2003 Annual Report - Turkish Airlines

TURKISH AIRLINES INC.NOTES TO THE FINANCIAL STATEMENTS AS OF 31 DECEMBER 2003 AND 2002 / continued11. LONG-TERM ADVANCES GIVENAdvances given consist of the following:31 December 2003 31 December 2002TL 000,000 TL 000,000Pre-delivery Payments for Aircraft 6,634,264 8,192,916Deposits Given for Operational LeasesOperational Leases 1,437,710 17,703,525Other Deposits Given 2,143,890 2,404,548Total Long-Term Advances Given 10,215,864 28,300,98912. FINANCIAL ASSETSThe investment accounted for using the equity method is as follows:31 December 2003 31 December 2002TL 000,000 TL 000,000Günefl Ekspress Havac›l›k A.fi. (Sun Express) 7,107,000 4,371,970Other financial assets available-for-sale are as follows:31 December 2003 31 December 2002TL 000,000 TL 000,000Emek ‹nflaat ve ‹flletme A.fi. 17,637 17,637Sita INC. 1,568,636 1,568,636Diminution in Value of Sita Inc. Shares - (1,112,597)THY SRL - 784France Telecom Shares 17,756,759 17,756,759Diminution in Value of France Telecom Shares (9,742,874) (11,008,323)Uçak Servis A.fi. (USAfi) 6,223,507 12,649,066Diminution in Value of USAfi Shares (525,172) (3,510,794)15,298,493 16,361,168Tender for the catering service was won by Uçak Servis A.fi. (USAfi) and service agreement was signed in 1 January 2002. Basedon share transfer agreement made between USAfi’s main shareholder Gate Gourmet Holding A.G. (GGH) and the Company, USAfiwill transfer its group B free shares corresponding to 15% of its total capital to the Company. According to agreement, ownershipof first 10% shares was transferred in 21 June 2002, and 1.25% shares was transferred on 2 January 2003; it will be completedto 15% by transferring the ownership of each 1.25% share in the years 2004, 2005 and 2006. Consequently, 641 million sharescorresponding to first 11.25% share of USAfi’s capital, which was transferred to the Company, was recorded to "Financial Assets"and "Deferred income" accounts from market value of TL 13,487,695 Million. "Deferred income" amount will be amortized to incomeduring 5 years catering service agreement on a straight-line basis. The Company has sold 342 Million USAfi shares in Istanbul StockExchange in 2003.Details of the Company’s long-term financial assets at 31 December 2003 are as follows:Place of Proportion of Proportion ofName of the Incorporation Ownership Voting Power PrincipalCompany and Operation Interest Held ActivityGünefl Ekspress Havac›l›k A.fi.Air(SUN EXPRESS) Turkey 50% 50% TransportationEmek ‹nflaat ve ‹flletme A.fi. Turkey 0.3% 0.3% ConstructionSita INC. Holland Less than 0.1% None Information & TelecommunicationServicesUçak Servis A.fi.(USAfi) Turkey 6.5% 6.5% CateringFrance Telecom France Less than 0.1% None Telecommunication64