized as a hedge as of September 30, 2013 and December 31, 2012, respectively, is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Interest rate derivative not recognized as a hedge | 4,171 | 4,477 | ||||||
Interest foreign currency derivative not recognized as a hedge | 254 | — | ||||||
|
|
|
| |||||
Total current | 4,425 | 4,477 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Interest rate derivative not recognized as a hedge | 2,426 | 5,515 | ||||||
|
|
|
| |||||
Total non-current | 2,426 | 5,515 | ||||||
|
|
|
| |||||
Total other financial liabilities | 6,851 | 9,992 | ||||||
|
|
|
|
122
(c) | Hedge derivatives |
Hedge derivatives as of September 30, 2013 and December 31, 2012 are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Accrued interest from the last date of interest rate swap | 5,890 | 4,660 | ||||||
Fair value of interest rate derivatives | 36,214 | 37,076 | ||||||
Fair value of fuel derivatives | — | 10,502 | ||||||
Fair value of foreign currency derivatives | 24,461 | 13,360 | ||||||
|
|
|
| |||||
Total current | 66,565 | 65,598 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Fair value of interest rate derivatives | 62,662 | 104,547 | ||||||
Fair value of fuel derivatives | — | 4,530 | ||||||
Fair value of foreign currency derivatives | — | 1,963 | ||||||
|
|
|
| |||||
Total non-current | 62,662 | 111,040 | ||||||
|
|
|
| |||||
Total hedging liabilities | 129,227 | 176,638 | ||||||
|
|
|
|
The foreign currency derivatives exchange are collars and cross currency swap.
123
Hedging operation
The fair values of assets/(liabilities), by type of derivative, of the contracts held as hedging instruments are presented below:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Cross currency swaps (CCS) (1) | (20,895 | ) | — | |||||
Interest rate options (2) | 5 | 6 | ||||||
Interest rate swaps (3) | (99,982 | ) | (146,283 | ) | ||||
Fuel collars (4) | 2,108 | (911 | ) | |||||
Fuel swap (5) | 3,237 | (9,000 | ) | |||||
Currency forward (6) | (269 | ) | — | |||||
Currency collars (7) | (7,307 | ) | (15,228 | ) |
(1) | Covers the significant variations in cash flows associated with market risk implicit in the changes in the 3-month LIBOR interest rate and the exchange rate dollar-UF of bank loans. These contracts are recorded as cash flow hedges. |
(2) | Covers the significant variations in cash flows associated with market risk implicit in the changes in the 3-month LIBOR interest rate for long-term loans incurred in the acquisition of aircraft. These contracts are recorded as cash flow hedges. |
(3) | Covers the significant variations in cash flows associated with market risk implicit in the increases in the 3, 6 and 12 months LIBOR interest rates for long-term loans incurred in the acquisition of aircraft and bank loans. These contracts are recorded as cash flow hedges. |
(4) | Covers significant variations in cash flows associated with market risk implicit in the changes in the price of future fuel purchases. |
(5) | Covers the significant variations in cash flows associated with market risk implicit in the changes in the price of future fuel purchases. |
(6) | Covers investments denominated in Peruvian sol to changes in the US Dollar – Peruvian sol exchange rate, with the aim of ensuring investment in dollars. |
(7) | Covers TAM’s revenues recorded in another currency. |
124
During the periods presented, the Company only maintains cash flow hedges. In the case of fuel hedges, the cash flows subject to said hedges will impact results in the next 6 months from the consolidated statement of financial position date, where as in the case of interest rate hedging, the hedges will impact results over the life of the related loans, which are valid for 12 years. The hedges on investments will impact results continuously throughout the life of the investment (up to 3 months), while the cash flows occur at the maturity of the investment.
During the periods presented, there have not occurred hedging operations of future highly probable transaction that have not been realized.
During the periods presented, there has been hedge ineffectiveness recognized in the consolidated statement of income, for currency collars.
Since none of the coverage resulted in the recognition of a non-financial asset, no portion of the result of the derivatives recognized in equity was transferred to the initial value of such assets.
The amounts recognized in comprehensive income during the period and transferred from net equity to income are as follows:
For the nine months ended | For the three months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Debit (credit) recognized in comprehensive income during the period | 68,307 | (21,267 | ) | 25,154 | 33,905 | |||||||||||
Debit (credit) transferred from net equity to income during the period | (22,484 | ) | (25,902 | ) | 11,807 | (11,137 | ) |
125
NOTE 22 - TRADE AND OTHER ACCOUNTS PAYABLES
The composition of Trade and other accounts payables is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
(a) Trade and other accounts payables | 1,214,600 | 1,403,546 | ||||||
(b) Accrued liabilities at the reporting date | 353,490 | 286,444 | ||||||
|
|
|
| |||||
Total trade and other accounts payables | 1,568,090 | 1,689,990 | ||||||
|
|
|
|
(a) | Trade and other accounts payable as of September 30, 2013 and December 31, 2012 are as follows: |
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Trade creditors | 936,447 | 1,069,345 | ||||||
Leasing obligation | 55,310 | 30,818 | ||||||
Other accounts payable (*) | 222,843 | 303,383 | ||||||
|
|
|
| |||||
Total | 1,214,600 | 1,403,546 | ||||||
|
|
|
|
(*) | Includes agreement entitled “Plea Agreement” with the Department of Justice of the United States of America. See detail in Note 23. |
126
The details of Trade and other accounts payables are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Aircraft Fuel | 259,097 | 360,618 | ||||||
Boarding Fee | 226,688 | 182,185 | ||||||
Other personnel expenses | 107,790 | 134,357 | ||||||
Airport charges and overflight | 99,794 | 125,402 | ||||||
Suppliers’ technical purchases | 95,031 | 64,981 | ||||||
Aircraft and engines leasing | 55,310 | 84,729 | ||||||
Land services | 49,090 | 38,436 | ||||||
Handling and ground handling | 47,215 | 49,738 | ||||||
Marketing | 42,401 | 51,360 | ||||||
Professional services and advisory | 42,813 | 46,934 | ||||||
Leases, maintenance and IT services | 28,584 | 34,903 | ||||||
Services on board | 25,446 | 26,674 | ||||||
Aviation insurance | 18,417 | 7,465 | ||||||
U.S.A . Department of Justice (**) | 18,290 | 18,387 | ||||||
Tax recovery program (*) | 15,304 | 19,668 | ||||||
Crew | 14,980 | 16,233 | ||||||
Achievement of goals | 14,512 | 5,024 | ||||||
Airlines | 10,590 | 9,362 | ||||||
Maintenance | 7,108 | 5,305 | ||||||
Communications | 3,637 | 4,948 | ||||||
Distribution system | 2,183 | 1,389 | ||||||
Fleet (JOL) | — | 59,181 | ||||||
Others | 30,320 | 56,267 | ||||||
|
|
|
| |||||
Total trade and other accounts payables | 1,214,600 | 1,403,546 | ||||||
|
|
|
|
(*) | Fiscal Recovery Program in Brazil (REFIS), established in Law No. 11.941/09 and Provisional Measure No. 449/2009. REFIS is intended to allow the settlement of tax debts through a special mechanism to pay and refinance. |
(**) | Includes agreement entitled “Plea Agreement” with the Department of Justice of the United States of America. See detail in Note 23. |
127
(b) | The liabilities accrued at September 30, 2013 and December 31, 2012, are as follows: |
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Accrued personnel expenses | 206,191 | 171,873 | ||||||
Accounts payable to personnel (*) | 104,063 | 70,625 | ||||||
Aircraft and engine maintenance | 13,788 | 22,053 | ||||||
Others accrued liabilities | 29,448 | 21,893 | ||||||
|
|
|
| |||||
Total accrued liabilities | 353,490 | 286,444 | ||||||
|
|
|
|
(*) | Profits and bonds participation (Note 26 letter b) |
128
NOTE 23 - OTHER PROVISIONS
The detail of Other provisions as of September 30, 2013 and December 31, 2012 is as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Provision for contingencies (1) | ||||||||
Tax contingencies | 6,772 | 6,774 | ||||||
Civil contingencies | 13,749 | 23,880 | ||||||
Labor contingencies | 10,246 | 28,920 | ||||||
|
|
|
| |||||
Total other provisions, current | 30,767 | 59,574 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Provision for contingencies (1) | ||||||||
Tax contingencies | 1,047,503 | 1,137,961 | ||||||
Civil contingencies | 51,681 | 60,732 | ||||||
Labor contingencies | 68,330 | 91,248 | ||||||
Other | 28,306 | 6,066 | ||||||
Provision for European Commission investigation (2) | 11,119 | 10,865 | ||||||
|
|
|
| |||||
Total other provisions, non-current | 1,206,939 | 1,306,872 | ||||||
|
|
|
| |||||
Total other provisions (3) | 1,237,706 | 1,366,446 | ||||||
|
|
|
|
(1) | Provisions for contingencies: |
The tax contingencies correspond to litigation and tax criteria related to the tax treatment applicable to direct and indirect taxes, which are found in both administrative and judicial stage.
The civil contingencies correspond to different demands of civil order filed against the company.
The labor contingencies correspond to different demands of labor order filed against the company.
The Provisions are recognized in the consolidated income statement in administrative expenses or tax expenses, as appropriate, except for the Fair Value by application of IFRS 3 business combination, in which case the recognition is in the State of Financial Position in the heading of Goodwill.
129
(2) | Provision made for proceedings brought by the European Commission for possible breaches of free competition in the freight market. |
(3) | Total other provision at September 30, 2013, and at December 31, 2012, include the fair value correspond to those contingencies with a probability of loss under 50%, which are not provided for the normal application of IFRS enforcement and that only must be registered in the context of a business combination in accordance with IFRS 3. |
130
The movement of provisions between January 1, 2012 and September 30, 2013 is as follows:
European | ||||||||||||
Legal | Commission | |||||||||||
claims | Investigation(**) | Total | ||||||||||
ThUS$ | ThUS$ | ThUS$ | ||||||||||
Opening balance as of January 1, 2012 | 19,073 | 10,675 | 29,748 | |||||||||
Increase in provisions | 16,355 | — | 16,355 | |||||||||
Provision used | (16,406 | ) | — | (16,406 | ) | |||||||
Additions due to business combination | 1,429,012 | — | 1,429,012 | |||||||||
Subsidiaries conversion difference | 17,523 | — | 17,523 | |||||||||
Exchange difference | 480 | (103 | ) | 377 | ||||||||
|
|
|
|
|
| |||||||
Closing balance as of September 30, 2012 (Unaudited) | 1,466,037 | 10,572 | 1,476,609 | |||||||||
|
|
|
|
|
| |||||||
Opening balance as of October 1, 2012 | 1,466,037 | 10,572 | 1,476,609 | |||||||||
Increase in provisions | 14,044 | — | 14,044 | |||||||||
Provision used (*) | (114,730 | ) | — | (114,730 | ) | |||||||
Reversal of provision | (449 | ) | — | (449 | ) | |||||||
Subsidiaries conversion difference | (9,132 | ) | — | (9,132 | ) | |||||||
Exchange difference | (189 | ) | 293 | 104 | ||||||||
|
|
|
|
|
| |||||||
Closing balance as of December 31, 2012 | 1,355,581 | 10,865 | 1,366,446 | |||||||||
|
|
|
|
|
| |||||||
Opening balance as of January 1, 2013 | 1,355,581 | 10,865 | 1,366,446 | |||||||||
Increase in provisions | 46,344 | — | 46,344 | |||||||||
Provision used | (57,009 | ) | — | (57,009 | ) | |||||||
Reversal of provision | (5,976 | ) | — | (5,976 | ) | |||||||
Subsidiaries conversion difference | (111,650 | ) | — | (111,650 | ) | |||||||
Exchange difference | (703 | ) | 254 | (449 | ) | |||||||
|
|
|
|
|
| |||||||
Closing balance as of September 30, 2013 (Unaudited) | 1,226,587 | 11,119 | 1,237,706 | |||||||||
|
|
|
|
|
|
(*) | The judicial deposit in guarantee, related to the Fundo Aeroviário (FA), in the amount of MUS$ 107, was done in order to suspend the enforceability of the tax credit. The company is discussing over the Tribunal the constitutionality of the requirement made by FA in a legal suit. Initially it was covered by the effects of a provisional remedy, meaning that, the company was not obligated to collect the tax while there was not a judicial decision in this regard. However, the decision taken by a judge in the first instance was publicized in an unfavorable way, revoking the provisional remedy relief. As the legal suit is still in progress (TAM appealed from this first decision), the company needed to do the deposit judicial in guarantee to suspend the enforceability of such tax credit. Finally, if the final decision is favorable to the company, the deposit already made is going to come back to TAM. On the other hand, if the tribunal confirms the first decision, such deposit will be converted in a definitive payment in favor of the Brazilian Government. |
131
(**) | European Commission Provision: |
(a) This provision was established because of the investigation brought by the Directorate General for Competition of the European Commission against more than 25 cargo airlines, including Lan Cargo S.A., as part of a global investigation begun in 2006 regarding possible unfair competition on the air cargo market. This was a joint investigation by the European and U.S.A. authorities. The start of the investigation was disclosed through a Essential Matter report dated December 27, 2007. The U.S.A. portion of the global investigation concluded when Lan Cargo S.A. and its subsidiary, Aerolíneas Brasileiras S.A. (“ABSA”) signed aPlea Agreement with the U.S.A. Department of Justice, as disclosed in a Essential Matter report notice on January 21, 2009.
(b) A Essential Matter report dated November 9, 2010, reported that the General Direction of Competition had issued its decision on this case (the “decision”), under which it imposed fines totaling € 799,445,000 (seven hundred and ninety nine million four hundred and forty-five thousand Euros) for infringement of European Union regulations on free competition against eleven (11) airlines, among which are LATAM Airline Group S.A. and Lan Cargo S.A., Air Canada, Air France, KLM, British Airways, Cargolux, Cathay Pacific, Japan Airlines, Qantas Airways, S.A.S. and Singapore Airlines.
(c) Jointly, LATAM Airline Group S.A. and Lan Cargo S.A., have been fined in the amount of € 8,220,000 (eight million two hundred twenty thousand Euros) for said infractions, which was provisioned in the financial statements of LATAM Airline Group S.A.. This is a minor fine in comparison to the original decision, as there was a significant reduction in fine because LATAM Airline Group S.A. cooperated during the investigation.
(d) On January 24, 2011, LATAM Airline Group S.A. and Lan Cargo S.A. appealed the decision before the Court of Justice of the European Union. At September 30, 2013, the provision reached the amount of ThUS$ 11,119 (ThUS$ 10,865 at December 31, 2012).
132
NOTE 24 - TAX LIABILITIES
The composition of Tax liabilities is as follow:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Sales tax | 51,741 | 47,122 | ||||||
Income tax | 16,524 | 14,512 | ||||||
Retentions | 30,889 | 45,413 | ||||||
Others | 10,264 | 8,434 | ||||||
|
|
|
| |||||
Total current | 109,418 | 115,481 | ||||||
|
|
|
|
133
NOTE 25 - OTHER NON-FINANCIAL LIABILITIES
Other non-financial liabilities as of September 30, 2013 and December 31, 2012 are as follows:
As of | As of | |||||||
September 30, | December 31, | |||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Current | ||||||||
Deferred revenues (*) | 2,557,201 | 2,360,151 | ||||||
Dividends payable | 696 | 4,023 | ||||||
Other sundry liabilities | 25,602 | 20,744 | ||||||
|
|
|
| |||||
Total other non-financial liabilities, current | 2,583,499 | 2,384,918 | ||||||
|
|
|
| |||||
Non-current | ||||||||
Deferred revenues (*) | 83,830 | 99,261 | ||||||
Other sundry liabilities | 57 | 62 | ||||||
|
|
|
| |||||
Total other non-financial liabilities, non-current | 83,887 | 99,323 | ||||||
|
|
|
| |||||
Total other non-financial liabilities | 2,667,386 | 2,484,241 | ||||||
|
|
|
|
(*) | Note 2.20. |
134
NOTE 26 - EMPLOYEE BENEFITS
Liability for employee benefits as of September 30, 2013 and December 31, 2012, respectively, are as follows:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ Unaudited | ThUS$ | |||||||
Pension payments | 27,900 | 32,323 | ||||||
Termination payments | 477 | 240 | ||||||
Other obligations | 17,177 | 5,532 | ||||||
|
|
|
| |||||
Total liability for employee benefits | 45,554 | 38,095 | ||||||
|
|
|
|
(a) The movement in Pension and termination payments and other obligations between January 1, 2012 and September 30, 2013 is as follows:
ThUS$ | ||||
Opening balance as of January 1, 2012 | 13,132 | |||
Increase (decrease) current service provision | 23,518 | |||
Benefits paid | 1,576 | |||
|
| |||
Closing balance as of September 30, 2012 (Unaudited) | 38,226 | |||
|
| |||
Opening balance as of October 1, 2012 | 38,226 | |||
Increase (decrease) current service provision | (91 | ) | ||
Benefits paid | (40 | ) | ||
|
| |||
Closing balance as of December 31, 2012 | 38,095 | |||
|
| |||
Opening balance as of January 1, 2013 | 38,095 | |||
Increase (decrease) current service provision | 8,209 | |||
Benefits paid | (750 | ) | ||
|
| |||
Closing balance as of September 30, 2013 (Unaudited) | 45,554 | |||
|
|
135
(b) The liability for short-term benefits as of September 30, 2013 and December 31, 2012 respectively, is detailed below:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ Unaudited | ThUS$ | |||||||
Profit-sharing and bonuses (*) | 104,063 | 70,625 | ||||||
|
|
|
|
(*) | Accounts payables to the personnel (Note 22 letter b) |
The participation in profits and bonuses corresponds to an annual incentives plan for achievement of objectives.
(c) Employment expenses are detailed below:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Salaries and wages | 1,298,873 | 861,833 | 417,411 | 416,235 | ||||||||||||
Short-term employee benefits | 345,741 | 254,515 | 122,572 | 171,411 | ||||||||||||
Termination benefits | 52,118 | 21,527 | 23,846 | 9,831 | ||||||||||||
Other personnel expenses | 185,603 | 129,402 | 61,162 | 50,621 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 1,882,335 | 1,267,277 | 624,991 | 648,098 | ||||||||||||
|
|
|
|
|
|
|
|
136
NOTE 27 - ACCOUNTS PAYABLE, NON-CURRENT
Non-current accounts payable as of September 30, 2013 and December 31, 2012 are as follows:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Fleet financing (JOL) | 144,424 | 140,769 | ||||||
Tax recovery program (*) | 185,550 | 207,089 | ||||||
Other accounts payable (**) | 2,868 | 26,354 | ||||||
Aircraft and engine maintenance | 654,712 | 685,441 | ||||||
Provision for vacations and bonuses | 9,778 | 9,954 | ||||||
Other sundry liabilities | 12,901 | 15,994 | ||||||
|
|
|
| |||||
Total accounts payable, non-current | 1,010,233 | 1,085,601 | ||||||
|
|
|
|
(*) | Fiscal Recovery Program in Brazil (REFIS), established in Law No. 11.941/09 and Provisional Measure No. 449/2009. REFIS is intended to allow the settlement of tax debts through a special mechanism to pay and refinance. |
(**) | Agreement entitled “Plea Agreement” with the Department of Justice of United States of America; its short-term part is in Trade and other payable. See details in Note 23. |
137
NOTE 28 - EQUITY
(a) | Capital |
The Company’s objective is to maintain an appropriate level of capitalization that enables it to ensure access to the financial markets for carrying out its medium and long-term objectives, optimizing the return for its shareholders and maintaining a solid financial position.
The Capital of the Company is managed and composed in the following form:
The capital of the Company at September 30, 2013 amounts to ThUS$ 1,605,165 divided into 483,547,819 common stock of a same series (ThUS$ 1,501,018, divided into 479,098,052 shares as of December 31, 2012), no par value. There are no special series of shares and no privileges. The form of its stock certificates and their issuance, exchange, disablement, loss, replacement and other similar circumstances, as well as the transfer of the shares, is governed by the provisions of Corporations Law and its regulations.
(b) | Subscribed and paid shares |
As of September 30, 2013, the total number of ordinary shares authorized stands at 551,847,819 shares with no par value, in accordance with the increase in equity approved at the Extraordinary Shareholders’ Meeting held on June 11, 2013 issuing 63,500,000 ordinary shares with no par value. 62,000,000 of these new shares shall be set aside to be offered preferentially to holders of shares in LATAM Airlines Group S.A. in accordance with Article 25 of the Corporations Law the unsubscribed remainder shall be offered and floated on the general market, and 1,500,000 shares shall be destined for compensation plans for employees of the Company and its subsidiaries. As of the close of this period, 348,428,753 are fully paid up and 135,119,066 were subject to exchange for shares in the companies Sister Holdco S.A. and Holdco II S.A.
As reported by Essential Matter dated June 28, 2012, the Board agreed to submit to the approval of shareholders of the Company that the remaining 7,436,816 shares that were not used in the exchange, not be used for the purpose of creating and implementing a compensation plan for employees of the Company and its subsidiaries, as provided in Article 24 of the Corporations Law, but instead preferably intended to be offered to shareholders of LATAM Airlines Group S.A., according to article 25 of the Corporation Law.
According to the information through Essential Matter dated August 3, 2012, to this date, the Board agreed to call Extraordinary Shareholders Meeting to discuss, among other matters, that the referred 7,436,816 shares were intended to be offered preferentially to shareholders of the Company and the balance not subscribed, was offered and placed on the market in general. The aforementioned Extraordinary Shareholders Meeting held on September 4, 2012, agreed, among other matters, the approval of the remaining 7,436,816 shares of total 142,555,882 shares issued under the authorization of the Extraordinary Shareholders Meeting dated December 21, 2011, and were not to be exchanged for shares of the Sister Holdco S.A. and Holdco II S.A., were intended to be offered preferably between the LATAM shareholders under Article 25 of the Corporations Law and that the unsubscribed balance, would be offered and placed on the market in general.
138
The re-destination and placement of those shares was approved by the Superintendency of Securities and Insurance, dated December 11, 2012. On December 20, 2012, the Board of Directors agreed to start, from December 21, 2012, the period of preferred option of those shares, proceeded to fix the price of placing them, which was reported to the Superintendency of Securities and Insurance by Essential Matter on the same date. At the end of the period of first refusal, that is, to January 19, 2013, were 6,857,190 shares subscribed and paid the said remnant, leaving a balance of 579,626 shares to be subscribed. This balance was auctioned on the Santiago Stock Exchange - Stock Exchange dated January 23, 2013 at a value of CLP$ 11,921 per share.
At December 31, 2012, of the total shares subscribed, 479,098,052 shares have been fully paid.
As reported by Essential Matter dated on April 30, 2013, on that date the Board approved an Extraordinary Shareholders’ Meeting to be held on June 11, 2013, to address matters including the following:
1. To increase corporate equity by the amount of US$ 1,000,000,000 (one billion United States Dollars), with the objective of financing part of the investment plan for upcoming years, particularly requirements for fleet renewal and growth, and to strengthen the company’s financial position, through the issuance of a number of ordinary shares with no par value, as determined at the meeting;
2. To destine a part of said new capital to compensation plans, under the terms specified in Article 24 of Law 18,046, the Corporations Law;
3. To set the price, manner, time, and procedure for the placement of the shares issued relating to this increase in equity; or to delegate to the Board the faculty of determining the price, manner, time, and procedure, and other conditions for the placement of said shares, including but not limited to setting the terms and conditions of the company’s compensation plans.
On June 20, 2013, information was presented to the Superintendency of Securities and Insurance in order to table a request for the inscription of the share issuance approved at the aforementioned Extraordinary Shareholders’ Meeting. On July 22, 2013 the Superintendency of Securities and Insurance remitted the Company providing comments for said presentation by Deed No. 16,141. The Company replied to these submissions on October 16, 2013.
139
The following table shows the movement of the authorized and fully paid shares described above between January 1, 2012 and September 30, 2013.
Movement of authorized shares | Nro . Of shares | |||
Autorized shares as of January 1, 2012 | 488,355,882 | |||
Increase capital option closing year 2007 options over canceled shares | (91 | ) | ||
|
| |||
Authorized shares as of September 30, 2012 (Unaudited) | 488,355,791 | |||
|
| |||
Authorized shares as of October 1, 2012 | 488,355,791 | |||
Increase capital option closing year 2007 options over canceled shares | — | |||
|
| |||
Authorized shares as of December 31, 2012 | 488,355,791 | |||
|
| |||
Authorized shares as of January 1, 2013 | 488,355,791 | |||
Increase capital approved at Extraordinary Shareholders meeting dated June 11, 2013 | 63,500,000 | |||
Full right decrease of treasury stock | (7,972 | ) | ||
|
| |||
Authorized shares as of September 30, 2013 (Unaudited) | 551,847,819 | |||
|
|
Movement fully paid shares (*) | N° of shares | Amount ThUS$ | ||||||
Paid shares as of January 1, 2012 | 340,326,431 | 476,579 | ||||||
Exercise stock options increase capital 2007 | 673,478 | 10,226 | ||||||
Exchange of shares for merger Companies Sister Holdco S.A. and Holdco II S.A. | 135,119,066 | 951,409 | ||||||
|
|
|
| |||||
Paid shares as of September 30, 2012 (Unaudited) | 476,118,975 | 1,438,214 | ||||||
|
|
|
| |||||
Paid shares as of October 1, 2012 | 476,118,975 | 1,438,214 | ||||||
Placement of the remaining preferred shares issued for merger with Companies Sister Holdco S.A. and Holdco II S.A. | 2,979,077 | 68,986 | ||||||
|
|
|
| |||||
Paid shares as of December 31, 2012 (*) | 479,098,052 | 1,507,200 | ||||||
|
|
|
| |||||
Paid shares as of January 1, 2013 | 479,098,052 | 1,507,200 | ||||||
Placement of the remaining preferred shares issued for merger with Companies Sister Holdco S.A. and Holdco II S.A. | 4,457,739 | 104,351 | ||||||
Full right decrease of treasury stock | (7,972 | ) | (25 | ) | ||||
|
|
|
| |||||
Paid shares as of September 30, 2013 (Unaudited) (*) | 483,547,819 | 1,611,526 | ||||||
|
|
|
|
(*) | Amounts reported represent only those arising from the payment of the outstanding shares, does not consider the capitalization costs for issuance and placement of shares by ThUS$ (179) at September 30, 2013, ThUS$ (3,510) at December 31, 2012 and ThUS$ (2,672) to December 31, 2011. |
140
(c) | Treasury stock |
At September 30, 2013, as per minutes of the extraordinary shareholder´s meeting held on June 11, 2013, the company relinquished all right to 7,972 stocks of its portfolio.
At September 30, 2013, the Company does not maintain treasury stock.
(d) | Other sundry reserves |
The movement of Other sundry reserves between January 1, 2012 and September 30, 2013, is as follows:
Stock option plans | Other reserves | Total | ||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ||||||||||||||
Opening balance as of January 1, 2012 | 7,130 | 1,362 | 8,492 | |||||||||||||
Stock option plan | 1,355 | — | 1,355 | |||||||||||||
Deferred tax | (257 | ) | — | (257 | ) | |||||||||||
Transactions with non-controlling interest | — | (621 | ) | (621 | ) | |||||||||||
Cost of issuance and placement of shares | (1 | ) | — | (3,510 | ) | (3,510 | ) | |||||||||
Capitalization share issuance and placement cost | (1 | ) | — | 3,510 | 3,510 | |||||||||||
Higher value for TAM S.A. share exchange | — | 2,665,692 | 2,665,692 | |||||||||||||
Legal reserves | — | (1,864 | ) | (1,864 | ) | |||||||||||
|
|
|
|
|
| |||||||||||
Closing balance as of September 30, 2012 (Unaudited) | 8,228 | 2,664,569 | 2,672,797 | |||||||||||||
|
|
|
|
|
| |||||||||||
Opening balance as of October 1, 2012 | 8,228 | 2,664,569 | 2,672,797 | |||||||||||||
Stock option plans | (2,654 | ) | — | (2,654 | ) | |||||||||||
Transactions with non-controlling interest | — | (983 | ) | (983 | ) | |||||||||||
Legal reserves | — | 3,096 | 3,096 | |||||||||||||
|
|
|
|
|
| |||||||||||
Closing balance as of December 31, 2012 | 5,574 | 2,666,682 | 2,672,256 | |||||||||||||
|
|
|
|
|
| |||||||||||
Opening balance as of January 1, 2013 | 5,574 | 2,666,682 | 2,672,256 | |||||||||||||
Stock option plan | 14,331 | — | 14,331 | |||||||||||||
Deferred tax | (2,580 | ) | — | (2,580 | ) | |||||||||||
Transactions with non-controlling interest | — | (5,057 | ) | (5,057 | ) | |||||||||||
Cost of issuance and placement of shares | (2 | ) | — | (179 | ) | (179 | ) | |||||||||
Capitalization share issuance and placement cost | (2 | ) | — | 179 | 179 | |||||||||||
Reserve absorption losses Aerolsne Lineas Aéreas Nacionales del Ecuador S.A. | — | (12,472 | ) | (12,472 | ) | |||||||||||
Legal reserves | — | 47 | 47 | |||||||||||||
|
|
|
|
|
| |||||||||||
Closing balance as of September 30, 2013 (Unaudited) | 17,325 | 2,649,200 | 2,666,525 | |||||||||||||
|
|
|
|
|
|
(1) | The costs of issuance and placement of shares recognized in reserves during the first half of 2012 were capitalized during the month of September 2012, according to the Extraordinary Meeting of Shareholders held on September 4, 2012. |
(2) | The costs incurred through the issuance and placement of the remaining 7,436,816 shares, not used in this exchange, reallocated as agreed at the Extraordinary Shareholders’ Meeting held on September 4, 2012, amounting to ThUS$ 179, were capitalized during June 2013, as agreed at the Extraordinary Shareholders’ Meeting held on June 11, 2013. |
141
(d.1) | Reserves for stock option plans |
These reserves are related to the “Share-based payments” explained in Note 38.
(d.2) | Other reserves |
The balance of Other reserves comprises the following:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Higher value for TAM S.A. share exchange (1) | 2,665,692 | 2,665,692 | ||||||
Reserve for the adjustment to the value of fixed assets (2) | 2,620 | 2,620 | ||||||
Reserve absorption losses Aerolsne Lineas Aéreas Nacionales del Ecuador S.A. | (12,472 | ) | — | |||||
Transactions with non-controlling interest (3) | (8,462 | ) | (3,405 | ) | ||||
Others | 1,822 | 1,775 | ||||||
|
|
|
| |||||
Total | 2,649,200 | 2,666,682 | ||||||
|
|
|
|
(1) | Corresponds to the difference in the shares value of TAM S.A. acquired (under subscriptions) by Sister Holdco S.A. and Holdco II S.A. (under the Exchange Offer), as stipulated in the Declaration of Posting of Merger by Absorption and the fair value of these exchange shares of LATAM Airlines Group S.A. at June 22, 2012. |
(2) | Corresponds to the technical revaluation of fixed assets authorized by the Superintendence of Securities and Insurance in 1979, in Circular No. 1,529. The revaluation was optional and could be taken only once, the reserve is not distributable and can only be capitalized. |
(3) | The balance at September 30, 2013, corresponds to the loss generated by the participation by Lan Pax Group S.A. in the capital increase carried out in Aerolane Líneas Aéreas Nacionales del Ecuador S.A. and Aires of ThUS$ (5,057) during the first semester of 2013 and accumulated losses from transactions with minority shareholders of ThUS$ (3,405) at December 31, 2012. The corresponding accumulated losses of ThUS$ (2,422) in Lan Pax Group S.A. for increases of capital held by Aerovías de Integración Regional Aires S.A. and the accumulated losses of ThUS$ (983) Lan Cargo Inversiones S.A. for the capital increase made by Línea Aérea Carguera de Colombia S.A. |
142
(e) | Reserves with effect in other comprehensive income. |
The movement of Reserves with effect in other comprehensive income between January 1, 2012 and September 30, 2013 is as follows:
Currency translation reserve | Cash flow hedging reserve | Total | ||||||||||
ThUS$ | ThUS$ | ThUS$ | ||||||||||
Opening balance as of January 1, 2012 | (13,317 | ) | (140,556 | ) | (153,873 | ) | ||||||
Derivatives valuation gains (losses) | — | (12,492 | ) | (12,492 | ) | |||||||
Deferred tax | (6,054 | ) | 7,814 | 1,760 | ||||||||
Conversion difference subsidiaries | 32,678 | — | 32,678 | |||||||||
|
|
|
|
|
| |||||||
Closing balance as of September 30, 2012 (Unaudited) | 13,307 | (145,234 | ) | (131,927 | ) | |||||||
|
|
|
|
|
| |||||||
Opening balance as of October 1, 2012 | 13,307 | (145,234 | ) | (131,927 | ) | |||||||
Derivatives valuation gains (losses) | — | 17,495 | 17,495 | |||||||||
Deferred tax | 3,327 | (12,991 | ) | (9,664 | ) | |||||||
Conversion difference subsidiaries | (13,060 | ) | — | (13,060 | ) | |||||||
|
|
|
|
|
| |||||||
Closing balance as of December 31, 2012 | 3,574 | (140,730 | ) | (137,156 | ) | |||||||
|
|
|
|
|
| |||||||
Opening balance as of January 1, 2013 | 3,574 | (140,730 | ) | (137,156 | ) | |||||||
Derivatives valuation gains (losses) | — | �� | 65,754 | 65,754 | ||||||||
Deferred tax | — | (10,942 | ) | (10,942 | ) | |||||||
Conversion difference subsidiaries | (368,505 | ) | — | (368,505 | ) | |||||||
|
|
|
|
|
| |||||||
Closing balance as of September 30, 2013 (Unaudited) | (364,931 | ) | (85,918 | ) | (450,849 | ) | ||||||
|
|
|
|
|
|
(e.1) | Currency translation reserve |
These originate from exchange differences arising from the translation of any investment in foreign entities (or Chilean investment with a functional currency different to that of the parent), and from loans and other instruments in foreign currency designated as hedges for such investments. When the investment (all or part) is sold or disposed and loss of control occurs, these reserves are shown in the consolidated statement of income as part of the loss or gain on the sale or disposal. If the sale does not involve loss of control, these reserves are transferred to non-controlling interests.
(e.2) | Cash flow hedging reserve |
These originate from the fair value valuation at the end of each period of the outstanding derivative contracts that have been defined as cash flow hedges. When these contracts expire, these reserves should be adjusted and the corresponding results recognized.
143
(f) | Retained earnings |
The movement of Retained earnings between January 1, 2012 and September 30, 2013, is as follows:
ThUS$ | ||||
Opening balance as of January 1, 2012 | 1,116,798 | |||
Result for the period | 47,080 | |||
Other increase (decreases) | 529 | |||
Dividends | (37,091 | ) | ||
|
| |||
Closing balance as of September 30, 2012 (Unaudited) | 1,127,316 | |||
|
| |||
Opening balance as of October 1, 2012 | 1,127,316 | |||
Result for the period | (66,156 | ) | ||
Other increase (decreases) | (366 | ) | ||
Dividends | 15,342 | |||
|
| |||
Closing balance as of December 31, 2012 | 1,076,136 | |||
|
| |||
Opening balance as of January 1, 2013 | 1,076,136 | |||
Result for the period | (234,992 | ) | ||
Other increase (decreases) | 11,461 | |||
|
| |||
Closing balance as of September 30, 2013 (Unaudited) | 852,605 | |||
|
|
(g) | Dividends per share |
As of September 30, 2013 (Unaudited) | ||||
Description of dividend | Final dividend 2012 | |||
Date of dividend | 04-29-2013 | |||
Amount of the dividend (ThUS$) | 3,288 | |||
Number of shares among which the dividend is distributed | 483,547,819 | |||
Dividend per share (US$) | 0.0068 |
144
As of December 31, 2012 | ||||||||
Description of dividend | Final dividend 2011 | Minimum mandatory dividend 2012 | ||||||
Date of dividend | 04-26-2012 | 12-31-2012 | ||||||
Amount of the dividend (ThUS$) | 18,462 | 3,287 | ||||||
Number of shares among which the dividend is distributed | 340,999,909 | 479,098,052 | ||||||
Dividend per share (US$) | 0.05414 | 0.00686 |
The Company’s dividend policy is that dividends distributed will be equal to the minimum required by law, i.e. 30% of the net income according to current regulations. This policy does not preclude the Company from distributing dividends in excess of this obligatory minimum, based on the events and circumstances that may occur during the course of the year.
At September 30, 2013, no provision was mandatory minimum dividend.
145
NOTE 29 - REVENUE
The detail of revenues is as follows:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Passengers | 8,225,112 | 5,108,019 | 2,833,605 | 2,811,232 | ||||||||||||
Cargo | 1,383,283 | 1,205,639 | 436,362 | 448,015 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 9,608,395 | 6,313,658 | 3,269,967 | 3,259,247 | ||||||||||||
|
|
|
|
|
|
|
|
146
NOTE 30 - COSTS AND EXPENSES BY NATURE
(a) | Costs and operating expenses |
The main operating costs and administrative expenses are detailed below:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Other rentals and landing fees | 1,034,379 | 695,214 | 335,623 | 337,709 | ||||||||||||
Aircraft fuel | 3,328,551 | 2,183,886 | 1,055,800 | 1,162,100 | ||||||||||||
Commissions | 292,979 | 225,569 | 113,547 | 108,201 | ||||||||||||
Other operating expenses | 1,216,434 | 815,608 | 417,889 | 439,522 | ||||||||||||
Aircraft rentals | 315,360 | 193,831 | 116,147 | 101,506 | ||||||||||||
Aircraft maintenance | 352,149 | 200,841 | 114,795 | 94,435 | ||||||||||||
Passenger services | 248,214 | 157,151 | 77,776 | 83,670 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 6,788,066 | 4,472,100 | 2,231,577 | 2,327,143 | ||||||||||||
|
|
|
|
|
|
|
|
(b) | Depreciation and amortization |
Depreciation and amortization are detailed below:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Depreciation (*) | 748,481 | 494,201 | 237,947 | 277,009 | ||||||||||||
Amortization | 43,080 | 20,137 | 11,777 | 13,750 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 791,561 | 514,338 | 249,724 | 290,759 | ||||||||||||
|
|
|
|
|
|
|
|
(*) | Includes the depreciation of Property, plant and equipment and the maintenance cost of aircraft held under operating leases. |
147
(c) | Personnel expenses |
The costs for personnel expenses are disclosed in Liability for employee benefits (See Note 26).
(d) | Financial costs |
The detail of financial costs is as follows:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Bank loan interest | 284,899 | 130,591 | 99,268 | 77,148 | ||||||||||||
Financial leases | 60,041 | 27,325 | 17,840 | 10,898 | ||||||||||||
Other financial instruments | (4,720 | ) | 27,812 | (3,314 | ) | 17,203 | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 340,220 | 185,728 | 113,794 | 105,249 | ||||||||||||
|
|
|
|
|
|
|
|
Costs and expenses by nature presented in this note plus the Employee expenses disclosed in Note 26, are equivalent to the sum of cost of sales, distribution costs, administrative expenses, other expenses and financing costs presented in the consolidated statement of income by function.
148
NOTE 31 - GAINS (LOSSES) ON THE SALE OF NON-CURRENT ASSETS NOT CLASSIFIED AS HELD FOR SALE
The Gains (losses) on sales of non-current assets not classified as held for sale as of September 30, 2013, and 2012 are as follows:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Property, plant and equipment | 8,434 | (1,750 | ) | 791 | (494 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 8,434 | (1,750 | ) | 791 | (494 | ) | ||||||||||
|
|
|
|
|
|
|
|
149
NOTE 32 - OTHER INCOME, BY FUNCTION
Other income by function is as follows:
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Duty free | 10,643 | 11,137 | 3,113 | 4,242 | ||||||||||||
Aircraft leasing | 27,814 | 20,044 | 8,518 | 8,296 | ||||||||||||
Customs and warehousing | 16,901 | 18,573 | 6,220 | 6,694 | ||||||||||||
Tours | 79,290 | 49,771 | 25,798 | 23,614 | ||||||||||||
Maintenance | 10,743 | 4,093 | 5,033 | 3,129 | ||||||||||||
Multiplus | 50,334 | 21,666 | 23,335 | 7,231 | ||||||||||||
Other miscellaneous income | 64,436 | 21,080 | 18,694 | 26,530 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 260,161 | 146,364 | 90,711 | 79,736 | ||||||||||||
|
|
|
|
|
|
|
|
150
NOTE 33 - FOREIGN CURRENCY AND EXCHANGE RATE DIFFERENCES
The functional currency of LATAM Airlines Group S.A. is the US dollar, also it has subsidiaries whose functional currency is different to the US dollar, such as the Chilean peso, Argentine peso, Colombian peso and Brazilian real, the latter due to business combinations with TAM S.A. and Subsidiaries.
The functional currency is defined primarily as the currency of the primary economic environment in which an entity operates in each state and all other currencies are defined as foreign currency.
Considering the above, the balances by currency mentioned in this note correspond to the sum of foreign currency of each of the entities that make LATAM Airlines Group S.A. and Subsidiaries.
a) | Foreign currency |
The foreign currency detail of balances of monetary items in current and non-current assets is as follows:
Current assets | As of September 30, 2013 | As of December 31, 2012 | ||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Cash and cash equivalents | 291,212 | 337,223 | ||||||
Argentine peso | 9,759 | 68,705 | ||||||
Brazilian real | 4,952 | 3,308 | ||||||
Chilean peso | 36,749 | 40,091 | ||||||
Colombian peso | 4,184 | 671 | ||||||
Euro | 14,514 | 15,502 | ||||||
U.S. dollar | 46,322 | 94,035 | ||||||
Strong bolivar | 141,037 | 51,346 | ||||||
Other currency | 33,695 | 63,565 | ||||||
Other financial assets | 53,103 | 30,936 | ||||||
Argentine peso | 944 | — | ||||||
Brazilian real | 2,072 | 2,167 | ||||||
Chilean peso | 25,868 | 550 | ||||||
Colombian peso | 2,025 | 2,147 | ||||||
Euro | 2 | 8 | ||||||
U.S. dollar | 21,932 | 18,020 | ||||||
Strong bolivar | 12 | 601 | ||||||
Other currency | 248 | 7,443 |
151
Current assets | As of September 30, 2013 | As of December 31, 2012 | ||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Trade and other accounts receivable | 495,008 | 503,601 | ||||||
Argentine peso | 35,431 | 9,441 | ||||||
Brazilian real | 41,495 | 33,313 | ||||||
Chilean peso | 93,705 | 130,736 | ||||||
Colombian peso | 15,496 | 3,153 | ||||||
Euro | 59,159 | 67,287 | ||||||
U.S. dollar | 69,110 | 166,758 | ||||||
Strong bolivar | 3,454 | 2,759 | ||||||
Other currency | 177,158 | 90,154 | ||||||
Accounts receivable from related entities | 636 | 14,565 | ||||||
Chilean peso | 636 | 14,565 | ||||||
Tax assets | 101,046 | 64,553 | ||||||
Argentine peso | 5,007 | 3,740 | ||||||
Brazilian real | 14,109 | 10,753 | ||||||
Chilean peso | 16,817 | 24,764 | ||||||
Colombian peso | 2,253 | 924 | ||||||
Euro | 2,598 | 4,618 | ||||||
U.S. dollar | 1,877 | 1,649 | ||||||
Strong bolivar | 254 | 351 | ||||||
Other currency | 58,131 | 17,754 | ||||||
Total assets | 941,005 | 950,878 | ||||||
Argentine peso | 51,141 | 81,886 | ||||||
Brazilian real | 62,628 | 49,541 | ||||||
Chilean peso | 173,775 | 210,706 | ||||||
Colombian peso | 23,958 | 6,895 | ||||||
Euro | 76,273 | 87,415 | ||||||
U.S. Dollar | 139,241 | 280,462 | ||||||
Strong bolivar | 144,757 | 55,057 | ||||||
Other currency | 269,232 | 178,916 |
152
Non-current assets | As of September 30, 2013 | As of December 31, 2012 | ||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Other financial assets | 21,995 | 31,329 | ||||||
Argentine peso | 7 | 8 | ||||||
Brazilian real | 5,783 | 3,505 | ||||||
Chilean peso | 790 | 98 | ||||||
Colombian peso | 337 | 524 | ||||||
Euro | 5,346 | 7,817 | ||||||
U.S. dollar | 9,091 | 15,895 | ||||||
Other currency | 641 | 3,482 | ||||||
Accounts receivable | 14,512 | 14,812 | ||||||
Chilean peso | 9,312 | 9,564 | ||||||
U.S. dollar | 5,000 | 5,000 | ||||||
Other currency | 200 | 248 | ||||||
Tax assets, long term portion | 20,401 | 22,063 | ||||||
Other currency | 20,401 | 22,063 | ||||||
Deferred tax assets | 5,185 | 4,203 | ||||||
U.S. dollar | 2,784 | — | ||||||
Other currency | 2,401 | 4,203 | ||||||
Total assets | 62,093 | 72,407 | ||||||
Argentine peso | 7 | 8 | ||||||
Brazilian real | 5,783 | 3,505 | ||||||
Chilean peso | 10,102 | 9,662 | ||||||
Colombian peso | 337 | 524 | ||||||
Euro | 5,346 | 7,817 | ||||||
U.S. dollar | 16,875 | 20,895 | ||||||
Other currency | 23,643 | 29,996 |
153
The foreign currency detail of balances of monetary items in current liabilities and non-current is as follows:
Up to 90 days | 91 days to 1 year | |||||||||||||||
Current liabilities | As of September 30, 2013 | As of December 31, 2012 | As of September 30, 2013 | As of December 31, 2012 | ||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | Unaudited | |||||||||||||||
Other financial liabilities | 260,992 | 241,473 | 679,049 | 589,105 | ||||||||||||
Chilean peso | 54,232 | — | 48,209 | — | ||||||||||||
Euro | 765 | 602 | 533 | 35 | ||||||||||||
U.S. dollar | 205,995 | 240,871 | 630,307 | 589,070 | ||||||||||||
Trade and other accounts payables | 621,980 | 899,536 | 15,684 | 19,850 | ||||||||||||
Argentine peso | 30,326 | 21,398 | 453 | — | ||||||||||||
Brazilian real | 28,496 | 38,506 | — | 8 | ||||||||||||
Chilean peso | 9,678 | 72,643 | 12,071 | 11,938 | ||||||||||||
Colombian peso | 14,712 | 29,268 | 83 | — | ||||||||||||
Euro | 18,322 | 38,540 | 2,563 | 1,695 | ||||||||||||
U.S. dollar | 354,880 | 283,003 | 484 | 6,157 | ||||||||||||
Strong bolivar | 5,396 | 2,710 | — | — | ||||||||||||
Other currency | 160,170 | 413,468 | 30 | 52 | ||||||||||||
Accounts payable to related entities | 228 | 14 | — | — | ||||||||||||
Chilean peso | 3 | 14 | — | — | ||||||||||||
U.S. dollar | 225 | — | — | — | ||||||||||||
Tax liabilities | 12,197 | 12,840 | — | — | ||||||||||||
Argentine peso | 2,151 | 2,125 | — | — | ||||||||||||
Brazilian real | 1,081 | 2,925 | — | — | ||||||||||||
Chilean peso | 76 | 3,019 | — | — | ||||||||||||
Colombian peso | 2,864 | 200 | — | — | ||||||||||||
Euro | 3,587 | 3,261 | — | — | ||||||||||||
U.S. dollar | 1,229 | 325 | — | — | ||||||||||||
Strong bolivar | 1 | — | — | — | ||||||||||||
Other currency | 1,208 | 985 | — | — |
154
Up to 90 days | 91 days to 1 year | |||||||||||||||
Current liabilities | As of September 30, 2013 | As of December 31, 2012 | As of September 30, 2013 | As of December 31, 2012 | ||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | Unaudited | |||||||||||||||
Other non -financial liabilities | 555 | 1,437 | 63 | 13 | ||||||||||||
Brazilian real | 10 | 98 | 45 | 10 | ||||||||||||
Chilean peso | 266 | 118 | 18 | 2 | ||||||||||||
Strong bolivar | 216 | 1,211 | — | — | ||||||||||||
Other currency | 63 | 10 | — | 1 | ||||||||||||
Total liabilities | 895,952 | 1,155,300 | 694,796 | 608,968 | ||||||||||||
Argentine peso | 32,477 | 23,523 | 453 | — | ||||||||||||
Brazilian real | 29,587 | 41,529 | 45 | 18 | ||||||||||||
Chilean peso | 64,255 | 75,794 | 60,298 | 11,940 | ||||||||||||
Colombian peso | 17,576 | 29,468 | 83 | — | ||||||||||||
Euro | 22,674 | 42,403 | 3,096 | 1,730 | ||||||||||||
U.S. dollar | 562,329 | 524,199 | 630,791 | 595,227 | ||||||||||||
Strong bolivar | 5,613 | 3,921 | — | — | ||||||||||||
Other currency | 161,441 | 414,463 | 30 | 53 |
155
More than 1 to 3 years | More than 3 to 5 years | More than 5 years | ||||||||||||||||||||||
Non -current liabilities | As of September 30, 2013 | As of December 31, 2012 | As of September 30, 2013 | As of December 31, 2012 | As of September 30, 2013 | As of December 31, 2012 | ||||||||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||||||||
Unaudited | Unaudited | Unaudited | ||||||||||||||||||||||
Other financial liabilities | 582,693 | 623,828 | 763,663 | 859,526 | 1,432,676 | 1,811,660 | ||||||||||||||||||
Chilean peso | 126,552 | — | 98,905 | — | — | — | ||||||||||||||||||
Euro | 666 | 1,148 | — | — | — | — | ||||||||||||||||||
U.S. dollar | 455,475 | 622,680 | 664,758 | 859,526 | 1,432,676 | 1,811,660 | ||||||||||||||||||
Accounts payable | 614,539 | 667,582 | 130 | 138 | 6 | — | ||||||||||||||||||
Chilean peso | 7,638 | 8,286 | 130 | 138 | 6 | — | ||||||||||||||||||
U.S. dollar | 605,440 | 657,998 | — | — | — | — | ||||||||||||||||||
Other currency | 1,461 | 1,298 | — | — | — | — | ||||||||||||||||||
Other provisions | 13,161 | 16,187 | — | — | — | — | ||||||||||||||||||
Argentine peso | 487 | 664 | — | — | — | — | ||||||||||||||||||
Brazillian real | 984 | 808 | — | — | — | — | ||||||||||||||||||
Chilean peso | 36 | 36 | — | — | — | — | ||||||||||||||||||
Euro | 11,119 | 10,865 | — | — | — | — | ||||||||||||||||||
U.S. dollar | 25 | — | — | — | — | — | ||||||||||||||||||
Other currency | 510 | 3,814 | — | — | — | — | ||||||||||||||||||
Provisions for employees benefits | 595 | 86 | — | — | — | — | ||||||||||||||||||
U.S. dollar | 595 | 86 | — | — | — | — | ||||||||||||||||||
Total non-current liabilities | 1,210,988 | 1,307,683 | 763,793 | 859,664 | 1,432,682 | 1,811,660 | ||||||||||||||||||
Argentine peso | 487 | 664 | — | — | — | — | ||||||||||||||||||
Brazilian real | 984 | 808 | — | — | — | — | ||||||||||||||||||
Chilean peso | 134,226 | 8,322 | 99,035 | 138 | 6 | — | ||||||||||||||||||
Euro | 11,785 | 12,013 | — | — | — | — | ||||||||||||||||||
U.S. dollar | 1,061,535 | 1,280,764 | 664,758 | 859,526 | 1,432,676 | 1,811,660 | ||||||||||||||||||
Other currency | 1,971 | 5,112 | — | — | — | — |
156
General summary of foreign currency: | As of September 30, 2013 | As of December 31, 2012 | ||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Total assets | 1,003,098 | 1,023,285 | ||||||
Argentine peso | 51,148 | 81,894 | ||||||
Brazilian real | 68,411 | 53,046 | ||||||
Chilean peso | 183,877 | 220,368 | ||||||
Colombian peso | 24,295 | 7,419 | ||||||
Euro | 81,619 | 95,232 | ||||||
U.S. dollar | 156,116 | 301,357 | ||||||
Strong bolivar | 144,757 | 55,057 | ||||||
Other currency | 292,875 | 208,912 | ||||||
Total liabilities | 4,998,211 | 5,743,275 | ||||||
Argentine peso | 33,417 | 24,187 | ||||||
Brazilian real | 30,616 | 42,355 | ||||||
Chilean peso | 357,820 | 96,194 | ||||||
Colombian peso | 17,659 | 29,468 | ||||||
Euro | 37,555 | 56,146 | ||||||
U.S. dollar | 4,352,089 | 5,071,376 | ||||||
Strong bolivar | 5,613 | 3,921 | ||||||
Other currency | 163,442 | 419,628 | ||||||
Net position | ||||||||
Argentine peso | 17,731 | 57,707 | ||||||
Brazilian real | 37,795 | 10,691 | ||||||
Chilean peso | (173,943 | ) | 124,174 | |||||
Colombian peso | 6,636 | (22,049 | ) | |||||
Euro | 44,064 | 39,086 | ||||||
U.S. dollar | (4,195,973 | ) | (4,770,019 | ) | ||||
Strong bolivar | 139,144 | 51,136 | ||||||
Other currency | 129,433 | (210,716 | ) |
157
b) | Exchange differences |
Exchange differences recognized in the income statement, except for financial instruments measured at fair value through profit or loss, for the period ended September 30, 2013 and 2012, generated a loss of ThUS$ 360,892 and a gain of ThUS$ 74,013, respectively. In the third quarter 2013 and 2012 represented a loss of ThUS$ 12,699 and a gain of ThUS$ 10,203, respectively.
Exchange differences recognized in equity as reserves for currency translation differences for the nine months ended September 30, 2013 and 2012, represented a loss of ThUS$ 391,143 and a gain of ThUS$ 32,535, respectively. In the third quarter 2013 and 2012, represented a loss of ThUS$ 36,968 and again ThUS$ 40,873, respectively.
The following shows the current exchange rates for the U.S. dollar, on the dates indicated:
As of September 30, 2013 | As of December 31, 2012 | |||||||
Unaudited | ||||||||
Argentine peso | 5.79 | 4.91 | ||||||
Brazilian real | 2.23 | 2.04 | ||||||
Chilean peso | 504.20 | 479.96 | ||||||
Colombian peso | 1,905.75 | 1,760.00 | ||||||
Euro | 0.74 | 0.76 | ||||||
Strong bolivar | 6.30 | 4.30 | ||||||
Australian dollar | 1.07 | 0.96 | ||||||
Boliviano | 6.91 | 6.86 | ||||||
Mexican peso | 13.15 | 12.99 | ||||||
New Zealand dollar | 1.20 | 1.22 | ||||||
Peruvian Sol | 2.78 | 2.55 | ||||||
Uruguayan peso | 21.75 | 19.05 |
158
NOTE 34 - EARNINGS PER SHARE
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
Basic earnings | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Unaudited | ||||||||||||||||
Earnings attributable to controlling company’s equity holders (ThUS$) | (234,992 | ) | 47,080 | 52,093 | (78,712 | ) | ||||||||||
Weighted average number of shares, basic | 483,552,248 | 390,708,886 | 483,553,134 | 476,118,975 | ||||||||||||
Basic earnings per share (US$) | (0.48597 | ) | 0.12050 | 0.10773 | (0.16532 | ) |
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
Diluted earnings | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Unaudited | ||||||||||||||||
Earnings attributable to controlling company’s equity holders (ThUS$) | (234,992 | ) | 47,080 | 52,093 | (78,712 | ) | ||||||||||
Weighted average number of shares, basic | 483,552,248 | 390,708,886 | 483,553,134 | 476,118,975 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Weighted average number of shares, diluted | 483,552,248 | 390,708,886 | 483,553,134 | 476,118,975 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Diluted earnings per share (US$) | (0.48597 | ) | 0.12050 | 0.10773 | (0.16532 | ) |
159
NOTE 35 - CONTINGENCIES
Lawsuits
(i) | Lawsuits filed by LATAM Airlines Group S.A. and Subsidiaries |
Company | Court | Case Number | Origin | Stage of trial | Amounts | |||||
ThUS$ | ||||||||||
Atlantic Aviation Investments LLC (AAI) | Supreme Court of the State of New York County of New York. | 07-6022920 | Atlantic Aviation Investments LLC. (“AAI”), an indirect subsidiary LATAM Airlines Group S.A., incorporated under the laws of the State of Delaware, sued in August 29th, 2007 Varig Logistics S.A. (“Variglog”) for non-payment of four documented loans in credit agreements governed by New York law. These contracts establish the acceleration of the loans in the event of sale of the original debtor, VRG Linhas Aéreas S.A. | In implementation stage in Switzerland, the conviction stated that Variglog should pay the principal, interest and costs in favor of AAI. It keeps the embargo of Variglog funds in Switzerland with AAI. Variglog is in the process of judicial recovery in Brazil and has asked Switzerland to recognize the judgment that declared the state of judicial recovery and subsequent the bankruptcy | 17,100 Plus interests And costs | |||||
Atlantic Aviation Investments LLC (AAI) | Supreme Court of the State of New York County of New York. | 602286-09 | Atlantic Aviation Investments LLC. (“AAI”) sued on July 24, 2009 Matlin Patterson Global Advisers LLC, Matlin Patterson Global Opportunities Partners II LP, Matlin Patterson Global Opportunities Partners (Cayman) II LP and Logistics LLC Volo (a) as alter egos of Variglog for non-payment of the four loans mentioned in the previous note and (b) for breach of its obligation to guarantee and other obligations under the Memorandum of Understanding signed between the parties on September 29, 2006. | AAI filed a “summary judgment” (abbreviated trial) which the court ruled favorably. The defendants appealed this decision which was ultimately dismissed by the High Court. The cause was turned back to the lower court for determination of the amount actually payable by the applicants (damages) ongoing proceedings before the court. | 17,100 Plus interest costs and compensation for damage. |
160
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Aerotransportes Mas de Carga S.A. | Federal Court of Fiscal and Administrative Justice | 31698/11-17-01-8 | Nullity trial against the tax authority’s refusal to restore balance in favor of VAT. | Pleadings stage | 4,900 | |||||
Aerolane Lineas Aéreas Nacionales del Ecuador S.A. | 2nd District Court Guayaquil. | 09504-2010-0114 | Order Determining the Value Added Tax (VAT) 2006. | The Ruling was adverse to the Company. A presentation to the Court appeal of Amplification and clarification was made, resolution is still pending | 4,565 | |||||
Aerolane Lineas Aéreas Nacionales del Ecuador S.A. | Tribunal Fiscal de Guayaquil. | 6319-4064-05 | Judicial proceedings against the Regional Director of the Internal Revenue Services Guayaquil, for overpayment of taxes. | Tax Litigation Division of the National Court accepts appeal of IRS. Extraordinary Action Protection for the Constitutional Court. | 4,210 Plus interest | |||||
Aerolane Lineas Aéreas Nacionales del Ecuador S.A. | Internal Revenue Service. | 17502-2012-0082 | Determination Act for 2006 Income Tax, which have unknown CEDT requesting certification of branch expenses, ARC commissions without Withholding of Income Tax, etc. Process initiated in 2012. | Sentence pending. | 8,064 | |||||
Aerolane Lineas Aéreas Nacionales del Ecuador S.A. | Internal Revenue Service. | 1720130100068 | IR Determination Act of 2008. Glosses are caused by lack of supports in rebills, audit certificates, no withholdings on commissions, lack of means of payment. Unaware exempt income because the federal return is not translated into Spanish | Sentence pending. Administrative Complaint was initiated - Waiting for response | 6,306 | |||||
Lan Argentina S.A. | National Administrative Chamber. | 36337/13 | ORSNA Resolution No. 123 which directs Lan Argentina to vacate the hangar located in the Metropolitan Airport | ORSNA appealed the injunction that ordered to rescind the eviction. Lan Argentina filed suit against Resolution No. 123 of ORSNA. | Indetermined |
161
(ii) | Trials received by LATAM Airlines Group S.A. and Subsidiaries |
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
LATAM Airlines Group S.A. y Lan Cargo S.A. | European Commission | - | Investigation for possible violations of airline competition freighters, especially fuel surcharge. On December 26, 2007, the Directorate General for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. of a case against twenty-five cargo airlines, including Lan Cargo S.A., for possible violations of free competition in the European air cargo market, especially the alleged fixing a fuel surcharge and freight. On November 9, 2010, the Directorate General for Competition of the European Commission notified Lan Cargo S.A. and LATAM Airlines Group S.A. the imposition of a fine in the amount of ThUS$ 11,119. This penalty is being appealed by Lan Cargo S.A. and LATAM Airlines Group S.A. The outcome of this appeal cannot be predicted. | On April 14, 2008, the notification of the European Commission was answered. The appeal was filed on January 24, 2011. | 11,119 | |||||
Lan Cargo S.A. y LATAM Airlines Group S.A. | In the High Court of Justice Chancery Division (Inglaterra) and Directie Juridische Zaken Afdeling Ceveil Recht (Netherlands). | - | Lawsuits filed against European airlines by users of freight services in private prosecutions as a result of the investigation for possible violations of airline competition freighters, especially fuel surcharge. Lan Cargo S.A. and LATAM Airlines Group S.A, have been sued in court proceedings as third parties, based in England and the Netherlands. | Case is in evidence discovery process. | Undetermined |
162
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Aerolinhas Brasileiras S.A. | Administrative Council for Economic Defense, Brazil | - | Investigation for possible violations of airline competition freighters, especially fuel surcharge. | On September 3, 2013, CADE’s decision was published in the Diario da Uniao confirming the sentencing of violation and imposition of fines to ABSA for the amount of ThUS$51,020. This fine will be appealed by ABSA. In turn CADE fined also a current director of ABSA and two former officials for the respective amounts of ThUS$1,020, ThUS$510 and ThUS$510. We can not predict the outcome of the appeal process. | 51,020 | |||||
LATAM Airlines Group S.A. | Tenth Civil Court of Santiago | - | The company Jara & Jara Limited sues LATAM Airlines Group S.A. based on the damage they have caused due to the criminal complaints filed for the crime of fraud against them in 2008, which were dismissed for good. They claim that the damage caused by LATAM Airlines Group S.A. affected their prestige and business continuity. | First instance. | 11,935 | |||||
Aerolane LineasAéreas Nacionales del Ecuador S.A. | Civil Court 20 Pichincha. | 374-2012 LA | Passenger demand for misuse by counter agent of credit card. | In discharge step test, hearing in November 26, 2013. | 5,500 |
163
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Tam Linhas Aéreas S.A. | Tribunal Regional Federal da 2 da Região the (Court of the Second Region). | 2001.51.01.012530-0 | Ordinary judicial action brought to declare that there is no legal relationship obligating the Company to raise the Air Fund. | First instance sentence not favorable. Currently awaiting the decision of the appeal filed by the company.
To suspend the tax credit application to the Court was delivered by guarantee MUS$ 107 which is revealed in more detail in Note 23. | 126,542 | |||||
Tam Linhas Aéreas S.A. | Secretary of Federal Revenues of Brazil (Internal Revenue Service of Brazil). | 16643.000087/2009-36 | Notice of Violation of the requirement to pay the social contribution on net profit (“CSL”). | Decisions of first and second administrative instance adverse to the interests of the Company. Currently awaiting the decision of the new action brought by the Company. | 32,482 | |||||
Tam Linhas Aéreas S.A. | Secretary of Federal Revenues of Brazil (Internal Revenue Service of Brazil). | 10880.725950/2011-05 | Compensation claims of social contributions PIS and COFINS. | Court decision was unfavorable to the interests of the company, so it was appealed. At present, pending the trial of the appeal, the Board of Tax Appeals (CARF.) | 29,861 | |||||
Pantanal Linhas Aéreas S.A. | Regional Court of the Third District. | 1997.0002503-9 | Execution filed to collect tax penalties for breach of special customs regime of temporary admission. | Waiting for the decision of the second instance. Favorable sentence. | 5,497 | |||||
Tam Linhas Aéreas S.A. | 6th Public rod of Sao Paulo | 0012938-14.2013.8.26.0053 | Judgment proposed to cancel the collection of incident Service Tax on amounts paid to Infraero. | The ruling overturned the injunction previously granted, and granted in part the action proposed by the company. Opposing a motion for clarification, which was rejected. Currently awaiting the publication of the decision and the subsequent presentation of the appeal | 14,909 |
164
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Tam Linhas Aéreas S.A. | Secretary of Federal Revenues of Brazil (Internal Revenue Service of Brazil | 16643.000085/2009-47 | Auto compound to demand and collection of income tax and detail CSL derived royalties and fees using the mark TAM | First instance decision unfavorable to the interests of the company. Currently expecting ruling on the appeal filed by the company | 14,375 | |||||
Tam Linhas Aéreas S.A. | Secretary of Federal Revenues of Brazil (Internal Revenue Service of Brazil). | 10831.012344/2005-55 | Infraction II presented to demand payment and social contributions of PIS and COFINS arising from the loss of unidentified international cargo. | Partially favorable decision in the first administrative and supportive in the second instance. However, the upper chamber of the Board of Tax Appeals was to the special appeal filed by the Union. Currently pending resolution of the motion for clarification with the opposition of the company | 11,564 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo) | 3.123.785-0 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Currently expecting the ruling on the appeal filed by the Company. | 10,035 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.130.043-1 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | On June 4, 2013, the decision was issued denying the special appeal filed by the company. Currently, waiting for the demarcation of the court order regarding the administrative process | 9,651 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.099.486-0 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Currently expecting ruling on the appeal filed by the Company. | 7,303 | |||||
Tam Linhas Aéreas S.A. | Secretary of Federal Revenues of Brazil (Internal Revenue Service of Brazil). | 11610.001360/2001-56 | Application for reimbursement of social security contributions of PIS. | Unfavorable ruling in the first and second administrative instances. Currently expecting fiscal execution ruling. | 8,123 |
165
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Tam Linhas Aéreas S.A. | Secretary of Finance of the State of Sao Paulo. | 3.117.001-8 | Notice of infringement demanding payment of ICMS on imports of aircraft. | Pending decision on the appeal filed by the Company. | 7,983 | |||||
Tam Linhas Aéreas S.A. | Tribunal Regional Federal da 3a Região (Court of the Third Region). | 2006.03.00.022504-6 | Penalty forcing IRPJ collection in the months of February, March and August 1998. | Pending first instance ruling. | 7,391 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.120.286-0 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Trial suspended. It now expects the end of main trial. | 6,629 | |||||
Tam Linhas Aéreas S.A. | Governo do Estado de São Paulo (State Government of Sao Paulo). | 990.172 | Fiscal Execution to demand payment of ICMS that affects the import of aircraft. | Trial suspended. It now expects the end of main trial. | 6,273 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.123.000-3 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Trial suspended. It now expects the end of main trial. | 6,039 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 004960-83.2013.8.26.0053 | Judgment proposed to cancel the charge and to demand payment of ICMS and fine affects import of aircraft. | Currently awaiting a ruling of first instance. | 6,090 | |||||
Tam Linhas Aéreas S.A. | Internal Revenue Service. | 2002.61.19.001123-1 | Injunction filed to prevent recovery of IPI on imports of aircraft. | Currently awaiting a ruling on the appeal filed by the Company. | 5,820 |
166
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 4.002.475-1 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Expected the ruling on impeachment filed by the Company. | 5,605 | |||||
Tam Linhas Aéreas S.A. | 6th Public rod of Sao PauloSecretary of Finance of the State of Sao Paulo | 0013306-23.2013.8-26.0053 | Judgment proposed to cancel the collection of incident Service Tax on amounts received as discount on the go over the shipping rates to Infraero | Currently awaiting the decision of first instance. | 5,155 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado da Paraíba (Secretary of Finance of the State of Paraiba). | 3.019.886-0 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Trial suspended. It now expects the end of main trial. | 5,139 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado da Paraíba (Secretary of Finance of the State of Paraiba). | 93300008.09.00000883/2009-31 | Order of infringement to demand payment of ICMS in particular operations. | Currently awaiting a ruling on the appeal filed by the Company. | 5,079 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo Secretary of Finance of the State of Sao Paulo). | 3.123.770-8 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Currently awaiting a ruling on the appeal filed by the Company. | 5,057 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.154.701-1 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Expected the ruling on impeachment filed by the Company. | 4,946 |
167
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.146.575-4 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Trial suspended. It now expects the end of main trial. | 4,792 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Receita Federal (Internal Revenue Service). | 10880-676.339/2009-13 | Order of infringement to demand payment of IRPJ. | Expected the ruling on impeachment filed by the Company. | 4,751 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.146.651-5 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Trial suspended. It now expects the end of main trial. | 4,670 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de Goiás (Secretary of Finance of Estado de Goias). | 3032722060291 | Order of infringement to demand payment of ICMS in particular operations. | Currently awaiting a ruling on the appeal filed by the Company. | 4,431 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Receita Federal (Servicio de Impuestos Internos de Brazil). | 16643.000088/2009-81 | Order of infringement to demand payment of IRPJ and CSLL. | Pending the publication of the second instance, it was not partial for the appeal filed by the company. | 4,378 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.117.801-7 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Trial suspended. It now expects the end of main trial. | 4,348 | |||||
Tam Linhas Aéreas S.A. | Secretaria da Fazenda do Estado de São Paulo (Secretary of Finance of the State of Sao Paulo). | 3.129.987-8 | Order of infringement to demand payment of ICMS governing the importation of aircraft. | Currently awaiting a ruling on the appeal filed by the Company. | 4,096 |
168
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Tam Linhas Aéreas S.A. | Public Rod of Florianopolis-SC. | 023.12.036784-2 | Lawsuit filed by Instituto Liberdade on the product Espaço+. | Currently awaiting convocation of the other companies, for us to answer | 4,485 | |||||
Tam Linhas Aéreas S.A. | 1st Civil Court of the District of Navegantes / SC. | 033.03.013110-6 (precautionary) 033.03.014870-0 (ordinary). | Action filed by a former sales representative of TAM demanding compensation for moral and economic damage in consequence of the alleged wrongful termination of contract and unfounded trade representative land freight transport other than agreeing in advance the establishment of protection enforceable court. | We are currently awaiting the evaluation of our objection to the expert report. | 4,187 | |||||
Tam Linhas Aéreas S.A. | Labour Court of Porto Alegre. | 0001611-93.2012.5.04.0013 | Civil Action in the Ministry of Labour, which requires the granting of black shoes, belts and socks for employees who wear uniforms | Process in the first instance, waiting judgment of appeal. | 10,298 Approximate value | |||||
Tam Linhas Aéreas S.A. | Labour Justice Guarulhos / SP | 0000728-47.2010.5.02.0313 | Class action by the Union of Aviation Workers of Guarulhos/SP which requires payment of risk bonus for all workers of the base. | According done. Pay the final installment of the agreement | 5,129 Approximate value | |||||
Tam Linhas Aéreas S.A. | Labour Justice Salvador / BA - Labor Jurisdiction Salvador / BA. | 0000033-78.2011.5.05.0021 | Class action by the National Union of Aviation workers, which requires payment of risk bonus for all employees of the SSA base. | Process in the first instance. Awaiting sentencing. | 15,535 Approximate value | |||||
Tam Linhas Aéreas S.A. | Labour Court Brasilia. | 01683.2009.015.10.00.3 | Action by the Union Aerovias Brasilia/DF demanding payment of hazard compensation for all maintenance employees. | Process in the last instance. Awaiting the outcome of the appeal. | 5,027 Approximate value |
169
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Aerolane Lineas Aereas Nacionales del Ecuador S.A. | Internal Revenue Service. | 1720130100068 | IR Determination Act of 2008. Glosses are caused by lack of brackets rebills, audit certificates, no withholdings on ARC committees, lack of means of payment. Unaware Aerolane Lineas Aereas Nacionales del Ecuador S.A. (subsidiare USA) free income, because the federal declaration was not translated into Spanish | Administrative Complaint was initiated before the Internal Revenue Service | 6,316 | |||||
Tam Linhas Aéreas S.A. | Secretary of Finance of Sao Paulo | 4.023.832-5 | Notice of infraction to demand payment of import tax that rules aircraft | Pending the result of the objection presented by the company. | 5,778 | |||||
Aerovias de Integración Regional AIRES S.A | Florida USA. | 2013-20319 CA 01 | In July 30, 2012 LAN AIRLINES COLOMBIA initiated legal proceedings in Colombia against regional One Inc. and Volvo Aero Services LLC, in order to declare that these companies are civilly liable for moral and material damages caused to LAN AIRLINES COLOMBIA , arising from breach of contractual obligations of the aircraft HK | The process in Colombia is pending resolution of preliminary objections filed by the defendant | 12,443 | |||||
In June 20, 2013 AIRES SA AND / OR LAN AIRLINES COLOMBIA was notified of the lawsuit filed in the U.S. by INC and Dash regional One 224 LLC for damages caused by the aircraft HK claiming COLOMBIA LAN AIRLINES had the requirement to obtain customs import declaration when the aircraft in April 2010 entered Colombia for maintenance required by Regional One | As for the process in the U.S. Federal Court is deciding whether the process follows on as a court with jurisdiction in Colombia is resolving a parallel demand in Colombia |
170
Company | Court | Case Number | Origin | Stage of trial | Amounts Committed | |||||
ThUS$ | ||||||||||
Tam Linhas Aéreas S.A. | Internal Revenue Service of Brazil | 10880-926.383/2013-66 | Decision of the Internal Revenue Service does not approve compensation made by the company in the application for refund of income tax for 2009. | Pending the result of the dissatisfaction expressed by the company. | 7,171 | |||||
Tam Linhas Aéreas S.A. | Internal Revenue Service of Brazil | 1720130100068 | Notice of infraction to demand tax credit is due, as the company would have improperly excluded amounts paid as interest on own capital for the years 2010 and 2011. | Pending the result of the objection filed by the company. | 5,498 |
In order to deal with any financial obligations arising from legal proceedings outstanding at September 30, 2013, whether civil, labor or tax, LATAM Airlines Group S.A., has made provisions, which are included in heading Other provisions, non-current, which is disclosed in Note 23.
The Company has not disclosed the individual probability of success for each contingency in order to not negatively affect its outcome
171
NOTE 36 - COMMITMENTS
(a) | Loan covenants |
With respect to various loans signed by the Company for the financing of Boeing 767, 777 and 787 aircraft, which carry the guarantee of the United States Export–Import Bank, limits have been set on some of the Company’s financial indicators on a consolidated basis. Moreover, and related to these same contracts, restrictions are also in place on the Company’s management in terms of its ownership and disposal of assets.
Additionally, with respect to various loans signed by its subsidiary Lan Cargo S.A. for the financing of Boeing 767F and 777F aircraft, which carry the guarantee of the United States Export–Import Bank, restrictions have been established to the Company´s management and its subsidiary Lan Cargo S.A. in terms of shareholder composition and disposal of assets.
In connection with the financing of spare engines for its Boeing 767, 767F, 777, 777F and 787, which are guaranteed by the Export - Import Bank of the United States, restrictions have been placed on the ownership structure of their guarantors and their legal successor in case of merger.
In relation to credit agreements entered into by the Company, for the current period local banks have set limits to some financial indicators of the Company on a consolidated basis.
The subsidiary TAM Linhas Aéreas S.A., in connection with the issuance of debentures (CVM 476) by an original amount of 600 million brazilian reais in 2009, the obligation has to comply with certain limits of financial indicators. As of September 30, 2013, the outstanding balance related to this debt is 400 million brazilian reais.
On November 5, 2013, TAM Linheas Aéreas S.A. sent an “Irrevocable Voluntary Prepayment Letter”to the Asamblea General de Debenturista, in order to formalize the determination of voluntary prepayment on November 21, 2013, for the total outstanding amount of the debentures (Note 40).
According to IFRS accounting standards, financial liabilities related to this issuance of debentures are classified in Other current financial liabilities.
As of September 30, 2013, the Company is in compliance with all indicators detailed above with the exception of the financial indicators included in the TAM Linhas Aéreas S.A.’s debentures, so the possible effects of the default has been fixed with the voluntary prepayment mentioned above.
172
(b) | Commitments under operating leases as lessee |
Details of the main operating leases are as follows:
Lessor | Aircraft | As of September 2013 | As of December 31, 2012 | |||||||
Unaudited | ||||||||||
ACS Aircraft Finance Bermuda Ltd. - Aircastle (WFBN) | Boeing 737 | 1 | 1 | |||||||
Air Canada (Sublessor) | Airbus A340 | 1 | 1 | |||||||
Airbus Financial Services | Airbus A340 | 2 | 2 | |||||||
Aircraft 76B -26261 Inc. (ILFC) | Boeing 767 | — | 1 | |||||||
Aircraft 76B -26329 Inc. (ILFC) | Boeing 767 | 1 | 1 | |||||||
Aircraft 76B -27613 Inc. (ILFC) | Boeing 767 | 1 | 1 | |||||||
Aircraft 76B -27615 Inc. (ILFC) | Boeing 767 | 1 | 1 | |||||||
Aircraft 76B -28206 Inc. (ILFC) | Boeing 767 | 1 | 1 | |||||||
Aircraft Solutions Lux V S.ÀR .L. (AVM AX) | Bombardier Dhc8-200 | — | 1 | |||||||
ALC A319 1703, LLC (*) | Airbus A319 | 1 | 1 | |||||||
Aviacion Centaurus, A .I.E (Santander) (*) | Airbus A319 | 3 | 3 | |||||||
Aviación Centaurus, A .I.E. (*) | Airbus A321 | 1 | 1 | |||||||
Aviación Real A.I.E (*) | Airbus A319 | 1 | 1 | |||||||
Aviación Real A.I.E (*) | Airbus A320 | 1 | 1 | |||||||
Aviación Tritón A.I.E. (*) | Airbus A319 | 3 | 3 | |||||||
Avolon Aerospace AOE 19 Limited | Airbus A320 | 1 | 1 | |||||||
Avolon Aerospace AOE 20 Limited | Airbus A320 | 1 | 1 | |||||||
Avolon Aerospace AOE 6 Limited | Airbus A320 | 1 | 1 | |||||||
Avolon Aerospace AOE 62 Limited | Boeing 777 | 1 | — | |||||||
Avolon Aerospace AOE 63 Limited | Boeing 787 | 1 | — | |||||||
AWAS (SWEDEN TWO) AB (*) | Airbus A320 | 1 | 2 | |||||||
AWAS 4839 Trust | Airbus A320 | 1 | 1 | |||||||
AWAS 5125 Trust | Airbus A320 | 1 | 1 | |||||||
AWAS 5178 Limited | Airbus A320 | 1 | 1 | |||||||
AWAS 5234 Trust | Airbus A320 | 1 | 1 | |||||||
Baker & Spice Aviation Limited (*) | Airbus A320 | 2 | 2 | |||||||
BOC Aviation Pte. Ltd. | Airbus A320 | 1 | 1 | |||||||
Celestial Aviation Trading 35 Ltd. (GECAS) | Boeing 767 | — | 1 | |||||||
CIT Aerospace International | Boeing 767 | 1 | 1 | |||||||
CIT Aerospace International (*) | Airbus A319 | 1 | 3 | |||||||
CIT Aerospace International (*) | Airbus A320 | 4 | 4 | |||||||
Continuity Air Finance IV B.V (BOC) (*) | Airbus A319 | 1 | 1 | |||||||
Delaware Trust Company, National Association (CRAFT) | Bombardier Dhc8-200 | 7 | 9 | |||||||
Eden Irish Aircr Leasing M SN 1459 (AERCAP) (*) | Airbus A320 | 1 | 1 | |||||||
GECAS Sverige Aircraft Leasing Worldwide AB (*) | Airbus A320 | 10 | 10 |
173
Lessor | Aircraft | As of September 30, 2013 | As of December 31, 2012 | |||||||
Unaudited | ||||||||||
GECAS Sverige Aircraft Leasing Worldwide AB (*) | Airbus A330 | 2 | 2 | |||||||
GFL Aircraft Leasing Netherlands B.V. (GECAS) (*) | Airbus A320 | 1 | 1 | |||||||
International Lease Finance Corporation | Boeing 737 | 2 | 2 | |||||||
International Lease Finance Corporation | Boeing 767 | 1 | 1 | |||||||
International Lease Finance Corporation (*) | Airbus A320 | 1 | 1 | |||||||
KN Operating Limited (NAC) | Bombardier Dhc8-400 | 3 | �� | 4 | ||||||
MASL Sweden (1) AB (MACQUARIE) (*) | Airbus A320 | 1 | 1 | |||||||
MASL Sweden (2) AB (MACQUARIE) (*) | Airbus A320 | 1 | 1 | |||||||
MASL Sweden (7) AB (MACQUARIE) (*) | Airbus A320 | 1 | 1 | |||||||
MASL Sweden (8) AB (MACQUARIE) (*) | Airbus A320 | 1 | 1 | |||||||
MCAP Europe Limited - Mitsubishi (WTC) | Boeing 737 | 1 | 1 | |||||||
Orix Aviation Systems Limited | Airbus A320 | 3 | 3 | |||||||
Pembroke B737-7006 Leasing Limited | Boeing 737 | 2 | 2 | |||||||
RBS Aerospace Limited (*) | Airbus A320 | 6 | 6 | |||||||
SKY HIGH V LEASING COMPANY LIMITED (*) | Airbus A320 | 1 | 1 | |||||||
Sky High XXIV Leasing Company Limited | Airbus A320 | 2 | — | |||||||
Sunflower Aircraft Leasing Limited - AerCap | Airbus A320 | 2 | 2 | |||||||
Volito Aviation August 2007 AB (*) | Airbus A320 | 2 | 2 | |||||||
Volito Aviation November 2006 AB (*) | Airbus A320 | 2 | 2 | |||||||
Volito Brasilien AB (*) | Airbus A319 | 1 | 1 | |||||||
Volito November 2006 AB (*) | Airbus A320 | 2 | 2 | |||||||
Wells Fargo Bank North National Association (ACG) (*) | Airbus A319 | 1 | 1 | |||||||
Wells Fargo Bank North National Association (ACG) (*) | Airbus A320 | 2 | 2 | |||||||
Wells Fargo Bank North National Association (BAKER & SPICE) (*) | Airbus A320 | — | 1 | |||||||
Wells Fargo Bank North National Association (BOC) (*) | Airbus A319 | 3 | 3 | |||||||
Wells Fargo Bank North National Association (BOC) (*) | Airbus A320 | 1 | 2 | |||||||
Wells Fargo Bank Northwest N.A (AVOLON) (*) | Airbus A320 | 4 | 4 | |||||||
Wells Fargo Bank Northwest National Association (ACG) (*) | Airbus A320 | 2 | 2 | |||||||
Wells Fargo Bank Northwest National Association (AerCap) (*) | Airbus A330 | 10 | — | |||||||
Wells Fargo Bank Northwest National Association (BBAM) | Boeing 777 | 1 | — | |||||||
Wells Fargo Bank Northwest National Association (BOC) (*) | Airbus A320 | 1 | 1 | |||||||
Wells Fargo Bank Northwest, N.A. (GECAS) | Boeing 767 | 4 | 4 | |||||||
Wells Fargo Bank Northwest, N.A. (GECAS) | Boeing 777 | 2 | 2 | |||||||
Wilmington Trust Company (ILFC) (*) | Airbus A319 | 1 | 1 | |||||||
Zipdell Limited (BBAM ) (*) | Airbus A320 | 1 | 1 | |||||||
|
|
|
| |||||||
Total | 127 | 123 | ||||||||
|
|
|
|
(*) | The composition of the fleet as operating leases at September 30, 2013, incorporates the effects of business combinations with TAM S.A. and Subsidiaries. |
The rentals are shown in results for the period for which they are incurred.
174
The minimum future lease payments not yet payable are the following:
As of September 30, 2013 | As of December 31, 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
No later than one year | 450,816 | 380,713 | ||||||
Between one and five years | 1,048,912 | 852,659 | ||||||
Over five years | 261,922 | 235,658 | ||||||
|
|
|
| |||||
Total | 1,761,650 | 1,469,030 | ||||||
|
|
|
|
The minimum lease payments charged to income are the following:
For the periods ended September 30, | ||||||||
2013 | 2012 | |||||||
ThUS$ | ThUS$ | |||||||
Unaudited | ||||||||
Minimum operating lease payments | 315,360 | 195,958 | ||||||
|
|
|
| |||||
Total | 315,360 | 195,958 | ||||||
|
|
|
|
In September 2011, the Company signed a contract to establish the early departure of three Boeing 737-700. The return of these three aircraft was completed during the second quarter of 2012.
During the second quarter of 2012, added three Airbus A320-200 aircraft leased for a period of 8 years. During the third quarter of 2012, it the Company added two Airbus A320-200 aircraft, leased for periods of six and eight years. In addition, two Boeing 767-300 aircraft and two Airbus A320-200 were returned given the end of the lease contract. During the fourth quarter of 2012, were returned four Airbus A320-200 on lease term.
In the first quarter of 2013, it returned an Airbus A320-200, while during the second quarter of 2013 two Airbus A319-100, one Airbus A320-200 and one Bombardier Dhc8-200 were returned as their leasing contracts had ended. During June 2013 the contracts system applied to ten Airbus A330-200 aircraft was changed from financial leasing to operative leasing, with each aircraft being leased for a period of forty months. During the third quarter of 2013, three Airbus A320-200 aircraft was leased for a period of 8 years each, one Boeing 787 aircraft was leased for a period of 12 years and two Boeing 777 aircraft were leased for a period of 5 years each. Moreover, one Airbus A320-200, two Boeing 767-300 aircraft and one Bombardier Dhc8-400 aircraft were returned. Additionally, during July of 2013 two Dhc8-200 aircraft were acquired on leasing.
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The operating lease agreements signed by the Company and its subsidiaries state that maintenance of the aircraft should be done according to the manufacturer’s technical instructions and within the margins agreed in the leasing agreements, a cost that must be assumed by the lessee. The lessee should also contract insurance for each aircraft to cover associated risks and the amounts of these assets. Regarding rental payments, these are unrestricted and may not be netted against other accounts receivable or payable between the lessor and lessee.
At September 30, 2013 the Company has existing letters of credit related to operating leasing as follows:
Creditor Guarantee | Debtor | Type | Value ThUS$ | Release date | ||||||
AFS Investments 48 LLC. | Lan Cargo S.A. | Two letter of credit | 3,500 | Jan 25, 2014 | ||||||
Air Canada | LATAM Airlines Group S.A. | One letter of credit | 1,800 | Dec 30, 2013 | ||||||
CIT Aerospace International | LATAM Airlines Group S.A. | Two letter of credit | 3,240 | May 13, 2014 | ||||||
GE Capital Aviation Services Limited | LATAM Airlines Group S.A. | Five letter of credit | 12,003 | Jan 10, 2014 | ||||||
GE Capital Aviation Services Limited | Lan Cargo S.A. | Five letter of credit | 15,222 | Jan 10, 2014 | ||||||
International Lease Finance Corp | LATAM Airlines Group S.A. | Six letter of credit | 2,680 | Nov 22, 2013 | ||||||
Orix Aviation System Limited | LATAM Airlines Group S.A. | One letter of credit | 3,255 | Jul 31, 2014 | ||||||
PB Leasing Aircraft, No 28 (UK) Limited | LATAM Airlines Group S.A. | One letter of credit | 3,265 | May 5, 2014 | ||||||
TAF Mercury | LATAM Airlines Group S.A. | One letter of credit | 4,000 | Dec 11, 2013 | ||||||
TAF Venus | LATAM Airlines Group S.A. | One letter of credit | 4,000 | Dec 11, 2013 | ||||||
Wells Fargo Bank Northwest, National Association | LATAM Airlines Group S.A. | One letter of credit | 2,530 | Jun 30, 2014 | ||||||
Baker & Spice Aviation Limited | Tam Linhas Aéreas S.A. | Four letter of credit | 34,337 | Oct 25, 2013 | ||||||
BOC Aviation (USA) Corporation | Tam Linhas Aéreas S.A. | One letter of credit | 5,500 | Nov 29, 2013 | ||||||
Cit Aerospace International | Tam Linhas Aéreas S.A. | Four letter of credit | 11,002 | Oct 5, 2013 | ||||||
DVB Group Merchant Bank (Asia) Ltd. | Tam Linhas Aéreas S.A. | One letter of credit | 5,500 | Dec 4, 2013 | ||||||
GE Capital Aviation Services Limited | Tam Linhas Aéreas S.A. | Twelve letter of credit | 10,641 | Oct 8, 2013 | ||||||
Masl Sweden | Tam Linhas Aéreas S.A. | Three letter of credit | 2,124 | Oct 31, 2013 | ||||||
PK Airfinance US, Inc. | Tam Linhas Aéreas S.A. | One letter of credit | 1,600 | Dec 19, 2013 | ||||||
SM BC Aviation Capital Ltd. | Tam Linhas Aéreas S.A. | Two letter of credit | 6,826 | Feb 20, 2014 | ||||||
Wells Fargo Bank Northwest, National Association | Tam Linhas Aéreas S.A. | One letter of credit | 6,000 | Mar 28, 2014 | ||||||
Wilmington Trust SP Services Ltd. | Tam Linhas Aéreas S.A. | One letter of credit | 5,544 | Jan 31, 2014 | ||||||
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144,569 | ||||||||||
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(c) | Other commitments |
At September 30, 2013 the Company has existing letters of credit, certificates of deposits and warranty insurance policies as follows:
Creditor Guarantee | Debtor | Type | Value ThUS$ | Release date | ||||||||
Comisión Europea | LATAM Airlines Group S.A. | One letter of credit | 8,220 | Feb 11, 2014 | ||||||||
Deutsche Bank A.G. | LATAM Airlines Group S.A. | Four letter of credit | 50,000 | Jan 31, 2014 | ||||||||
Dirección General de Aviación Civil de Chile | LATAM Airlines Group S.A. | One hundred and twenty three ticket guarantee | 20,534 | Nov 1, 2013 | ||||||||
Dirección Seccional de Aduanas de Bogotá | Línea Aérea Carguera de Colombia S.A. | Two insurance policies guarantee | 2,430 | Apr 7, 2014 | ||||||||
Empresa Pública de Hidrocarburos del Ecuador EP Petroecuador | LATAM Airlines Group S.A. | One letter of credit | 5,500 | Jun 21, 2014 | ||||||||
Metropolitan Dade County | LATAM Airlines Group S.A. | Five letter of credit | 1,675 | May 31, 2014 | ||||||||
The Royal Bank of Scotland plc | LATAM Airlines Group S.A. | Two letter of credit | 18,000 | Jan 8, 2014 | ||||||||
Washington International Insurance | LATAM Airlines Group S.A. | Five letter of credit | 2,650 | Dec 12, 2013 | ||||||||
Westpac Banking Corporation | LATAM Airlines Group S.A. | One letter of credit | 1,118 | Apr 4, 2014 | ||||||||
6a Vara de Execuções Fiscais Federalde Campo Grande/MS | Tam Linhas Aéreas S.A. | Three insurance policies guarantee | 33,013 | Jan 4, 2014 | ||||||||
8 Vara da Fazenda Pública da Comarca de São Paulo | Tam Linhas Aéreas S.A. (Pantanal) | One insurance policies guarantee | 16,585 | Apr 12, 2015 | ||||||||
Vara da Fazenda Pública da Comarcade São Paulo | Tam Linhas Aéreas S.A. | One insurance policies guarantee | 3,528 | Mar 29, 2016 | ||||||||
Vara De Execuções Fiscais De Santa Cataria | Tam Linhas Aéreas S.A. | One insurance policies guarantee | 1,706 | Nov 20, 2013 | ||||||||
União Federal | Tam Linhas Aéreas S.A. | One insurance policies guarantee | 1,143 | Jul 24, 2015 | ||||||||
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NOTE 37 - TRANSACTIONS WITH RELATED PARTIES
(a) | Transactions with related parties for the period ended September 30, 2013 (Unaudited) |
Tax No. | Related party | Nature of | Country of origin | Explanation of | Nature of related | Currency | ThUS$ | |||||||||
96.810.370-9 | Inversiones Costa Verde Ltda. y CPA. | Controlling shareholder | Chile | Investments | Revenue from services provided | CLP | 12 | |||||||||
96.847.880-K | Lufthansa Lan Technical Training S.A. | Associate | Chile | Training center | Leases as lessor | CLP | 197 | |||||||||
Services received | CLP | (1,013 | ) | |||||||||||||
Services received | US$ | (828 | ) | |||||||||||||
65.216.000-k | Comunidad Mujer | Other related parties | Chile | Promotion and training of women | Revenue from services provided | CLP | 11 | |||||||||
Services received | CLP | (11 | ) | |||||||||||||
78.591.370-1 | Bethia S.A y filiales | Other related parties | Chile | Investments | Leases as lessor | CLP | (1 | ) | ||||||||
Revenue from services provided | CLP | 2,175 | ||||||||||||||
Services received | CLP | (573 | ) | |||||||||||||
Sale of Property plant and equipment (1 | CLP | 14,217 | ||||||||||||||
79.773.440-3 | Transportes San Felipe S.A | Other related parties | Chile | Transport | Revenue from services provided | CLP | 8 | |||||||||
Services received | CLP | (148 | ) | |||||||||||||
Commitments made on behalf of the entity | CLP | (89 | ) | |||||||||||||
87.752.000-5 | Granja Marina Tornagaleones S.A. | Other related parties | Chile | Pisciculture | Revenue from services provided | CLP | 183 | |||||||||
Foreign | Inversora Aeronáutica Argentina | Other related parties | Argentina | Investments | Revenue from services provided | US$ | 5 | |||||||||
Leases as lessor | US$ | (275 | ) | |||||||||||||
Foreign | Jochmann Paticipacoes Ltda. | Other related parties | Brazil | Transport | Services received | US$ | (21 | ) | ||||||||
Foreign | Made In Everywhere Com . Distr. Ltda. | Other related parties | Brazil | Transport | Revenue from services provided | BRL | (1 | ) | ||||||||
Foreign | TAM Aviação Executiva Taxi Aéreo S/A | Other related parties | Brazil | Transport | Revenue from services provided | BRL | 383 | |||||||||
Commitments made on behalf of the entity | BRL | (19 | ) | |||||||||||||
Foreign | Prismah Fidelidade S.A. | Joint Venture | Brazil | Marketing | Liabilities settlement on behalf of the entity for the related party | BRL | (524 | ) |
On December 28, 2012, Inmobiliaria Aeronáutica S.A. as seller and Sotraser S.A. (Subsidiary of Bethia S.A.) as purchaser, entered into an agreement to purchase the land called “Lot No. 12 of parcellation project Lo Echevers”. The value of the sale amounts to ThUS$ 14,217. On September 30, 2013, this balance is paid.
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(b) | Transactions with related parties for the period ended September 30, 2012 (Unaudited) |
Tax No. | Related party | Nature of | Country of origin | Explanation of | Nature of related parties | Currency | ThUS$ | |||||||||
96.810.370-9 | Inversiones Costa Verde Ltda. y CPA. | Controlling shareholder | Chile | Investments | Revenue from services provided | CLP | 11 | |||||||||
96.847.880-K | Lufthansa Lan Technical Training S.A. | Associate | Chile | Training center | Leases as lessor | CLP | 347 | |||||||||
Services received | CLP | (667 | ) | |||||||||||||
Services received | US$ | (442 | ) | |||||||||||||
65.216.000-K | Comunidad Mujer | Other related parties | Chile | Promotion and training of women | Services received | US$ | (13 | ) | ||||||||
78.591.370-1 | Bethia S.A . y Filiales | Other related parties | Chile | Investments | Leases as lessor | CLP | 550 | |||||||||
Revenue from services provided | CLP | 540 | ||||||||||||||
Commitments made on behalf of the entity | CLP | 3 | ||||||||||||||
Services received | CLP | (565 | ) | |||||||||||||
79.773.440-3 | Transportes San Felipe S.A. | Other related parties | Chile | Transport | Services received | CLP | (279 | ) | ||||||||
87.752.000-5 | Granja Marina Tornagaleones S.A. | Other related parties | Chile | Pisiculture | Revenue from services provided | CLP | 187 | |||||||||
96.812.280-0 | San Alberto S.A. Y Filiales | Other related parties | Chile | Investments | Services received | US$ | (29 | ) | ||||||||
Foreign | Inversora Aeronáutica Argentina | Other related parties | Argentina | Investments | Leases as lessee | US$ | (338 | ) | ||||||||
Foreign | Tadef-Transporte Administração e Participação Ltda. | Other related parties | Brazil | Transport | Services received | US$ | (18 | ) | ||||||||
Foreign | Made In Everywhere Repr. Com. Distr. Ltda. | Other related parties | Brazil | Transport | Revenue from services provided | BLR | 124 | |||||||||
Liabilities settlement on behalf of the entity for the related party | BLR | 16 | ||||||||||||||
Foreign | TAM Aviação Executiva e Taxi Aéreo S.A. | Other related parties | Brazil | Transport | Services received | BLR | (116 | ) |
Operations corresponding to holders of common stock in TAM S.A. and subsidiaries are included following the date of the business combination, on June 22, 2012.
The balances of Accounts receivable and accounts payable to related parties are disclosed in Note 9.
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(c) | Compensation of key management |
The Company has defined for these purposes that key management personnel are the executives who define the Company’s policies and major guidelines and who directly affect the results of the business, considering the levels of Vice-Presidents, Chief Executives and Directors.
For the nine months ended September 30, | For the three months ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
ThUS$ | ThUS$ | ThUS$ | ThUS$ | |||||||||||||
Unaudited | ||||||||||||||||
Remuneration | 11,360 | 9,793 | 2,746 | 4,547 | ||||||||||||
Management fees | 258 | 318 | 108 | 203 | ||||||||||||
Non-monetary benefits | 380 | 294 | 127 | 100 | ||||||||||||
Short-term benefits | 4,049 | 5,051 | 1 | 94 | ||||||||||||
Share-based payments | 13,390 | — | 4,495 | — | ||||||||||||
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Total | 29,437 | 15,456 | 7,477 | 4,944 | ||||||||||||
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NOTE 38 - SHARE-BASED PAYMENTS
(a) | Employee Compensation Plan for the Company and its subsidiaries: |
At a Special Shareholders Meeting held December 21, 2011, the Company’s shareholders approved, among other matters, an increase in its capital by US$ 1,465,372,970.09 through the issuance of 147,355,882 common shares with no par value. US$ 47,733,352.49 of that increase, corresponding to the issuance of 4,800,000 shares, would be allocated to compensation plans for employees of the Company and its subsidiaries, pursuant to Article 24 of the Companies Law.
The main conditions for these compensation plans are:
a) | Upon a recommendation by the Company’s Executive Committee, the Board will determine the employees of the Company and its subsidiaries included in the Compensation Plan and the number of options for the acquisition of shares in the Company that will be allocated to each, after which a stock option agreement will be signed with each employee. |
b) | Until the shares in the option are subscribed, the optionee will have no economic or political rights and will not be considered in the quorum for shareholders meetings. |
c) | The options allocated to each employee will accrue in parts on the following three dates: (1) 30% on December 21, 2014: (2) 30% on December 21, 2015 and (3) 40% on June 21, 2016, subject to remaining in the company’s employ. |
d) | The price payable for each share allocated to the Compensation Plan, if the options are exercised, will be CLP$ 11,000. It will be calculated, adjusted and payable in the manner indicated in letter h) below. |
e) | Once the options accrue, in the aforesaid parts, the employee may exercise them in whole or in part, in which case he must subscribe and pay for the respective shares at once, in the act of subscription, in cash, by check, by bank check, by electronic fund transfer or any other instrument or paper representing money payable on demand. Partial exercise may be for no less than 10% of all options held by the Employee. |
f) | The period during which the employee must exercise the options after they have accrued according to letter c) above will expire December 21, 2016. If the employee has not exercised or waived the options in that period, he will be understood, for all purposes, to have waived the options and, accordingly, all rights, powers, promises or offers in relation to the subscription of cash shares in the Company will be deemed extinguished and it will be understood that the employee has irrevocably waived any right or power in relation thereto. The Company will be released from any obligation. |
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g) | If the employee resigns from his position or his employment contract is terminated for any reason other than the reasons contained in article 160 of the Labor Code, only the options accrued through the date of termination of the employment contract may be exercised, always provided the period for exercise of the options is in force. |
The employee will also forfeit the right to exercise the options, whether or not they have accrued, if he is severed for any of the reasons contained in article 160 of the Labor Code.
The heirs or legatees of the employee shall exercise the rights and fulfill the obligations in substitution for the employee should he die, and the above provisions in this letter shall consequently not apply. In that case, all of the options granted shall accrue automatically and the heirs or legatees must exercise them within 180 calendar days after the date of the employee’s death. The employee shall retain his rights to the options in the event of a permanent disability and may exercise them in the periods indicated above.
h) | The price payable for these shares, if the respective options are exercised, will be expressed in Dollars of the United States of America (“Dollars”), for the equivalent in that currency to the Placement Price indicated in letter d) above on the date when the Company’s Board of Directors sets it (the “Pricing Date”), converted at the observed dollar exchange rate published in the Official Gazette on the Pricing Date, that is, US$23.19. As of the Pricing Date, said price expressed in Dollars will be adjusted by the change in the Consumer Price Index (CPI) published monthly by the U.S. Department of Labor, from the Pricing Date to the date of subscription and payment of the shares. The subscription price shall be paid in pesos, local currency, converted at the observed dollar exchange rate published in the Official Gazette on the date of subscription and payment of the shares. |
i) | The options may not be assigned, liened or transferred in any way by the employee. However, the employee may state his waiver of the options at any time by sending a certified letter of waiver to the Chief Financial Officer of the Company. |
It is expressly stated that the Extraordinary General Meeting dated December 21, 2011, it was agreed that no member of the controlling group would be benefited by this compensation plan.
On January 2, 2013, LATAM Airlines Group S.A. Option contracts signed for Shares with 46 employees of the Company and its subsidiaries for a total of 4.382 million shares
These options have been valued and recorded at fair value at the grant date, determined by the “Black-Scholes-Merton”. The effect on income to September 2013 corresponds to ThUS$ 12,900.
The input data of option pricing model used for share options granted are as follows:
Weighted average share price | Exercise price | Expected volatility | life of option | Dividends expected | Risk-free interest | |||||||||||||||||
US$ | 23.55 | US$ | 24.97 | 61.52 | % | 3.6 years | 0 | % | 0.0055 |
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At the Extraordinary Shareholders’ Meeting held on June 11, 2013, the Company’s shareholders approved motions including increasing corporate equity by US$ 1,000,000,000 through the issuance of 63,500,000 ordinary shares with no par value, of which US$ 23,622,047.25, corresponding to the issuance of 1,500,000 shares, shall be destined for compensation plans for employees of the Company and its affiliates, in conformity with the stipulations established in Article 24 of the Corporations Law. Similarly, it was agree that the Company’s Board of Directors would remain broadly empowered to decide on all matters related to the options that form part of compensation plans, including but not limited to: the periods during which the options shall be valid, the time periods, moments, manner, and other conditions for their acceptance or exercise, the workers to receive such benefits, the number of shares to be subject to the options offered, and all other matters related to the above.
At the same Extraordinary Shareholders’ Meeting, a resolution was approved to delegate the Board, for a five year period starting on December 21, 2011, with the power to fix the new price of the placement of the 4,800,000 shares destined for compensation plans, as provided for in Article 24 of the Corporations Law, in conformity with the Extraordinary Shareholders’ Meeting held on December 21, 2011, as modified at the Extraordinary Shareholders’ Meeting held on September 4, 2012, and to amend and resolve the terms and conditions applicable thereto.
Compensation plans implemented by providing options for the subscription and payment of shares that have been granted from the first quarter of 2013 are recognized in the financial statements in accordance with the provisions of IFRS 2 “Share-based Payment”, showing the effect of the fair value of the options granted under compensation in linear between the date of grant of such options and the date on which these irrevocable.
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(b) | Subsidiaries compensation plans |
TAM Linhas Aereas S.A. and Multiplus S.A., both subsidiaries of TAM S.A., have outstanding stock options at September 30, 2013, which amounted to 851,555 shares and 917,212 shares, respectively.
TAM Linhas Aéreas S.A. | ||||||||||||||||||||||||||||||||
Description | 1st Grant | 2nd Grant | 3rd Grant | 4th Grant | 1st Extraordinary Grant | 3nd Extraordinary Grant | 4th Extraordinary Grant | Total | ||||||||||||||||||||||||
Date | 12-28-2005 | 11-30-2006 | 12-14-2007 | 05-28-2010 | 09-27-2007 | 04-01-2010 | 04-01-2010 | |||||||||||||||||||||||||
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Outstanding option number | — | 119,401 | 259,857 | 242,297 | 230,000 | — | — | 851,555 | ||||||||||||||||||||||||
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Multiplus S.A. | ||||||||||||||||||||||||||||||||
Description | 1st Grant | 2nd Grant | 3rd Grant | 4th Grant | 1st Extraordinary Grant | 2nd Extraordinary Grant | 3nd Extraordinary Grant | Total | ||||||||||||||||||||||||
Date | 10-04-2010 | 11-08-2010 | 04-16-2012 | 10-04-2010 | 10-04-2010 | 10-04-2010 | 04-16-2012 | |||||||||||||||||||||||||
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Outstanding option number | 11,289 | 2,245 | 166,236 | 334,207 | 403,235 | — | — | 917,212 | ||||||||||||||||||||||||
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The Options of TAM Linhas Aéreas S.A., under the plan’s terms, are divided into three equal parts and employees can run a third of its options after three, four and five years respectively, as long as they remain employees of the company. The agreed term of the options is seven years.
For Multiplus S.A., the plan’s terms provide that the options granted to the usual prizes are divided into three equal parts and employees may exercise one-third of their two, three and four, options respectively, as long as they keep being employees of the company. The agreed term of the options is seven years after the grant of the option. The first extraordinary granting was divided into two equal parts, and only half of the options may be exercised after three years and half after four years. The second extraordinary granting was also divided into two equal parts, which may be exercised after one and two years respectively.
Both companies have an option that contains a “service condition” in which the exercise of options depends exclusively on the delivery services by employees during a predetermined period. Terminated employees will be required to meet certain preconditions in order to maintain their right to the options.
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The state, in relation to the acquisition of the share’s rights, in both companies is as follows:
Company | Number of shares Accrued options | Number of shares Non accrued options | ||||||
TAM Linhas Aéreas S.A. | 609,258 | 242,297 | ||||||
Multiplus S.A . | — | 917,212 |
In accordance with IFRS 2 - Share-based payments, the fair value of the option must be recalculated and recorded as a liability of the Company once payment is made in cash (cash-settled). The fair value of these options was calculated using the Black-Scholes method, where the cases were updated with information LATAM Airlines Group S.A. The fair value recorded in liabilities at September 30, 2013 is ThUS$ 1,339 and in income ThUS$ 490.
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NOTE 39 - THE ENVIRONMENT
LATAM Airlines Group S.A. manages environmental issues at the corporate, centralized in Environmental Management. To monitor the company and minimize their impact on the environment is a commitment to the highest level, where continuous improvement and contribute to the solution of the problem of global climate change, generating added value to the company and the region, are the pillars of his administration.
One function of Environmental Management, in conjunction with the various areas of the Company, is to ensure environmental compliance, implementing a management system and environmental programs that meet the increasingly demanding requirements globally; well as continuous improvement programs in their internal processes that generate environmental benefits and to join the currently completed.
The Environment Strategy LATAM Airlines Group S.A., is based on the following objectives:
• | Minimize the impact of its operations by using a modern fleet, efficient operational management and continuous incorporation of new technologies. |
• | promote the efficient use of resources and minimization of waste in all processes. |
• | Manage responsibly our carbon footprint by measuring, monitoring and reducing emissions. |
• | Promote the development and use of alternative energy more efficient and less environmental impact. |
• | Encourage sustainable tourism as a pillar for the development of the region. |
For 2013, we have established three priority areas of work to develop:
1. | Implementing an Environmental Management System; |
2. | Management Carbon Footprint by measuring, verification and compensation of our emissions; |
3. | Promoting biofuels market development in the region. |
Similarly, during Q3 activities were conducted in the following initiatives:
• | The environmental management of LATAM was an important part again for maintain recognition as industry leaders in the subgroup of Emerging Markets of Dow Jones Sustainability Index. |
• | Implementation of an Environmental Management System for LAN Airlines and LAN Cargo, and specific to the offices of Miami, USA and Quito, Ecuador; |
• | Improving Environmental Reporting System, which allows measuring progress in environmental issues. |
• | The corporation’s carbon footprint was externally measured and verified. |
• | Review the environmental standards demanded at ours suppliers. |
• | A biofuel study was conducted, including application potential, costs, and benefits. |
• | Active participation in the project Renewable Bio Chile. |
• | The Corporation took part in discussions regarding global climate change, spearheading the industry’s regional position alongside ALTA (Asociación Latinoamericana de Aviación Civil). Most notably the industry’s commitment to achieve carbon-neutral growth from 2020. |
• | Compliance was made with European regulations on CO2 emissions, providing compensation to offset flights within the EU during 2012, corresponding to US$ 32,000. |
The budget of the Environmental Division for 2013 is US$ 143,380.
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NOTE 40 - EVENTS SUBSEQUENT TO THE DATE OF THE FINANCIAL STATEMENTS
(a) | Incorporation of LAN Colombia and TAM Linhas Aereas tooneworld® |
Through the Essential Matter report dated October 1, 2013, the Company reported to the Superintendency of Securities and Insurance as follows:
1. | According to Material Event dated March 7, 2013, it was informed that LATAM Airlines Group’s Board of Directors in an ordinary meeting held on March 5, 2013, agreed to chooseoneworld®at its global alliance for the airlines that are part of its Group. With this decision, TAM y Aerovías de Integración Regional - Aires S.A. (“LAN Colombia”) would enteroneworld®and would join LATAM Airlines Group and the other members of such global alliance. |
2. | Such LATAM Board of Director’s agreement was adopted in compliance of Resolution No. 37 dated September 21, 201, issued by theH. Tribunal de Defensa de la Libre Competencia (“TDLC” or “Tribunal of Competition”) and decision dated December 14, 2011, issued by the BrazilianConselho Administrativo de Defesa Economica(“CADE”) which was partially amended on February 8, 2012; by which the merger between LAN Airlines S.A. (currently LATAM Airlines Group S.A.) and TAM Linhas Aereas S.A. was approved. |
3. | Consequently, and according to what was informed by Material Event dated March 7, 2013, it is hereby informed that as from March 30, 2014, TAM Linhas Aéreas will no longer be a member of the Star Alliance; and will become a member of theoneworld Alliance as of March 31, 2014. |
4. | Meanwhile, LAN Colombia will enter oneworld on October 1, 2013. |
(b) | Securitization of Future Flow Receivables |
On November 27, 2012, the Company’s Board of Directors agreed to authorize obtaining financing through the securitization of the flows of its airfare and cargo airway bill sales in the United States of America and Canada expressed in Dollars of United States and in Canadian Dollars (securitization of future flow receivables), made by certain foreign institutions operating credit card systems in the United States of America and through which payment of such airfare and airway bill sales are carried out in that country.
The Company mandated Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Inc. to implement this operation for a total volume of up to US$450,000,000. (Four hundred fifty million). The payment structure of the securitized bond considered a 7 year maturity, a 2 year grace period (interests) and 5 years of amortization. The assignee of the new financing is a company specially incorporated for this purpose in the Cayman Islands which is denominated Guanay Finance Limited. The transaction’s structure also considered the possibility that, in the future, new series of bonds would be issued for the same rights assigned and with the same underwriter.
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On November 4, 2013 the price of/amount issued by the securitized bond was determined with future flows of US$450,000,000.- (Four hundred fifty million dollars), a 7 year maturity (a 2 year period ofinterest only, 5 years ofamortization, and aduration of 4,75 years). The offering is 144A/Reg S. The securitized bond coupon is 6.0 %. The settlement and reception of funds were performed on November 7, 2013.
(c) The subsidiary TAM Linhas Aéreas S.A., in connection with the issuance of debentures (CVM 476) by original amount of 600 million of brazilian reais in 2009, has the obligation to comply with certain limits of financial indicators. As of September 30, 2013, the outstanding balance related to this debt is 400 million brazilian reais.
On November 5, 2013, TAM Linheas Aéreas S.A. sent an “Irrevocable Voluntary Prepayment Letter”to the Asamblea General de Debenturista, in order to formalize the determination of voluntary prepay on November 21, 2013, for the total outstanding amount of the debentures.
According to IFRS accounting standards, financial liabilities related to this issuance of debentures are classified in Other current financial liabilities.
LATAM Airlines Group S.A. and Subsidiaries’ consolidated financial statements as at September 30, 2013, have been approved by the Board of Director’s in an extraordinary meeting held on November 11, 2013.
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